Friday, February 27, 2009
The wage has become a thing that is almost universally considered necessary. When looking at current capitalism it is ubiquitious and it's domain is growing. However, more importantly, looking at almost every future picture of the organisation of production that is currently popular, we find the wage to be central. From economic proposals as diverse as Schweickart's Economic Democracy  to Hahnel and Albert's Parecon  we have as a core feature of the system, the wage.
While a mainstay of critiques by traditional libertarian communists and anarchist communists , the repercussions of the wage have been insufficiently evaluated in most modern libertarian socialist literature. These repercussions must be seriously evaluated in relation to a different system. A system of freely given labour, one in which satisfaction of demand is not dictated by the mode or type of ones labour.
What is a Wage
At it's core, the wage is a mechanism for creating differences in the amount of consumption that people are entitled based on the way in which they work. The evaluation of the way in which they work can vary. Under modern capitalism, the wage is set entirely by market forces. In some envisioned socialist systems, the wage is set based purely on the number of hours worked. In Parecon the wage is set based on a combination of market forces and percieved "effort". Each of these will be dealt with in turn.
The idea of remunerating labour based strictly on hours worked is an old idea. In addition it seems to have some basis in the Marxian Labour Theory of Value (LTV). If the value of goods is in their labour content (as it is in LTV), it gives a reasonably strong argument that people could be fairly remunerated in terms of labour time.
This idea however has at least three serious problems. The first is that the LTV is a macro-economic theory of value, that is, it doesn't talk about individual products made by individual firms but rather broad emergent trends. Therefor different prices of goods will diverge from the actual labour time by product and sector.
In addition, the fact that labour time is in aggregate the value of a product is an emergent property of capitalism, not socialism. It requires that capitalists are continually trying to undercut each other in competition and buyers are always trying to find the best price.
Lastly, if factories started using labour time vouchers, and some factory produced goods and sold them at their labour time, what would happen if people didn't buy them? Then they would have to reduce the price. Then who would be paying the difference between the products sold and the full remuneration for labour time? It would have to be coordinated by a central clearing house that assured that workers were paid by their time and not the amount that the good sold for.
Supposing that the workers decided to start doing a slow down. This means that they would be remunerated the same for their time, but would produce less. Then the price of the good would rise in the market and more scarcity but the same remuneration. Sectors that did this would exhibit price inflation. Now we have a wage, one that requires that you show up, but doesn't incentivise you to do anymore than if you didn't have a wage at all. It is more complicated than no wage, and serves no function.
Remuneration for Productivity
If productivity is the quantity rewarded then we are in a situation in which the differential becomes the important quantity again. Even with the total non-existence of profit we end up with competition. The worker who is able to produce 10 times as much of a good as another worker will get rewarded for their differential productivity. This immediately incentivises them to hide any productive knowledge from others in order to avail of the incentives that one would get for exceptional productivity. Surely a world where every worker would attempt to withhold productive knowledge is not one that we would like to generate.
Remuneration for Effort
Remuneration for effort is often held up as a remedy for this problem. The problem then becomes who gets to decide who is working well and expending effort. If you have a lot of people in a workplace, who is going to track this? Are you going to be putting quotas on individual workers? When quotas were instituted in the USSR they had all sorts of unintended effects, from having thousands of 1/2" nails to getting a few nails several feet long, all with the intention of satisfying the policy details, but not actually producing things of use-value.
Witholding of Labour
In a system with some form of remuneration tied to the distribution of goods we have the problem of the witholding of labour. Even in the system of labour notes, a particular key sector of society could strike to try to get a greater share or better treatement from society. The one solution to the problem of slowdown, the witholding of labour and sabotage is to ensure that work is done on a voluntary basis. At this point the collective responsibility is to provide opportunities for productivity. This turns the problem on it's head, allowing labour to be an opportunity to participate rather than a burden to bear.
The Attribution Problem
“Not everything that can be counted counts, and not everything that counts can be counted” -Albert Einstein
At the core of Kropotkin's critique of the wage system is the impossibility of attributing the usefulness of work. The benefits of production are difficult to see with commodity production. As we move to intermediate commodity production used in production of other goods it becomes even more complex. However, when one starts looking at the effects of knowledge production, tracking the benefit becomes nearly impossible even in principle. What is the benefit recieved from the invention of Algebra, without which no engineering would be possible? How could that possibly be quantified? Such questions make a mockery of the notion that attributing the productive increase of an activity can serve as a means to decide a fair wage.
The Wrong Incentives
The incentives that are provided by either remuneration for effort or remuneration by time encourage the wrong behaviour. The hours worked, or effort expended becomes a parameter which one must game in order to be remunerated. The end goal is never to produce the most socially desirable outcomes or to fulfil needs, or to be safe or happy, but always to fulfil some policy demand, whether it be piece work, quotas, hours or the appearance of being an efficient or hard working person, something which is necessarily a subjective measurement by others. The end result of such policy oriented systems are adherence to the structural laws.
The only effective way to ensure the adherence to the specific meaning of the regulations is to create a managerial cast with the capacity of enforcing sanctions. This tendency has manifested itself repeatedly. In the Russian Revolution the Bolsheviks began calling for managerial control over the factories to ensure productivity . This repeated itself in Hungary and Poland . Indeed even in modern times with the National Health Service in Britain we've seen these systemic problems of attempting to use performance measures.
The Right Incentives
Communism is unique in that it supplies the appropriate incentives for a just, egalitarian and free society. It demands that work be sufficiently satisfying and pleasurable that people are willing to do it. It is production were people find fulfilment by cooperation and play. The incentive structure strongly rewards the reduction of all undesirable labour towards total elimination. Nobody will be forced to work in some terrible activity.
Communism gives a powerful incentive to share information. The ability to reduce unnecessary or undesirable work to nothing is potentiated by the total freedom to communicate. These two factors are self reinforcing in a way that moves our society towards one in which people will truely be free.
 David Schweickart, Economic Democracy
 Michael Albert, Hahnel, Parecon
 Peter Kropotkin, The Wage
 Paul Averich, The Russian Anarchists
 Andy Anderson, Hungary '56
Thursday, February 5, 2009
Communism has been variously described and various completely unlike systems have been described as communist. Communism in the analysis presented refers to libertarian communism, not the state capitalism of the USSR or other 'Socialist' regimes.
Communism is sometimes described by the credo: "From each according to one's abilities, to each according to one's needs." This credo captures part of the essence of communism. That is, the free production of goods from labour and the supply of goods decoupled from any systematic valuation of labour.
All wage systems effectively assign a value to labour by determining the amount of remuneration (in money, vouchers, or kind) to the productivity of the worker, and therefor violate this credo.
Another way that communism is sometimes described is "production for use value". This means that the value of a good is only the value it has subjectively as an object for use, and not exchange.
Under capitalism, the value of everything is determined by its exchange value. For commodities, this is often, though not exclusively the result of an equilibration between supply and demand. However, fictitious capital can also determine part of the exchange value of products. More will be said about this later.
The Necessity of Communism
Capitalism is characterised by the exploitation of labour. The capitalist is able to obtain profit by controlling the means of production. This excludes the worker from manufacturing goods themselves. The profit comes from the fact that the price of a good on the market is less than all of the inputs needed to produce the product. Since labour transforms the inputs into the final product, this profit must come from a failure to give back the value for the full product of labour to the worker.
However, even if the workers obtained the full product of labour from their work, they would still be in competition with each other. If two enterprises are competing in an open market over price, then this will force prices down. The only variable quantities in the production of goods which can allow a price decrease are labour or more efficient capital. If more efficient capital is employed, this has the effect of reducing scarcity of the good even further, leading to global price reductions leading right back to the original scenario with an even lower price. If the price decrease comes out of labour, this means that labour must speed itself up or lower its own remuneration.
These factors ensure that competition creates precarity for the competitive workers, just as it does for capitalists in competition. The solution that capitalists have generally used is to produce monopoly, and this would be the reasonable approach for collectivised workers as well. In other words, the workers have incentive to control scarcity to ensure remuneration for productivity. Now the exploitation has been shifted from a fight over price in a given industry, to an attempt to generate unnecessary scarcity to ensure the differential advantage of labour against all other consumers.
It is exactly communism which can rectify this state of affairs. The cooperative production of goods with the elimination of competition. The labourer may now be free of worry about how they will be remunerated given the exchange value of the product because exchange is no longer performed. The labourer is able to take freely of the goods produced.
As scarcity diminishes due to increasing efficiency we have a situation where organising production and consumption around exchange value becomes increasingly absurd.
Already, in the production of intellectual goods, goods with no scarcity after production, capitalism finds itself in an unresolvable quandary. In the immediate term exchange-value is impossible to determine. The first buyer could sell the product on for a price reduced from the original and, as this process is carried out, the exchange value of the product rapidly converges on zero. If the activity approaches zero exchange-value within capitalism it becomes impossible to perform the activity, excepting in the very limited free time which exists after agents are done with some other labour which remunerates.
Alternatively, innovations or cybernetic advances within a given industry can produce vast differential advantages against competitors. This leads to a total non-communication of the information. These 'trade secrets' as they are often called can have enormous, even unbounded negative effects on the efficiency of the economy*.
The traditional approach among capitalist states to the problems of zero exchange value or non-communication is to grant limited term monopolies over immaterial labour. This means that the state protects the value of the production by carrying out coercive actions against agents that attempt to obtain benefit from the immaterial labour without compensating the holder of the monopoly. Contrary to the notion of supply and demand that is usually held by neo-classical economists we have a peculiar situation of potentially infinite supply, held by a monopoly. The price is then set by the monopoly to maximise the profit.
Again the results of this monopoly in the case of some innovation or cybernetic advance is that the entire productive economy suffers a diminished efficiency. Since immaterial advancements are often predicated on a large number of people using former immaterial advancements and innovating with respect to them, we find the global** economy suffering under massive loses in efficiency.
As cybernetics and automation progress there is also the very real potential for singularities in production to arise. These singularities would arise from the automation of a task to the extent that no human labour is required to create the product. That is, the exchange value of the product, given that it could saturate demand, would fall to zero. Capitalism would be unable to produce such things at zero exchange value. In fact it is arguable that capitalism is unable to even approach the situation, as no investment could take place in a direction that would eventually remove all profits! The most rational approach to such a singularity would be to steer all investment clear of it. A situation which should be seen as totally intolerable for labour.
Communism on the other hand, has no aversion to the reduction of the use of labour. Maximising the productivity means less total labour is needed to saturate demand. Communism measures progress by the minimisation of all non recreational activity such to approach, and hopefully at sometime reach, zero, while simultaneously providing the needs of society.
Aside from the inability to progress, capitalism is bringing us towards disaster. The current ecological situation is intensely worrying. Capitalism, relying on completely local profits by capital, and a bourgeois democracy controlled by that capital, is unable to create any collective solution. It is only under a communal and collective approach to polity that we can devise a system which is capable of taking into account the totality of ecology.
How Communism Might Work
Communism, as defined earlier, can not be reduced to any absolute systematics. There are an infinity of systems which could arguably be called communist and would satisfy the idea of production for use value, or the communist credo. However, we would like to restrict these systems to those that are capable of supplying the entire current world with an alternative to capitalism.
Of fundamental importance to any mechanism that would decide the distribution of goods and services is the need to know what goods and services are demanded. This can only be done by asking people what they want. A listing of what is wanted is known as a demand schedule. It should list all things that a person wants, from food, shelter and clean air to a new iPod.
In addition to demand schedules, we must have information about productive potential. This means an assessment of all capital, and what its productive capacity is with given inputs. These inputs become contingent demands for a demand of output and necessary labour. The demands and contingent demands become the total input demand.
Lastly, the labour that is available, that is, the labour that people are willing to freely give to a particular productive industry in order to satisfy the demands and contingent demands (until a fixed point is reached) is then determined by the labour force.
Filling in the Details
This is a very simple exposition of an immensely complex process. We will now go into the various complexities that can arise.
Durable goods that are frequently useful, such as a television, telephone and others, are most usefully thought of as personal effects of an individual. However, goods that are useful for only small periods of time (this might be a hammer if you aren't particularly handy, or a jack-hammer even if you are) should probably best be communally managed. Libraries are a common example of this activity, but really any good that is difficult to produce, used infrequently, has high maintenance costs or some combination thereof is more usefully placed in a borrowing model. Goods in the borrowing model don't need to be directly produced to fulfill demand, but rather can be collectively produced to fulfill a much larger collective demand.
Even in the case of frequently used durables, we can think of the borrowing period as indefinite. At the end of the useful lifetime of the good (it fails), or at the point that you would like to requisition a different model, with different properties it could be returned. Necessary repairs could be done and it could be placed back in circulation, or broken into components in order to fulfill new productive demands.
Externalities are results of production which are unintended. Not all externalities are bad, some may be benign. However all pollution falls into the category of externalities as do health effects to labour.
The assessment of externalities is a very difficult but important task. Demands such as "I would like clean air" have to be identified, and developed into measurable and quantifiably demands. Clean air would have to be with respect to both the health and safety of people, and the productive demands of people.
Demands for things like "clean air" are not unreasonable, we hear them all the time from people, especially those living in areas of poor air quality. However, to determine what acceptable levels are, requires an open process where as much of the methodology and outcomes of the process are described as possible. It requires education both of the analysts, in terms of what these demands might mean more specifically, and of the people about the various levels of risk and effects of production.
Production of externalities don't need to be removed. They need to be managed. In the event that deproduction or neutralisation of their effects is not possible, they can be minimised, or at least reduced to a level that is not harmful to continued human life or production.
An example of this might be the use of fertiliser for farming. Fertiliser of some sort is required to create plants, and all fertiliser will produce some sort of nutrient increase in ground water. However, it is only when the levels become extreme that one has problems with eutrophication. Examples of disposal of externalities might be the use of scrubbing technologies to capture pollutants in a neutral or recyclable form.
In the final analysis we can think of the non-production of externalities as a demand that can be satisfied. Clean air, clean water, quiet streets, low danger infrastructure, all of these are formulated as positive demands for the non-existence of the externality and can then be taken into the simplified framework of labour and demand.
There have been attempts by capitalism to recuperate the ecological movement as "green capitalism". Green capitalism intends for the market to assign exchange value to various different externalities as a solution to the problem of assessing cost. However, many externalities are not even in principle exchangeable in the sense that the demands they satisfy may not even be related and no distributary or technological method can convert the two.
Even if two externalities were interconvertible, there is no single objective value which could be placed on their interconvertibility. How would one establish the amount of mercury poisoning which is exchangeable for an amount of arsenic poisoning of the water supply. From what we know of toxicity it is much more likely that both should be limited by some threshold density. This means that no objective linear value for exchange could be decided in a rational way, and hence the notion of creating a market in externalities is not rational. The only way to deal with the problems of externalities is to look at how each of the costs affect us and what levels of production of a given externality are acceptable.
Time and Demand
The demands of production can not be seen only in the short term. It is critical that when we envision demand schedules as something which operates over all time into the future.
The most basic example of the necessity for such a time scale is that I may not want to work for a 3 day period in the future. This affects future productive capacity for goods and services. I may want to take a vacation to Morocco on the 28th of June. In order to ensure that labour and capital can fulfill my demand it is necessary to be able to speculate about what labour and capital will be available for that demand on the 28th of June.
In addition, speculation is a critical feature. We need to be able to determine what is a likely method of meeting our demands and divert capital to it. This means speculating on the value of new capital investments. It will include diversion of capital towards direct production of infrastructure such as train routes or production of immaterial or human capital such as research into life-saving drugs.
Some types of production will be resource limited in such a way that meeting immediate demand causes an inability to meet future demand. Fishing provides an excellent example. The use of fish as a resource which meets the demands of everyone in the world will, in very short order, lead to a world without fish. In order to meet future demand it will be necessary to take into account the ways which current demands can be met, and the ways in which they can't due to resource constraints.
This leads neatly into the problem of the black market. If goods, such as fish, are not produced by a systematic communist economy, and yet the real demand still exists, what will keep people from finding other means of producing it. Non-production within communism is very similar to prohibition under capitalism. While the good may or may not acquire contraband status, any production of the good outside the systemics will be effectively black market. The effects of the black market itself will likely have to be considered an externality of non-production which can not be evaded, but must rather be held in equilibrium. While pigovian taxes in capitalism are regressive and suffer from a lack of flexibility, democracy, and expert control (All simultaenously!) they have proved the ability of price controlled supply to mitigate the problems of the black market. That is, by allowing a restricted supply, one can make the opportunity cost of engaging in black market activity undesirable.
Maximisation and Minimisation
The production of goods in industry must also look at the increase of efficiency both of the production of goods, but also of the minimisation of input resources. There are no systemic factors in communism that lead inexorably to the maximisation of production for use-value while minimising inputs. In order for maximisation and minimisation to continue improving and function, we will have to rely on principle.
The local minimisation of resources, having no immediate affect on the well being of those involved have at times caused problems in communist contexts such as the Kibbutzim. Water-use, for instance, when unregulated by social control, can quickly end up being problematic. Examples that have worked in the Kibbutzim have included metering of water-taps, which increases the effectiveness of social control.
In contrast, cost based systems, which make it difficult to acquire inputs, or which will eventually eat into profits if not carefully managed, are quite good at this type of minimisation.
However, since the democratic communist economy is essentially an open computational system, it will be possible to look globally at where resources are being used, and to attempt to devote capital and attention to those areas which perform least well.
In software it is well known that computational processes have "bottle-necks". These, usually very small, parts of programs will use disproportionate amounts of the resources. Optimising various different parts of the program will have almost no affect on the global performance unless one addresses these bottle-necks.
While capitalism may be good at the level of enterprise optimisation of resources, it does not look at optimisation systemically.
Boundaries, Borders and the Collective
The explication of demands will have to be made at a collective level for various types of goods. While individuals can freely associate their demands with those of others, the full articulation of demands can sometimes only be done collectively.
A good example would be a mass transit system, which would need to set routes and the labour and capital required for creation and maintenance.
In addition, the fulfillment of demands will have to be organised by organs which are somewhat specialised.
Examples would involve the manufacture of buses, or the assessment of air quality. These would each need their own collective.
Humans labour will associate in ways that can create finality to organs and bureaucratisation which may be unnecessary and possibly harmful. This tendency can not be eliminated, so the principle of openness and democracy must be maintained.
When I was working in high-energy particle physics with the CDF group at Fermilab, I found that they did not release the CDF detector data. This is despite the fact that it was entirely funded by government bodies, in order to produce information for consumption (for free) by the scientific community. They kept their data because they were jealously guarding an exclusive ability to provide analysis and probably out of a fear that some analysis might be shown wrong if it was seen by many eyes. This tendency of information hiding can exist even without the profit motive, and the only remedy is vigilance for democracy and openness.
Sometimes demand will exceed supply. There is nothing that can overcome this given that labour and productive potential is not infinite for every good. There are a number of ways in which scarcity can be dealt with.
Ordering of demand schedules is one of the ways in which partial non satisfaction can be done in a relatively fair way. The ordering would mean that the system would prioritise satisfaction of those things high in the demand schedule, over those things that are not. Those things at the bottom of the demand schedule may be unlikely to be satisfied at all.
Another way of dealing with it is lottery. Goods which are scarce will go only to those who win at some random game of chance. The utmost care would need to be taken to ensure that this could not be manipulated by those running the system. Ways to ensure this might mean making predictions of some widely visible naturally occurring phenomenon which is highly random. Perhaps the least significant digit up to precision of the time of the occurrence of the next sunspot.
Bad jobs will be difficult to satisfy in communism since labour is given freely. There are a number of options at our disposal.
One method is as a shared responsibility of the community which will be done collectively. This may be all at once, or by rotation, depending on the nature of the job. Its often the case that unpleasant activities that you know that everyone has to do, are less troublesome mentally than those that you specifically are required to do. This method, however, may not work in the presence of highly skilled bad jobs. Examples of this might include system administration and underwater welding. In order to deal with these, one would need to first de-skill them, or use another method. If deskilling is impossible it may need to use some other method.
Another mechanism is the removal of some form of labour. If this is done immediately, it may induce scarcity which is unacceptable. It might however be possible to invest in the automation of the activity, the increase in the level of enjoyment that can be gained from the activity or the elimination of the activity by using some other processes. All of these would need to be explored.
If the former processes don't work, people will either have to learn to live with the greater scarcity or some incentive will have to be introduced. It is possible to introduce incentives in terms of more complete fulfillment of demands, but the prospect is dangerous.
If labour is to be given freely, it should be given with as little view to austerity as possible. We need to recreate as much of work as fun as possible. Most of what I've done for a living has been an unbearable pain. However, I've often done very similar activities outside of work for my own enjoyment. Finding what makes people want to do productive activities that satisfy needs is one of the most important areas of research. Under communism it should be much easier for people to believe that work is meant to be fun, when they aren't under compulsion and being exploited for their labour.
The Defector and the Leech
One common critique of communism is that, since there is no incentive to work, labour will not work, and instead freeload on the rest of society. This may be an even stronger, or more difficult tendency to deal with during any transitional period, where society is just learning about and coming into familiarity with a new communist economy.
If there are a few "defectors" as they are termed in game theory, it probably isn't a problem. However, if large sections of society fail to produce the basic necessities the entire productive system will collapse and scarcity will become a scourge. There is no greater failure than a system to provide the basic necessities to its population and the price is often revolution.
The public goods game provides some insight into this problem. In the public goods game people freely give some value into a communal pot. The communal pot is then multiplied by some value, and the goods are distributed back in a purely even manner. The game can suffer from complete collapse unless punishment rounds are carried out on defectors. That is, everyone withholds from the pot when someone tries to leech. Leeches, being rational will then start contributing again, in order to increase their payoff.
In an extremely large system, it would be very difficult to carry out such witholding of full access to production for those that are non-cooperative. However, it may be possible at the communal level, or even at the level of a federation of communes (to punish a commune for clear dereliction of duty).
These mechanisms of course are inherently coercive. It would be more desirable for people to give their labour freely of their own accord. Short of such punishment for non-cooperation however there appear to be only two other alternatives. Those are social control / social pressure and some sort of distributive incentive.
Socialism as a Transitional Programme
We will take the meaning of the word 'socialism' to be: a processual "bridge" between capitalism and communism, allowing the continuation of the wage (in some regime) but allowing some phasing or transition towards communism.
It may be that direct movement towards communism proves too difficult, in that it is impossible to get a sufficiently level of satisfaction from labour freely given. It is critical in a revolutionary situation to ensure that capitalism is not capable of reasserting control. If the economy is unable to rectify the problem of the satisfaction of critical areas of labour requirements, then some differentials will have to be introduced.
The withholding of full remuneration, as decided by ones peers may be an effective way to encourage labour.
The other alternative is the increase in the satisfaction of demands due to the free giving of labour activity.
Both of these instruments may need to be used. The former is likely less dangerous than the later, and indeed it may be directed at only particular classes of demands that are deemed unnecessary.
In the sense that differential compensation is being given, it could be argued that this in fact is the introduction of wage. It is not, however, a profit motivated system, and it is not involved in competition excepting in the sense that one might view oneself relative to ones peers. It still would retain many of the features of the full communist system. For this reason it seems a better transitional program than mutualism or collectivism.
The Capitalist Interface
In order to achieve a communist society there will almost certainly be an interface to capitalism. This interface will last from the inception of communism, up until the entire world is communist, and probably for some time afterwords (in the form of black markets). Determining exactly the best way of interfacing with capitalism so as not to be recuperated (infected) is critical to any theory of communism.
It may be possible to begin instituting some of the communist modes of production of goods immediately, within a globalised capitalist economy.
A single firm, if expropriated would allow the socialisation of capital among the workers. The workers would then given that they had or could raise sufficient capital to purchase the inputs to production could begin producing without exploitation. They could produce goods for themselves at a discount. This is effectively a workers cooperative. If in addition the collective administrates the purchase of collective goods for the purpose of workers, then one is moving towards a kibbutz model and we have moved into planning for consumption.
If two firms are collectivised in this way, and the firms have no products in common in terms of inputs, then we have collectivism.
If two firms are collectivised and one has inputs to the other, then the firms can begin planning for production. They can share the profit from final sales and plan the distribution of goods internally.
Strategically, it would make sense to attempt to collectivise supply chains and merge the supply chains by way of planning. This could effectively eliminate competition along the supply chain and remove exploitation while allowing the workers democratic control of production. However, remuneration would still be in terms of the profit from sale of goods to the extent that the purchase of goods was not communally administered or the demands could not be decided in kind.
If this type of activity could become widespread, and the mechanism of internal planning was developed it may be possible to exist along side capitalism. Particularly if capitalism is not functioning well, as workers would be looking for an alternative.
This interface of exchange of money with external capitalism will exist in a manner similar to this until the entire globe is communist, so it is worth thinking about how it should be done.
* Production of rubies was a trade secret for over half a century
** global, in the sense of the economy in its entirety as a subject of study, not necessarily the 'world'.