no third solution

Blogging about liberty, anarchy, economics and politics

The Tea Party Does Not Understand Inflation

November 5th, 2011

I saw this picture on Facebook today. It is a very simple explanation of a very complicated problem: how inflation robs all of us, predominately by destroying the purchasing power of accumulated savings and fueling an unsustainable debt-cycle.  The other side of this is Malinvestment, which when coupled with the effects of inflation, destroy an economy from the inside-out.

Unfortunately, the comments were full of fail: Once you buy in to the propaganda known as the American Dream, there is virtually no limit to the bullshit you’ll apologize for.  I hate to paint with a broad brush, but it seems like people apologize for capitalism because they’ve bought in to the propaganda and they honestly do believe that one day if they just work hard enough they will also succeed. And although some people do succeed, these are exceptions rather than the rule.

Oh, the lulz. Except they're serious.

John: Good for you. You took an opportunity that most people don’t have. Maybe you had a good idea that others didn’t think of. Maybe you had some capital saved up that many people don’t have. Maybe you just got lucky. Just because you were raised to believe something doesn’t make it true. Lots of people work their asses of and still struggle to make ends meet. A generation ago families could (and often did) live comfortably middle-class lifestyles on a single income whereas today it takes 2 parents working full time to scrape by. The most important part about a free market is the freedom. If you’re working 80 hours a week to get by, you’re not free, you’re indebted to an exploitative system.

You are working 80 hours a week non-stop just to “do alright”.  Is this the sort of world you want for future generations? Should it be this hard to put food on the table and a roof over your children’s heads?

Ruth: Try to read your words with someone else’s brain, preferably not John’s because you’re making the same mistakes. You believe that the 1% normally acquire their wealth through honest hard work, frugality and ingenuity, the fruits of which labor is passed from generation to generation. This ignores a great many people who succeed only insofar as they can exploit a system of privilege to their advantage. It is not a level playing field and success is not determined predominately by merit.

There are a million fucking reasons why we’re not free and we don’t have a free market, and each of these distortions has a ripple-effect of consequences that further distort the array of opportunities available, the choices we are presented. You’re forget that most of the people who play in to this game will never make it, most will fail somewhere along the way, thus the “1%”. Is this the sort of world that you want?

Bill: You’re making a common mistake. Maybe you believe that the bastardized “market” that we have is a near-enough approximation of what a really free market would look like just because we get the illusion of choice in some areas of our lives. The rich are rich because they work hard and the poor are poor because they’re dumb and lazy. Way to blame the victims. Do you really believe that Goldman Sachs isn’t rigging the game? Is this the sort of world that you want?

Donald: You are a beacon of light in an otherwise regrettable thread.

The rest of you, you need to pull your heads out of the fucking sand and understand the problems we face for what they are. People are protesting because they want to work and can’t find jobs. They’re protesting because at every level, their governments and elected “leaders” have let them down. They’re protesting because they’ve realized that the illusion of meritocracy is just an illusion, we don’t live in a free market or anything remotely resembling one, success is an exception rather than the rule, and it is becoming increasingly difficult to get by and to plan and save for the future.

These people aren’t lazy, they’re fucking fed up.

“Big Business” is the Problem

July 27th, 2011

If a workplace needs to be unionized, it’s already a problem that “seizing the means of production” can’t fix. The problem is “Big business” no matter who’s in charge and that’s why syndicalism or trade unionism doesn’t do it for me* . I object to any organization the aim of which is to monopolize a sector of the economy (and a very large union of would do precisely that).

If the unions are meant to be a counterweight to state-granted corporate privilege, the proper recourse is repeal, revoke, or nullify all the privileges in order to facilitate the the liquidation and distribution of the wealth they have amassed**. Whether this distribution may be achieved to some degree through the state’s legal apparatus is suspect, since the “law” is the capitalists’ primary instrument of oppression.

Although I am sympathetic to many labor causes, and not opposed to their means, I have reservations about their efficacy in achieving desired results.  As an equality of means brings about equality of opportunity, the real challenge is to equalize the means and I’m not convinced this happens.

  • If successful in “seizing”, the largest unions would control the “means of production”, employed thereafter for the benefit of themselves. They may be tempted to restrict membership to ensure higher wages, and by restricting membership, the union controls access to the means of production in much the same way that the capitalist-owner does: keeping employment safely out of reach for many.
  • Since all means of production are collectively held, a dissatisfied member can’t just walk off on his own because he can’t take his “share” of the cooperative capital when he leaves. Nor can he, or a group of others decide they are unhappy with the union’s stewardship, they probably can’t instigate a micro-“strike” and claim the product of their labor, or a homestead right to a share of the collective assets.
  • The individuals would be in a position much like the majority who live hand-to-mouth today: bound to the occupation by the necessity of hunger.  And if they choose to leave, they would leave with nothing***  whereupon they would ascertain that the only thing they have to negotiate with is their own labor power; they would be at the mercy of others.

On the contrary, in a free society with the means more-or-less distributed, the average man being unhappy with his station should have options:

If he has acted wisely and put some money away, if there is freedom to buy, sell, loan and borrow, he should have the financial wherewithal take some modest risks: he can go off on his own or join with co-workers and form a competing enterprise or start a new one altogether. Or he may choose to work for someone else; since there would be no workplace large enough or economically powerful enough to exert appreciable pressure on the markets for goods or for labor. In short there should be plenty of opportunities one could pursue.

What I hope we may one day obtain is an environment where no sector of the economy (including labor) is dominated by oligopoly.

I am all for abolishing the current order of things, but I do not want to simply put the power in another party’s hands (no matter which flag they’re waving). Instead I want to abolish that concentration of power which is so easily abused.


I am not suggesting  there is anything inherently wrong with labor organizations. Nor am I arguing against tactics advocated by labor organizations like the IWW (direct action, “If you need a break, take one”, etc.) nor am I fundamentally opposed sabotage, etc. If you want to argue for a syndic or a co-op of a dozen people or so who have a small shop and manage that endeavor “collectively”, be my guest. I am absolutely not debating that.
** In order to make an omelet you have to break some eggs. This is probably going to be a messy process.
*** Barring of course, any prior arrangements which may provide for severance pay, or other remuneration based on length of service, etc.

Marx’s General Formula for Capital

February 2nd, 2009

In Chapter 4 of Capital, Marx begins to discuss the transformation of money into capital.

Marx imagines two sorts of abstract circuits of exchange: C-M-C’ and M-C-M’. In the former, Peter brings to market a commodity, C, and sells it in exchange for money, which he then uses to purchase another commodity, C’. In the latter, Paul brings to market money, M, and sells it in exchange for a commodity, C, which he then sells in order to obtain M’.

From the former Marx concludes that, “The circuit C-M-C comes completely to an end, so soon as the money brought in by the sale of one commodity is abstracted again by the purchase of another,” which is to say that Peter has exchanged one commodity for another commodity of equal value. In the latter circuit Marx objects to the “surplus value” created by capitalist Paul, who merely exchanged £100 for £110, the difference of £10 being “surplus value”.

Now let us examine the circuit M-C-M a little closer. It consists, like the other, of two antithetical phases. In the first phase, M-C, or the purchase, the money is changed into a commodity. In the second phase, C-M, or the sale, the commodity is changed back again into money. The combination of these two phases constitutes the single movement whereby … a commodity is bought with money, and then money is bought with a commodity. The result, in which the phases of the process vanish, is the exchange of money for money, M-M. If I purchase 2,000 lbs. of cotton for £100, and resell the 2,000 lbs. of cotton for £110, I have, in fact, exchanged £100 for £110, money for money

At least two objections come immediately to mind:

  1. The M in C-M-C may at any time be either M or M’ in the circuit M-C-M, and that as such, these are not independent circuits but rather interlocking parts of a greater whole.
  2. What Marx is really describing is an arbitrageur, although painted as a thief and usurer.

In the first instance, Peter does not keep the money he receives any longer than is needed for his own security. He may of course immediately effect the C-M-C by exchanging the money he receives for another commodity item. Or, he may enter into an M-C-M circuit, exchanging the money for a commodity, to which he adds his labor over a period of time, the completed product which he expects to exchanges for M’ in the future. The farmer, for instance, spends money M on the purchase of new seeds, stock and tools with which to work the soil, in hopes of selling them in the future for M’.

Is the lack of transformation (as in the example of the farmer) what riles Marx? If so, this is barely worthy of scorn: where the farmer creates value, the arbitrageur has at the very least prevented the destruction of value, thus allowing its creator to realize value in exchange far greater than he could’ve on his own accord. The “capitalist” function in this instance is, if nothing else, Pareto efficient. One must not lose sight of the fact that the arbitrageur performs a valuable service of allocating scarce resources across an economy. Without the “capitalist” in Marx’s M-C-M circuit, the commodity is sold at a steep discount (if it is in-fact sold at all) and the most urgent need as measured by opportunity cost remains entirely unsatisfied. The problem of “surplus value”, posed by the M-C-M appears only as a result of Marx’s imaginary demarcation.

In the real world, C-M-C and M-C-M, are indistinguishable parts of a complex economy, in which economizing individuals are to some extent, constantly in the midst of performing both roles.  Even Marx’s vulgar capitalist holds and acquires money in order to satisfy some future need to consume.

Or, to put it another way, even the vulgar capitalist, at some time in the past had to provide valuable goods; he had to contribute materially to the economy in order to earn that first chunk of money, which Marx scorns.  What he does with it after that is of no man’s concern but his own.

no third solution

Blogging about liberty, anarchy, economics and politics