Cleveland Leads The Way In Economic Democracy

[Havet]

http://www.time.com/time/business/article/0,8599,1947313,00.html


While officials, pundits and the everyday folks who have to pay bills lament unemployment rates that won't go down and wages that won't go up, some Rust Belt planners and union leaders are feeling optimistic: they're taking inspiration from the Basque region of Spain, where a network of worker-owned cooperatives launched amid the rubble of the Spanish Civil War has grown to become the country's seventh-largest corporation, and among its most profitable.

The Mondragon Corp. (MCC), based in northern Spain, is a multilayered business group with 256 independent companies (more than 100 of which are worker-owned cooperatives) that employs more than 100,000 people. It has long been legendary among scholars and activists seeking to bolster workers' rights.

The Mondragon story began in 1941, when a Catholic priest, Jose Maria Arizmendiarrieta (often shortened to Arizmendi), found in the Basque town war-torn devastation where there had been a thriving manufacturing base. He opened a polytechnic school, which in 1956 spawned its first cooperative, a stove factory. Half a century later, the Mondragon enterprise encompasses firms making everything from machine tools to electronics to bicycles, along with a retail division, a university and a significant financial sector, with the large cooperative bank Caja Laboral at its core.

While many think of cooperatives as a small-scale hippie mainstay, the Mondragon Corp. is huge, hard-nosed business-wise and successful; in 2008, with Spain's economy in the doldrums, MCC's income rose 6%, to 16.8 billion euros. The Mondragon Corp. maintains its commitment to one-worker, one-vote democratic governance through a complex, carefully honed organizational structure in which the corporation serves as a kind of metacooperative for the individual companies. Through representatives and resources drawn from the larger network, it provides support for planning, research and generation funding for new businesses.

Several nonprofit and medical institutions in Cleveland have turned to the Mondragon model for a consortium of businesses that will provide needed services and bolster an impoverished community. Evergreen Cooperative Laundry, a state-of-the-art commercial launderer designed to be LEED silver–certified, opened for business this fall in Cleveland's University Circle, an area where the average annual household income is $18,500. Rather than just bringing home wages, its eight employees will gain equity through "patronage accounts," a portion of earnings put aside to both build personal assets and reinvest in the company.

Another company within the Evergreen Cooperative group, Ohio Cooperative Solar, offers weatherization services and will soon embark on solar-panel installations — the first a 100-kw system on the roof of the Cleveland Clinic. According to CEO Stephen Kiel, Ohio now has 2 solar megawatts of the 60 the state requires by 2012. "Most installations in Ohio are small," he says. "One hundred kilowatts is a pretty significant system."

Kiel, who as a business owner and management consultant has worked with nearly 200 companies of varying scale, says he has already seen advantages to employee ownership. "Since the business belongs to the workers, my job is expos[ing] them to how to run a business," he says. "In addition to the technical training, we're training in administration and managerial skills — how to obtain work orders, track profitability, read a financial statement." Unlike the typical workplace, here employees know exactly how much a company — and each individual — is making. "There's a value in dealing with an informed workplace," says Kiel. In terms of problems that can arise, including safety, production and theft concerns, "if people feel a part of it, that makes solving the problem a lot easier."

He adds that the spread between the high and low salaries is limited so that the CEO earns no more than five times the lowest-earning entry-level employee. This follows the Mondragon template, which keeps the ratio down to 1 to 4 or 5 (though in a few cases of specialized positions, it's as high as 1 to 9).

One hallmark of the Mondragon model is its use of capital. Rather than flowing into the pockets of executives and outside investors, a company's profits are distributed in a precise, democratic way; set aside as seed money for new cooperatives; distributed to regional nonprofits; or pooled into shared institutions like the university and research center. In other words, each individual cooperative gains long-term benefits from the financial assets of the whole. (How this would play out in the context of U.S. tax rules remains to be seen.) In Cleveland, the Evergreen Cooperative Development Fund, managed by ShoreBank Enterprise Cleveland, provides low-interest, long-term financing. In the future, a financial institution more aligned with Caja Laboral, which also handles consumer saving and lending, might be developed.

The "Cleveland model," as Evergreen has already been dubbed, creates "a way to stabilize jobs in an area as well as democratize ownership," says Gar Alperovitz, professor of political economy at the University of Maryland and a founding principal of the Democracy Collaborative, a nonprofit organization that has advised Evergreen. He says part of the strategy has been to address growing sectors of the economy, such as health care and energy. To have a major impact on the regional economy, manufacturing has to be brought in, says Alperovitz. "We're thinking about similar approaches with bullet trains and mass-transit vehicles, asking the question, How can some of that production be organized according to this model?"

In late October, the Mondragon Corp. and the million-plus-member United Steelworkers (USW) union announced an alliance to develop Mondragon-type manufacturing cooperatives in the U.S. and Canada. Says USW's Rob Witherell: "Initially we are looking to convert an existing manufacturing operation." As for financing new ventures, he adds, "There's a significant amount of infrastructure already in place in the U.S. to assist in the development of cooperatives, such as the National Cooperative Bank and the National Cooperative Business Association. It's possible the NCB could function in a Caja Laboral ... role for us here."

Witherell stresses that the union aims to implement the basic principles of worker ownership and democratic governance rather than precisely replicate the Mondragon model. Still, he says, success comes down to well-run companies that meet a need. "The people who formed these co-ops did not do so because of some egalitarian ideal — they did it out of the necessity to feed and provide for their families."

The Arizmendi Association of Cooperatives, the umbrella organization for a group of four (soon to be six) worker-owned bakeries in the San Francisco Bay Area, took its name as well as its business plan from Mondragon. The companies share technical and financial resources — as well as proprietary recipes — and a portion of profits goes to funding new enterprises. The notion of cooperative artisan bakeries sounds quaint, but the group is thinking beyond the breadbox. "We consider this the very beginning phase," says Melissa Hoover of Arizmendi, who is also executive director of the U.S. Federation of Worker Cooperatives. She says the companies plan to develop more businesses and are researching possibilities "along the supply chain": trucking, retail, health and wellness, as well as a funding vehicle like Caja Laboral.

Arizmendi now employs 125 workers and annually generates $12 million in sales. Despite the economic downturn, the businesses remain strong and poised for growth. This in part owes to the collective decision-making model, says Hoover. "Worker-owned cooperatives are an innately conservative form. We didn't overleverage ourselves."

Pretty interesting read. This sort of goes along with what Moore was saying in the end of his movie Capitalism: A Love Story.

Unfortunately, i'm rather skeptical that these co-ops will be able to compete with the corporate monsters that are out there. I mean, i'd take a co-op to a corporation any day, but I just don't see how the coops are going to get around the massive privilege going against them unless they too lobby for privilege to the State.

What do you think?

[Zanthorus]

All I saw was the word "mondragon" and stopped reading.

Please read this (http://libcom.org/library/co-operatives-all-together) and this (http://libcom.org/forums/news/mondragon-capitalists-exploitation-repression-poland-20072008) and then give up on your illusions in co-operative capitalism.

[Bob George]

This article is just damage control from the left after the row of bad publicity central planning, public-private partnerships, business regulations, high taxes and government management have received in relation to the city of Cleveland.

Cleveland #1 most miserable city in the U.S. (http://www.forbes.com/2010/02/11/americas-most-miserable-cities-business-beltway-miserable-cities.html)

Drew Carey and Reason.tv just did a series called "Reason Saves Cleveland" in which they investigated the causes of Cleveland's downfall, and practices conducted in other cities that would help bring Cleveland back. This is part one...

096pjEOrdK4

[Havet]

All I saw was the word "mondragon" and stopped reading.

Please read this (http://libcom.org/library/co-operatives-all-together) and this (http://libcom.org/forums/news/mondragon-capitalists-exploitation-repression-poland-20072008) and then give up on your illusions in co-operative capitalism.

I have no illusions on cooperative capitalism. That is why I am a revolutionary, not a reformist.

What would your solution for the workers be, then?

[Skooma Addict]

All I saw was the word "mondragon" and stopped reading.

Please read this (http://libcom.org/library/co-operatives-all-together) and this (http://libcom.org/forums/news/mondragon-capitalists-exploitation-repression-poland-20072008) and then give up on your illusions in co-operative capitalism.

Do you think cooperatives could exists side by side with for profit firms where the means of productive are owned privately?

[Zanthorus]

What would your solution for the workers be, then?

Well they could always organise against capitalism.

[Havet]

Well they could always organise against capitalism.

What would they do in the meantime? Work in coops or work in corporations?

[Demogorgon]

I think people misunderstand Mondragon, both its critics and its supporters. It is a democratic workplace in the same way the United States is a democratic Government, i.e. it isn't, but just as you would still rather live under the American system than the Saudi system you would rather work for Mondragon than a more conventional firm.

[Havet]

I think people misunderstand Mondragon, both its critics and its supporters. It is a democratic workplace in the same way the United States is a democratic Government, i.e. it isn't, but just as you would still rather live under the American system than the Saudi system you would rather work for Mondragon than a more conventional firm.

This is exactly what I think. It could never be a true democratic workplace by the simple fact that it operates within the capitalist society and is, therefore, subject to forces which necessarily change the coop behaviour (competing privilege, monopolies, etc)

[Dean]

This is exactly what I think. It could never be a true democratic workplace by the simple fact that it operates within the capitalist society and is, therefore, subject to forces which necessarily change the coop behaviour (competing privilege, monopolies, etc)

hayenmill, competition in terms of privilege seems to be a central theme in your ideology. That is, you think that if we can remove privilege vis a vis the state (which you conveniently describe as all coercive elements), then free marketeerism will no longer seek exploitative conditions, or at least won't have the means for it.

So, what makes you think that such coercive elements won't arise in the context of a competitive market system? What makes that kind of system so special from other, past structures? How does the "openness" of a market dissuade people with inequitable market shares and other assets to compete violently with each other?

I know you said you didn't know much about private security (and seemed to discount the concern altogether) but that seems critical to your ideology. That is, if you think that the market can provide for the function of the state - especially in a "just," "non-centralizing" manner - why aren't you concerned with how that might play out?

[RGacky3]

What would they do in the meantime? Work in coops or work in corporations?

Wherever you can get work, I'd much rather work in a coop though.


Do you think cooperatives could exists side by side with for profit firms where the means of productive are owned privately?

cooperatives in a capitalist context are for profit firms. Yes they can compete, they do.

Our goal though is to overthrow capitalism.

[Havet]

So, what makes you think that such coercive elements won't arise in the context of a competitive market system?

The fact that I have never seen historical evidence to support your argument. If you care to show it, ill be glad to read it.

[Dean]

The fact that I have never seen historical evidence to support your argument. If you care to show it, ill be glad to read it.

What? I'm not posing any argument other than the present paradigm. The presence of coercive elements in our society indicates that there is some reason for them to exist. What makes your system exist contrary to this standard?

You're the one who proposes what I outlined above about states, I just want to know what makes you think its viable. Apparently, you have no understanding of the systemic issues fundamental to your "coercion" theory, otherwise you would have more to say than a feeble rejection of my right to criticize.

[Havet]

What? I'm not posing any argument other than the present paradigm. The presence of coercive elements in our society indicates that there is some reason for them to exist. What makes your system exist contrary to this standard?

Ok, fine:

1. Define what elements you consider coercive
2. Explain how you can apply the present paradigm to my proposed system (which isn't really a system, but a group of other systems, such as ansoc, ancom, "an-ind", etc).
3. After we clear semantics, i'll answer.

[Dean]

Ok, fine:

1. Define what elements you consider coercive
Why don't you? I'm drawing from your posts, where you define "the state" as coercion. When people have said that coercive elements will arise, you said "well that would constitute a state." And that's fine for our purposes. I just want to know what makes Mutualism act contrary to the history of our society.


2. Explain how you can apply the present paradigm to my proposed system (which isn't really a system, but a group of other systems, such as ansoc, ancom, "an-ind", etc).
Again, the onus is on you. You're claiming that Mutualism is a different system, with different results (and I'll grant you that we live in a multi-faceted society, but that doesn't address the point).

Communists have a responsibility to address these topics since they are claiming that another system is possible. It follows that systemic issues must be addressed.

Since you claim to have the blueprints, at least roughly, for a "non-coercive" society, I want to know what your understanding of that system is. As far as I remember all of our discussions, you have explicitly ignored that responsibility. I'm just asking you to address it.


3. After we clear semantics, i'll answer.
Please do.

[Havet]

Why don't you? I'm drawing from your posts, where you define "the state" as coercion. When people have said that coercive elements will arise, you said "well that would constitute a state." And that's fine for our purposes. I just want to know what makes Mutualism act contrary to the history of our society.

Coercion: the practice of forcing another party through the use of fraud and/or physical force to behave in an involuntary manner (whether through action or inaction).

I don't think that mutualism will act contrary to the history of our society. There will still be corruption and theft. But their scale will be drastically reduced due to the decentralization that follows from the availability of the MOP through equality of opportunity and the end of the exploitation of labor by the "capitalist class"


Since you claim to have the blueprints, at least roughly, for a "non-coercive" society, I want to know what your understanding of that system is. As far as I remember all of our discussions, you have explicitly ignored that responsibility. I'm just asking you to address it.

What do you want to know exactly?

[Publius]

hayenmill, competition in terms of privilege seems to be a central theme in your ideology. That is, you think that if we can remove privilege vis a vis the state (which you conveniently describe as all coercive elements), then free marketeerism will no longer seek exploitative conditions, or at least won't have the means for it.

So, what makes you think that such coercive elements won't arise in the context of a competitive market system? What makes that kind of system so special from other, past structures? How does the "openness" of a market dissuade people with inequitable market shares and other assets to compete violently with each other?

I know you said you didn't know much about private security (and seemed to discount the concern altogether) but that seems critical to your ideology. That is, if you think that the market can provide for the function of the state - especially in a "just," "non-centralizing" manner - why aren't you concerned with how that might play out?

Because people like hayenmill define the capitalist system and the free market in such a way that it's definitional that the free market could never be coercive.

And if an actor or agent in the free market did attempt to be coercive, they would somehow inevietably lose in free and fair exchange with their non-coercive competitors.

Of course this is complete nonsense, as any cursory examination of history shows. The reason every single human society is centered around the use of unilateral force to preserve its prevailing interests should tell you that the reason violence is so common is because it's so effective.

Libertarians have a certain disconnect between their ideal of how a free market works and how actual markets in the world work. They just assume that all the bad things that happen in 'free markets' nowadays are results not of the inherent logic of capitalism, but of bungling state administrators or something.

[Publius]

Coercion: the practice of forcing another party through the use of fraud and/or physical force to behave in an involuntary manner (whether through action or inaction).

IF that's the definition then the state has never once "coerced" me to do anything. I've never been defrauded by the state in any transaction I've undertaken, and it's never used physical force against me. But I bet you want to say the state still coerces me to do things.

Your definition is wrong.

ALSO: http://www.youtube.com/watch?v=ysmLA5TqbIY

[Skooma Addict]

And if an actor or agent in the free market did attempt to be coercive, they would somehow inevietably lose in free and fair exchange with their non-coercive competitors.

Of course this is complete nonsense, as any cursory examination of history shows. The reason every single human society is centered around the use of unilateral force to preserve its prevailing interests should tell you that the reason violence is so common is because it's so effective.It wouldn't be inevitable, but it isn't likely to work. In most industries, being "coercive" isn't even an option. I assume you are referring to private arbitration or PDAs? Private arbitration has worked fine historically. For example, look at Merchant law at its prime.

I don't see what your point is about violence being effective. Violence is necessary and effective for a well functioning society to operate.

[Publius]

It wouldn't be inevitable, but it isn't likely to work.

If it isn't inevitable, then at some point it will work.

And that'll be the end of the "free market".



In most industries, being "coercive" isn't even an option.Depends on how broadly you define coercion.

Is monopoly coercive? What exactly constitutes fraud? Is certain advertising coercive without being fraudulent?



I assume you are referring to private arbitration or PDAs? Private arbitration has worked fine historically. For example, look at Merchant law at its prime. This isn't just arbitration, this is arbitration in the context of small, competing armies with financial incentives to envelop one another.

Either the government has a monopoly on force or companies have an oligopoly on force.

I don't see how the latter is better, and I see many ways it could be worse.



I don't see what your point is about violence being effective. Violence is necessary and effective for a well functioning society to operate.I agree. Violence exists because it works. Even the communist revolution we hear so much about on these forums must be predicated on violence.

That's why the idea of a perfect free market society is just a fable. That society would have every problem ours has. Why, then, go through the trouble of making it actual?

How could it improve anything?

[Skooma Addict]

If it isn't inevitable, then at some point it will work.

And that'll be the end of the "free market".I would definitely suspect that at some point, coercion will pay off somewhere in the world. I barely take this as a criticism of the free market.


Depends on how broadly you define coercion.

Is monopoly coercive? What exactly constitutes fraud? Is certain advertising coercive without being fraudulent?
Oh, I thought you were just talking about violent coercion. I don't think monopoly is necessarily coercive. But anyways, I don't imagine there being monopolies except maybe there will be single providers of certain services in certain small communities. Or maybe one provider of one extremely scarce resource that can only be found at one relatively small location. What constituted fraud would differ between communities.


This isn't just arbitration, this is arbitration in the context of small, competing armies with financial incentives to envelop one another.

Either the government has a monopoly on force or companies have an oligopoly on force.

I don't see how the latter is better, and I see many ways it could be worse.I see no reason why there would be oligopolies. There were private police in California during the gold rush and things worked pretty well. The situation they dealt with was insane. Many people from many different ethic groups all trying to go after one scarce resource, and not one official judge or officer within 500 miles.


That's why the idea of a perfect free market society is just a fable. That society would have every problem ours has. Why, then, go through the trouble of making it actual?

How could it improve anything?
I don't get what you are saying here. It wouldn't suffer from every problem our society has.

[Havet]

IF that's the definition then the state has never once "coerced" me to do anything. I've never been defrauded by the state in any transaction I've undertaken, and it's never used physical force against me. But I bet you want to say the state still coerces me to do things.

Your definition is wrong.

ALSO: http://www.youtube.com/watch?v=ysmLA5TqbIY

Yeah, I noticed I forgot to add THREAT OF COERCION as well. You comply with paying taxes because there is a threat behind the demand for taxes. ie: you will go to jail if you don't pay taxes.

[Publius]

Yeah, I noticed I forgot to add THREAT OF COERCION as well. You comply with paying taxes because there is a threat behind the demand for taxes. ie: you will go to jail if you don't pay taxes.

That's more like it.

But now the threat of coercion is rather broad.

Being threatened with losing your job is coercion, since without a job you'll lose your house/car/family etc.

What's the principled distinction here?

[Publius]

I would definitely suspect that at some point, coercion will pay off somewhere in the world. I barely take this as a criticism of the free market.

If coercion succeeds enough there won't be a "free market".

That's the potential problem.



Oh, I thought you were just talking about violent coercion. I don't think monopoly is necessarily coercive.

Coercion doesn't have to overt physical violence. The state won't even actually kill or injure you if you fail to comply (unless you do so violently) it'll simply detain you.



But anyways, I don't imagine there being monopolies except maybe there will be single providers of certain services in certain small communities. Or maybe one provider of one extremely scarce resource that can only be found at one relatively small location.

I don't see why this should follow.

There many industries where cost of entry makes monopoly or at least oligopoly almost certain.

Public services in anything other than very large cities would be a good example of this.



What constituted fraud would differ between communities.

That's problematic.



I see no reason why there would be oligopolies. There were private police in California during the gold rush and things worked pretty well. The situation they dealt with was insane. Many people from many different ethic groups all trying to go after one scarce resource, and not one official judge or officer within 500 miles.

Define "pretty well".

I know nothing of this particular example, but I find it awfully hard to believe that the standards they adhered to were that good.

Furthermore, how did 'private police' work?

Did they have the power to unilaterially punish or arrest people? How, then, is that not coercive force of the worst kind?

And if they didn't, how were they really police?

Maybe the only reason they functioned pretty well was because they acted, de facto, like real police.



I don't get what you are saying here. It wouldn't suffer from every problem our society has.

No, it'd suffer form similar ones created by its unique set of incentives.

But would it be better than our society? I don't see how.

[Skooma Addict]

If coercion succeeds enough there won't be a "free market".

That's the potential problem.

Okay, and this "potential problem" applies for all possible social systems. If there is too much coercion it is going to break down. This will always be a potential problem no matter what.


I don't see why this should follow.

There many industries where cost of entry makes monopoly or at least oligopoly almost certain.

Public services in anything other than very large cities would be a good example of this.

Given that it is much easier to enter industries in a free market, I don't see how monopoly or oligopoly would be a problem.


That's problematic.

Why? Is it a problem that what constitutes fraud differs between countries?


Define "pretty well".

I know nothing of this particular example, but I find it awfully hard to believe that the standards they adhered to were that good.

Furthermore, how did 'private police' work?

Did they have the power to unilaterially punish or arrest people? How, then, is that not coercive force of the worst kind?

And if they didn't, how were they really police?

Maybe the only reason they functioned pretty well was because they acted, de facto, like real police.

Many groups of people made their rule of operations before they even left their homes. Company constituents also specified arrangements for payments to be used for caring for the sick and unfortunate. There were also rules for personal conduct.

Read this if you are interested in the details.

http://mises.org/journals/jls/3_1/3_1_2.pdf

[Havet]

What's the principled distinction here?

The existence of choice on a broader scale.

In my utopian and perfect "free-market" the availability of choice, not just in terms of jobs, but especially in other forms of association, would allow each person to be affected far less by a job loss, without the inconvenience of large geographical voyages.

The same cannot be said for taxes, or other forms of public-private privileges.

[Publius]

Okay, and this "potential problem" applies for all possible social systems. If there is too much coercion it is going to break down. This will always be a potential problem no matter what.

Yes, but free market libertarians always want to tell this idealistic utopian story about how their society is going to function.

If you're repudiating that, then good.



Given that it is much easier to enter industries in a free market, I don't see how monopoly or oligopoly would be a problem.

There simple economic reasons why this might be so.

Economies of scale favor those already rich, startup costs favor those who are already in an industry, and many businesses require huge infrastructural outlays that require, for example, imminent domain.

Imagine a city that has one cable company that has a monopoly on cable television in that city.

How, in a perfectly free market, without a government, would a competitor reasonably compete? They would have to lay an equivalent amount of infrastructure without any recourse to eminent domain or use of public resources like underground tunnels, since all those would privately owned anyway.

Therefore they would have install every inch of wire they wanted, or they'd have to pay rent to the current owners of the infrastucture, that is, the company they want to compete with.

Obviously this wouldn't work.

How can you wire an entire city with coaxial cable when it's already been wired, and when a single person who, along the line, doesn't allow you to lay your cable would force you to reroute, etc.

You'd have to pay each person whose land you put cable on, simply because there would be no public property for you to put on it without paying anyone.

I'm not going to let you dig under my lawn without paying. I may not let even if you'd pay me a king's ransom.

What are you going to do when you want to put new infrastructure underground in a large city? Nowadays it's not a problem because stuff like this is controlled by the local government. There are commons in which you can install wire and pipes and such, and you get government help to install this stuff. It's not an issue if you have to tunnel under a road, you're allowed to.

But if another private company owns the road, they'll just tell you to fuck off or give them a cut.

You'd quite literally have to pay for rent on every single inch of space you use to lay your cable.

These are costs that a company that uses existing infrastructure just avoids.

You can tell yourself that this wouldn't result in de facto monopolies, but it would.



Why? Is it a problem that what constitutes fraud differs between countries?

Yeah. Even worse are cases where things like intellectual property laws aren't respected.

Countries having (let alone private defense agencies having) different laws is a huge problem for trade. See the recent flap over lead paint in Chinese toys.

Or look at how China steals intellectual property.

These problems would seem to multiply in a world where instead of a few hundred states there were were thousands of defense agencies of varying levels of power and influence.



Many groups of people made their rule of operations before they even left their homes. Company constituents also specified arrangements for payments to be used for caring for the sick and unfortunate. There were also rules for personal conduct.

Read this if you are interested in the details.

http://mises.org/journals/jls/3_1/3_1_2.pdf

There's a rumor that I shot someone.

What happens to me?

Do I get a trial?

What if I don't want to participate in the trial?

Do I get forced to?

If not, how did this work as a police force? If so, isn't this just illegitimate use of force?

[Publius]

The existence of choice on a broader scale.

In my utopian and perfect "free-market" the availability of choice, not just in terms of jobs, but especially in other forms of association, would allow each person to be affected far less by a job loss, without the inconvenience of large geographical voyages.

How?

In your utopian society people would get paid for doing nothing?

I guess if you're going for utopia, you may as well go all the way...




The same cannot be said for taxes, or other forms of public-private privileges.

In our society taxation is used to help the recently unemployed.

In a society with no taxation, what, exactly, prevents unemployed people from becoming destitute?

[Havet]

How?

In your utopian society people would get paid for doing nothing?

I guess if you're going for utopia, you may as well go all the way...

In the society I envision, if you are threatened with a job loss, you will be able to access the means of production and start an enterprise of your own, whether a sole proprietorship, a cooperative or even a commune.

Integral to the scheme is the establishment of a mutual-credit bank which would lend to producers at a minimal interest rate only high enough to cover the costs of administration. See Miller, David. 1987. "Mutualism." The Blackwell Encyclopedia of Political Thought. Blackwell Publishing. p. 11 for more info.


In our society taxation is used to help the recently unemployed.

This is debatable. In this current society taxation is also used to grant corporations special privilege (http://www.walmartsubsidywatch.org/), bail out huge financial businesses (http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008), etc

[Publius]

In the society I envision, if you are threatened with a job loss, you will be able to access the means of production and start an enterprise of your own, whether a sole proprietorship, a cooperative or even a commune.

How and why?

Why will you get hundreds of thousands of dollars of capital just for losing your job? How is that a sensible or a feasible idea?



Integral to the scheme is the establishment of a mutual-credit bank which would lend to producers at a minimal interest rate only high enough to cover the costs of administration. See Miller, David. 1987. "Mutualism." The Blackwell Encyclopedia of Political Thought. Blackwell Publishing. p. 11 for more info.

I'm sure a bank that gives huge loans to everybody who loses their job will probably have very low interest rates, because that's just how things probably would work.

Also, if more people started more businesses would fail, making these loans even worse bets. Enough loans already fail. In a society with more people starting businesses which enter direct competition with one another, an even greater proportion of loans will fail, resulting in an even higher interest rate.

None will work that bank if its wages are low, and if its wages are high that increases "administration" which increases the interest rate.

Furthermore there's an opportunity cost associated with loaning money to these small businesses. If the rate of return isn't higher than using the money to invest in established businesses or buy bonds or whatever, who in their right mind would do that?



This is debatable.

No it isn't.

Not all of it is used this way, but some certainly is.


In this current society taxation is also used to grant corporations special privilege (http://www.walmartsubsidywatch.org/), bail out huge financial businesses (http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008), etc

Yeah.

And that's often bad.

But that's beside the point.

[Skooma Addict]

Yes, but free market libertarians always want to tell this idealistic utopian story about how their society is going to function.

If you're repudiating that, then good.


You must be confusing free market libertarians with communists.


Economies of scale favor those already rich, startup costs favor those who are already in an industry, and many businesses require huge infrastructural outlays that require, for example, imminent domain.

Economies of scale are only beneficial up to a certain point. Startup costs would be lower in a free market. Even though most individuals may not be able to, different associations have the capital to enter capital intensive industries.


Imagine a city that has one cable company that has a monopoly on cable television in that city.

How, in a perfectly free market, without a government, would a competitor reasonably compete? They would have to lay an equivalent amount of infrastructure without any recourse to eminent domain or use of public resources like underground tunnels, since all those would privately owned anyway.

Therefore they would have install every inch of wire they wanted, or they'd have to pay rent to the current owners of the infrastucture, that is, the company they want to compete with.

Obviously this wouldn't work.

I am not following this at all. They would have to pay rent to their competitor?

They wouldn't have to lay an equivalent amount of infrastructure to compete.


I'm not going to let you dig under my lawn without paying. I may not let even if you'd pay me a king's ransom.

Then they won't use your lawn. Or more likely, this would be settled before your house has even been purchased.



What are you going to do when you want to put new infrastructure underground in a large city? Nowadays it's not a problem because stuff like this is controlled by the local government. There are commons in which you can install wire and pipes and such, and you get government help to install this stuff. It's not an issue if you have to tunnel under a road, you're allowed to.

Depends how deep underground you want to go. You can go under a persons property. You just have to be careful not to cause any damage to their property. Making a tunnel under a road would be no problem since the road owner does not own all the land under his road. You just cannot damage the road.


Yeah. Even worse are cases where things like intellectual property laws aren't respected.

Countries having (let alone private defense agencies having) different laws is a huge problem for trade. See the recent flap over lead paint in Chinese toys.

Or look at how China steals intellectual property.

These problems would seem to multiply in a world where instead of a few hundred states there were were thousands of defense agencies of varying levels of power and influence.

I agree with you that certain forms of IP are good and I would like to see some IP enforced (whether or not I would get my way, I don't know). But the fact that different countries have different laws isn't a problem. Businesses already have legal, research, and marketing teams which inform them on these issues. It really isn't a problem.

[Havet]

How and why?

I'm sure a bank that gives huge loans to everybody who loses their job will probably have very low interest rates, because that's just how things probably would work.

Also, if more people started more businesses would fail, making these loans even worse bets. Enough loans already fail. In a society with more people starting businesses which enter direct competition with one another, an even greater proportion of loans will fail, resulting in an even higher interest rate.

None will work that bank if its wages are low, and if its wages are high that increases "administration" which increases the interest rate.

Furthermore there's an opportunity cost associated with loaning money to these small businesses. If the rate of return isn't higher than using the money to invest in established businesses or buy bonds or whatever, who in their right mind would do that?

What sources/evidence/facts/data are you using to back all of your statements in this quote? I'd like to give it a read.

Additionally, you may or not find this interesting:

http://en.wikipedia.org/wiki/Mutual_credit

http://en.wikipedia.org/wiki/Ripple_monetary_system

http://en.wikipedia.org/wiki/Mutual_banking#Modern_mutuality


No it isn't.

Not all of it is used this way, but some certainly is.

Yeah.

And that's often bad.

But that's beside the point.

Yes, it's debatable, and no, it's not besides the point. You made the following statement:


In our society taxation is used to help the recently unemployed.

In which I proceeded to prove how that affirmation is false. Do you seriously want me to prove to you how the USA spent more in bailouts than in unemployment subsidies? Or can we move on?

[Publius]

Economies of scale are only beneficial up to a certain point. Startup costs would be lower in a free market. Even though most individuals may not be able to, different associations have the capital to enter capital intensive industries.

But do they have any real incentive to?

Google has the capital to enter the pharmaceutical industry or the health supplies industry (industries with criminally high profit margins) but they don't.

And it's not because they can't or don't have the money.



I am not following this at all. They would have to pay rent to their competitor?

They either have to lay their own infrastructure or use existing. In order to use existing, they'd have to pay rent.



They wouldn't have to lay an equivalent amount of infrastructure to compete.

Yes they would.

If they only covered half the town they'd have only half the potential profit. The existing could simply lower prices in those areas where there is direct competition, and take the extra from areas where still have a monopoly as pure profit.

They would, therefore, have a competitive advantage in any price war. They'd be bound to win.



Then they won't use your lawn. Or more likely, this would be settled before your house has even been purchased.

We'll tear down all the old cities and build new ones? Start up planned cities?



Depends how deep underground you want to go. You can go under a persons property. You just have to be careful not to cause any damage to their property.

Digging deeper costs more money, and it doesn't work linearly.

Everywhere we turn in this rudimentary example I just thought up we run into cost after cost after cost.



It Making a tunnel under a road would be no problem since the road owner does not own all the land under his road. You just cannot damage the road.

He owns some. He owns 3 centimeters. He owns 3 inches. Right?

Good luck defining just how much dirt someone owns in a society with no laws.

Me? I own all the way to the center of the earth.



I agree with you that certain forms of IP are good and I would like to see some IP enforced (whether or not I would get my way, I don't know). But the fact that different countries have different laws isn't a problem. Businesses already have legal, research, and marketing teams which inform them on these issues. It really isn't a problem.

Tell that to my father's company.

The plastic injection molding machines his company makes were reverse engineered and China now produces identical units at below what they can be made for in America.

You say this sort of thing isn't a problem. I know for a fact countless businesses have been destroyed or forced to relocate operations to China simply to compete.

This is a complete abdication of intellectual property rights which, in the modern economy, are becoming ever more important.

If your anarcho-capitalist society cannot secure intellectual property then it can't work, at least not in the long run.

Businesses have no incentive to invest in R&D if there's absolutely nothing preventing competitors from simply stealing their ideas.

[Publius]

What sources/evidence/facts/data are you using to back all of your statements in this quote?

A basic understanding of how economics and finance work.



I'd like to give it a read.

Additionally, you may or not find this interesting:

http://en.wikipedia.org/wiki/Mutual_credit
One major downside of mutual credit, as with any form of credit, is the possibility of exploiting the system by running up a negative balance and then leaving. This problem is often addressed by caps on negative balance which can be raised as balances are paid off, or by limiting the system to a small, close-knit community based on trust, where the community holds people accountable. For this reason, most mutual credit systems are small (under 2000 members).
So we'll just kill 7 billion people, minus 2000, and then start this thing up? Let's get to it.

This doesn't sound practical to me.

EDIT: Fun fact. I live near Utopia, Ohio and have driven through it often.



http://en.wikipedia.org/wiki/Ripple_monetary_systemThis doesn't even exist yet.



http://en.wikipedia.org/wiki/Mutual_banking#Modern_mutualityIs this even the same sense of 'mutual' as the previous articles?

Is what you mean by a 'mutualism' something currently practiced by TIAA-CREF and State Farm Insurance?



Yes, it's debatable, and no, it's not besides the point.No, it's not debatable, and yes it is the beside the point.



In which I proceeded to prove how that affirmation is false. Do you seriously want me to prove to you how the USA spent more in bailouts than in unemployment subsidies? Or can we move on?Did I say the US spent MORE on one thing than another?

No.

I said, as you quoted "In our society taxation is used to help the recently unemployed".

That taxation is used for other things doesn't make what I said false.

By the law of excluded middle either taxation is or is not used to help the recently unemployed.

And it is.

[Skooma Addict]

But do they have any real incentive to?

Google has the capital to enter the pharmaceutical industry or the health supplies industry (industries with criminally high profit margins) but they don't.

And it's not because they can't or don't have the money.Well we wouldn't expect Google to enter the industry. However, banks and investment firms can provide the necessary capital if the industry is profitable.



They either have to lay their own infrastructure or use existing. In order to use existing, they'd have to pay rent.Or they could pay a fixed cost. Or they could offer discounts/benefits to people who let them lay infrastructure on their property. None of this is a problem. The fact that it takes money to enter an industry is nothing new.


Yes they would.

If they only covered half the town they'd have only half the potential profit. The existing could simply lower prices in those areas where there is direct competition, and take the extra from areas where still have a monopoly as pure profit.

They would, therefore, have a competitive advantage in any price war. They'd be bound to win.You can have more than 1 firm cover each part of town. Two firms can have infrastructure on a single plot of land. Also, a competitor would not have to own half of the town to compete. That is not the way it works with any other industry. A competitor does not need to be of equal size.



We'll tear down all the old cities and build new ones? Start up planned cities?No. Cable may already be put in place by the time you purchase your house.


Digging deeper costs more money, and it doesn't work linearly.

Everywhere we turn in this rudimentary example I just thought up we run into cost after cost after cost.Yes it costs more money. In all industries you run into "cost after cost after cost."


He owns some. He owns 3 centimeters. He owns 3 inches. Right?

Good luck defining just how much dirt someone owns in a society with no laws.

Me? I own all the way to the center of the earth.This is what courts are for. Good luck getting a judge to rule that you own the center of the earth. If by some miracle he does rule in your favor, good luck getting anyone in the city to take that ruling seriously. And besides, digging 3 centimeters below a persons road would not be the best idea as you would be liable for damages.

Again, I don't see why this wouldn't be settled beforehand.

[IcarusAngel]

The "freedom" to compete with companies like GM and Ford is pretty meaningless. The power they would wield in a free-market would be even greater than their power now. Basically for every property owner that owns a vast amount of land there are hundreds of people who are denied access to that property, so that they cannot share their ideas. To remedy this the government tries to sponsor small business owners and tries to regulate and force car companies to implement what we know can work, and so on.

Communism to some degree is equally utopian, but at least it's utopian in the sense of handing resources to the public and assuming they will trade it with one another based on people's talents, ideas of interests, etc.

The left and the right are basically playing the prisoner's dilemma. The "right" wants to turn all resources over to the market (under the assumption that the government protects property), the left wants all resources turned over to the people.

Since both the left and the right do not want the other side to have power (complete free-markets, or complete freedom of the people to democratically make decisions) what we end up with is a government that protects markets but also tries to educate people and all them to put their ideas into the market by regulating big corporations.

I myself believe in blocking Libertarians and their efforts. If we allow markets to control everything we will destroy society or the earth by pollution. Should we pass the Comprehensive Test Ban Treaty as Obama is trying to do, or should we put nuclear weapons on the open market for terrorists to buy and kill us with? Free-markets would also destroy science as there would be no need to pay people to sit around and think about the universe.

So obviously the government must be proactive until capitalism is either brought under complete democratic control or eliminated and a new system is moved in.

[Havet]

A basic understanding of how economics and finance work.

So you don't have any sources then.


So we'll just kill 7 billion people, minus 2000, and then start this thing up? Let's get to it.

No need to kill anyone. The point being made is that it necessarily requires decentralization into smaller communities.


This doesn't even exist yet.

So fucking what? I'm just giving you a heads up. You should be thanking me :thumbup1:


Is what you mean by a 'mutualism' something currently practiced by TIAA-CREF and State Farm Insurance?

Sort of. You have to understand that these institutions are operating within a capitalist framework, therefore they are subject to/are granted privileges.



Did I say the US spent MORE on one thing than another?

No.

I said, as you quoted "In our society taxation is used to help the recently unemployed".

That taxation is used for other things doesn't make what I said false.

By the law of excluded middle either taxation is or is not used to help the recently unemployed.

And it is.

Listen, it was you who brought the obvious: that there are some services many people use due to taxation. That doesn't mean taxation is justified, or that its the most efficient way to deal with the unemployment problem.

[Skooma Addict]

The "freedom" to compete with companies like GM and Ford is pretty meaningless. The power they would wield in a free-market would be even greater than their power now. Basically for every property owner that owns a vast amount of land there are hundreds of people who are denied access to that property, so that they cannot share their ideas. To remedy this the government tries to sponsor small business owners and tries to regulate and force car companies to implement what we know can work, and so on.

You do know GM was bailed out by the government, right?



Communism to some degree is equally utopian, but at least it's utopian in the sense of handing resources to the public and assuming they will trade it with one another based on people's talents, ideas of interests, etc.

Not only is that utopian, but it would be a failure even if it happened the way you describe it. Trading based on "ideas of interests" wouldn't work. What would most likely happen in such a scenario is that some form of common law would take over.



The left and the right are basically playing the prisoner's dilemma. The "right" wants to turn all resources over to the market (under the assumption that the government protects property), the left wants all resources turned over to the people.

It will soon be reasonable to drop the left/right dichotomy, as the former is going to become as meaningless as the latter.

[Dean]

You do know GM was bailed out by the government, right?

Listen, it was you who brought the obvious: that there are some services many people use due to taxation. That doesn't mean taxation is justified, or that its the most efficient way to deal with the unemployment problem.

You both need to stop looking at the state apparatus as a black-white issue. Its not. Typically, governments try to appease all empowered elements in society - advanced capital and petty bourgeois.

Its not some high moral issue. This is why you two are hopelessly idealistic. You never make any attempts to understand extant systems of capital and state.

Hayenmill: this quote is a classic case in point. The issue isn't whether its "just" or not, just that the state acts in a certain function that Publius pointed out.

The fact that you both refuse to look at things except from the context of an obsessive, narrow morality really underlines your incredibly unrealistic expectations for competitive propertarianism.

[Skooma Addict]

You both need to stop looking at the state apparatus as a black-white issue. Its not. Typically, governments try to appease all empowered elements in society - advanced capital and petty bourgeois.

Its not some high moral issue. This is why you two are hopelessly idealistic. You never make any attempts to understand extant systems of capital and state.
I was responding to the claim that GM would be more powerful in the absence of the government. This is clearly incorrect as the government bailed it out.

The second portion of what you said does not make sense.

[Dean]

I was responding to the claim that GM would be more powerful in the absence of the government. This is clearly incorrect as the government bailed it out.
Right - not having to follow the massive number of laws governing vehicle safety would really hurt GM. And I bet it would really suck for them if they had total autonomy over their workplace, and could forcibly expel the union!

You're incredibly delusional.



The second portion of what you said does not make sense.
Maybe you don't agree with it. But it does make sense.

[Havet]

Hayenmill: this quote is a classic case in point. The issue isn't whether its "just" or not, just that the state acts in a certain function that Publius pointed out.


So what? I never denied that the State helps unemployed. But many communists seem to want to deny the role the State has in business. It would be naive and ignorant to pretend that more money is spent in unemployment benefits than in financial bailouts.

[Dean]

So what? I never denied that the State helps unemployed. But many communists seem to want to deny the role the State has in business. It would be naive and ignorant to pretend that more money is spent in unemployment benefits than in financial bailouts.

No, we don't. The state acts to perpetuate systems of economic control, and even where the state helps the unemployed, it is in the furtherance of this goal.

This is the primary criticism that communists have for the state. Where we differ on the character of the state is that we recognize that competitive systems need force to maintain their competition. Its a pretty basic function of capitalism, and any "free-market" propertarianism at that.

If in any given society, people are consistently at odds with each other over claims to property, you will have force.

[Publius]

So what? I never denied that the State helps unemployed.

Yes you did.

Of course it was ill-advised for you to have done so, as even you knew it was false when you said it, but you did say it.



But many communists seem to want to deny the role the State has in business. It would be naive and ignorant to pretend that more money is spent in unemployment benefits than in financial bailouts.

It would be naive to claim that, which, of course, is why I didn't claim it.

It would also be naive to claim that taxation isn't used for unemployment, but you did claim that.

Also, to a large extent financial bailouts play the role of pre-emptive unemployment. We could let GM fail and give money to the workers later or we could subsidize GM before it fails and divert some of that bailout money to the workers.

Not to say I defend the bailouts, merely that they're just a symptom of the greater problem and not the problem itself.

[Havet]

Yes you did.

Of course it was ill-advised for you to have done so, as even you knew it was false when you said it, but you did say it.

It would also be naive to claim that taxation isn't used for unemployment, but you did claim that.

Where have I said that? Please don't spread lies.


Also, to a large extent financial bailouts play the role of pre-emptive unemployment. We could let GM fail and give money to the workers later or we could subsidize GM before it fails and divert some of that bailout money to the workers.

Not to say I defend the bailouts, merely that they're just a symptom of the greater problem and not the problem itself.

I agree, bailouts are just a symptom, not the problem.

[Publius]

Where have I said that? Please don't spread lies.

Don't accuse me of lying when you're wrong.

I said:


In our society taxation is used to help the recently unemployed.

Quoting this, you said:


This is debatable. In this current society taxation is also used to grant corporations special privilege (http://www.anonym.to/?http://www.walmartsubsidywatch.org/), bail out huge financial businesses (http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008), etc

Note that what I said isn't actually "debateable". Continuing.

In response to your quote I said both:


No it isn't.

Not all of it is used this way, but some certainly is.

and


Yeah.

And that's often bad.

But that's beside the point.

In response to this you quote me again, with special emphasis:



In our society taxation is used to help the recently unemployed.

and say this in response:



In which I proceeded to prove how that affirmation is false. Do you seriously want me to prove to you how the USA spent more in bailouts than in unemployment subsidies? Or can we move on?

Since "the affirmation" in question is that taxation is used to help the recently unemployed, an unassailable truth, you did not prove that it was false.

If the statement "taxation is used to help the recently unemployed" is false, then, by the law of excluded middle, its negation "taxation is NOT used to help the recently unemployed is true".

Ergo you said that taxation is not used to help the unemployed.

You said it was false that taxation is used for unemployment.

Then you brought some irrelevant nonsense about how more tax money is used for other purposes, but recall that I never once said or implied anything contrary to this.

So in addition to being completely wrong you made me waste my time demonstrating it.

[Havet]

Don't accuse me of lying when you're wrong.

I said:



Quoting this, you said:



Note that what I said isn't actually "debateable". Continuing.

In response to your quote I said both:



and



In response to this you quote me again, with special emphasis:



and say this in response:



Since "the affirmation" in question is that taxation is used to help the recently unemployed, an unassailable truth, you did not prove that it was false.

If the statement "taxation is used to help the recently unemployed" is false, then, by the law of excluded middle, its negation "taxation is NOT used to help the recently unemployed is true".

Ergo you said that taxation is not used to help the unemployed.

You said it was false that taxation is used for unemployment.

Then you brought some irrelevant nonsense about how more tax money is used for other purposes, but recall that I never once said or implied anything contrary to this.

So in addition to being completely wrong you made me waste my time demonstrating it.

Ok, so I made a misinterpretation of what you said. Can we move on now, for fucks sake?