I’d like a moneyless system, but see a couple flaws that need fixing

[ladybug]

 

Hello comrades!

I recently read the article by Robin Cox called The “Economic Calculation” controversy: unravelling of a myth (http://www.cvoice.org/cv3cox.htm). Overall I found the article convincing, and it laid to rest various scepticisms I’d had about a moneyless system, but there were still a couple things that remained problematic for me. (They are explained below.)

I would prefer to live in a moneyless system, but as long as these problems remain unsolved I don’t think such a system is viable.  That does NOT mean I think we need markets or wages or even a single unit for accounting. We could have non-circulating credits for labor time and also for various environmental impacts (so we each have a quota of CO2 credts, fresh water credits, etc.). These credits can be distributed according to need. This would place limits on our consumption and thus require that we prioritize what to consume, which would then automatically signal information about what our consumption/production priorities are, without needing to have various meetings to communicate our priorities.

In any case, like I said I would prefer a moneyless system so I’m posting this not to try to shoot down your ideas but because I’m hoping you know how to solve this problem.

 

The Problems Explained…

 

Critics, and also supportive sceptics, of a moneyless system have said that in such a system we won’t be able to decide how to allocate resources necessary for production (raw materials, such as steel, and intermediate goods, such as microchips).

For example, if producing a month’s supply of thing X for our community takes 200 units of chlorine, and producing a month’s supply of thing Y requires 100 units of chlorine, but we only have 200 units of chlorine per month available (due to our democratic decision to limit harsh chemicals), how will we decide what to produce? Should we produce half a month’s supply of X so we can produce an entire month’s supply of Y? Should we not produce any Y so we can produce the entire month’s supply of X? Or some other combination?

The solution usually given is that we will make these decisions through meetings where we will discuss, debate, and decide our consumption priorities, using something roughly like Maslow’s hierarchy of needs. Basic survival needs like food, shelter, and medicine will take top of the list priority. Trivial luxuries will be at the bottom of the list.

I agree with this solution in principal but I don’t think it solves the problem adequately – for a few reasons:

1. Cases involving goods of equal priority. Continuing with the example where the available supply of chlorine falls short of the demand for it, If thing X is of very high priority and thing Y is of very low priority, then we can produce the full amount of thing X and reduce the production of thing Y. But what if both are of the same priority? What if they both rank at level 15 (out of a possible 30 priority levels)? We will need to have a meeting to decide which is of the two is of slightly higher priority. If we decide X is of higher priority we can’t just stick X in level 14 because we already decided it was less important than goods in that level. And we can’t stick Y in level 16 for the opposite reason. So we have to create a new priority level, which means we now have 31 priority levels. But eventually the same problem will come up again with another two goods and we will need to have another meeting and will then have 32 priority levels. This process can go on indefinitely, every time two goods of equal priority come into conflict.

2. Even when goods are not of equal priority we still don’t know to what extent to reduce production of each good. Knowing that X is of a higher priority than Y tells us that we rather reduce production of Y than of X. But it doesn’t tell us to what extent we are willing to sacrifice Y to get X. Are we willing to have no Y whatsoever so we can have a full supply of X? Or would we rather have a half supply of Y which still leaves us with a three-quarters supply of X? There are many other possible options. Which to choose? You might say that these decisions would be made at meetings, but with all the fluctuations of supply and demand that might occur from day to day for all the myriad of goods and their inputs, this would require more meetings than most would be willing to tolerate.

3. A good in a low priority category should not necessarily, in each case, be sacrificed to produce a good in a high priority category. For example, the need for food is obviously in a tie with various other needs for being of the utmost priority. But not all food deserves to be on such a high level – i.e. potato chips. And even a food staple, such as bread, is not in itself absolutely essential, as long as alternatives are available. If there is no bread I can have potatoes, corn tortillas, rice. Now let’s imagine a scenario where we have a demand for both bread and beer, but not enough wheat to fully meet the demand for both. In fact, to totally meet the demand for bread we will have to fall short of our beer demand by 70%. If we were using a priority ranking system, staple food is in the highest priority category and beer is probably at least halfway down, so indeed we would produce only 30% of our desired amount of beer but plenty of bread. But wouldn’t it make more sense to reduce the production of bread somewhat so that more beer could be made? After all, there are other food options besides bread. (There are also other alcohol options besides beer, so perhaps this wasn’t the best example, but if you use your imagination you can think of other examples where it doesn’t make sense to drastically reduce a low priority good to meet production for a “high priority” good. I’ll give another example: not enough rubber to meet the demand for both raincoats and dildos. Protection from the rain is more important than a masturbation tool, but there is also the option of the umbrella which needs no rubber. And maybe half the people who want raincoats already have one that works fine, but it looks shabby so they want a new one. In that case the need is not for protection from the rain (a high priority) but fashion (a priority which is not necessarily of more or even equal importance to masturbation). Again, you might say common sense will solve this issue, but whose common sense? For the decision to be democratic, we will require meetings for our collective common sense to be put to use. But with such issues coming up frequently, it would require frequent meetings.

4. Different people have different desires/priorities. For most people thing Y might be at a level 20 priority (out of, say, 30 priority levels) and thing X at a level 5. But for some people it might be the exact reverse. Such people would not be happy with the decision to produce lots of X and very little Y. Of course as in any democratic decision not everyone will be happy with the outcome. But we should at least hope that what little of Y is produced goes to those who most desire it. In a free/open access system, how can this be assured? Unless we think of some way to make it otherwise, what will happen is that people will get things on a first come first serve basis. If I do not have to limit my consumption, that means I don’t need to prioritize what I consume, either, and therefore I might consume Y even though it’s at a level 20 priority for me. My neighbour for who Y is at a level 5 priority happens to get to the distribution outlet later than me and by then there is no more Y left. I suppose we could reserve scarce goods for those who most wanted them, but how would this be determined?   

Now the purpose of bringing this up isn’t to conclude that a moneyless system of free/open access is impossible. It’s to ask if you can think of any solution(s). I imagine the solution may be an extension of the solution which is usually given, mentioned above, that we will know how to allocate scarce resources because we will set our consumption priorities through a democratic process. Although such a simple answer is insufficient, I believe it can be the basis or nucleus of an adequate answer. Then again, maybe the solution is to be found in something else entirely (but something that, of course, does not resort to either authority or wages).

Thank you for your time and your help!

[Anonymous]

ladybug wrote:

Hello comrades!

 Hello ladybug and thanks for your contribution.  Inevitably someone will reply to your comments in detail.  In the meantime, have you explored our site?By clicking ‘publications’ on the navigation toolbar at the top of the page, then on ‘education’ from the drop down menu, you (and others) can access a wealth of information.  Try this for starters.http://www.worldsocialism.org/spgb/education/depth-articles/socialism/why-we-dont-need-money

[Young Master Smeet]

Morning,these are good questions, and I’m afraid the short answer to them is, we’d just have to debate and decide.Longer answer: see, even Von Mises et al. didn’t dispute that we could as a community simply decide what it was we wanted to consume, the basis of the argument of economic calculation rests not on end goods, but intermediates.  To take your bread v. beer example, both are using wheat, and one formula, say, for beer uses 5 parts wheat whilst another uses 3 parts wheat (but uses, say, a synthetic chemical).Our opponents say we wouldn’t be able to choose between the different formulas of beer, and so we couldn’t rationally choose how to allocate our wheat (after all, opting for the synthetic chemical may commit a lot of energy and resources, far outweighing the putative savings of wheat).So, what we need to add is the idea that because information flows freely through the system, we would know the true state of supply and demand (i.e. how much wheat there is, how much demand there is for wheat, and the amount of synthetic substitute available).  After all, that is all the market is meant to do already.  Except where the market measures effective demand marked in money (which is subject to manipulation) we’d have real demand expressed in real units upon which to make our decisions.I hope that answers your question.

[DJP]

Some thoughts in no particular order:Firsty the money / market system doesn’t effectivly solve these problems since market decisions are made according to ‘effective demand’ i.e who has money, not human need. But we all know this…The ‘community’ is the whole world so if needed scarce resources can be bought in from elsewhere.When the determining factor is not what takes the less labour-time but what fulfills needs to the highest degree, I think resources will rapidly be pushed into finding alternatives to materials that are scarce.Supply and demand can be tracked directly as goods flow through distribution centres. It is unnecessary to have a centralised plan or meetings to decide what people want.I’m not sure if it is really possible to rank needs in such a way as you are describing, since ‘use’ is something entirely subjective and it is impossible for individuals (and a society at large) to come up with a priotised list of wants, since these are constanly changing. I think you’ve bought this idea accross due to the influence of marginalist economics. (I’ll probably have to say more to explain this better)If there is no need or incentive for individuals to hoard I don’t think overconsumption would be a problem. An accumulation of stuff you don’t need is a burden.Here’s an article on labour vouchers. http://www.worldsocialism.org/spgb/education/depth-articles/history/labour-vouchersThere’s a lot more detail that could be gone into..

[DJP]

ladybug wrote:

Hello comrades! :)I recently read the article by Robin Cox called The “Economic Calculation” controversy: unravelling of a myth (http://www.cvoice.org/cv3cox.htm). Overall I found the article convincing, and it laid to rest various scepticisms I’d had about a moneyless system, but there were still a couple things that remained problematic for me. (They are explained below.)

I recently re-discovered this video thanks to another thread on here. Perhaps this answers your questions, particularly the bit from 24mins onwards. Would like to know what you think?

[robbo203]

Hi Ladybug As others have noted, your post above is an excellent contribution . It is a model of the kind of constructive criticism that is needed to clarify and develop our ideas. I will be as brief as I can in response Your raise two main points. The first concerns the form of rationing that may be needed in a post capitalist society. I would certainly  entertain the idea that some of rationing may be required  to operate alongside  free access within a dual distribution  model, so to speak.  According to the structural logic of the production system I outlined in the article to which you refer, those goods likely to be subject to rationing would tend be low priority goods at the “luxury end” of the spectrum of goods while those goods likely to be made available on a free distribution  basis would tend, by contrast,  to be essential goods satisfying “basic human needs”.  This follows from the way in which the hierarchy of production goals I referred to would tend to skew the allocation of resources in favour of the latter at the expense of the former  where we have to deal with bottlenecks in  the supply of  such resources. As to the form of rationing I have to say that I am not  particularly enamoured  of the labour vouchers proposal or even a system of credits based on environmental impacts which I think would be administratively unwieldy and would be beset by all sorts of other difficulties – theoretical and practical. I favour instead what I call a compensation model of rationing based on the quality of housing stock.There are two main reasons for preferring this system 1)  Our living accommodation constitutes a hugely important component  of  our quality of life.  Realistically, though,   the legacy of material inequalities in housing we will inherit from capitalism will persist for many years after we have got rid capitalism. Such inequalities are likely to generate unacceptable social tensions and this will need to be acknowledged and addressed. People having to put up with low quality housing will need in some sense to be  “compensated” for this and this accords with a sense of natural justice and basic fairness. 2) We will need, in any case,  to assess the housing stock in our communities with a view to eventually  upgrading and improving  this stock in many cases. This assessment process can be easily tied in with a system of rationing which assigns different levels of priority access to individuals according to the assessed quality of the houses they occupy in terms of a number of criteria e.g. size and overall condition, facilities, proximity to amenities etc.  A prototype for this is to be found in the way housing stock is assessed today by placing individual houses in one of  a number  of bands according to the market value of the property in question for the purposes of  raising local taxes. Naturally the question of marketable value of properties will not arise in a socialist society but the basic approach  could still be used Obviously what I have presented here is just the bare bones of the idea; the meaty details need a lot more thought.  Nevertheless I do think it is an eminently do-able and more administratively straightforward system than , say, Marx’s cumbersome labour voucher scheme. The second point you raise concerns the practicality of some kind of hierarchy of production goals.  You make a number of very telling observations which point to the need for further research and investigation in this area.  I do not wish in any sense to brush under the carpet the criticisms that you make which are perfectly reasonable  and valid  but my first inclination is to urge you to look at what was being proposed in that article in  a more holistic all-rounded fashion.  The four basic components of the production system proposed are1) calculation in kind2) a self regulating system of stock control3) the law of the minimum4) a hierarchy of production goals Your criticisms mainly concern 4).  The point I’m making here and this is a point that has been lost sight of in many criticisms of that article, is that these different components of the system are organically interconnected and do  not function in isolation from each other.  Its is through their  mutual interaction that  a framework of structural constraints comes into being  which will guide production decisions in ways that ensure a rational outcome, in my view.  So its important not to lose sight of the wood for the treesLet  us remind ourselves what purpose a hierarchy of production goals is intended to serve.  It is as I said above, to differentiate between end uses by organising them into some kind of ordinal ranking arrangement in  the event that a particular input  common to all these end uses happens to be in short supply. In that event it is perfectly rational to allocate such an input to high priority ends uses as opposed to low priority end uses Your criticisms basically focus on the nitty gritty details of this allocation process which, as I say, is quite a reasonable thing to do.  However, there are several points that need to be born in mind1)  In this model of a socialist production system the basic orientation of every enterprise would be to produce slightly more than what is demanded – or, in other words, to maintain a buffer stock as part and parcel of a self regulating system of stock control.  Marx,  I believe, said something along the same lines about buffer stocks  though I cannot locate the relevant quote.  The point of so doing would be to accommodate the vicissitudes of fluctuating demand  including of course the possibility of unforeseen emergencies . This is relevant to the question of a  hierarchy of production goals insofar as the latter comes into play only in the event of supply bottlenecks  – where an input is in short supply –  and provides decision makers on the ground, as it were,  with a rough rule of thumb as to how to allocate the input  or resource in question 2) The fact that a resource  bottleneck might occur does not in any case necessarily prevent a low priority good from being produced in the quantities demanded insofar as technological substitution is a possibility.- that is, using some alternative and more abundant input instead . This is the point that I am trying to make –  that this model of a socialist production system is eminently flexible 3) The idea of  a hierarchy of production goals is not a detailed blueprint  that assigns every conceivable  kind of good produced to a specific  place within a strict ordinal ranking.  That would be a preposterous idea yet some of the people who cricised my article implied that that was precisely what I was saying.  Nothing could be further than the truth.  In point of fact what I was simply trying to impress on people was the common sense of some kind of hierarchy of production goals and of the notion  of having to chose between end uses when the occasion demanded this.  I would even go so far as to say that we might  not even need to consciously attend to this and that it would be implicit in a system of socialist values that we would prirotise housing over, say,  luxury yachts. Whats there to argue about here? It is only perhaps  in the case of specific projects democratically decided upon by the community – eg the construction of  a new community school or doctors surgery – that we might be talking of the conscious commandeering of resources for a particular end use at the expense of other end uses.  For the most part I suspect all the detailed decisionmaking about how much of a particular scarce resource  should be devoted to this particular end use as opposed to that can left to individuals on the ground to decide upon, using their own intuition and common sense. I suggest, further, that a system of convergent  values is likely to produce a pattern of outcomes in respect of these  micro level decisions that is broadly consistent and regular. Of course there will be times when X will allocate a particular resource amongst various end uses  that does not fully accord with how Y might view things that but then we would expect that.  No system of production is ever going to be perfect and in any case such decisions will be subject to the scrutiny and influence of others so there will be a tendency  towards “self correction” : If a particular end use that people particularly desire is being starved of inputs then the resultant clamour for changes in the way these inputs  are allocated will mount and exert social pressure on the enterprise in question (which enterprise certainly would have nothing to gain by resisting social pressure in a socialist society). That  is quite apart from the fact that we could 1) increase the supply of the input in question 2) opt for technological substitution But it is really  what happens at the macro-level and in the long run  that ultimately counts in the end – doesnt it? – and I would contend that an integrated system  of production such as is being proposed here  provides for a comprehensive structure of constraints that will guide production in a way that is sufficiently pervasive and potent as to ensure an outcome that broadly conforms to what people  desire and expect.. If people are broadly happy with the system they are not going to jeapordise becuase of a few niggling imperfections But like I said, I’m not trying to brush your criticisms under a carpet of bland generalisations or smooth talk my way out of a tricky theoretical situation.  I don’t have all the answers to you probing questions though,  in my defence, I don’t possess a crystal ball either to enable me to adequately answer them.  All I can do is constantly try  to find ways in which to refine and strengthen the model that has been presented. So if you – or anyone else – have any observations on how this might be done this would be very welcome indeed! Cheers Robin

[robbo203]

DJP wrote:

I’m not sure if it is really possible to rank needs in such a way as you are describing, since ‘use’ is something entirely subjective and it is impossible for individuals (and a society at large) to come up with a priotised list of wants, since these are constantly changing. I think you’ve bought this idea across due to the influence of marginalist economics. (I’ll probably have to say more to explain this better)

 Hi Darren Just noticed your comment above.   I don’t want to put words in your mouth but are you suggesting that a socialist society would be unable to determine whether a luxury yacht, say, was more important than an ambulance?   Agreed, these determinations are subjective but then that is the whole point, isn’t it – its a question of values and values cannot really be measured.  We can say that one thing is more “valuable” than another but we cannot definitively say by how much.  Even von Mises conceded that some things cannot be subject to calculation Talking of which, I think the Austrian School of  economists certainly had a valid point in their debates with the more conventional neoclassical economists on the question of measuring utility.  They opposed the tendency to mathematise economics and held that utility is essentially ordinal rather than cardinal.  Paradoxically perhaps it is the Austrians who are most closely identified with the so called economic calculation argument.  Between their preference for ordinal ranking in respect of utlity and their insistence on market prices as a means of precise economic calculation, there is a huge credibility gap which they were never able to span In my view some kind of hierarchy of production goals is indispensable to socialism. We may argue about the way in which this might be implemented (and Ladybug has made a number of penetrating observations in that regard) but what we cannot reasonably argue against the need for such a hierarchy in the first place.  How for example are you going to decide if two particular end uses, X and Y,  both require 10 units each of input M  (of which there is only 15 units in total)  whether X is going to get 10 and Y, 5,  or whether it should be the other way round?  Or do you split them evenly  between X and Y  (which you may not be able to do if units of M are non-divisible) so that each gets 7 1/2?   But why would that be rational as opposed to some other allocation pattern? This is what I was getting at in an earlier post about so called “marginal rates of substitution”.  Its not that I’ve gone all soft in the head and started to embrace marginalist bourgeois economic mumbo jumbo but these are the sort of difficult questions which we socialists really need to start getting our heads around and coming up with some serious answers in my opinion.   Thinking seriously about how a socialist system of production would operate is not utopian speculation; it is actually vital to the whole business of presenting a credible and convincing alternative to capitalismRobin

[DJP]

robbo203 wrote:

Just noticed your comment above.   I don’t want to put words in your mouth but are you suggesting that a socialist society would be unable to determine whether a luxury yacht, say, was more important than an ambulance?   Agreed, these determinations are subjective but then that is the whole point, isn’t it – its a question of values and values cannot really be measured.  We can say that one thing is more “valuable” than another but we cannot definitively say by how much.  Even von Mises conceded that some things cannot be subject to calculation

It depends on how many yachts or ambulances society already has or needs. A socialised mode of production requires and makes possible a free flow of information, this is what will guide production. Producers and consumers (who are of course the same people) will vote with their feet as to what they want to produce and consume, that’s how society will determine what is important.I don’t think we have much to gain by trying to incorporate spurious models from capitalist economics into projections of how a future society may work.Sorry if this sounds brief but I don’t have the time to write long forum posts at the minute.

[ladybug]

 Hello again! Thanks to everyone for your contribution to this discussion AND for being so friendly.  Some weeks ago I had emailed the SPGB with this exact question, almost word for word, and the particular member who replied was sorta mean to me, as if I was either stupid or insincere in my socialism for having any doubts about a moneyless system. (I don’t take this as a reflection on the SPGB as a whole… of the comrades I know personally, some can also be kind of mean when dealing with disagreements.) I was a little worried about the responses I’d get so it felt great to be treated so comradely here! Special thank you to Robin who clearly put a lot of time into his response. I must admit that my belief that the issues I highlighted would be a problem has not changed… but I will continue to think it over, and maybe reread this thread in a week or two. There are various things which I am now convinced of (and feel strongly about) which I used to reject. Sometimes it takes the mind a while to adapt to new ideas. And sometimes, even after much time, the mind decides the new ideas aren’t worth adapting to. Time will tell what will be the case here… meanwhile I’m keeping an open mind. In any case, I do feel a LITTLE bit less worried about these problems… I still think they will be problems but perhaps not as giant as I’ve been suspecting. (Although whether the problems would be tiny or disastrous, I don’t think we can predict.) Gnome, yes I have read several articles by the SPGB. They have an excellent library and have contributed positively to my political knowledge. DJP, thanks for the video link. I don’t have time to watch it right now but I have put it on my “to watch” list.  

[Anonymous]

ladybug wrote:

Hello again! Thanks to everyone for your contribution to this discussion AND for being so friendly.  Some weeks ago I had emailed the SPGB with this exact question, almost word for word, and the particular member who replied was sorta mean to me, as if I was either stupid or insincere in my socialism for having any doubts about a moneyless system. (I don’t take this as a reflection on the SPGB as a whole… of the comrades I know personally, some can also be kind of mean when dealing with disagreements.) I was a little worried about the responses I’d get so it felt great to be treated so comradely here! 

What!   Someone was mean to you?      Perish the thought.  That comrade will be flushed out and publicly castigated     In the meantime, keep an open mind (but not that open!) and hope to meet you sometime; perhaps you’ll come to Clapham one of these days…………….

[ALB]

I think the reply may have been based on the assumption that the enquirer was a supporter of Parecon as suggested by their blog. I’m afraid, Ladybug, that we do disagree fundamentally with them. Hopefully, though, you have moved/are moving on from them.

[robbo203]

Hi Ladybug I think the problems that you refer to in relation to the fourth aspect of a hypothetical  socialist production system that i touched on in my article  – namely a hierarchy of production goals – are not nearly as grave as they perhaps might appear. They are complications, yes, but they do not add up to an insurmountable obstacle that would bring the system crashing to its knees.  To understand why you need to step back a little to see the bigger picture. As I said to Darren in my post above, you need to have such a hierarchy in order to  prioritise the allocation of inputs in cases where you run into supply bottlenecks. It makes a lot of sense in such cases to allocate such inputs to high priority end uses first and foremost and then to other end uses lower down your ranking system.  As I said this is a matter best left to the intuitive judgment of individuals on the ground; there is no need for society to formulate some kind of elaborate and explicit hierarchy of end uses and it would it would be absurd even to attempt that.  My working assumption is that people in a socialist society would broadly share the same kind of values and this would be reflected in the decisions they make. It is only in the case of particular community-based projects that I envisage a kind of conscious socially-based commandeering of inputs for a given purpose but even then low priority end uses deprived of inputs in this fashion can still turn to technological substitution as another option The problems that you are alluding boil down to one of  how you proportion a scarce input between various end uses.  I wont go into this in great detail here as I will give a fuller response to this matter in the ECA working group forum on which I see you have  begun posting.Suffice to say this relates to what the neoclassical economist, Marshall, referred to as the “equimarginal principle” – .how to allocate between different lines of  production to ensure that the marginal unit in each case ends up with the same “utility”.  I don’t know if you are familiar with the writings of J A Hobson. In Neoclassical Economics in Britain (1925) he presented  a rather effective demolition job of this Marshallian concept which I think has implications for our discussion here. I quote the relevant section:http://www.marxists.org/archive/hobson/1925/09/neoclass.htmA person adjusting the use of his resources to the demands of a new situation makes a number of delicate adjustments at the margins. But the determinate judgments, of which these delicate adjustments are expressions, are made, not at the margins, but at the center. They are the quantitative implications of the new organic plan he has applied. If we regard him as a creative artist working out a new ideal with the materials at his disposal, we shall get nearer to the true psychological interpretation. A painter in mixing colors to get some particular effect must exercise care to obtain the exactly right proportions. This care will be greatest when in mixing he comes near the limit, and is in danger of putting too much or too little of the several colors into his mixture. A marginal economist, observing him, might pronounce the judgment that he kept adding increments of the different colors until he stopped, and that therefore an exactly equal art value must be attached to the last increment of each color. For if the last brushful of Turkey-red had been found to have less value than the last brushful of green, another would be added, so as to even out the values of the different colors at the margin.Now this, of course, simply means that in every sort of composite plan, economy or harmony, involving the use of different materials, some exact amount of each material is required. In forming such a plan no special thought is directed to the marginal unit of each factor. But in carrying out a change of an existing plan, the process of shifting pieces from the old plan to the new involves a series of operations at the margins. The size of these operations is, however, determined and laid down in the conception of the scheme as a unity. The painter, not knowing exactly how much of each color is required to produce his effect, may try a little too much of this or too little of that, rub out, and begin again until he has it just right.But the idea of imputing any special value to the marginal units, or of regarding the artist as comparing the colors at each margin by some common standard of art value, is alien from the psychology of art. As soon as it is clearly comprehended that the business man, the consumer, and every man pursuing a line of policy or conduct, is acting as an artist, the invalidity of Marginalism will be equally apparent in their cases. 

[ladybug]

 Gnome, thanks for the support!  (why are your smiley faces here soooo cute? That alone makes this forum better than all the others. ) ALB, I have moved from parecon to other ideas but I think even if I had not that isn’t reason for that person to have been condescending. 99.9% of people don’t see eye to eye with our ideas and I think we have to be patient and respectful or it will give people just one more reason to dismiss us. Easier said then done of course and I’ve been not so nice before myself! Thanks again Robin! I think that Hobson quote is a bit over my head but I look forward to your post on the ECA forum to hopefully get a better understanding. The first half of your post makes sense to me. Just a follow up question, though…You said: “It makes a lot of sense in such cases to allocate such inputs to high priority end uses first and foremost and then to other end uses lower down your ranking system.  As I said this is a matter best left to the intuitive judgment of individuals on the ground ; there is no need for society to formulate some kind of elaborate and explicit hierarchy of end uses and it would it would be absurd even to attempt that.”  By “individuals on the ground”, who are you talking about? My guess is you’re talking about the workers in the workplace that produces the good in question. They would have orders/requests from various other worker collectives and they would sort through the various orders/requests and decide which was most important using their own common sense and consideration of a hierarchy of needs. So for example if I work at a steel plant and we have too many orders/requests to meet them all, we sort through them and decide to fulfill the order for the train manufacturer 100% and for car manufacturing only 80% because we decided that public transit should trump individual transit. Is that it? Or by “individuals on the ground” were you thinking of something broader?  

[robbo203]

ladybug wrote:

Thanks again Robin! I think that Hobson quote is a bit over my head but I look forward to your post on the ECA forum to hopefully get a better understanding. The first half of your post makes sense to me. Just a follow up question, though…You said: “It makes a lot of sense in such cases to allocate such inputs to high priority end uses first and foremost and then to other end uses lower down your ranking system.  As I said this is a matter best left to the intuitive judgment of individuals on the ground ; there is no need for society to formulate some kind of elaborate and explicit hierarchy of end uses and it would it would be absurd even to attempt that.”  By “individuals on the ground”, who are you talking about? My guess is you’re talking about the workers in the workplace that produces the good in question. They would have orders/requests from various other worker collectives and they would sort through the various orders/requests and decide which was most important using their own common sense and consideration of a hierarchy of needs. So for example if I work at a steel plant and we have too many orders/requests to meet them all, we sort through them and decide to fulfill the order for the train manufacturer 100% and for car manufacturing only 80% because we decided that public transit should trump individual transit. Is that it? Or by “individuals on the ground” were you thinking of something broader?  

 Hi Ladybug It is easier to get at what Hobson is saying about the equimarginal principle if you look at his example  of the painter.  A painter does not chose the proportions of different colours used in the painting  according to the “marginal utility” of each colour.  He or she does not say:  “I like the colour red more than green and will therefore continue using the colour red until the last brushstroke I apply yields the same amount of satisfaction or utility as the last brushstroke using the the colour green”.  Yet this is precisely what Alfred Marshall’s famous equimarginal principle implies – that comparisons are made at the margin so that the numbers of different items in your shopping basket, for example,  are adjusted in a way that ensures the last unit of each item yields the same utility as every other item.  According to Marshall, by doing this we are able to maximise the total utility we obtain across the entire range of items in our shopping basket – by ensuring that the marginal unit of each item is the same for every other item.  In other words,  we would arrive at the most efficient allocation of our  budget  by conforming to this equimarginal principle and this can be demonstrated in a simple graph Hobson’s counterargument is that this is a totally bogus way of looking at things.  The painter in his analogy does not apply different colours by comparing the marginal utility of each colour.  Rather, allocation is made from the “centre” as he put it – that is, from a holistic perspective that looks at the painting as a unity .  Try imagine what the painting would look like if the painter had a marked preference for the colour red.  Most of the painting would be cololured in red so that in the case of landscape painting, say, you might end up with most of the trees being painted in red rather than green!  It only appears that the painting has allocated different  colours according to the equimarginal principle  but this is quite misleading , argued Hobson; it is what is called a  “post hoc, ergo propter hoc” (meaning, “after the fact, therefore before the fact”)  fallacy.  What applies to his painting analogy applies to life in general – we allocate our time and effort according to our core values – from the centre and not at the margin Another early critic of marginalisim – Nicolas Georgescu-Roegen – looked at the matter from a somewhat different perspective. He argued that  the equimaginal principle was only really applicable to goods that met the same basic need – such as the need for food.  Once you start attempting to apply it to consumer goods that satisfy different kinds of needs the principle breaks down completely.  This is because of what he called the principle of irreducibility of needs.  However , for mainstream neoclassical economics it was simply assumed that everything could be boiled down to, or rendered commensurable in terms of , the abstract notion of utility. Thus , the utility of eating a bowl of rice pudding was in principle no different from the utility of riding a horse of playing a game of golf  – the only  difference lying with the amount of utility each of these activities offered the individual There are numerous other criticisms that can be leveled against the whole corpus of marginalist theory.  The key concept of diminishing marginal utility , for example, is highly questionable.  There are many  counterexamples where the exact opposite is the case such as where there is a tipping point involved.  Taking a course of antibiotic pills is an example.  If you stop halfway through the course the “utility” of the last pill would be significantly less than the last pill  if you took all the pills prescribed.  In fact the bacteria might well develop resistance and so you would incur a disutilty by not completing the course prescribed.  There are other kinds of examples that defy the law of diminishing marginal utility such as Giffen goods, Status goods and Inferior goods.  I wont go on about this except to draw your attention to them On your final point , yes.  by ” people on the ground” I mean basically the people  working in the factories or whatever – the people at the coal face so to speak –  who have to make practical day to day decisions.  In the face of multiple demands that exceed the supplies of the available product that is made in the factory  itself. They would have to make on the spot decisions about how to allocate this product among these different demands.  This is what i am getting at.  My point is that for the most part, such things can be left to the basic intuition of the individuals concerned .  You can certainly finetune the decisionmaking process by introducing into the equation other considerations such as frequency of demand amongst the different end uses to which this product would be allocated  as well as whether or not  the or how often the requirements of particular end use had been met in the pastI don’t see any real insurmountable problem with this approach, Bearing in mind we are talking about a society in which a common set of values will prevail  which will tend to be reflected in a fairly consistent pattern of decision making vis a vis resource allocation. Also bear in mind that the producer-consumer distinction would no longer apply, that individuals would not necessarily just work in one particular place of work  and that there would be no special vested interest in commandeering a particular input for one particular purpose at the expense of another Above all , and finally,  bear in mind that this whole notion of a hierarchy of production goals  only comes into play when there is a discernable  discrepancy  between the multiple demands for a particular good, on the one hand, and the available supply of said good on the other. The built in tendency of a socialist production system will always be towards the elimination of such bottlenecks since the existence of buffer stocks is a key indicator  in the management of a self regulating system of stock control.  Moreover,  whenever a bottleneck might arise this does not prevent those lower priority end uses from being  addressed.  This is because it  may well be possible in such cases to resort to technological substitution – substituting a scarce input that is mainly diverted to higher priority end uses for a  more abundant input  that is made available through the self regulating system of stock control. Hope this helps Cheers Robin

[DJP]

robbo203 wrote:

On your final point , yes.  by ” people on the ground” I mean basically the people  working in the factories or whatever – the people at the coal face so to speak –  who have to make practical day to day decisions.  In the face of multiple demands that exceed the supplies of the available product that is made in the factory  itself.

I’d add a further point of clarification here. A communized system of production would see the end of the individual enterprise as a separate body from the whole of society. Just because some people currently happen to be working in the production of a certain good or raw material does not mean that they would be able to dictate to society where these goods or raw materials went. Ultimately the whole of society has a say in this. If there was a shortage of materials or labour this would be communicated to society at large and the distribution of labour would adjust accordingly.In short “workers control of industry” is not socialism / communism as it still maintains the separation of control from the whole of society.The Italian communist Bordiga wrote a few things on this subject, though his support of the vanguard party should be rejected.

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