[Technology]

Worker's co-ops trade in a market system with other worker's co-ops, combining the market signals of a free price system, with the equality of ownership and pay in each democratically run workplace. Essentially lassez faire built on a property system that replaces enshrinement of private ownership of the workplace with a wage hierarchy, with a socialized democratized property system in a liberal democratic economy.

Horrific? Monstrous?

[lucky]

Horribly inefficient if a new hire automatically gets ownership. Incentives are not aligned for maximizing productivity.

[slybaldguy]

Isn't this David Schweickart's idea?

[Technology]

Isn't this David Schweickart's idea?

More or less... apparently, according to wikipedia.

[slybaldguy]

Might be a good idea to try this sort of thing in Cuba. I think i'd prefer Scandinavian style capitalism.

[KlassWar]

Worker's co-ops trade in a market system with other worker's co-ops, combining the market signals of a free price system, with the equality of ownership and pay in each democratically run workplace. Essentially lassez faire built on a property system that replaces enshrinement of private ownership of the workplace with a wage hierarchy, with a socialized democratized property system in a liberal democratic economy.

Horrific? Monstrous?

It's a massive step up from liberal capitalsm, but this form of pinko collectivized free market is still a free market economy and still capitalist, and we'd do well to remember that. Moreover, if you give it a serious class analysis the jury is still out about whether or not this system is more progressive than the good ol' M-L 'state capitalism as a stepping stone in the construction of socialism'.

It is problematic because it generates class tensions among proletarians: Worker-owners who have set up a cooperative might not be too keen on the idea of extending ownership to all new hires. If there was a serious attempt to force'em to do so, you'd probably see a massive tendency towards outsourcing everything: I predict a boom of theoretically petty burgeois but functionally self-exploited proletarians working as freelancers and contractors in order to meet the manpower needs of a privileged labor aristocracy of worker-owners, which would be the defacto ruling class of such a system.

Workers' cooperatives are a vital and necessary part of socialist economy, as they're the go-to solution to how to manage sectors that have been expropriated but there's not a clear strategic imperative to actually run from the State. But they should exist in an economy with a strong State sector, because private cooperatives as a dominant economic model would generate fresh class contradictions of their own.

TL;DR: Cooperatives are an adequate substitute for the private sector, but most definitely not a substitute for the public sector (which should encompass all strategic industry).

[Red Barn]

. . . still a free market economy and still capitalist, and we'd do well to remember that.

"Still capitalist". . . ? How do you figure that?

[Technology]

Might be a good idea to try this sort of thing in Cuba. I think i'd prefer Scandinavian style capitalism.

Yeah. I can see some inherent structural problems with it (how to expand production), but if I had to choose a socialism, a liberal market socialism would be the one I can accept morally.

Ethically speaking, while I would prefer co-ops coexist with private property, an actual socialism complete with the banning of private property could still be tolerable to me if it privileged the workers and defended them on the basis of social property which is market operable, instead of engaging in horrific vanguardism which crushes the worker's rights even as it crushes counter-revolutionaries. The state should determine the base of rights for the workers to find their voice in, but socialism historically has claimed that the state is the only voice of workers, leading to the crushing of worker's councils and the suppression of union power outside the state and the right to strike.

Pravda: ''We have a working people's state here, and who would ever dream of striking against himself?''

Mikhail Bakunin (though not any sort of market socialist), was spot on about the U.S.S.R.

It's a massive step up from liberal capitalsm, but this form of pinko collectivized free market is still a free market economy and still capitalist

A shame. There's nothing intrinsically capitalist about markets (is mutualism capitalist for example?) - capitalists exist due to the institution of titled private property - but you suggest that workers equal in property in a market would simply seek loopholes in order to exploit exterior laborers, so as to expand without reducing their own incomes. This is a legitimate problem (which is why I believe co-operative ownership can only become dominant after there is sufficient automation of production for need), but exposing that exposes a problem of human nature that can't simply be solved by enough force of arms, propaganda, and control. When those things fail, societies burned by them are wary of trying them again, and it sends a message to people about what "socialism" means, which its adherents may not wish to be sent.

This is why I believe any push for Marxist-Leninist revolution in the West is dead on arrival. This is why we've seen socialist and even communist parties rush to soften their image in the West after the fall of the U.S.S.R. Parties that once supported revolution are now progressive social democrats. The Communist Party USA falls in line as a sort of radical "college cool" extreme left-liberalism, as it supports the push for new gun control laws which only disarm the workers.

I'm not saying that only piecemeal reforms are possible and capitalism will reign forever (it won't; it has a dialectic problem that is technological in origin), but any revolution which can gain mass support again will have to promise a system (and mean it) which actually gives the workers control, less it simply looks like the worst kind of monopolized state capitalism wearing the mask of the worker's state, looming over the workers to protect them from themselves. There's no way you are swaying pinkos, on the fence left wingers, and even the marginally right to your side with a Leninist style socialism. If a liberal market socialism can be made to operate within a paradigm where workers control their own labor, then there's a lot more allies down the road than you'd think.

[KlassWar]

Means of production still privately owned, however collectively. For-profit commodity production. Still competition in a free market economy. It still displays the near-complete anarchy of production typical of free market economies, instead of the far more ecologically sustainable democratic economic planning. Economic activity is not truly accountable to the Workers' State.

Relevant question: Should the means of production belong to their respective workers or to the working class as a whole? Marxists have generally held that to the working class as a whole, and usually so have most an-coms. Titoists and anarcho-syndicalists differ, but I don't believe a cooperative represents working class interests better than a People's Industry which is run by democratically elected cadres alongside the local union leadership. A bureaucrat designated by the Workers' Government to direct an industry would be directly answerable to the local Soviet anyway *shrug*.

[Red Barn]

Means of production still privately owned, however collectively. For-profit commodity production. Still competition in a free market economy. It still displays the near-complete anarchy of production typical of free market economies, instead of the far more ecologically sustainable democratic economic planning. Economic activity is not truly accountable to the Workers' State.

Okay. But that doesn't make it capitalist, surely.

Relevant question: Should the means of production belong to their respective workers or to the working class as a whole?

Very relevant, yes.

I'm an Anarcho-Syndicalist, so I guess my position on that is fairly obvious: the MOP belong first to the respective workers; second - and far less directly - to the population of workers as a whole.

So I actually quite like the idea of Market Socialism as a practical, workable transitional stage - which is probably not terribly surprising, all things considered.

[anticlimacus]

Economic activity is not truly accountable to the Workers' State.

You mean it is not centrally planned. Indeed, I think Technology's idea--which is very similar to Schweickart's--calls for worker owned coops (they are owned by the people who work them,i.e. the workers). And we can even add what Schweikert adds: investment capital controlled publicly. THis seems to be entirely accountable to the workers, if not a worker's state.

[lucky]

Indeed, I think Technology's idea--which is very similar to Schweickart's--calls for worker owned coops (they are owned by the people who work them,i.e. the workers). And we can even add what Schweikert adds: investment capital controlled publicly.

Either the company is owned by the workers who work for the company, or by the public. You can't have it both ways. Company assets *are* what the investment is.

[Rainbow Crow]

The existence of market socialism, which is basically policy in some debt-ridden European countries, is a good example of how unworkable socialism really is because market and socialism are opposites.

[anticlimacus]

Either the company is owned by the workers who work for the company, or by the public. You can't have it both ways. Company assets *are* what the investment is.

I underlined one of Schweikart's suggestions, and in that case investment capital is publicly owned through public banking. The public also constitutes the workers in a more general sense--they too are the public.

[lucky]

So I've read a summary of Schweickart's proposal, and it suffers from the same problem as every proposal I've heard about "democratic" companies.

He wants workers of a company to share profits of the company via a democratic process, even though they themselves don't own the capital (the capital is public). This is extremely inefficient.

Consider a typical situation. You have a successful two-person company (A & B). Perhaps they are smart, or perhaps they worked hard on marketing their product, or perhaps they just got lucky in the market, or perhaps a public bank gave them a lot of capital to buy cool machinery. In either case, they are making big revenues (say, $500k per year). So they split it, $250k per person. It makes sense to expand. Say, if you add a third person C, they could increase revenue to $600k. Assume C is equally smart and works equally hard as A&B, and they split the profits equally: now everybody gets $200k. That would suck for A&B, so it's not going to happen.

But if they could hire C for $90k (assume he's making just $80k elsewhere), everybody would be happy, economy would grow and the three people would increase their incomes. This is precisely how a capitalist economy grows, and it's prevented by this socialist system.

Now, Schweickart says compensation doesn't have to be equal. But he suggests that it should be proportional to how smart/hardworking/etc the workers work. So it would be "unfair" to give C just $90.

But whatever, fair or not, A&B have 2 votes versus C's one, so I suppose this could work out OK.

But what if they want to expand to 3 more people? Now A&B would lose the majority vote if they did that. So of course they are not going to do that, and the economy suffers as a consequence.

It seems to me that all these schemes are trying to solve a non-problem. Socialists simply think there is something evil about making money from something other than labor, because they don't quite understand economic theory. So they want to prevent it, regardless of how it affects they economy, and don't realize they are actually trying to destroy a productive force.

[AFAIK]

What about the concept of risk, lucky? If I join an established operation I face a low risk of ruin but if I start a new operation I face higher risk and uncertainty. Shouldn't the founder(s) be remunerated for their initial gamble?

We could ration voting power depending on when someone joined the company.

[lucky]

We could ration voting power depending on when someone joined the company.

That's a bit better. Many companies do exactly that, they compensate employees with stock rights that vest over time if they stay. I don't see the benefit of a rigid regulation about this, if that's what you have in mind. Keep thinking in this direction and you'll arrive at more-less the capitalist system that already exists

[SueDeNîmes]

So I've read a summary of Schweickart's proposal, and it suffers from the same problem as every proposal I've heard about "democratic" companies.

He wants workers of a company to share profits of the company via a democratic process, even though they themselves don't own the capital (the capital is public). This is extremely inefficient.

Consider a typical situation. You have a successful two-person company (A & B). Perhaps they are smart, or perhaps they worked hard on marketing their product, or perhaps they just got lucky in the market, or perhaps a public bank gave them a lot of capital to buy cool machinery. In either case, they are making big revenues (say, $500k per year). So they split it, $250k per person. It makes sense to expand. Say, if you add a third person C, they could increase revenue to $600k. Assume C is equally smart and works equally hard as A&B, and they split the profits equally: now everybody gets $200k. That would suck for A&B, so it's not going to happen.

Then it does not (as you claim) make sense to expand. Schweickart is quite clear about this - individual firms wouldn't have the same expansionary incentive for precisly that reason. If it makes sense to expand because there's additional demand, it makes sense for competitors to step in. So wage-share among the "equally smart and hard working" would equilibriate via market mechanisms - not remain disparate via ownership.

But if they could hire C for $90k (assume he's making just $80k elsewhere), everybody would be happy, economy would grow and the three people would increase their incomes. This is precisely how a capitalist economy grows, and it's prevented by this socialist system.

But everybody isn't happy. You have "equally smart and hard working" folks getting a smaller piece of the pie they create. Extrapolate that throughout the labour market and you end up with the working poor and insufficient aggregate demand.

Now, Schweickart says compensation doesn't have to be equal. But he suggests that it should be proportional to how smart/hardworking/etc the workers work. So it would be "unfair" to give C just $90.

But whatever, fair or not, A&B have 2 votes versus C's one, so I suppose this could work out OK.

But what if they want to expand to 3 more people? Now A&B would lose the majority vote if they did that. So of course they are not going to do that, and the economy suffers as a consequence.

It seems to me that all these schemes are trying to solve a non-problem. Socialists simply think there is something evil about making money from something other than labor, because they don't quite understand economic theory. So they want to prevent it, regardless of how it affects they economy, and don't realize they are actually trying to destroy a productive force.

See above.

[AFAIK]

We could ration voting power depending on when someone joined the company.
That's a bit better. Many companies do exactly that, they compensate employees with stock rights that vest over time if they stay. I don't see the benefit of a rigid regulation about this, if that's what you have in mind. Keep thinking in this direction and you'll arrive at more-less the capitalist system that already exists

Yeah, screw those socialists come latelies. One working man delays gratification and decides to save, then invest his surplus wages in a project. If he fails he suffers 100% of the cost but if he succeeds some hangers on turn up and demand "their fair share". Cynical.

[lucky]

Then it does not (as you claim) make sense to expand. Schweickart is quite clear about this - individual firms wouldn't have the same expansionary incentive for precisly that reason.

Here is where economics comes in: since marginal cost < marginal revenue, it does make sense to expand.

If it makes sense to expand because there's additional demand, it makes sense for competitors to step in.

If C was going to step in as a competitor and make more money there, he would not have applied to A&B in the first place. If you think the situation I described is impossible, then what's the point of trying to prevent things that are impossible? But of course it's quite possible. This is how all companies grow. There are many reasons it often gets you more money to join forces with others rather than roll out another company on your own.

But everybody isn't happy. You have "equally smart and hard working" folks getting a smaller piece of the pie they create.

I was using the word "happy" as a metaphor for "everybody increased their incomes", not in the sense of psychology. Quite possible that C is unhappy because he's jealous of A&B's success, and because his wife is cheating on him.

Hiring C contributes exactly $100k, not $200k, towards revenue, because without him the revenue is $500k and with him it's $600k. The pie was already being baked before he joined. Labor is not the only contributing factor.

The concept of marginal cost and revenue was understandably alien to Marx because he wrote before anybody came up with the concept. Today's socialists would know better if they studied economics. And yet they seem to be continuously confused about average vs marginal cost and revenue.