The social architecture of capitalism
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https://ianwrightsite.wordpress.com/2017/11/16/the-social-architecture-of-capitalism/
A very interesting and suggestive article, setting out models of inequality and exploitation, and, i think, clarifying quite well why the focus should be on why the wages system must go.
Ian Wright knows the Party and is sort of sympathetic to us. He follows us on Twitter and may even have voted for us. However he doesn’t agree with our non-market conception of socialism.
This doesn’t come out in this article (as it didn’t need to) but he is a market socialist of sorts envisaging an economy of workers cooperatives still producing for the market but not for profit, selling their products at their labour-time value rather than at their “price of production” (cost price + average rate of profit). A sort of simple commodity economy where the producers are workers coops rather self-employed artisans.
It must be a moot point whether or not this really represents the abolition of the wages system.
Sorry but I’ve said before when faced with such algebraic explanations as the Zipf law graph, my brain simply goes numb
Yes, his co-operativism shows here:
However, it does provide a useful thought experiment:
So let’s consider the role of the investor in a firm. Do they get their fair share?
An investor lends one million pounds to a firm. The firm promises to repay this sum, in a year, plus interest to cover price inflation, and also mitigate the risk of default. The investor also demands collateral, such as a claim on premises, equipment or unsold inventory. So, if the firm defaults, the investor can recover some losses.
At the end of the year, when the firm repays the loan, the investor is made whole again.
And this does seem perfectly fair, at least in terms of an equal exchange in the market: the investor lends money, and the firm repays it. This is an equal exchange of like for like.
Yes, the interest rate may favour the borrower or the lender, depending on accidental circumstances. And if the interest rate equals inflation, then the investor isn’t even making a profit. So there’s no systematic exploitation going on here.
But this is not how investment typically works in capitalist economies.
Investors don’t simply lend capital and get repaid. Instead, they typically lend capital and receive equity in the firm. In other words, they invest in order to become part owners of the firm.
So, at the end of the year, when the firm could repay the initial loan, and make the investor whole, something else happens instead. The investor now has equity with a cash value that covers their initial loan, and are therefore made whole, yet now have something more: an additional property claim on the future value created by the workers, who supply labour to the firm, in perpetuity. As owners of the firm they can extract profits, without having to supply any additional labour or capital. They are now getting something for nothing.
Been reading a spot of Michael Lebowitz, who has the skinny on what happened with workers’ self management in Yugoslavia:
Consider, for example, the workers’ orientation toward common ownership of the means of production. The form that this took in Yugoslavia was to reject the inequality arising from differential access to particular means of production. Workers in less profitable firms expected their wages to rise much like those in the more profitable firms. The effect was to reduce significantly the liquidity of the weaker firms and to compel them to turn to the banks to secure funding not merely for expanded reproduction but even to meet the personal income requirements of workers.
So, both a thought experiment and a real experiment.
I was at the talk which was the basis for that article by Ian Wright on Labour’s economic policies. He was searching for something in them that encourages worker coops and dug up this definition of socialism (in an obscure policy discussion document on “Alternative Models of Ownership”) :
“What we have presented, as an alternative, amounts to the first steps in challenging that dominant model of ownership and control. We have shown, in simple, practical terms, how a government committed to addressing those profound, structural problems could implement key policies that would rectify them. Its goal would be nothing other than the creation of an economy which is fairer, more democratic, and more sustainable; that would overturn the hierarchies of power in our economy, placing those who create the real wealth in charge; that would end decades of under-investment and wasted potential by tearing down the vested interests that hold this country back. The historic name for that society is socialism, and this is Labour’s goal.”
It didn’t, and probability won’t, find its way into Labour’s election manifesto. So it’s just a curiosity, an obscure attempt by some Labourites to define socialism.
I can confirm from discussions with him that he sees nothing wrong in principle with interest (which will survive into his petty commodity production by workers coops economy). It’s only profit that he objects to as a something-for-nothing income.
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