Heard Of The Cincinnati Time Store?

[Havet]

The Cincinnati Time Store (http://en.wikipedia.org/wiki/Cincinnati_Time_Store) was a successful retail store that was created by American individualist anarchist Josiah Warren to test his theories that were based on his strict interpretation of the labor theory of value. The experimental store operated from May 18, 1827 until May 1830. It is considered to be the first use of notes for labor and as such, the first experiment in mutualism.

Warren embraced the labor theory of value, which says that the value of a commodity is the amount of labor that goes into producing or acquiring it. From this he concluded that it was therefore unethical to charge more labor for a product than the labor required to produce it. Warren summed up this policy in the phrase "Cost the limit of price," with "cost" referring the amount of labor one exerted in producing a good. Believing the labor is the foundational cost of things, he held that equal amounts of labor should, naturally, receive equal material compensation. He set out to examine if his theories could be put to practice by establishing his "labor for labor store." If his experiment proved to be successful, his plan was to establish various colonies whose participants all agreed to use "cost the limit of price" in all economic transactions, hoping that all of society would eventually adopt the tenet in all economic affairs.

In the store, customers could purchase goods with "labor notes" which represented an agreement to perform labor. The items in the store were initially marked up 7% to account for the labor required to bring them to market with the price increasing the longer the time that a customer spent with the shopkeeper, as measured by a timer dial; later this markup was reduced to 4%. Corn was used as a standard, with 12 pounds of corn being exchangeable with one hour of labor. The result of the system was that no one was able to profit from the labor of another --every individual ostensibly received the "full produce" of his labor. Adjustments were made for the difficulty and disagreeableness of the work performed, so that time was not the only factor taken into consideration. Warren also set up boards on the wall where individuals could post what kind of services they were seeking or had to sell so that others could respond, and trade among each other using labor notes.

After a rough initial period, the store proved to be very successful. Warren's goods were much cheaper than competitors', though he maintained that he was not trying to put other stores out of business. Another store in the neighborhood converted to Warren's methods. The fact that prices for goods rose the more time a customer spent with Warren resulted in very efficient transactions. Warren said that he was doing more business in one hour than normal businesses do in one day, leading him to close shop part of the day to rest. Though the store was successful, the problem of equal labor times for different difficulties of work was a concern for Warren. He was never able to reconcile the objectivity of his "labor for labor" prescription with the subjectivity employed in determining how much time used for one type labor entailed the same amount of work exerted during a different amount of time performing another type of labor. He settled to simply credit it with being a matter of individual judgement. Warren closed the store in May 1830 in order to depart to set up colonies based upon the labor-cost principle (the most successful of these being "Utopia"), convinced that the store was a successful experiment in "Cost the limit of price."

What would resident communists say to this kind of experiment, and its results? Do notice that he only left in order to multiply his success on other colonies.

Here's an actual Labor Note, btw:

http://upload.wikimedia.org/wikipedia/commons/c/c7/LaborNote.JPG

References:

Men Against the State by James J. Martin (1953)
Equitable Commerce by Josiah Warren (1846)
Plan of the Cincinnati Time Store (http://www.crispinsartwell.com/warren.htm)
Equitable Commerce(pdf) (http://tmh.floonet.net/pdf/jwarren.pdf)

[Dean]

Interesting. Of course, in a competitive market, there isn't any real compulsion to be "honest." You can supply a ton of goods for cheaper rates and make no (or little) profit, or you can do 1/3rd as many transactions with much better markup, and still be able to provide for leasing contracts, employee wages and more with a handsome profit.

I don't see how this is an effective model in a competitive market.

[Havet]

I don't see how this is an effective model in a competitive market.

What are your reasons behind that opinion?

[Dean]

What are your reasons behind that opinion?

Primarily that locations with lucrative consumer market shares (which is what this would be if it became popular) would require grater costs - be that for leasing, security or employee compensation. An organization which makes little to no profit (which this model is a distinct example of, because each credit or product put through the system would return less than a normal capitalist market would) will not have sufficient capital to maintain these fees.

Why would someone work harder (as evidenced in your article) for the same or less profit? What incentive would there ever be, in any market system, to sell commodities for less than the customer is willing to pay, the standard of today's competitive markets?

Why would somebody pass up a business model which provides for greater profit, less labor?

[Skooma Addict]

What incentive would there ever be, in any market system, to sell commodities for less than the customer is willing to pay

This happens all the time. In fact, this is what happens in the vast majority of transactions.

[Havet]

Primarily that locations with lucrative consumer market shares (which is what this would be if it became popular) would require grater costs - be that for leasing, security or employee compensation.

An organization which makes little to no profit (which this model is a distinct example of, because each credit or product put through the system would return less than a normal capitalist market would) will not have sufficient capital to maintain these fees.

Would you care to go into a bit more detail? Why exactly will more lucrative locations require greater costs? And how do you know that those hypothetical higher costs are higher enough to cripple the whole institution?

There was nothing mentioned in the sources/references about these costs, so why would you be assuming them?

For example, it would be in every worker's interest to provide security of this shop since it is the main point where all workers exchange promisses of labor. Since its their "job", they would likely go over the shop several times a day and see other worker's "ads" so that next time the shop would be open they would be the first one to exchange with them.

Not to mention employee compensation (what do you even mean by this?). Wouldn't employees, by the very fact they are going to that shop, experience the greatest compensation for their labor they have ever done? They are receiving the full product of their labor, after all.


Why would someone work harder (as evidenced in your article) for the same or less profit? What incentive would there ever be, in any market system, to sell commodities for less than the customer is willing to pay, the standard of today's competitive markets?

Wait, what? In the article, the owner of the store is not working harder for the same or less profit. He is working less overall:


...Warren said that he was doing more business in one hour than normal businesses do in one day, leading him to close shop part of the day to rest.

Think about it. In 1 hour he does more business than 1 day. Yes, its exhausting, but its a lot more efficient. After only a couple of hours he has done all the business for a day, and can close the shop to rest.

Unless I completely misunderstood the article, in which case I apologize in advance.


Why would somebody pass up a business model which provides for greater profit, less labor?

I think the Cincinnati Time Store is sort of the opposite: less profit (for the owner), more products of labor for the same amount of labor, which means less labor overall (at least compared to what we see today).

[Dean]

Would you care to go into a bit more detail? Why exactly will more lucrative locations require greater costs? And how do you know that those hypothetical higher costs are higher enough to cripple the whole institution?

This is precisely why a discussion with you is impossible. I don't know if you've been living completely in a bubble for a long time or you're intentionally being obtuse, but its hard to discuss things with you when you contradict me on well-known characteristic of a competitive market.

The cost for leasing, employment &c is different in each location. More lucrative locations are more expensive, because the storefront represnts a certain amount of profitability.

If I purchase 100 ink cartridges 1t 5$ ea. and only sell them based on my labor input, I will be selling them at around 7$. I'll do 5 times as many orders to get what a typical merchant would do, charge 10$.

In fact, in the industry I work in, a lot of small businesses have gone out of business after taking a lot of orders from us - because their low-profit model was ineffective at acquiring profits.

It doesn't benefit any competitor to charge less than what the consumer is willing to pay. This has got to be one of your most ridiculous suggestions to date.

[Skooma Addict]

It doesn't benefit any competitor to charge less than what the consumer is willing to pay. This has got to be one of your most ridiculous suggestions to date.

Again, this happens all the time.

[Dean]

Again, this happens all the time.

It only benefits them insofar they undercut competitors. There is no incentive to cease exploitation as such, and this is why these organizations always raise prices as soon as they have acquired enough of the market share. It would be against their interests not to.

Also, this undercutting has nothing to do with the exploitation (or lack thereof) of labor. It may be dramatically higher (though still cheaper) or dramatically lower than the "fair compensation for labor" as outlined in the Wiki article in the OP.

[Skooma Addict]

It only benefits them insofar they undercut competitors. There is no incentive to cease exploitation as such, and this is why these organizations always raise prices as soon as they have acquired enough of the market share. It would be against their interests not to.

Also, this undercutting has nothing to do with the exploitation (or lack thereof) of labor. It may be dramatically higher (though still cheaper) or dramatically lower than the "fair compensation for labor" as outlined in the Wiki article in the OP.

Even if they weren't trying to undercut competitors, they still wouldn't be able to practice perfect price discrimination. Firms do not know each individual customers willingness to pay.

[Havet]

It doesn't benefit any competitor to charge less than what the consumer is willing to pay. This has got to be one of your most ridiculous suggestions to date.

Then how do you explain the success of the Cincinnati Time Store?

How do you explain predatory pricing (http://en.wikipedia.org/wiki/Predatory_pricing), which is something most communists believe that happens everytime everywhere and in every manner?

How do you explain that, for example, in Australia, competition in banking has driven the prices down (http://www.bankers.asn.au/Competition-in-Banking-has-Reduced-Business-Costs---Merchants-Paying-Less-in-Merchant-Service-Fees-on-Credit-Cards/default.aspx)?

How do you even explain prices fall in general?

[Dean]

Then how do you explain the success of the Cincinnati Time Store?
Apparently it was so successful that no other capitalist organization has found any value in perpetuating the system since.


How do you explain predatory pricing (http://en.wikipedia.org/wiki/Predatory_pricing), which is something most communists believe that happens everytime everywhere and in every manner?
This is how I explain it, from above:

It only benefits them insofar they undercut competitors. There is no incentive to cease exploitation as such, and this is why these organizations always raise prices as soon as they have acquired enough of the market share. It would be against their interests not to.



How do you explain that, for example, in Australia, competition in banking has driven the prices down (http://www.bankers.asn.au/Competition-in-Banking-has-Reduced-Business-Costs---Merchants-Paying-Less-in-Merchant-Service-Fees-on-Credit-Cards/default.aspx)?

How do you even explain prices fall in general?

The same way I did above. Capitalist firms make every atempt to corner the market and then exploit their market as much as possible. This is why the credit union model is weak and the corporate banking firm has grown so far beyond that kind of structure.

If what you were saying was a reasonable expectation in a market economy, we would see the market struggling against The Mystical State of coercion in the furtherance of localized, less influential system.

Contrarily, we see the state acting with these structures to help maintain their hegemony. The market produces profit-driven enterprises, of which predatory economic practices, and the accumulation of capital, are staples.

[Havet]

Apparently it was so successful that no other capitalist organization has found any value in perpetuating the system since.

You expect marginal politics/economics to suddenly become mainstream?


This is how I explain it, from above:

It only benefits them insofar they undercut competitors. There is no incentive to cease exploitation as such, and this is why these organizations always raise prices as soon as they have acquired enough of the market share. It would be against their interests not to.

The same way I did above. Capitalist firms make every atempt to corner the market and then exploit their market as much as possible. This is why the credit union model is weak and the corporate banking firm has grown so far beyond that kind of structure.

Of course there is no incentive to cease exploitation, because the barrier to entry in most industries is artificially high due to a number of state-induced factors like regulations or intellectual property. THis is why businesses can safely keep a market share once they undercut competitors, because it becomes increasingly costly for other potential competitors to enter the market.


If what you were saying was a reasonable expectation in a market economy, we would see the market struggling against The Mystical State of coercion in the furtherance of localized, less influential system.

Why should capitalists struggle when there are ways to work within the mixed economy to increase their profits, even though at the expense of everyone else?


Contrarily, we see the state acting with these structures to help maintain their hegemony. The market produces profit-driven enterprises, of which predatory economic practices, and the accumulation of capital, are staples.

Predatory economic practices are only predatory because competition is artificially reduced, like you said, through the state acting to maintain their own structures. Consequently, accumulation of capital is, not only possible, but will occur faster and at a greater rate.