[p2p-research] against human rentals

[Michel Bauwens]

Dear friends,

I sense the book below is making a very important argument, and I'd like to
feature it as book of the week,

however, I'd like assistance in contextualizing the debate, I'm thinking of
Kevin in particular here?

see http://p2pfoundation.net/Case_for_Economic_Democracy


 Case for Economic Democracy
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*= an argument for the Labor Theory of
Property<http://p2pfoundation.net/Labor_Theory_of_Property>which
opposes "human rentals" (or wage labour) on principled grounds of
inalienable human rights.*



   - Book: PROPERTY AND CONTRACT IN ECONOMICS: The *Case for Economic
   Democracy*. David P. Ellerman*

Available via http://www.ellerman.org/Davids-Stuff/Books/P&C-Book.pdf


   Contents[hide <javascript:toggleToc()>]

   - 1 Summary<http://p2pfoundation.net/Case_for_Economic_Democracy#Summary>
   - 2 Excerpts<http://p2pfoundation.net/Case_for_Economic_Democracy#Excerpts>
      - 2.1 Introduction<http://p2pfoundation.net/Case_for_Economic_Democracy#Introduction>
      - 2.2 Conclusion<http://p2pfoundation.net/Case_for_Economic_Democracy#Conclusion>
   - 3 More Information<http://p2pfoundation.net/Case_for_Economic_Democracy#More_Information>

 [edit<http://p2pfoundation.net/Case_for_Economic_Democracy?title=Case_for_Economic_Democracy&action=edit&section=1>
] Summary

"The book is divided into three main parts. In Part I, the focus is on
property, principally the descriptive and normative questions of property
appropriation. The conventional view of property appropriation is clouded by
a basic myth which needs to be cleared away before the questions can even be
adequately posed. Then the functioning of the property system–in the
presence of the employment contract–can be analyzed. The normative
perspective is provided by the old "labor theory of property" which is
simply the usual juridical norm of imputation applied to the matter of
property appropriation. The history of the labor theory of property has
always been obscured by the confusion with the labor theory of value, a
confusion sponsored for different reasons by both Marxian economists and
neo-classical economists. That intellectual history is analyzed and a number
of standard misinterpretations of the labor theory of property are
discussed.

In Part II, the focus is on contract, principally the employer-employee
contract and its individual and collective predecessors, the voluntary
self-sale contract and the Hobbesian pactum subjectionis. Here we find the
analysis of intellectual history to be most revealing. Liberal capitalism
presents the most basic social question as being "consent or coercion."
Slavery and autocracy lie on the side of coercion while capitalism and
democracy are grouped together on the side of consent. But we find a
different story. We find that the most sophisticated defenses of slavery and
autocracy were in fact liberal and based those institutions on implicit or
explicit voluntary slavery contracts or political pacts of subjugation.

The definitive answer to the liberal defenses of slavery and non-democratic
government came not from general liberal appeals to consent or from
procedural fussing about the reality of the "implicit contracts" but from
the doctrine of inalienable rights that descends from the Enlightenment. The
real point of debate turns out not to be "consent or coercion" but
"alienable or inalienable basic rights." As noted above, neo-classical
economic theory and liberal capitalist ideology contain no coherent and
uncontrived notion of inalienability that would rule out vote-selling, the
self-sale contract, or the Hobbesian pactum subjectionis. Yet these
prohibitions are fundamental to the modern western democracies. Thus we find
the usual correlation of capitalism with democracy to be superficial. On the
real question of alienable or inalienable natural rights, capitalism lies on
one side of the fence and democracy on the other.

We resurrect the Enlightenment doctrine of inalienable rights (called the
"de facto theory of inalienable rights") and present it in modern terms.
That old doctrine of inalienable rights has considerable "bite" left in it.
In fact, it supplies a critique of the contract for renting human beings, a
contract which could also be viewed as the limited Hobbesian pactum
subjectionis for the workplace, namely the employer-employee contract. The
theory concludes that the employment contract is invalid "in the light of
natural law" (to use the older language).

Parts I and II of the book are written for "intelligent general reader."
Part III applies the results of Parts I and II, namely the labor theory of
property and the de facto theory of inalienable rights, to economics. Here
it is assumed that the reader has an acquaintance with upper level
undergraduate economics.

The initial focus in Part III is on descriptive theoretical flaws in capital
theory and in general equilibrium theory (the Arrow-Debreu model) that
purports to prove the possibility of a competitive equilibrium with positive
pure profits. Then the focus turns to marginal productivity (MP) theory
which plays the role of both a descriptive and a normative theory in
neo-classical economics. A single corn-and-labor model is developed so that
marginal productivity theory, the Marxian labor theory of value and
exploitation, and the labor theory of property can all be compared and
contrasted in the same model.

Finally, the basics of a modern theory of property and contract are
sketched. The theory has both a descriptive and a normative side.
Neo-classical economics has a "fundamental theorem" which relates the
notions of competitive equilibrium and allocative efficiency. We develop the
similar notions for property theory and sketch the fundamental theorem of
property theory.

The ideas and theories resurrected and developed in this book are in sharp
structural and paradigmatic conflict with the conventional wisdom in
economics and legal theory. The arguments presented here are developed in
the form of a running debate with this conventional wisdom–a debate that is
summarized at the end of most chapters. The debate is difficult at times to
follow since the conventional wisdom does not even pose the right questions.
Pouring better wine into the wrong bottles will not suffice. New bottles are
developed–or rather, much older bottles are rediscovered and refurbished for
modern usage."
[edit<http://p2pfoundation.net/Case_for_Economic_Democracy?title=Case_for_Economic_Democracy&action=edit&section=2>
] Excerpts [edit<http://p2pfoundation.net/Case_for_Economic_Democracy?title=Case_for_Economic_Democracy&action=edit&section=3>
] Introduction

Introduction: End of the "Great Debate", by David Ellerman:

The Great Debate between Capitalism and Socialism is at last over. The free
market and private property have decisively won. Does that mean the "end of
ideology" or the "end of history"? Can we rest assured that there are no
fundamental structural flaws in the western-style economy? Our legal system
is structured to forbid discrimination on the basis of race, but racism
persists. Is that the only type of social problem that remains–where the
structure is correct in principle but the implementation is flawed?

We shall argue that the current western-style economic system is
fundamentally and structurally flawed. The problems are not just in the
implementation of sound principles. Moreover, we shall argue that the system
is flawed because it violates the principles of the institutions that are
usually associated with capitalism. That is, it violates the basic
principles of both private property and democracy. From the conventional
point of view, this will seem to be a strange position. Isn't capitalism
usually identified with private property and democracy? That identification
has been based on the Great Capitalism-Socialism Debate, on assuming that
"the alternative" to capitalism is state ownership of businesses and
one-party dictatorships. But that debate is over, and accordingly capitalism
can now be evaluated in a new light.

Since "capitalism" is so often definitionally identified with a private
property market economy, we must give a more precise definition of
"capitalism" so that we are not just arguing about definitions. By
"capitalism" we mean production organized on the basis of the
employer-employee relationship. We shall also use "the employment system" or
"employer-employee system" as more accurate but less known names of the
system based on the employer-employee relation. The alternative is a private
property market economy where everyone is self-employed (individually or
jointly) in their workplace. A firm where the managers and workers are
jointly working for themselves will be called a "self-employment firm," a
"worker-owned firm" (where "worker" always includes all who work in the
business enterprise), or a "democratic firm" in contrast to the conventional
"capitalist firm" or "employment firm."

The basis question is this –the employer-employee relation or universal
self-employment in the workplace?

We shall have more that one occasion to use a slavery analogy. Consider a
private property market economy where the workers were largely privately
owned slaves, like the American economy before the Civil War. Suppose the
defenders of such a system managed to restrict consideration of an
alternative to a system of state businesses with state or socially owned
slaves. The "Great Debate" would be between the "Athenian" model of
privately owned slaves and the "Spartian" model of publicly owned slaves.
The Athenian model would most likely be more efficient. Over the years, it
would demonstrate its superior efficiency while the Spartian model might
eventually collapse under its own weight. Would the victory of the Athenian
model of private slave ownership signal the "end of history"? Would the
victory mean that the Athenian model contained no structural flaws, only
problems of implementing otherwise correct principles?

The Great Debate of our day has been similar except that the question has
been the voluntary private or public hiring (or renting) of workers instead
of the private or public ownership of workers. In spite of its political
importance, the public-private debate has been conceptually wrong-headed
from the beginning. The real question about slavery is not the public or
private ownership of slaves but whether the master-slave relationship should
be allowed (involuntarily or voluntarily) or should people always be
self-owning (which implies that the right of self-determination should be
inalienable even with consent). Today, the real question is not about the
public or private employment of workers (as it was in the
capitalism-socialism debate). The question is: should the hiring or renting
of people be allowed at all or should people always be self-employed in the
their place of work?

Some would say that the universal self-employment system should be presented
as a variant of capitalism rather than an alternative. That may be; there is
no need to argue only about words. But there are conceptual and historical
reasons to use the word "capitalism" exclusively to represent the
employer-employee system so long as one is clear, precise, and explicit
about that usage. When people are self-employed in their firms, then the
suppliers of capital are not hiring the workers. Labor (in the sense of all
the people, managers and blue-collar workers, who work in the firm) is
hiring capital. Since Labor would then be the "residual claimant" (the party
receiving the profits left from the revenues after the costs are covered),
it would be odd to call that arrangement a variant of "capital-ism." In any
case, *the reader has been forewarned; "capitalism" herein refers to the use
of the employer-employee system. The alternative is a private property
market economy based on universal self-employment*.

...


We have considered a number of areas where conventional economics is
directly at odds with the legal structure of the western democracies.

Modern legal systems · prohibit vote-selling by citizens,

· prohibit voluntary self-sale contracts between adults,

· take basic political rights of self-determination to be inalienable,

· would not recognize any political pactum subjectionis, and

· impute responsibility only to persons (never to things regardless of their
"productivity").

All these practices are in direct conflict with the most fundamental
recommendations of conventional economics. On the one hand, economics does
not advocate that these practices be changed to be consistent with economic
theory and, on the other hand, it does not give a coherent and uncontrived
explanation of why these practices should be considered as "exceptions." In
short, economics tends to duck these basic issues. There have always been
these intimations of structural shortcomings, lacuna, and flaws in
conventional economics. Economics has only seemed to be coherent and
complete theory because it chooses to ignore the paradigm-threatening
discrepancies between the theory and the legal structure of the modern
western democracies.


The discrepancies outlined above between received economics and modern legal
systems are not minor problems that can be patched up without disturbing the
basic paradigm of neo-classical theory. They drive to the core of the
notions of property and contract. Hence this book is about property and
contract. It is not simply that the concepts of standard economics need to
be applied with even more cleverness to resolve these discrepancies. New
concepts need to be developed–or rather old concepts need to be
rediscovered, dusted off, and represented in modern terms. Hence our
theoretical discussions will be interrupted by forays into the intellectual
history of ideas almost totally unknown in the conventional histories of
economic thought." (http://www.ellerman.org/Davids-Stuff/Books/P&C-Book.pdf)



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