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Vlad speaks. Mutualism

economics

(Professor J. Moriarty) #1

“What you said about government and business is absurd,” he stated coldly. It was a tone of voice that had not been heard much at the congress so far, contemptuous and dismissive. “Governments always regulate the kinds of business they allow. Economics is a legal matter , a system of laws. So far, we have been saying in the Martian underground that as a matter of law, democracy and self-government are the innate rights of every person, and that these rights are not to be suspended when a person goes to work. You.”—he waved a hand to indicate he did not know Antar’s name—“do you believe in democracy and self-rule?”

“Yes!” Antar said defensively.

“Do you believe in democracy and self-rule as the fundamental values that government ought to encourage?”

“Yes!” Antar repeated, looking more and more annoyed.

“Very well. If democracy and self-rule are the fundamentals, the why should people give up these rights when they enter the workplace? In politics we fight like tigers for freedom, choice of residence, choice of what work to pursue—control of our lives, in short. And then we wake up in the morning and go to work, and all those rights disappear. We no longer insist on them. And so for most of the day we return to feudalism. That is what capitalism is—a version of feudalism in which capital replaces land, and business leaders replace kings. But the hierarchy remains. And so we will handover our lives’ labor, under duress, to feed rulers who do no real work.”

“Business leaders work,” Antar said sharply. “And they take the financial risks—”

“The so-called risk of the capitalist is merely one of the privileges of capital.”

“Management—”

“Yes yes. Don’t interrupt me. Management is a real thing, a technical matter. But it can be controlled by labor just as well as by capital. Capital itself is simply the useful residue of the work of past laborers, and it could belong to everyone as well as the few. There is no reason why a tiny nobility should own the capital, and everyone else therefore be in service to them. There is no reason they should give us a living wage and take all the rest that we produce. No! The system called capitalist democracy was not really democratic at all. That is why it was able to turn so quickly into the metanational system, in which democracy grew ever weaker and capitalism ever stronger. In which one percent of the population owned half the wealth, and five percent of the population owned ninety-five percent of the wealth. History has shown which values were real in that system. And the sad thing is that all the injustice and suffering caused by it were not at all necessary, in that the technical means have existed since the eighteenth century to provide the basics of life to all.

“So. We must change. It is time. If self-rule is a fundamental value, if simple justice is a value, then they are values everywhere, including in the work place where we spend so much of our lives. That was what was said in point four of the Dorsa Brevia agreement. It says everyone’s work is their own, and the worth of it cannot be taken away. It says that the various modes of production belong to those who created them, and to the common good of the future generations. It says that the world is something we all steward together. That is what it says. And in our years on Mars we have developed an economic system that can keep all those promises. That has been our work these past fifty years. In the system we have developed, all economic enterprises are to be cooperatives, owned by their workers and by no one else. They hire their management, or manage themselves. Industry guilds and co-op associations will form the larger structures necessary to regulate trade and the market, share capital, and create credit.”

Antar said scornfully, “These are nothing but ideas. It is utopianism and nothing more.”

“Not at all.” Again Vlad waved him away. “The system is based on models from Terran history, and its various parts have all been tested on both worlds, and have succeeded very well. You don’t know about this partly because you are ignorant, and partly because metantionalism itself steadfastly ignored and denied all alternatives to it. But most of our microeconomy has been in successful operations for centuries in the Mondragon region of Spain. The different parts of the macroeconomy have been used by the pseudo-metanat Praxis, in Switzerland, in India’s state of Kerala, in Bhutan, in Bologna Italy, and in many other places, including the Martian underground itself. These organizations were the precursors to our economy, which will be democratic in a way capitalism never even tried to be.”

…Antar’s objections did not seem like much. Metanational capitalism’s track record at this point did little to support it; in the last century it had precipitated a massive war, chewed up the Earth, and torn its societies apart. Why should they not try something new, given the record?
Someone from Hiranyagarba stood and made an objection from the opposite direction, noting that they seemed to be abandoning the gift economy by which the Mars underground had lived.

Vlad shook his head impatiently. “I believe in the underground economy, I assure you, but it has always been a mixed economy. Pure gift exchange coexisted with a monetary exchange, in which neoclassical market rationality, that is to say the profit mechanism, was bracketed and constrained by society to direct it to serve higher values, such as justice and freedom. Economic rationality is simply not the highest value. It is a tool to calculate costs and benefits, only one part of a larger equation concerning human welfare. The larger equation is called a mixed economy, and that is what we are constructing here. We are proposing a complex system, with public and private spheres of economic activity. It may be that we ask people to give, throughout their lives, about a year of their work to the public good, as in Switzerland’s national service. That labor pool, plus taxes on private co-ops for use of the land and its resources, will enable us to guarantee the so-called social rights we have been discussing—housing, health care, food, education—things that should not be at the mercy of market rationality. Because la salute non si paga, as the Italian workers used to say. Health is not for sale!”

… “So nothing will be left to the market,” Antar said.

“No no no,” Vlad said, waving at Antar once more irritably than ever. “The market will always exist. It is the mechanism by which things and services are exchanged. Competition to provide the best product at the best price, this is inevitable and healthy. But on Mars it will be directed by society in a more active way. There will be not-for-profit status for vital life-support matters, and then the freest part of the market will be directed away from the basics of existence towards non-essentials, where venture enterprises can be undertaken by worker-owned co-ops, who will be free to try what they like. When the basics are secured and when the workers own their own businesses, why not? It is the process of creation we are talking about.”

Jackie, looking annoyed at Vlad’s dismissals of Antar, and perhaps intending to divert the old man, or trip him up, said, “What about the ecological aspects of this economy that you used to emphasize?”

“They are fundamental,” Vlad said. “Point three of the Dorsa Brevia states that the land, air, and water of Mars belong to no one, that we are the stewards of it for all the future generations. This stewardship will be everyone’s responsibility, but in case of conflicts we propose strong environmental courts, perhaps as part of the constitutional court, which will estimate the real and complete environmental costs of economic activities, and help to coordinate plans that impact the environment.”

“But this is simply a planned economy!” Antar cried.

“Economies are plans. Capitalism planned just as much as this, and metanationalism tried to plan everything. No, an economy is a plan.”

Antar, frustrated and angry, said, “It’s simply socialism returned.”

Vlad shrugged. “Mars is a new totality. Names from earlier totalities are deceptive. They become little more than theological terms. There are elements one could call socialist in this system, of course. How else remove injustice from economy? But private enterprises will be owned by their workers rather than be nationalized, and this is not socialism, at least not socialism as it was usually attempted on Earth. And all the co-ops are businesses—small democracies devoted to some work or other, all needing capital. There will be a market, there will be capital. But in our system workers will hire capital rather than the other way around. It’s more democratic that way, more just. Understand me—we have tried to evaluate each feature of this economy by how well it aids us to reach the goals of more justice and more freedom. And justice and freedom do not contradict each other as much as has been claimed, because freedom in an unjust system is no freedom at all. They both emerge together. And so it is not so impossible, really. It is only a matter of enacting a better system, by combining elements that have been tested and shown to work. This is the moment for that. We have been preparing for this opportunity for seventy years. And now that the chance has come, I see no reason to back off just because someone is afraid of some old words. If you have any specific suggestions for improvements, we’ll be happy to hear them.”


(Professor J. Moriarty) #2

damn. they took this down cos copyright claim by BBC Worldwide. I need to find another version cos it’s a really good video. (old episode of horizon , (before they dumbed it down))


(Professor J. Moriarty) #3

http://www.lowimpact.org/mutualism-philosophy-changing-society-difference-implementable


(Professor J. Moriarty) #4

@Amon_Twyman said:
"Well, that’s interesting… at first I thought “well, that’s just Marxism-on-Mars”, then as it went on I thought “hmm, maybe more like small-s-socialism”, and then the story addressed my thoughts directly. I think I’ll have to re-read it a few times, over a few days, in order to get a sense of how it’d work.

In the mean time, I would say that I personally see (pure) Marxism as a folly in the same way that (pure) Capitalism is. Unmoderated, these systems lead to crisis - unbridled authoritarianism or economic meltdown, respectively. Of course that’s a common enough view, which is why liberal democracies tend to have some balance of both free market and government regulation.

For me, however, there is the strongest nagging feeling that the various forms of ‘third way’ thinkers are almost certainly right… that it’s not enough to draw a line between Marxism and Economic Libertarianism and pick a point somewhere along the continuum. We must find a third point, a new principle, turning the line into a triangle… and then find an optimal point within that conceptual space.

I only mention this here because the story excerpt seems to be getting at such a “third way” analysis… I just don’t quite understand the author’s proposed model yet - thanks very much for the link, Peter!

Has anybody else got any thoughts on this?"


#5

I very much agree. Neither works on it’s own.

Personally, I’ve been considering a model where something like 10-20% of the economy (as in ownership/control) is allocated to people generally. Shares that are not possible to sell. This would be a basis for basic income. The remaining 80% would be allocated to capitalistic system.

However, what I just described seems like it falls directly on the line between Marxism and Economic Libertarianism. So, what could the third part be? I don’t have a clear idea of that, but I have a feeling that something I call incentive engineering is a crucial part of it.

So, what is incentive engineering? It’s an art of designing systems such that the incentives of different actors in the system are naturally balanced such that they encourage cooperation rather than competition. It’s something I first bumped into in the context of blockchains. A blockchain is a structure that requires properly done incentive engineering to have any chance of working in practice.

The important thing to understand is that a properly incentive engineered blockchain has the potential to replace the government. This is because when properly engineered, the system naturally attracts people to participate and benefit from the system. The actual design process is difficult, but the basic goals are simple. You just need to design the system such that the incentives of the individual parts of the system are aligned with the goals of the system as a whole.

The hard part of is figuring out how to cut up a problem in such a way that the incentives for the parts naturally align.


(Michael Hrenka) #6

Getting incentives right is probably the most important part of any economic system. It’s funny that capitalism does many things right in that context, even though, or perhaps because, capitalism is more of an evolved system that we stumbled into, rather than a meticulously designed system. Our attempts at designing economic systems in advance are not especially convincing. The level of complexity of the economy seems to lie at a scale that human intelligence on the level of individual humans cannot process effectively. The more we make use of augmented, artificial, and collective intelligence, the better.

The blockchain is one of the latest tools in the tool kit of economic systems. It’s not inherently a game changer.

I just had the insight that both humans and capitalism are self-transcending systems. Their evolutionary dynamics drive themselves to improve themselves, and finally escape the boundaries of their initial definitions. It follows that both humanity and capitalism haven’t seen their apex, yet, and that once they reach it, they both will give rise to something new, and better.

Regarding cooperation and competition I more and more get the impression that those shouldn’t be seen as opposing, but rather as complementary concepts. Humans cooperate to create companies which compete against one another. Companies can also cooperate in ways that profit them (by price gouging for example), while harming the general public. Alternatively, companies could cooperate in ways that could benefit everyone, for example by agreeing on useful industry standards. Competition can drive people to push themselves to their limits, while cooperation can redefine those limits. The real question is how to interweave competition and cooperation in the optimal way – which includes the implicit question of what “optimal” is supposed to mean.


#7

There’s one quite revolutionary aspect to blockchains that’s difficult to replicate in any other way. Blockchains can eliminate trust from many enomic equations. This is a direct reduction in transactions costs. For some classes of transactions, the cost of trust is entirely removed and for others it’s reduced. To put this in other words, blockchains reduce the transaction costs arising from dirty opportunism.

While I can’t say for sure if this means it’s an inherent game changer, it’s definitely different in a very interesting way.

I think you’re on to something there. However, I don’t think talking about capitalism and humanity is going to successfully communicate the insight. I mean, both of those are aspects that arise from intelligence.

[quote=“Radivis, post:6, topic:1029”]
Regarding cooperation and competition I more and more get the impression that those shouldn’t be seen as opposing, but rather as complementary concepts. Humans cooperate to create companies which compete against one another. Companies can also cooperate in ways that profit them (by price gouging for example), while harming the general public. [/quote]

By the way, price gouging is harmful precisely because it eliminates competition and thus the motive for improvement. In fact, it creates an incentive to not improve things because doing that might cause the arrangement to end. … actually, come to think of it, my intuition is telling me it also limits cooperation in that sector of economy but I’m not able to pinpoint exactly where yet.

Also, similar effect does happen naturally as well. Companies often look at their competitors pricing when deciding how to price theirs and I suspect they usually decide to “not compete” on the price and prefer trying to compete with other things first. After all, they’ll both lose out if they start trying to compete through the price. Neither wants to poke at the other due to fear of being poked back.

I suspect optimal is what happens when incentives are perfectly aligned. Companies today do a lot of things that no customer would wish for them to do. For example, planned obsolescense. The simplest way to buy something is to just make a single payment, which leads to the motive on part of the producer to have that happen as often as possible, so they’ll try to make products that need to bought again and again. Whenever they can get away with it.

However, what if the way long term things are paid for is changed? What if the customer offered to pay a small amount for each day the product is usable? The incentives would suddenly be aligned. Now even the manufacturer would have the incentive to make something that actually lasts. However, at least in the past, there were practical problems in implementing this. Especially keeping track of how long a product is usable. The so called Internet of Things might actually change that. Especially when combined with some level of intelligence in every product.


#8

what if an ai calculates, that at the end of the durability of the product, i will have payed amount x, for which i needed y working hours of my work to earn the amount x, and another ai calculates the same for the product and it turns out, that the product in question needed half the amount of working hours of other people, to be made, than i needed to work for to pay for it?
what is it that makes a price fair? incentives? durability?


#9

I don’t think either of those is important for defining if a price is fair or not. Nor even the price itself, really. I’d say a price is fair when the person who pays it would agree that the money ends up distributed to the right people in right proportions. When I see people calling prices unfair, it seems to generally imply that it’s quite likely that someone undeserving is getting a large part of the money.

Aligned incentives are different matter than fair price. If incentives aren’t aligned, it may well be that you can’t find the product you want at any price. If incentives are aligned, you can at least count on what you want being available.

Durability (or more accurately longevity), however, I would say is directly related to the value of the product (which is not necessarily the same as the price).


#10

ok, then we have the value of the product that is connected to longevity of the product because we can use it longer ( i suppose you mean that)…
and we have the price of the product that not necessarily expresses the value of the product, so it could be that a valuable product could be purchased for a cheap price and the other way round.
but what is the connection of the production of the product to the value? the resources and the work that is needed to make the product.

true. now back to topic:[quote=“Elriel, post:7, topic:1029”]
For example, planned obsolescense. The simplest way to buy something is to just make a single payment, which leads to the motive on part of the producer to have that happen as often as possible, so they’ll try to make products that need to bought again and again. Whenever they can get away with it.
[/quote]
planned obsolescence mean that we already have a good, functional product, for example care spare parts, and the company invests more resources with additional working hours of people and material to put those products into acid baths to make them corrode much earlier than they usually will. so from the company point of view the planned obsolence make the product more expensive to produce than the original quality product. and from the company point of view this product is more valuable. shouldn´t be a product, that consumes more energy, more working hours and material and planning to design it for planned obsolence much more expensive than the original quality product?


#11

This really depends on the profit margin. it makes sense for a company to use some of the profit margin to ensure repeat customers. How much makes sense to use depends on how much it increases sales. For example, if you spend 10% of the profit margin and that increases your sales by 15%, you’re making 3.5% more profit (0.9*1.15 = 1.035).

Of course, if they can increase their profits by increasing the price, then naturally you can expect them to do that too. However, planned obsolescence can often be used to squeeze more profits out of the equation. Especially if you have a monopoly on the product or if the customers are unable to tell that your product is degraded.

As far as costs go, the degraded product might be more expensive, but if it can be sold for enough profit, it can be worthwhile for the company to do so. However, planned obsolescence doesn’t always increase costs. Sometimes it decreases them as well. For example, if you can achieve the degraded product by using less or lower quality materials. Of course, this might benefit the customer too, if the savings show up in the price. However, it’s often the case that companies push this further than any customer would actually want if they understood what’s going on.