Capitalism, A Beneficial Exchange

Blogger Sam Rocha wrote a post the other day titled, “A Brief Defense of ‘Capitalism’”. However, Rocha’s attempt is, I think, somewhat hampered by the fact that he by his own description does not think much of capitalism.

For the most part we (by “we” I mean those of us on the left, yes I will own up to being something of a leftist, whatever that means) like to say that all capitalism, and its governing libertarian sentiment, desires is for there to be no limit at how much one can take for one’s self. It is a creed of the indulgent and the rich. Greed, selfishness, isolationism, sterile individualism and other nasty things, are what we enjoy making capitalism out to be.

With such an opener, what might wonder what it is that Rocha then finds to praise in capitalism. What he find is, I think, not at all unique to capitalism narrowly defined, but it is something which those of us in the West are much attached to:

If we can cut-out the name calling, I think we can find a powerful meaning within capitalist sentiment. Namely, the much-abused, taboo, and rejected idea of the individual, the person-singular. I think that if we take notions of private property and negative freedom (“freedom from”) inherent in capitalist sentiment, and ponder what they mean, we will find that we all value such things privately….

Here is my defense: Capitalism, as it is believed in benevolently, reminds us of our radical existence as images of God with a potency to as we wish within the vast sea of possibility. What we need next is the ability to control ourselves with the prudence, grace, and love of our Creator in this stormy sea of freedom. But we should never be too quick to accept external-control over our bodies, minds, and hearts. We need to be free. And perfect freedom is not the raw, brute force of libertarianism, to be sure. At the same time, it also is that imposing force.

I don’t find what Rocha finds to praise unappealing, but at the same time I think that there is something more to be found in capitalism as described by Adam Smith and others which even many of those who frequently condemn capitalism would find it in themselves to admire if they could look past their preconceptions and see Smith-ian capitalism for what it is.


The following is based on my efforts over the last few week to keep up with the folks over at the EconTalk book club as they work through Adam Smith’s Theory of Moral Sentiments (a book he wrote before On the Wealth of Nationsbut continued to revise until his death). I’ve not finished the book yet, nor indeed have I been able to make it through as fast as the podcasters have been doing so, but it’s been an enjoyable experience and I may well be writing more about the book once I’m done.

First, I think it’s important to understand that Smith in both his famous works is engaged in what he considers a descriptive rather than a prescriptive exercise. He does offer judgments and advice at times, but he is not attempting to set forth an order which, if followed, would result in a utopia (which is the Marxist project) but rather to describe how things work. In this sense, one probably does well to think of Smith in the context of a society shaped by English common law attitudes, where intricate order emerges from thousands of small decisions over hundreds of years rather than being planned at a single sitting.

Next, let us take a moment on Smith’s concepts of morality, on which the Theory of Moral Sentiments is focused. Smith seems to draw moral notions from two primary sources. First is a sort of empathy. We feel for other people’s predicaments by imagining them to be our own, and as such we feel the urge to help them. Second is a notion of status or approval. We want to be seen to treat others well, and so we are always conscious of how our actions towards others would appear to an impartial observer, and try to act in ways that such an impartial observer would approve of. However, these are modified by another human factor, which is that the difficulties of others are necessarily less immediate to us than our own. We know this, and try to make up for it with empathy, but for instance: When we visit a family who has recent lost a loved one, we do so in the knowledge that no matter how much empathy we may feel we do not experience their grief as acutely as they do. Further, the acuteness with which we are able to sympathize with others’ sufferings is related to how close they are to us in kinship and/or location. So we will naturally feel the death of a neighbor’s child more acutely than we will the report that someone in China just experience the same tragedy.

Now note: These are moral observations rather than moral precepts. There’s much more of psychology than of theology or philosophy here.

Let us now turn to capitalism. I would put it forward that the essence of capitalism is not “for there to be no limit at how much one can take for one’s self” nor indeed “the individual, the person-singular”, though the latter is implied by capitalism and the former is sometimes allowed by it. Rather, I would say that the essence of capitalism is roughly this: That which you possess or produce is yours until you agree to give it to another in return for some mutually agreed upon good or service.

Why should people who are communitarian in outlook appreciate this?

Smith observes that our own troubles are naturally more immediate to us than those of others. As such, the baker will naturally be more conscious of his own family’s need for food and his own desire to spend leisure time with his family than he will be of the hunger of the blacksmith’s family. And the blacksmith will naturally be more conscious of his own needs for iron implements and for time with his family than he will be of the baker’s need for iron implements.

Because of this, both men will be better served to rely upon the other’s self interest than the other’s beneficence. If the blacksmith gives the baker a new griddle in return for a week’s bread, or if he pays the baker coin which the baker can then use to purchase clothes from the tailor or grain from the miller, he joins the baker’s well being to his own well being.

Does this mean that capitalism suggests that everyone simply be greedy? Not necessarily. Greed is a passion for consumption, which seeks to take all things into oneself. What this principle of exchange is really based upon is relationship: If I want to get something from someone else, I may only do so by giving him something which is of equal or greater value to him. I must form a relationship (however tenuous) with him and give him something which he values in order to get from him what I value. Capitalism is thus at root a system which requires a certain degree of relationship and solidarity, as I cannot get anything without providing to others what they in turn need.

Now here is where I may lose my more left-leaning readers: I would put it that the advantage of capitalism (understood as the principle that we own what we have or produce and that in order to get me to part with those things which I own, you ought to propose a mutually beneficial exchange) is that it is the only means of moving goods around through society which does not rely on the threat of force. People often like to talk about the “inherent violence of capitalism” (I suppose because they picture the central image of capitalism being Mr. Moneybags forcing thousands of impoverished workers into a factory) but while capitalism theoretically rests upon mutually beneficial exchange, socialist/communitarian systems do in fact rest upon the implicit threat of violence. How so? Well, in our earlier illustration, if the blacksmith and the baker live in a socialist society, the reason for the baker to give bread to the blacksmith is the implicit threat of the political entity’s monopoly on legal violence: If he doesn’t give bread to everyone in the village someone will come and take it from him, or he will be punished for not doing his job.

Now, any reasonable polity must use its implicit threat of violence to exact a certain amount from people, in order to run the state and provide basic services to those who need them. But one reason why we ought to prefer that as much of the movement of goods and services within society be capitalistic rather than communitarian is that the former is based upon mutually beneficial exchange, while the latter on the implicit threat of violence. I would suggest that we ought to prefer that as much of the exchange in our society as possible be mutually beneficial rather than forced.

A brief concluding digression: I’m sure that someone will point out that in reality there is often so much inequality between the richest in a society and the poorest that it is impossible for them to be on an even footing to make mutually beneficial exchanges. Thus, with extreme inequality, people may be “forced” to work for wages which are not in fact adequate to sustain them. I would agree that extremes of inequality do allow capitalism to become much less beneficial for the have-nots. And to mitigate extreme injustices, the state doubtless sometimes has to use its implicit threat of force to protect the vulnerable. However, beyond assuring basic human needs are met, I would tend to support finding ways for the have-nots to be more productive in relation to the haves (and thus giving them more leverage when negotiating exchange) rather than a more radical leveling approach to bringing the haves down. I would imagine that nearly everyone supports both these methods to some extent, but the difference between left in right has a great deal to do with where one sees the proper balance between them.

30 Responses to Capitalism, A Beneficial Exchange

  • Sam Rocha says:

    Thanks for reading my brief article. I also appreciate your critical remarks, and, for the most part, I agree with them. Aside from a couple glitches (like keeping my quotation in separated text), I think you put too much emphasis into what it is I am arguing for. It is not so much capitalism, socialism, distributism, or what have you. There are much more qualified people doing that. My goal is simply to point out what seem to be intuitive ways in which the words we use measure the belief people have in them. It is not very technical, but, to me, it is important to add to the discourse on these subjects. After all, such things really play out on the ground, I think.

  • Sam,

    My apologies on the formatting. I believe that it’s fixed now. (Some sort of trouble in transferring from Blogger to WordPress, I believe.)

    For what it’s worth, I wasn’t so much trying to impute a specific communitarian system to you as to point out that the distinction between capitalism and the other “isms” is that it’s based on mutually beneficial exchange rather than on the states implicit right to use violence. (Thus, I always have a mental twitch when people walk about “the inherent violence of capitalism”.) I picked a communitarian counter-example simply because it was readily available and frequently used as an alternative to capitalism.

    So I hope like it didn’t seem that I was coming down like a ton of bricks on your post. I just thought it provided a well articulated example of an assumption that I’d been wanting to write a post arguing against for some time.

  • Sam Rocha says:

    No apologies in order here, plus, you helped me realized that I missed a “do” in there. This is fine to me, I just want to be sure that the purposes we have are a bit crossed. I call my self all these absurdities like “leftist,” “democratic socialist,” and so on. But the truth of the matter is that they do not stick for me, not at the level of conscience. What does stick are things I think can find in common belief that creates the devotion we seem to have for this or that ideology. I guess the most direct point of the essay is the first line: “Language seems to poison our ability to be rational.”

    Thanks again for the engagement, it sure beats the alternative.

  • Phillip says:

    I think the first part of Sam’s quote reflects what I see among many of my classmates in my social justice class. There are a few hardened capitalists also among us who, through their lives, prove that such a narrow perception is false.

  • Joe Hargrave says:

    At the risk of sounding like an unreconstructed Marxist, I just have to point out that Marxism is simply not utopian.

    Frederic Engels wrote an introduction to Marxist theory called “Socialism: Utopian and Scientific.” The whole point was to distinguish his and Marx’s ‘scientific’ socialism from the ‘utopian’ socialism of the past.

    Meanwhile Marx himself criticizes a whole series of utopian policy proposals that are ironically and mistakenly attributed to him by people who have never read his work in ‘The Critique of the Gotha Program.’ Engels does the same in ‘Anti-Duhring’.

    Please don’t misunderstand – I’m not advocating a Marxist program (I’m a distributist, which Marx would have found reactionary and utopian), but there’s a right way to criticize Marx and a wrong way. The wrong way is to dismiss him as a utopian, since there isn’t a shred of evidence to suggest that he was by any reasonable understanding of that word.

  • Phillip says:

    A look at how JP II in Centesimus Annus looked at how to understand capitalism:

    “42. Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

    The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

    The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.

    43. The Church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with one another.84 For such a task the Church offers her social teaching as an indispensable and ideal orientation, a teaching which, as already mentioned, recognizes the positive value of the market and of enterprise, but which at the same time points out that these need to be oriented towards the common good. This teaching also recognizes the legitimacy of workers’ efforts to obtain full respect for their dignity and to gain broader areas of participation in the life of industrial enterprises so that, while cooperating with others and under the direction of others, they can in a certain sense “work for themselves”85 through the exercise of their intelligence and freedom.”

  • Joe,

    I guess I would tend to find the whole concept of the dictatorship of the proletariat and the changes that would have on society as a whole somewhat utopian in the sense of a society which if fundamentally differ (in part due to a change in human nature) even if it’s not seen as utopian in the sense of “perfect”. However, you clearly know a lot more about Marx and Engels than I do, since you studied them seriously and I read the Manifesto in a big hurry because we covered it in one class of Steubenville’s great books program. I suppose honestly I should reread Marx too one of these days as well as Smtih — though I have the bias of liking Smith more.

    Philip,

    In response to JP2′s quote which you provide (which I agree with in essentials) I guess I’d say that the original insight of Smith is not actually a “model” in the sense that JP2 is discussing. It’s simply a description of how trade occurs when unimpeded by some other force.

    In this sense, I’d say that the pope is right to say that the Church is still looking for models at present. Socialism does not seem to be the answer to our problems, because it does not take human nature into account. And capitalism (I would argue) was never meant to be a moral answer in the first place. Unlike distributism or socialism, capitalism does not include a moral component. It is simply a basic understanding that in order for exchange to take place it must be mutually beneficial.

    As a Catholic and a capitalist, I would tend to see this as meaning that capitalism as an economic system works well in coordination with a strict moral system such at Catholicism, which tells us as individual agents of action what consists of moral action. But the two are separate systems, and at the moment I remain skeptical as to whether there is an economic system which provides a blueprint for right behavior.

  • Joe Hargrave says:

    Darwin,

    Regarding Marx,

    Here’s the thing: a lot of liberals in the 19th century too believed in a never-ending progression towards a ‘better’ society and a ‘better’ humanity. Is a naive faith in human progress ‘utopian’? Perhaps. But usually I associate the word with people who want to pre-design blueprints for the perfect society, something Marx consciously avoided.

    Regarding capitalism,

    This is what I have a problem with.

    “Unlike distributism or socialism, capitalism does not include a moral component. It is simply a basic understanding that in order for exchange to take place it must be mutually beneficial.”

    Is this really what capitalism ‘simply’ is? There has to be more to it than that. Unequal bargaining power is a fact of life for billions of people who come into contact with Western countries and their corporations on the labor market.

    Didn’t Adam Smith himself admit that the wealthy, the employers, are always in a more powerful bargaining position than most workers, than the poor?

    If so, does this have moral implications? For the Church it does – it has always defended trade unionism.

    Unbalanced exchanges do take place, even if both parties benefit. The Marxian argument and the socialist argument in general has been that the worker does not merely confront one boss, but an entire system where the vast majority of employers exploit their labor. For them the choice is between different rates of exploitation, not between exploitation or something else.

    That said, nothing prevents workers from forming cooperatives where they are not exploited – nothing but inertia, and perhaps ignorance.

    On a final note, looked at in certain ways, neither capitalism nor socialism have moral components – in other ways, they both do. Surely capitalists prefer voluntarism to coercion, as much as socialists prefer that the workers win the inevitable class war instead of the capitalists.

    But both also have simply descriptive elements – capitalists note that mutually beneficial exchanges produce such and such results, while socialists note that class struggles result in this or that. Both camps base their positions on what they believe to be an objective analysis of reality, and claim that their moral position follows from this analysis.

    Not all, though. Austrians seem to start from moral axioms instead of empirical data. Many non-Marxian types of socialist start from similar axiomatic principles.

  • j. christian says:

    Joe,

    To say that capitalism does not have a moral component is not to say it is without moral consequences. The difference Darwin is highlighting (not to speak for him) is that capitalism is merely descriptive of the terms of exchange; the normative necessarily follows. Whereas socialism always presupposes the normative (i.e., power relationships) and then goes on to describe the terms of exchange.

    This is a very fundamental difference. It’s not to say that capitalism is morally neutral — how could it be? But one does not have to *begin* by thinking about power to work within the confines of capitalism. Not true with socialism. Socialism makes an idol out of power relationships, I think. John 19:11 and all that.

    As you said, nothing prevents workers in a free economy from forming cooperatives. Or being entrepreneurs. Or ascetics, for that matter. The power that business lords over us can be somewhat illusory in that sense, just as the power of big business can be fleeting (How are those Big 3 American auto manufacturers doing these days?)

    This isn’t capitalism apologetics. I’m not dismissing the reality of exploitation. As you said, bargaining power is often unequal. Bargaining power can become concetrated in different institutions — big business, big government, and even big labor unions. Things other than size skew power as well. However, there are ways of working politically and technically around these problems without resorting to the socialist “it’s all about power” rallying cry.

    Maybe “capitalism” is too loaded a word. There’s no purely capitalist society, anyway. I always refer to the U.S. as a mixed economy. I prefer to start from the first fundamental welfare theorem and, if something’s not right, ask, What’s going wrong here? Where’s the market failure, and what policies might correct it? Economic freedom is somewhat analogous to social freedom; you start from the premise of liberty, but liberty guided by the duty to do what is morally right. This is where it’s helpful to have the Catholic lens.

  • Joe Hargrave says:

    j,

    I just have a problem with the notion that ‘description’ is all capitalism consists of.

    Of course you are right about the distinction between component and consequences.

    Capitalism is a thing people do. Classical liberal economics, on the other hand, is the thing I would call ‘descriptive’.

    So I draw a distinction between those two. Adam Smith’s writings are like Karl Marx’s writings – they’re largely descriptive, and only occasionally normative.

    “Whereas socialism always presupposes the normative (i.e., power relationships) and then goes on to describe the terms of exchange.”

    By my understanding of the word ‘normative’ – and I will concede that it may be totally wrong – power relationships are not necessarily normative. They are and can be objectively analyzed and described without any normative statements. For Marx, a class is generally a group of people who have a specific relationship with the productive forces of society. Like Adam Smith, he is simply describing what people do (and he was an avid reader of Smith, calling him the ‘Luther of political economy’). Why would that necessarily fall under a normative analysis?

    “But one does not have to *begin* by thinking about power to work within the confines of capitalism. Not true with socialism.”

    Who does? If I made it sound as if that is where socialists “begin”, it was a mistake. Marx says nothing about power relations at the beginning of his analysis of capitalism. He begins with the commodity, the ‘cell’ of capitalist society as he calls it.

    Of course, not all socialists are Marxists. But then, not all economic liberals are devotees of Adam Smith.

    “here are ways of working politically and technically around these problems without resorting to the socialist “it’s all about power” rallying cry”

    Of course! I agree, and it’s why I’m not a socialist (anymore). In the end I believe only Christian charity can transform the world.

  • Phillip says:

    Darwin,

    Thanks. I’ll have to admit I have not thought heavily on the subject of capitalism, socialism or other such things much in my day. I have become more interested since my social justice class started. I have read many of the social encyclicals in the past but never in a rigorous way. The challanges of some of my fellow students has prompted seeking a deeper understanding of capitalism in relation to Catholic social teaching.

    The reason I posted however was more to challange Joe, Sam and others who take a prejudiced (?) view that all capitalism is exploitative. Again, several of my classmates are dedicated, orthodox Catholics who are also small businessmen. Their experience is far from that that Sam describes and thus his impression can be noted as not universally descriptive of capitalism.

    I remember the teacher saying that the course would challenge everyone. One of my small business owner classmates commented that the way the course was taught it was meant to only challange some. I post the quote I do to challange all, but in particular those who hold an extremely biased perspective of capitalism.

  • Donald R. McClarey says:

    “One of my small business owner classmates commented that the way the course was taught it was meant to only challange some.”

    Very few professors in academia have ever operated so much as a lemonade stand. Concepts such as “making payroll”, “solvency”, “self-employment tax”, etc., might as well as be written in Sanskrit as far as they are concerned.

  • Philip,

    Agreed. My personal experience of working for a small business and briefly running one (and now working for a very large business) bears very little resemblance to class warfare dynamics and a great deal of resemblance to Smith’s descriptions of mutually beneficial exchange. Experience is not everything, but all the business owners I’ve known have at other times in their lives been workers, while very few economic justice theorists have been business owners, and some have not even been workers.

    Joe,

    Agreed that the 19th century had a massively inflated idea of progress — one I don’t think corresponds well with human reality. I guess I’d taken Marxist dialectic as assuming something even more transformative and inevitable (the idea of reaching a classless society, for instance, strikes me as intensely utopian) but that may merely be my reaction.

    I’d love to dig into the unequal exchange question, but family vacation duties call. Perhaps later.

  • j. christian says:

    Joe,

    Socialism theory starts with an analysis of the factors of production, but it seems to me that from there it proceeds rather hastily to the conclusion that these factor relationships are exploitative. Smith and Marx might be descriptive in many ways, but to my knowledge Smith didn’t have a “manifesto” attached to his name.

    And this goes to the point that both Phillip and Darwin make about the advocates of socialism and their personal experience with economic exchange. Except in the case of some radical libertarians (who view all state regulation of economic activity as an immoral imposition on personal autonomy), one generally doesn’t start from the normative side of market exchange. Economic freedom might not be morally neutral in its outcomes, but then again neither is social freedom — and I doubt even orthodox Catholics here want a kind of theocracy to make the laws conform to the Magisterium. Instead, we look for laws that at a minimum do not violate justice and the common good. We don’t try to “root out” immorality, as many left-secularists fear we would do with the law.

  • Joe Hargrave says:

    Yes, well, when was Smith a young radical?

    I think it’s wrong to judge Marx by the Manifesto. Capital is what Marx wanted to be remembered for, but it consists of thick volumes that aren’t easy to read. Some versions of the Manifesto, on the other hand, fit into your pocket.

    Also, while I think capitalism is exploitative, I also think people voluntarily submit to it, at least in the West (the third world is a different story). As long as no capitalist ideologues try to stop me and others from spreading the word about cooperatives and economic democracy, we’re cool!

    “Except in the case of some radical libertarians”

    Well, we just call those anarchists anyway, right?

  • Sam Rocha says:

    Now wait a minute: My description of capitalism at the front end was to point out the error and ridiculous nature of run-of-the-mill, capitalist-hating critics. I may identify myself as a leftist, only because I seem to have to or people’s heads explode, but I am not capitalism hater. In theory it seem worth keeping around a long time like all the others, the question is whether I like it here and now…

    But if I understand you most recent point on this column correctly, then, you misread my article.

  • Phillip says:

    Yes I can see that now. I apologize for that. Though I will add many on the “left” do hold the view stated in your first paragraph.

  • Sam Rocha says:

    Sure they do, but I would much prefer you to quote “them” instead. I clearly am saying nothing of the sort and am getting sold as if I was here. I hope you add an update or something. Apology certainly accepted, but with some reservation until the misreading is corrected for the viewing audience.

    I work pretty hard not to settle into one of the categories and only graze them from time to time because, as I said before, no one likes a non-descript. If you want a glance of my politics, then, read this post I wrote on the matter: http://vox-nova.com/2009/04/21/i-guess-i-should-reveal-my-politics/

  • j. christian says:

    I guess our definitions of exploitation are different, then. I don’t think people submit voluntarily to severely unjust relationships very often or for very long. If by “exploit” you merely mean take advantage of or use to one’s own ends, well then I’ve seen just as many workers exploit their employers.

    If one believes that merely being a worker and not an owner is exploitation, then I doubt there’s much that can be done to rectify that. The division and specialization of labor is pretty extensive in an industrialized world; we all have to act as “units of labor” in some sense, unless we’re entrepreneurs. I’d love to know more about distributism and economic democracy to understand how it would work. I remember when America West Airlines came on the scene years ago; they made a big deal out of being an “employee owned airline,” but basically it was just an ESOP. If I’m an airline pilot, unless I can afford my own Boeing 737, I’m always going to be a worker (and thus exploited?) by the employer. Owning shares of the airplane/company doesn’t seem to change much. Who’s the residual claimant on those assets? I need more concrete examples of distributism, I suppose.

  • j. christian says:

    One more thing I’ll add, Joe: I think the analytics of classical economics support more economic democracy than less. Market concentration leads to inefficient outcomes, transparency and information is better than imperfect/asymmetric information, etc. So I think within the framework of economic theory, there’s definitely support for distributist ideas. Hey, that’s good news! :)

  • Joe Hargrave says:

    J,

    “I don’t think people submit voluntarily to severely unjust relationships very often or for very long.”

    Well when you throw ‘severely’ and ‘very long’ in there, not quite as much. But when every employer is an exploiter, then there is no escape from exploitation, only from greater degrees of it. That is what many people in poor countries face. They do submit, because the will to live overrides everything.

    “If by “exploit” you merely mean take advantage of or use to one’s own ends…”

    Ah – ‘take advantage of’ is an interesting way of putting it.

    All businesses must be profitable. The difference between economic oligarchy and economic democracy, if you like, is who controls the profits.

    I believe people are exploited when they accept the terms of wage labor; they give up all claim and control to the product of their labor in exchange for a wage. They do so because they do not and cannot practically access the means of production as individuals. In other words, because they can’t or won’t for whatever reasons be a) self-employed or b) in a cooperative. It isn’t entirely their fault, many things stand in the way. But not enough things to make it impossible, or to justify violent revolution.

    We don’t have to agree with everything Marx said to agree with this idea: a conductor doesn’t need to own the instruments that the symphony plays with in order to make great music.

  • Joe Hargrave says:

    As for examples of distributism, I made a post here not long ago, “Will the Real Utopians Please Stand Up?” Try to find it. Worker cooperatives are real. There is no speculation as to ‘how they would work’, there is how they actually do work, and succeed, in real life. To be a distributist is to be for the expansion of these principles, not their implementation from nothing.

  • j. christian says:

    Joe,

    I did see that post, but I didn’t have time to comment on it or read through the links. I’ll go back and look, because I’m very curious about real world examples.

    “The difference between economic oligarchy and economic democracy…is who controls the profits.”

    Controls as in who gets a share of them, or has a say/vote in how they’re disposed? How is that different from an equity stake in a public company? Is there some enforced leveling of the equity shares? What this seems to imply is a flat organization or a non-hierarchical structure.

  • Joe Hargrave says:

    J,

    The best example is the Mondragon in Spain. Of course like any company they face difficulties. There’s nothing utopian about distributism, but I don’t see why there should be. Alternatives don’t have to be perfect, only better in some way.

    “What this seems to imply is a flat organization or a non-hierarchical structure.”

    Not quite. In some cases, however, the worker/owners hire the managers and, ironically, ‘exploit’ them. The problem with exploitation, though, has never really been the exploitation itself, but its results – people working harder for less than they would otherwise obtain if they weren’t exploited.

    There are differences between cooperatives and public companies. But the main difference, I think, is the social aspect more so than the economic. It’s like the difference between a bunch of us talking on the Internet, and a bunch of us actually getting together to make something positive happen. The former isn’t a bad thing, but the latter, I think, acts as a realistic material foundation for the kind of social change I want to see in the world.

    The Compendium says that businesses ought to strive to be ‘communities of solidarity’, for instance. When we meet with one another as true partners, we have more of an incentive to solve common problems.

  • Sam,

    No, I’m the author of the post. I’m just a bit reclusive at the moment since I’m traveling. :-)

    I’m sorry if it seemed I was attempting to paint you as a non-thinking leftist. I haven’t read much of your stuff yet, but I would certainly take it from what I’ve read so far that you are determinedly unclassifiable.

    My purpose in jumping off from your article was basically that I thought you’d written a pretty clear presentation of, “As left-leaners, we are often tempted to describe capitalism as negatively thus, however capitalism actually has a redeeming quality which we all accept as follows.” Good so far as it went, but my contention is that the former (which I took you to find at least somewhat attractive, in the sense that I might, in an unrigorous moment, comment that the government is much like the mafia in that it possesses sufficient potential for violence that it can extract protection money from all of us whether we like it or not) is a mischaracterization of what capitalism is which obscures an element (the necessity of providing someone else with something they recognize as beneficial in order to get anything from them) which actually does tend towards relationship in a way that many of a communitarian leaning should find attractive.

    So no, I hope I did not come off as characterizing your views on capitalism as being limitted to the first (it sounds like we both agree rather foolish) summary, but I did think that in underlining the good elements of capitalism you’d missed something which I think you actually ought to like _more_ than the individualism implicit to capitalism: that one may not expect to get things from someone without building a mutually beneficial relationship.

  • Joe,

    I guess I don’t see the ownership divider as being such a hard and clear line. For instance, I’ve used credit unions and banks over the course of the last decade, depending on availability, but to be honest I’ve felt no more community feeling being a part owner of a credit union than simply putting my money in the bank.

    If my ownership in a worker’s cooperative was little more immediate than my ownership in the credit unions I’ve belonged to, I don’t think I’d feel nearly the sense of responsibility I felt when I was running my small web design business. The sense of ownership there can be very, very strong. For instance, my business partner and I would routinely change our ownership distributions (pay) in order to match how profitable we were at the time, and there were points when we met significant costs out of our own personal money in order to keep the business moving along. At various times we had several programmings working for us for wages (part time, in this case) and we would never that even thought of asking them to take a pay hit when a client was late paying us or chip in to cover expenses. They hadn’t asked for that kind of responsibility for the business, and if we’d asked them to come in as partners and take the same risks, they probably would have walked away instead. They were much happier knowing they’d make the same number of dollars per hour no matter how the company was doing. (I know I’m not making this sentiment up, because the people we employed were and are still personal friends, and said as much.)

    At a business model level, I like the idea of getting workers into an ownership mentality via employee stock programs (the company I now work for both grants stock to people it sees as having particular potential, and has a subsidized stock buying program where the company will help subsidize your purchases of stock if you set aside money for it via your paycheck) and through bonuses based on company profits. However, I’d tend to see a lot of the question of whether a company makes a lot of money being reliant on the decisions made by a comparatively small number of people near the top (and I’m not sure one can successfully change that much via democratic processes) and so I’d see it as appropriate for those people to get hit with most of the risk while most workers have the comparative assurance of “wage slavery”.

  • Joe Hargrave says:

    Darwin,

    There is nothing assuring about ‘wage slavery’, especially during a recession.

    Per your personal experience, not everyone is going to run their own service business. I’m thinking in broad, general terms – we’re always going to need many types of labor and many of those types, I think, are best organized cooperatively. Notice that I did include self-employment along with cooperatives most of the time when discussing this with J.

    I’m not inflexible but most agriculture, manufacturing, and many services must be done in by many people functioning collectively. There is a division of labor over which no one has any control, determined by our level of technological development.

    And so it is not a question of why kind of work is to be done, or at what level, but rather, who will own and control the surplus, the profit. Cooperatives mean that everyone who plays a role in creating profits earns some of them, and everyone has a say in the decisions that affect their lives.

    Some people may indeed prefer the ‘freedom’ of wage labor – less responsibility, less risk, less incentive and less reward – and that’s fine by me. But I think a mature society would see that sort of work carried out by children, with the majority of adults moving into the responsible role of owner and partner.

    “I’d tend to see a lot of the question of whether a company makes a lot of money being reliant on the decisions made by a comparatively small number of people near the top”

    Is it not true at this point that much of business management is a science? Why is it that a democratic assembly could not have the same access to the same objective information that forms the basis of executives decisions today? Economic oligarchy only seems to have one function – to ensure that the profits flow as narrowly upward as possible.

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