Robert,

Doesn’t Mises say that individual rationality is what separates us from the animals? You tell me he says, no one can tell me I I’m not acting individually rationally; but what if I say I’m not acting individually rationally! He tells me I am but just don’t know it. In the tautological sense, sure, I perceive individual rationality everywhere: myself, other humans, and other animals. But in no meaningful sense of “individual”, or “rational”, do I put the whole or even most of my involvement in decision-making.

And even if we presume first that man is self-interested, and second, that that self-interest is best left without the hindrance of repressive social systems, I see that as rather an argument AGAINST capitalism. The egoist tradition is least offended, as I see it, by the anarcho-communists of the Goldman variety. There, I’m only expected to deny my desires when they step over the line of that small part of the world occupied by others’ minds and bodies. With anarcho-capitalism, I’m expected to deny my desires whenever they cross the line of that near-totality of the world occupied by what society, via the now-deposed government, has determined to be owned by others.

Joe,

I believe you’ve misunstood Misunderstanding Communism. The Marxist transitional stage is meant to be consumption IN PROPORTION TO LABOR, not infinite consumption by virtue of a specific amount of labor.

Cuba, the Soviet Union, China, and Venezuala, were all impovements over their pre-revolutionary selves by most criteria. By same criteria, they were also improvements over most countries that were of similar standing at the time of revolution. Austrians like to compare the Soviet Union to the U.S. The Soviet Union was a third world country at the time of its revolution! Why not compare the Soviet Union to like nations that, unlike the U.S., followed a more consistently free market trajectory. Brazil is a good candidate on both counts. Why not compare Cuba to its Carribean neighbors (and even ignore the sanctions if you want). Why not compare Venezuala to its neighbors or even other oil-rich nations. Read Latinobarometro, get the people’s opinion. Or make a visit. Zimbabwe’s rhetorical populism has been mismanaged, of course, but even the right-wing economists are quick to point out the lack of foreign investment due to frequent nationalisation. That’s called a virtual parliment, and it’s not so much an indictment of local “populism” as it is an indictment of global capilalism.

“Needers know their needs
There is no human action
Just exploitation

All is not yet lost
Marxism can still triumph
Elect Dear Leaders

Be North Korea
Enact socialist planning
Good times lie ahead

Ignore your hunger
Collectivism provides
There are no more needs”

In the middle of 1984, I take it? Spoiler: Orwell was a socialist.

Not much of a spoiler, since I already knew as much. I read 1984 in 1983; Orwell/Blair was a Social Democrat who fought in the Spanish Civil War — which itself was all about socialism vs. socialism. Just recently I finished a book called “George Orwell: Essays” (Penguin Classics). Some decent thoughts mixed with — you guessed it — too much Social Democracy rhetoric/fiction.

I am perplexed, though, about the similarity you pretend exists between 1984 and my various haiku above. Can you explain?

————

Orwell fought fascists
Also Stalin fought Hitler
Socialism sucks

Socialism sucks

There’s socialism and there’s socialism

newson,

“Economic output”, with an emphasis on “out”. American mobsters did well under Batista, but I’m more concerned with the quality-of-life indices of the nation itself. But you do make a point with the solidarity funds. Venezuala, even taking such charities into account, beats its neighbors, including Chile, in a number of incices, including that most important one, public approval.

I wasn’t aware “number of whores” was a generally-accepted measure. Cuba, whores and all, enjoys a more effective healthcare system than America, despite its being a traditionally much poorer country. Other Latin American countries, including Chile, don’t come close.

The main progress in Venezuala is that individuals are beginning to have self-determination consitituting more than the occasional vote. In some districts, the citizens’ councils outrank the governors (a situation that would be unheard of in the party-ruled American states, and of course pre-Chavez Venezuala). Not surprisingly, it is the Chavist governers, particularly those on the left-wing of Chavismo, who are most willing to defer to the citizens in the event of disagreement. Such decentralization is a requirement of Chavez’ Bolivarian constitution, if you should read it.

i was so mad when i read that dumb “refutation” i had to stop and post a response. i share it here.
—————————
Just about everything written in this “refutation” of Hoppe is confused.

Present goods does not mean that you get paid before you do anything. What is being exchanged here are means to different ends, and logically ends are always more subjectively valuable than means. The worker’s means and ends are the obverse of the capitalist’s means and ends. The worker is just selling his labor for a wage, because he needs more money now. The capitalist is essentially selling the wage for the labor because he needs more money later. You may disapprove of the amount paid for this or that labor but that does not change the facts of this economic relationship.

The worker could produce produce his own goods and sell them and keep the full market value of those goods for himself. Why does he not do so? He lacks capital. The capitalist, on the other hand, has capital. He has saved and can pay to wait and risk a higher return later. He pays the workers their salary regardless of whether he recoups his investment and interest. The worker benefits because he does not have to save and wait. The capitalist benefits only if he in fact gets a profit, which does not always happen. The fact that both parties work together show that they need each other. The fact that they need each other shows it is a mutually beneficial relationship, as opposed to a truly exploitative relationship where one party interferes with the rights of another.

I suppose it is “involuntary” in a sense that the worker lacks capital. But one cannot merely acquire capital by force of will. As you admit, he could save money and start his own business (and become an exploiting capitalist, according to you). Unless it is the result of prior violent redistribution of wealth, the capitalist has acquired his savings through previous market valuations. He either has his own capital saved or borrows the capital of others (in which case he, like the worker, is trading present goods for future goods).

Your example of your hypothetical human is just silly. If he seeks credit and gets it he is only illustrating this economic theory, not refuting it. He is seeking present goods by trading up future goods, and he needs someone who wants to provide present goods in exchange for future goods. And it seems that if this is the “only way he can survive” then it seems he is in fact better off by working with the capitalist.

But why doesn’t the capitalist just give the worker the full value of the product? Because then he would not be serving consumers efficiently, and his resources would be more effectively employed elsewhere. Both worker and capitalist are subservient to the consumer, who can bring a business to its knees if it fails to provide a good they want for the right price. It is just as wrong to say the worker is exploited because he can’t have his wage plus interest as it would be to reverse it and say the capitalist is exploited because he must pay for the labor before he gets his positive return.

Rather than a relationship of parasitism, capitalist and worker are working in the harmony of the market. The worker is not exploited by being denied something that is not his to begin with. No man has the right to force another to provide for him food, shelter, or a job. The capitalist buys the worker’s labor by trading x price now in exchange for x+interest premium later. It is man helping man, for individual and collective improvement.

A lesser point, in a complex market economy the worker can become a capitalist quite easily himself through the stock market or any other investment, large or small.

You should brush up on your economics and Marxism. Peace.

newson, if you can’t accept the data from the locked-down “populisms”, it’s going to be tough to conduct a a meaningful comparitive analysis. It might be time to look at the more open European welfare states…or perhaps the simple fact that no country in history, certainly not the U.S., has ever freed itself from dependency without stong protectionism.

Apologies – another addendum –

I have worked as a contractor in both Brazil and China, among many other countries. While I’m not completely up to speed on current government policy in either country, I have taken back a few impressions of how policy is made:

In Sao Paulo, each car has a day of the week on its license plate, and on that day it is forbidden to drive into the city. This is intended to reduce traffic and encourage use of public transport.

So what is the result? Everyone owns a cheapo piece of crap car to drive on their primary car’s day off. Many of these break down, causing even more traffic problems! This illustrates the common Austrian argument that interventionist policy often has unforeseen consequences.

In China, my client was concerned about placing a certain system in their office, even though this system is designed for desktop use. Instead, we are putting it in an equipment room where it will be unpleasant to use due to noise, HVAC, etc.

The reason for their concern is that locating it in the office could be seen as a bribe. This is regardless of the fact that this is included as part of a system that has already gone through a substantial bidding process (our sales agent advised that they make decisions based on the physical weight of each proposal).

The fact that such steps have to be taken to prevent corruption indicates that the system is highly susceptible to corruption. To me this means the system is unsustainable.

With any centrally planned system, it seems that constant revisionism is required to keep up with changing needs (market forces). Do we really expect the bozos running the show to always (or ever) get it right? Even if one leader is very good, who replaces him?

Leadership placement in a democracy is granted prior to the time a leader performs his job (fulfilling the demands of his electorate), whereas in a market system, this placement only comes as the result of a successful performance (having fulfilled demands more effectively than his competitors). Where would you put your money (assuming that you are aprioristically self-interested of course!)?

Take what you will from the above anecdotes – They may be irrelevant to this discussion, but I think they’re at least good for a chuckle.

“The fact that such steps have to be taken to prevent corruption indicates that the system is highly susceptible to corruption. To me this means the system is unsustainable.”

I take it then that you are anti-capitalist as well?

I mean really, that is illogical. All systems are susceptible to corruption. The fact that A can happen does not mean A is unavoidable or that the risk of A outweighs the rewards.

Joe Brochu,

Your foreign experiences are really interesting. Maybe you could develop these “anecdotes” in depth and submit them for pub.

We recently posted an article about individualism on our blog: http://riseuprochester.org/2008/12/01/why-individualism-is-better/

This caused a long dialog with db0 on our site and on his. I got turned off when he started resorting to calling people names on his site. Names like tw@t.

He referred me to some reading at marxists.org to learn more about the topic. Naive me, I thought the school of Marxism had advanced in recent years. Wrong. The introduction to Marxism included all of the junk articles I read in English class (that’s right, not economics). The other articles are from great minds like Lenin and Mao.

Funny, last time I checked there were no Austrian Economists with tens of millions of murders on their hands (of their own citizens).

But the walls of the Soviet prisons within which all dissenters disappear forever are a hard fact.

Yeah, well, I’m not for prisons either. Any “supreme commander” would not be equal to the rest of the people and thus against the concept of egalitarianism. So he would not exist in the system I’m striving for.

Any attempt to legislate or mandate uniformity will fail.

Egalitarianims =/= Uniformity

This seems to be a classic error that libertarians (purposefully?) make

Egalitarianism does indeed equal uniformity when combined with socialism/communism comrade.

Please don’t call me “comrade”. It slaughters the word and sends a chill up my spine…

No, egalitarianism does not equal uniformity when combined with Communism, however much you’d like it to be so that you can have an easy target. All you have is a strawman.

There can be no egalitarianism without economic egalitarianism.

who’s quite fond of Marx, Lenin and Mao.

And then you wonder why I called you a twat.

TLB,

First of all, thank you for sticking to cogent arguments. You have obviously put in some time to study these subjects and I hope that others can appreciate this and follow your example.

Can you recommend any websites or readings that explain some of the current leading socialist/communist theory? I am particularly interested in the functional/logistical side of the theory – how does it work, what measures are needed to implement and sustain it, can it be derived from basic principles about how people interact. I probably won’t agree with these, but I am curious to learn more. Then I can go raise some hell on their blog!

I’m not familiar with labor credits, but based on your description I would guess that it means a fixed price is posted for each job that needs to be done, and this price is determined by the necessity of the job as well as the willingness (or unwillingness) of workers to do it. I imagine that this loosely corresponds to my “the sewer cleaner gets a better car” scenario.

I think Austrians would see this as an unnecessary and inefficient manipulation of market forces. How is necessity determined? A daily vote? Representative government? And how much does a representative get paid?

This brings up Mises’ calculation problem, which is still valid in the age of computers. While we now have the ability to solve numerous multiple equations simultaneously, the problem lies in determining all of the inputs. How do you know what every individual wants or needs at a given point in time, and will those needs still be valid by the time you can react? Econometric analysis relies on past transactions and has to make assumptions even to describe present demand.

In stating that a free market is not susceptible to corruption, I mean that the corrupt actions of one or a few individuals can’t pervert the whole system. There is certainly still room for an individual to abuse a position of power – but his power and therefore abuse is necessarily limited to whatever industry he has succeeded in. The rest of the world will chug merrily along, and will quickly find substitutes for whatever product gives him this power.

If someone manages to monopolize or cartelize a necessary commodity such as water or energy and intends to enslave the human race at all costs, they might have a shot. However, they would face an uphill battle, requiring massive expenses to protect their means of production from even grassroots opposition.

In a populist system, the leader already has the monopoly along with an army and fiat currency to pay them. All he needs is a reason.

When the industry is the entire economy as in a socialized state, a corrupt action or even a poorly thought-out decision at the top can have unrecoverable consequences across the board.

The Austrian view of the current financial crisis would be an example of this. Decentralized banking in general means that the failure of one or a few banks doesn’t disrupt the whole monetary system. Instead, allowing banks to fail clears the playing field for the banks who have kept more prudent policies to gain more market share. Some people may lose their money in a bank run, but they will be all the more cautious when choosing their next bank.

Regarding the biological virus, the strength of the virus isn’t proportionate to the benefits (in a relative sense) gained by the surviving species – they have only gained immunity to that particular strain, regardless of how many died. In an apocalyptic case where too few of a species survive to further propagate their genes, other species will fill the ecological gap left behind. Neither species has played a conscious, active role in this transition, and only humans would even comprehend that it was happening at all.

If I haven’t lost track of my original vague analogy, this corresponds to new entrepreneurs finding ways to fulfill whatever demand the corruptor has denied. In addition, my arguments here regarding the importance of decentralization as an insulating factor should suggest that such an event would be highly unlikely in a free market.

The cooperation seen in ecological systems is the result of the fact that the battles have already been fought and won, and demands are relatively constant. Take any ecological system, introduce a few bunny rabbits, and watch what happens. The demands of conscious humans are in constant flux, which prevents a similar universal cooperation from occurring naturally.

I won’t argue against cooperation – voluntary cooperation can be a powerful force, and can open new avenues for competition. I am a big fan of open-source software and even contribute to a few projects. I recommend the book “Wikinomics” for an interesting look at how some companies are voluntarily choosing to work in more collaborative ways, and mutually benefitting everyone involved.

However, the benefits of voluntary cooperation should not be used to justify coerced cooperation – otherwise I think we will see a lot less voluntary cooperation.

A free market system can benefit everyone without requiring everybody to be nice. I don’t like Wal-mart, but it has raised the standard of living for a lot of people by putting more goods within their reach. Megastores like Carrefour are playing a similar role for the “exploited” workers who make Wal-mart’s products.

Monetary inflation works against this beneficial force by sustaining higher prices, and prices play an equal role to wages in wealth creation. So who is really to blame for keeping the workers down? If you were to levy a “Megastore tax” (or “windfall profits” tax) to promote smaller, local markets, who would really be paying it? Hint: How many billionaires do you know who shop at Wal-Mart?

Is today’s wealth disparity too much of a price to pay if it means that everyone benefits over the long term? If you allow the envied wealth of the top few to exist and focus instead on the factors that can create wealth production for the masses as a goal, what kind of system will facilitate this most effectively?

Whew… my head hurts. Although that could have something to do with the tile sealant fumes emanating from my bathroom…

Start with Noam Chomsky

Joe,

I’ve mentioned Albert, whose website zmag.org has a Parecon forum. But more to the point of the calculation problem is www3.sympatico.ca/bernard.leask/renewal.html.

The labor-credits paid by the job could be determined by the labor-credits dedicated to it by the society in their capacity as consumers. Price of the product would be determined similarly, thus resulting in a convergence of production and consumption, as the (literally) shitty jobs you mention pay in inverse proportion to their natural attractiveness and in direct proportion to demand for their products. In complex industries, the wage might better be allocated to the industry itself, and its exact distribution be determined democratically by the workers’ themselves (each under the understanding that as the more valuable workers become unhappy with their level of pay, they might switch industries, potentially weakening the quality/quantity of the product, thus ultimately reducing the collective wage of the industry, hence their own). That’s one model, still overly-incentivised, but without the distortion of arbitrary initial distribution.

The flip-side to the economic calculation problem is the problem of uncertainty and the problem of initial distribution. Does the rationality supposed inherent in free markets outweigh the self-reproducing irrationality of an initial distribution based on chance, or worse, dispossession? Does the supposed rationality of unplanned allocation outweigh the waste that results from the uncertainty?

You’re assuming an undemocratic state is necessary for socialism. I might at least as well assume an undemocratic state is necessary for capitalism. I doubt you condemn capitalism for the many un-Austrian actions of the U.S. government. You may call them ” state socialistic” actions; similarly, I agree with Lenin and Trotsky’s assessment of the Soviet Union as “state capitalism”. In America, the rich control the army indirectly through their state executive. In ideal capitalism, anarcho-capitalism, their control over the army would be direct. They would of course face competing private armies, but only inasmuch as modern states face competing state armies.

The flaw in your decentralization logic is the assumption that there will be an equal number of failures in each system. In addition to the obvious (that more banks means more opportunities for failure), a central bank wouldn’t be as likely to fail as a small bank, because it wouldn’t need to take the kinds of risks the small banks would in order to stay competitive and get to the long run. And I’d be much more comfortable with what was left if all but one of an initial two banks failed, than if all but one of an initial ten did.

I’m not against entrepeneurs, although it seems logical to me that their flip-side (Veblen’s saboteurs) would account for an equal number of the upwardly mobile in a free market.

Kropotkin’s study of mutual aid focused primarily on humans, in fact. Anyway, species less conscious than humans (or apes) can be more competitive. Crocodiles, for example, simply lack a cooperative instinct. Nor do I feel that humans’ needs are constantly changing. As you can see easily in the starving populations, human needs stay about the same. Bourgeois “needs” may vary, but that should be expected at the level where needs must be invented.

The absence of “voluntary” cooperation, in the presence of “coercive” cooperation, will logically be meaningless. It’s interesting you use the example of intellectual property, which is unique. Other forms of property, including those basic needs prerequiste for intellectual activity, is scarce and has itself been obtained through coersion. When a sharecropper is taxed by the plantation-owner, that is a free market; but when the government, which doesn’t have the arrogance (or sense) to call itself “owner” of the land (which it has no less a claim to) taxes the plantation-owner, that is called “extortion”, “robbery”, and all the rest. I’m not so concerned with cooperation vs. competition as I am who owns what. Two duopolists could be perfectly cooperative; it won’t make it socialism. First we should correct the false perception of them as having negative authority over others as regards that which they call their property. If beyond that, people wished to come to a consensual agreement as regards what is properly the property of no one, and that agreement were functionally the same as capitalism but that it were only temporary (new generations had also to consent), only then would you have voluntary property.

I don’t think anyone here has ever refused to read a Mises publication on the basis of his working for the Austrofascist regime (“It’s not fascism when Austria does it.”) The Hoover article cited no sources, not that it matters, given that even if all information were correct and all quotes provided sufficient context, Chomsky’s essential point stands: money equals influence in a capitalist economy. I know many of you voted for Bob Barr (or one of the others) even though you may reject the system of mixed government by which the people may elect such a powerful position. You did so presumably upon facing the reality that abstinence is a waste of potential influence, influence that may be useful for the dismantling of that evil basis for influence.

Chomsky is the first to admit that his altruism has decreased with age, and that family has gained ground over humanity in his considerations; all of this a scientifically-correct conception of the brain predicts. “Do As I Say (Not As I Do)”, understood correctly as “Hear My Arguments and Make Up Your Own Mind” has of course been a constant theme throughout his work. I would be far more suspicious of one’s philosophy if it forgave one’s behavior, for obvious reasons.

TLB,

This is going to be my last post here, because at this point I think I’ve written more about Austrian economics than I’ve actually read!

Thanks for the links, I’ve looked into them a bit and intend to look into some of those ideas a bit further.

I think that a system like Parecon could work as a business model or framework, but the application of it to a whole economy would require some form of a centralized state. The examples that I found (on Wikipedia) appear to be businesses that would attract people who are sympathetic to the political causes involved. How would you get the Austrians to participate?

I don’t quite buy the notion that a centrally planned system removes uncertainty. Even if such calculations only incorporated necessities such as food and shelter, the Bourgeois needs are still in competition for the same scarce resources and would have an effect. You could reduce uncertainty by limiting the variety of available goods, but this pretty much goes against everything we’re trying to accomplish here. The goal is to maximize choice for everyone, right?

I also take a less rosy view of electoral democracy. It removes some of the advantages of division of labor by expecting everyone to be capable of making a decision on everything. This in itself introduces a significant amount of inefficiency – decisions can take a long time, and if only one option is explored and fails, the process must start over (or the failure must be propped up to justify the system!).

I think you’ll agree that very few of the democratically elected representatives in the world have any clue about the factors and consequences involved in the decisions they make daily. The electorate who put them there is even more ill-informed and apathetic. If a popular vote came up between a free plasma TV for everyone and modernizing the electricity grid, which would win? Democracies don’t think long-term – investors do.

I intend to do some more reading, and at some point will write a post on my blog outlining my thoughts on an anarcho-whatever system. I think this would start by focusing on what “would” happen, and might go into what else “could” happen. I think that any system requiring use of the word “should” will be expensive to implement and sustain (requiring education and/or enforcement), but this doesn’t rule them out completely. Note that this applies to Austrian ideas such as Rothbard’s non-agression axiom just as much as it does to socialist ones.

One key point of contention is obviously property rights. In the absence of a coercive state, I think property rights will be determined simply by “If you can protect it, it’s yours.” This protection could be in the form of a fence, a private security force, or voluntary consent to a legal system by which you can agree with others on the definition of property rights. It might turn out that the latter is the easiest and most effective option for most people, and conflicting legal systems could possibly coexist in the same geographical areas.

I think the economic superstructure of an anarchic world would be the free market, due to its propensity to arise naturally. However, communal systems such as Parecon could be established, and if they can prove to be more effective at meeting demand, they could catch on and spread. They might face an uphill battle since they would be in competition with other private enterprises, but they might also attract better workers and loyal customers.

As to how a peaceful anarchy could be established, I think it would require a peaceful transition by gradually offering people better non-governmental options than those provided by the existing governments. I’m not sure how feasible this would be – obviously the guys with guns will always have a strong say. But if alternative voluntary legal systems could be established and attract enough people, then pressure for an “opt-out” option might emerge.

I don’t think any transition involving violence could result in a system that won’t quickly devolve back in to a militarized state. I see this as almost self-evident. I also don’t think that any current governments could be changed from within – they carry too much historical baggage, and have vested interests in preserving their current form.

The current governments might still play a role in an anarchic world. They’d make great mall security guards.

Thanks for the discussion!

A point of clarification – I use the term “anarchic” to refer only to the absence of a coercive government – I certainly don’t think that a purely anarchistic world could be stable in any circumstance.

Since this post, I have read a bit about “Panarchism” and I think this is probably more along the lines of what I was thinking – governments can exist, but citizenship is voluntary (thus they are in competition with each other for citizens/customers), and they are not determined by geographic boundaries (to allow greater competition).

In a system like this there would be plenty of room for all kinds of systems – and each consumer would decide which one works best for him.