From: Dan Fabulich (daniel.fabulich@yale.edu)
Date: Sun Apr 19 1998 - 08:18:44 MDT
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Nico MYOWNA wrote:
>No. They are hierarchical because they have had an history of okonomy. Do
>you know f. exsample the industrial history of time? Do you know f. exsam-
>ple the industrial history of work-organisation and work-structures? Do
>you know, that the first industries had been "working-houses" for the
>poor? Do you realy knowing the diffrents between the short industrial
>history of USA and the much longer industrial history of Europe since the
>middle age?
History written by Marxists/socialists makes capitalism look oppressive,
and the history written by capitalists makes socialism look out and out
tyrannical. Both claim that the other's history is morally and
economically bankrupt. So what precisely are you trying to show here?
>Do you know that we have in Europe 25% non-hierarchical co-operations in
>competition? They don't need any hierarchy to survive in competition. So
>your thesis, that firms and groups in competition have hierarchical struc-
>tures cannot explain the entire reality.
Go back and reread what I said in my second response to you. "... if
organizing in another way would improve efficiency, then I suspect you'd
see more organizations incorporating it. But I'm not sure about this." To
state my opinion more clearly, I'm totally in favor of co-ops in
competition if that improves economic efficiency. However, that's a far
cry from embracing the abolition of capitalism.
>> I know you're probably opposed to the very idea, but try reading an
>> introductory neo-classical microeconomics textbook. (It's important to
>> understand the language of your enemy. ;) Hell, I've read _Capital_.)
>
>You don't know that I have had studied okonomy.
I'm sure that you have. But what I suggested is that you read an
introductory *neo-classical microeconomics* textbook, not just any book on
economics. But at any rate..
>What a nice simple picture. Unfortunately is this only a picture. Why are
>the high of wages in relation to the spending power on the same level as
>1970? Where comes your higher quality workers? Out of the Sky? Or must we
>spend money to give workers a better qualification?
First of all, this is simply untrue. The real income of the poor (which is
income adjusted for inflation) has undergone severe fluctuations over the
last 30 years, both up and down. The 70s were marked by severe inflation,
while the beginning of the 80s started in recession, then pulled out again
by deficit spending, then dragged back into recession again when Bush
increased taxes and cut spending to recover a runaway deficit. Inflation
now is at an unparalleled low and I'm proud to say that real income,
including and especially that of the poor, has been higher throughout this
decade (even including the recession of the early ninties) than in the 70s.
Care to check my data? http://www.census.gov
>Who produce your products? The managment? Of course, the workers.
Actually, it usually takes both. Workers must coordinate their efforts in
order to produce; one way to do so is by having people whose sole job is to
coordinate. And before you tell me that the workers can manage themsleves,
let me also add that I AGREE that the workers can manage themselves: the
manager is a worker too.
>Only
>work gave the managment products to sell. So the managment need workers.
The management ARE workers, at least under capitalism.
>And the managment need buyers to sell their products and to survive in
>competition.
They need buyers to stay in business. The management would not die if a
recession happened next year.
>Every product have a price -- and this price is subordinated
>to all other prices for the same product of other firms who act in the
>same business. The competition force the high of the price who the firms
>can earn at the market.
Please don't take this in the wrong way... I don't mean this as a joke or
as an insult, but I'm having a really hard time understanding your English.
I think your last sentance should read "Competition forces (sets?) the
height of the price which the firms can earn in the market." If I've
misread you, please correct me. And if I've read you correctly, then I
agree with this.
>This price represent partly the costs of produc-
>tion: interests, materialcosts, firmownerloans, costs of promotion, tax,
>wages etc. If one buyer buy a product than he pay all this costs. And the
>majority of this buyers are workers who spend their money which they earn
>as wage.
In microeconomics, labor is not the source of all value, but rather labor
is a product which workers make using their "human capital." The price of
this labor is ALSO set by competition, just like all other market goods;
just like how consumers can't and don't expect goods at an arbitrarily low
price, firms can't and don't expect more labor at lower wages than workers
are willing to supply.
>Every firm hope to earn more money if they selling their products as they
>have had spend to produce them. Marx call this "Mehrwert" -- value adding.
>And every firm payed wages to the workers who are under that value adding,
>because their workers work is just one point in the list of cost of pro-
>ducing. -- This is the theory of labor which you don't reject with your
>nice picture above. The workers can only earn wages who are under that va-
>lue adding who pay capital gains of capital investments by as well firm
>owners as outside capital owners.
Underlying this theory is the highly contestable assertion that "the
management" doesn't do any economically useful work. After all, we EXPECT
value adding to happen if value is actually added, as when workers turn raw
steel into a car door. And the fact of the matter is that capital owners
DO work, and thus deserve a just return on their OWN labor.
Owners of capital must make decisions on how to invest their capital, in
what forms, and with whom. These are not trivial decisions, nor can they
be made lightly. Despite what people say about "old boy networks,"
investing in one's friends simply because they are friendly is highly
detrimental to one's own economic livelihood. The rich do not stay rich
for long with this investment strategy. (Instead, "old boy networks"
usually tend to consist of those (WASP men, sadly) who have consistently
proven themselves to be the money makers in society, not just any old
fuddy-duddies who happen to own capital.) The best way to invest is with
those who can make the most money: those who can produce the most
efficiently, at the lowest cost to the greatest number; those who can
provide the greatest service to the community, as measured by the amount
which the community is willing to pay for it.
Again, this is no easy decision to make. It often requires intimate
knowledge of the people involved, the tools being used, the demand for the
product being offered, etc. And there's no question that investing in this
way requires intelligence and skills which not all people have. By
allowing those capitalists to collect their rightfully earned return on
their capital, a decentralized system of voluntary market coordination
develops, one which ultimately tends towards greater efficiency and greater
wealth for all than a democratic allocation of resources.
Capitalists do economically useful work. Not only do they do useful work,
but their work is far more scarce (and in much greater demand) than most
other labor due to the complicated and difficult nature of their task.
Meanwhile, manual laboring, which Marx sees as the only source of value, is
in abundant supply. Due to this, and the fact that it is under
capitalism's voluntary coordination that the richest nations have
prospered, I say with most certainty that the capitalist's task is in many
ways more valuable than the manual laborer's job.
>> When there is only ONE buyer of labor, however, the firm has complete
>> freedom to set the price of labor to be whatever it wants, which workers
>> must accept because there is no one else to whom they can sell labor. This
>> is how Marx viewed the labor market, and it is clearly wrong, which we can
>> observe empirically: there are MANY different firms out there, each
>> offering different wages and producing goods of different quality.
>
>Nonsense.
Look, I'm prepared to discuss this matter if you'd like, but I need a
little more to go on. Care to expand on this?
>You forgot here the back of this class war. If the firms space out there
>workers and force them to live from there wages investments in the union
>than the workers must return to work if their collectively owned money is
>out. Than they have to acept every wage because they need money to survi-
>ve. And every firm are able to dismiss all striking workers and to hire
>other workers.
Let's examine what you're saying economically.
I'm saying that in perfect competition, the market for labor looks like this:
Wages |\_ _/ <-- supply
| \_ _/
| \_ _/
W* |______\_/
| _/^\_
| _/ | \_
| _/ | \_
|/ | \ <-- demand
----------------------
E*
Employment
Wages are set entirely by the market in this imaginary model. Workers are
unwilling to work for less than a certain wage at a given employment level
(given by the supply cuve), and will seek other firms rather than work in
such conditions. Firms are unable to pay more than a certain wage at a
given employment level (shown here as the demand curve). Workers make
surplus utility on their labor, given by the area above the supply curve
and below the price; firms make surplus profit given by the area below the
demand curve and above the price. Firms which attempt to lower wages do
not receive any labor supplied as all workers substitute into other firms;
firms which attempt to increase wages operate at a loss.
However, the market for labor probably doesn't look like this. To some
extent, it may look monopsonistic, like this:
Wages |\_ MFC>/ _/ <-- supply
| \_ / _/
| \/ _/
| / \_/
| / _/ \_
WM|__/_/ \_
| // ^ \_
|/ | \ <-- demand
----------------------
EM
Employment
A monopsonist suffers a larger marginal cost of labor than simply the
supply curve, since the firm must increase the wage level in order to
increase the labor supply. Since the firm will only produce until its
marginal revenue is equal to its marginal costs, it will employ a smaller
number of workers (EM) and pay them less (WM).
This is all good and well, except that if workers DO suffer under a
monopsony, then their supply is likely much much greater. (ie they will
accept lower wages for the same level of employment). There is very little
that one won't accept, as you note, when not accepting means not eating.
Destitution leads to a huge increase in the labor supply. So instead the
monopsonist would face this supply curve and marginal cost: (enlarged for
clarity)
Wages |\__ __/ <-- MFC
| \__ __/
| \__ __/
| \___/ ____ <-- supply
| __/^\__ ____/
W*|--- __/ ->|___\__
| ___/ ____/| \__
|/____/ | \ <-- demand
-----------------------------
E*
Employment
Workers are prepared to accept much lower wages (though still not
arbitrarily low) for the same level of employment as would be existing
under perfect competition. In all likelihood, I've probably even
overestimated the slope of this supply curve: it should remain almost zero
for a little longer.
Now we can see that we should be asking questions like these: Do workers
actually have a supply curve this low, and if so, how can we increase it?
I think the answer to the first question is no, for two reasons: employees
ARE able to switch firms if wages are too low; they are also wealthy enough
to strike if switching firms would be too costly.
How we could cause the supply curve to increase? The answer is simple:
increase the substitution and income effects by increasing the number and
availability of firms so that employees can switch industries/firms more
easily, and by helping wealth per capita to increase. Having more wealth
should result in an income effect, (at least with respect to "inferior
goods," if not immediately with respect to the quantity of employment
supplied,) which allows employees to invest in their wages more easily.
The fact that workers DO strike and that they do switch firms for better
pay indicates that these effects are ALREADY taking place; however, I also
agree with the argument for helping them to take place even more than they
are now. However, this is still no argument against capitalism.
>Many firms didn't acepted union members generally. In the USA are just 15%
>of all workers in an union.... I think, you have to notice that we have an
>diffrent capitalism after the New Deal of 1913 -- which Marx who died seve-
>ral years before havn't known.
The percentage of unionized workers says very little to me. In fact,
considering how the unions have lobbied so heavily (and have permanently
entrenched themselves) in their right to free assembly, it seems to me that
the reason more workers aren't part of unions is not that they find it too
difficult, but simply that it is not worth the effort. They're getting a
great wage as it is, the economy is still booming and people are wealthier
today than they were in previous decades. What do they need to strike for?
>I don't suggest this. I havn't proposed that workers are forced to earn
>wages of one firm's to survive. I have proposed that workers are forced to
>sell their work and have therefore to be on the staff of one of the phara-
>os.
Capitalists can't (legally) chain anybody to anything under lf-capitalism.
In this way, capitalists are fundamentally different from pharaohs.
>They could only change their jobs if there are other firms in their re-
>gion who seek for new workers in their training-groups. If they lose there
>jobs and havn't the right qualification than they are unenployed -- inde-
>pended of how industrious they are.
Industrious people are in high demand in a capitalist economy; due to their
industriousness, they also tend not to get themselves unemployed. So IMO,
this doesn't happen as much as you say it does. However, we can't measure
industriousness, so I don't think we can have a reasonable discussion about
it.
And as to when people are or aren't able to change their jobs, I think I
have a surprise for you. Millions of people across the country switch jobs
DAILY, for all kinds of different reasons; among these reasons (and a
popular one at that) is better pay. Are you trying to tell me that this
doesn't happen? That they can't? That the capitalists won't let them?
You're wrong.
>Your mistake is, that your thinking about the labor market use a universal
>worker and don't deal with workers of diffrent qualifications.
This is outrageous! Above I said that "... there are MANY different firms
out there, each offering different wages and producing goods of different
quality," and you called it nonsense! Now you're telling me that I don't
deal with workers of different qualifications? Give me a break!
>A worker
>with the qualification to assemble cars cannot produce tomorrow computer-
>chips without a long training to get a new qualification. A doctor who ha-
>ve studied physik couldn't sell his work as a doctore of medicine.
No, but there's more than one car maker out there, and more than one
computer chip maker, and more than one university, and more than one
hospital, so most people still have ample room to change jobs within their
own industry without much difficulty.
>Unfortunately are 51% of all costs of labor costs of transactions; it's
>cheaper for the firm's today and tomorrow to do this work with a PC. 51%
>of all jobs get lost in the coming time sequence of the next 30 years. All
>other jobs will in future need more and more an academic qualification.
Labor-saving innovations lead to lost jobs, huh? They also bring down the
price of everything, resulting in increased wealth for everyone relative to
the price level. What more do you want from technology?
>> >The structure of the military is as well hirarchically as the structure of
>> >the industry. Both have structures where competence and responsibility are
>> >split from the top to the bottom; the people on the top make the decisions
>> >and have a high responsibillity whereas the people at the bottom carry out
>> >orders with a low responsibillity; only the managment -- the industrial
ge-
>> >neral staff -- could change the production and the structure of the firm
>> >and have command of this structure of working.
>>
>> This is true.
>
>Yes, and therefore the real capitalism is for myself in opposite to "spon-
>taneous orders".
They are spontaneous because they are formed voluntarily and therefore
spontaneously. But even if I cede to you that corporations aren't
spontaneous, (which I don't,) capitalism does NOT require people to form
corporations: co-operatives are as much a capitalistic phenomenon as
corporations, and they're BOTH spontaneous.
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