The "economic calculation argument"

You don't deal adequately with the issue of relative preference or desire for things produced by others, that is, outputs of the social economy. The Austrians had argued that preferences, or personal priorities for outcomes of social production, a product of individuals' desires, had to be "transformed" into prices in order to have an efficient economy. This is based on the assumption that an economy is efficient to the extent it satisfies the wants or personal priorities of the population. In the early 19th century this was called "use value" or "utility" but this is somewhat misleading because it is a relational. I've sharpened pencils witha knife but I really prefer a pencil sharpener because it uses up less of the pencil and creates a more even point. Both have "use-value" as methods of prencil-sharpening, but i prefer one over the other.

As far as I can see, your piece never really touches on this. You don't indicate how allocation in an economy is to be tied to preferences or desires. Referring to Maslow's "hierarcy of desires" (which is not a universally accepted theory of needs) only talks about "need" in the abstract. But what people want is not "food" in the abstract, but particular foods -- a pizza tonite, oat cereal with milk for breakfast, kung pao chicken for lunch, and so on, and particular things that are used as ingredients. Wants for food vary from person to person, from time to time, and from culture to culture. You can't infer these wants from an abstract concept of "need". Indeed, your talk of Maslow's theory of needs being a basis of allocation could suggest to someone that you have in mind a highly paternalistic idea of certain people deciding "on our behalf" what is going to be produced for us. And that would be a gross violation of self-management -- having control over the decisions that affect us. And self-management, in this sense, is also a human need. But there is nothing in your article that recognizes self-management over consumption in the sense of linking people's decisions about what they want to allocation.

You are right that market prices are not an accurate "transformation" of subjective preferences, and that quote from Pigou is an excellent attack on this notion. However, you assume that subjective preferences, or priorities that reflect personal desire, cannot be transformed into prices. From the fact that markets do not do this effectively, it does not follow it can't be done. Participatory planning was devised by radical economists like Pat Devine and Robin Hahnel precisely to do exactly this....to transform preferences into prices that do accurately reflect personal priorities or desires.

You mention in passing that there is an "epistemological" component to the argument of the Austrian economists but you don't go into this. Basically, Mises and Hayek argued that an effective economy needs to draw out through social interaction a lot of "tacit knowledge" including information about the priorities or relative desires people have for various products or outcomes. Part of the argument against centrally planned socialism is that it provides an incentive for workers and managers to lie, to deceive the central authorities about their aims and capacities. Pat Devine and Fikret Adaman argue that capitalism also fails to draw out "tacit knowledge" because workers also have an incentive to not cooperate or to lie to their bosses. There have been a lot of studies that show that productivity increases to the degree workers control production, because they start to let down their guard about being screwed. The argument of Devine and Adaman is in their article "Lessons from the Calculation Debate":

http://www3.sympatico.ca/bernard.leask/renewal.html

But you don't show how tacit knowledge about people's priorities is to be drawn out. In the participatory planning proposals of Pat Devine and Robin Hahnel, this knowledge is drawn out through a socially interactive process in which residents of communities make an initial series of requests for what they want produced, and community assemblies make decisions about what initial requests they want for public goods (parks, child care, housing, whatever). Through a process of negotiation with production groups, projected prices are developed through people showing how strongly they want things. But this only works because individuals and communities have finite budgets -- a finite entitlement to consume, or make demands on the social system of production. Under your proposal, however, everything is distributed free with no apparent limits so there is no limit on a budget. The problem with free distribution is that it makes it impossible to draw out from people the "tacit knowledge" of how much they prefer various possible alternatives.

But the thing is, we can't really know the social opportunity costs of the various possibilities without knowing what people want. You suggest various possible schemes for efficient allocation. But I'll point out to you that the problem with all of them is that they never tie back to what people desire. For example, you infer from some principle about plant ecosystems that the scarcest component should be economized on. This will not guarantee efficiency. That's because you don't know how important this component is in terms of the desires of the population. Something could be scarce but of little importance. Argon may be a scarce element but how important is it to us?

This means you do in fact need to make all possible inputs commensurable in terms of a measure of human priorities. And that's where prices come into play. But as the example of participatory planning shows, prices need not be formed by a market. There are other potential forms of social interaction that can draw out the tacit information about people's priorities that gets encapsulated in a price system.

Another thing you fail to consider is the issue of a plausible system of incentives. If there is no system of reward for work effort, if able-bodied adults are not required to do socially useful work to earn an entitlement to consume, it's unlikely there will be adequate incentives to do the work people need to have done. If incomes are equal, then the argument against prices that you articulate doesn't apply. Prices can measure intensity of desire between different people accurately if their rate of remuneration is the same.

t.

Hi

Ha ha. Excellent thread. With unrest in the UK’s public sector, visiting the likes of Hayek yields powerful economic arguments against the government running (aside from financing) the NHS, indeed the whole "public sector".

gatorojinegro is one of my fav posters at the mo. gatorojinegro, you’re presumably familiar with Castoriadis’ “market for consumer goods” coexisting with a planned economy for everything else. I personally find the argument a bit specious, I’d be interested to know what you make of it all.

Also, I’m suspicious that the economic relationships you suggest, which are absolutely fine – if you don’t mind me saying, constitute a market in any common sense meaning of the term. I’m increasingly convinced that ideological positioning explicitly a priori “against the market system” is useless in developing the meaning and content of what looks like our shared understanding of the project that confronts us.

Love etc

LR

I agree completely, LR...'market abolitionism' is a waste of time, especially for anarchists...how can you abolish free exchange?

Hi Robin, gato,

Robin - a lot of your article makes sense to me. The problem is that it presumes a static society once capitalism is transcended. It's almost like the break from capitalism creates something like a pause button, where human development ceases to advance once capitalism stops, and we just keep re-stocking the resources that capitalism had. But surely the point is that a post-capitalist society can better capitalism - and also produce more. So, the problem that I don't see your article addressing is the question of how do we decide what to do with the extra resources freed up by the move away from captialism? Sure, the running-down of stocks is a clear sign that we need to fill those stocks up again, but what about creating new stocks - how do we decide what to do there, and what signals do we use?

gatorojinegro - I think your critique of Robin is unfair. (1) He does deal with preferences - they are revealed by the using up of resources in a society where people are free to take what they want; clearly what they take more of is the resource that is most desired. (2) You talk about the lack of a link between scarcity and importance, and how this would undermine the efficiency of a production system based on avoiding scarcity; but presumably something wouldn't become scarce (or at least more scarce) unless it was important - if it's not what people want to be used, it wouldn't be being used up. (3) I think the argument about the lack of incentives is more valid (although personally I accept the assumption posited in the introducdtion to the article in which it basically states that, in creating post-capitalism, we will de facto have overcome the individualistic model of incentives, and have instanciated a society in which individuals are much more inclined to feel a sense of social responsibility) - but you're point about 'equal incomes' surely misses the point, in that there are no incomes (or outgoings) in a society in which resources are allocated on the basis of demand/desire/need and contributions are voluntary. The motivations for work come from factors that can't be considered in terms of incomes.

in response to John: "unfair", eh? Well, you can *assert* what you like, but you haven't made your case. I'll respond to each point:

"(1) He does deal with preferences - they are revealed by the using up of resources in a society where people are free to take what they want; clearly what they take more of is the resource that is most desired."

This is nonsense. That's because if everything is free, that someone takes something does NOT reveal anything about degree of importance. This requires that a person has a finite entitlement to consume -- is limited to a certain budget -- and thus must indicate trade offs. Moreover, this would simply encourage a wasteful overconsumption of scarce resources. for example, when Aragon communities in 1936 made everything free, bread was used to feed pigs -- an inefficient use of this product.

"(2) You talk about the lack of a link between scarcity and importance, and how this would undermine the efficiency of a production system based on avoiding scarcity; but presumably something wouldn't become scarce (or at least more scarce) unless it was important - if it's not what people want to be used, it wouldn't be being used up."

Again, nonsense. Everything is scarce in the sense that producing anything has social opportunity costs. You're forgetting about the most imporrtant resource of all -- human work time. Any time that anyone spends making anything cannot then be used to make something else. That's why human labor time is a precious, limited resource. We need to know that what we spend our time making/doing is in keeping with what is most important to people. The economy can't "know" this without revealed preferences.

(3) "...ou're point about 'equal incomes' surely misses the point, in that there are no incomes (or outgoings) in a society in which resources are allocated on the basis of demand/desire/need and contributions are voluntary. The motivations for work come from factors that can't be considered in terms of incomes."

YOU are missing the point. His argument against prices was that prices cannot capture or reflect accurately relative preferences because of income inequality in market society. This argument falsely assumes that markets are the only form of social interaction that can capture relative preferences as prices. That assumption is shown to be false by the models of participatory planning developed by Devine, Hahnel and others. These are models of a non-market, socialized, self-managed economy with prices.

t.

I think I'll let robin reply to most of these himself, as you're basically taking issue with his argument that it would be possible to allocate resources on teh basis of demand.

My own point - of course a collectively-organized society can't operate if individuals are wasteful when presented with the opportunity of 'free' resources. The point is that to get to that point the personalities of the individuals that constitute contemporary society will have changed. I think you've essentialized the nature of the human personality somewhere along the line - to the extent that your view of how humans work is worrying like the kind of assumptions about utility-maximization that the neo-liberals hold.

no, i make no such assumption about people BUT i think we do have to show that a socialized, self-managed economy would work effectively EVEN IF we were to assume that everyone is self-interested. In fact we know that people are not "essentially" dominated by self-seeking. However, as you also point out, in a period of transition, when we're coming out of capitalism, people will have the personality structures shaped by capitalism, even if -- as must be the case -- the revolutionary mass movement has eroded these tendencies significantly through the increase in habits of self-management and solidarity. We need to also envision an initial, transitional economy that can further develop these tendencies towards mutual trust, solidarity and self-management, so that over time people will come to trust each other more to not act in socially irresponsible ways. To the degree that happens, i would expect the free or public goods sector to expand.

but, ironically, i don't think giving everything away free in the transition era would do that. I think that would just create opportunities for self-seeking "free riders" to take advantage, which would undermine social solidarity. i think we could start out with many free things, but these would be decided by institutions of social self-management such as neighborhood assemblies or regional congresses, and these decision-making venues would still have to work within the framework of a finite budget and thus revealed preferences, but these would be a community's revealed collective preferences.

t.

ok, so now we're getting to the transition stage - agreed my argument won't apply there, and to be honest, I'm not sure how that would work, other than that it needs to come about through some kind of pre-figurative politics - so I suppose that means the creation of an enclosed space, within which people can set up their alternative society, with the aim of (ever-)expanding the boundaries of that space?

Here is a bit from Bryan Caplan, yes, that Bryan Caplan... certainly no fan of socialism.

Why I Am Not an Austrian Economist

It is not a case of abolishing "free exchange" (which is not the same as the market as gifts are free exchanges), It is a case of transcending the market. Nor should the market be confused with capitalism, which the Austrians always do. markets existed before capitalism and may exist after it is abolished.

The original article is pretty good. Have you seen the discussion on this issue in section I of "An Anarchist FAQ"? In particular, sections I.1.1, I.1.2 and I.4.4

Also John O'Neil has some good analysis of the "Calculation Argument" from a communist perspective in his books "The Market" and "Ecology, Policy and Politics"

I've enjoyed reading what ya'll have to say on this...I've been thinking about this question on and off for years (I read a ton about market socialism in high school and got really caught up in speculative non-capitalist economics).

More and more I'm beginning to think that there's a serious problem with making a dichotomous distinction between market and non-market systems of exchange. For instance, one could argue that there are commodities involved in the gift exchanges other than the goods being 'gifted'--namely an investment into a mutual system of insurance rooted in the reciprocal nature of the exchange. Furthermore, in real existing gift economies the most prosperous are able to use the gift exchange to buy status and a degree of influence in community affairs.

I also get the impression that the gift economies lack of a price mechanism relates to the lack of a supply-demand structure which makes it rather unwieldy in an industrial economy...we aren't talking about grain and jewelry and livestock but nuts and bolts as well as very particular finished consumer goods...producers and consumers all need to be able to get exactly what they need when they need it. There's not much room for the gray areas like generosity and stinginess.

Of course this problem would be immediately remedied without much trouble--a system of communication would spring up throughout the economy organized through a variety of producers and consumers organizations making a dynamic system of free exchanges through formalized channels.

Still, this isn't a market...(although it certainly looks more like a market than a real world gift economy does). What it lacks is the explicit price mechanism. That doesn't mean that there isn't some sort of value exchange going on, however...I would argue that each involved party feels content with the terms of the exchange as it is, after all, a "free exchange". Hence, the price mechanism may very well still be working behind the scenes and if this is the case we are dealing with a market economy of a sort.

I'm going to attempt to put forward an idea that I've been working on recently which may not be fully fleshed out so bear with me...at this point I must stress the importance that the exchanges in question are in fact freely made--with terms agreeable to all...I don't think that's controversial. I think that this issue could become problematic, however, if we push it a bit (ultimately bringing, i hope, to a better understanding of 'community ownership' and 'worker control'). Ultimately I'll attempt to theoretically demonstrate a market price mechanism that would rear its head even in an anarchistic economy (or perhaps especially in an anarchistic economy)!

Let's take the example of a group of workers who realize that the subjective value of the goods/services/privileges they receive from the community due to their contribution doesn't add up to the subjective value they attach to the 'toil and trouble' they put in (as Adam Smith would say). I would hope a group of factory workers would resist giving up the rights to exchange the fruit of their labor on terms they deemed to be unfair. This is where I am getting into controversial turf, but I strongly feel that if the workers in question decide to hold out for better terms...perhaps to barter with a neighboring community instead of just putting their latest pile of widgets into the communal storehouse or whatever...and if they are not free to do so, and furthermore if the 'community' uses force to make these particular workers participate in the economy of the commune on the commune's terms have we not seen a reemergence of the state and a transgression against the rights of these individuals?

One properly communist answer would be, "of course not...what you described is workers asserting private property rights...the commune owns this factory now." I assume that this is pretty straightforward and not really offensive to many of us. I'm pretty sure that Kropotkin's critique of Proudhon's mutualism, was that the commune or nation ought to properly own the means of production, not the specific workers who occupied and used these means of production with regularity. Proudhon had argued in favor of the latter...and he was tapping into a feeling shared by many working people at the time...and would extend well into the 20th century--at least in North America).

I don't think that we can easily take sides on this divide until we attempt to break down what property rights are and how they would be distributed in a stateless society. Anarchist-communists and left-communists share a commitment to worker-control. Usually this focuses only on self-management in terms of self-organization. This is to say that the focus is put not on worker-control of what is produced and the terms on which it is exchanged...left-communists/anarchist-communists don't ignore this sphere of things entirely but they do pass it over since 'in communism' it isn't supposed to be an issue. Instead focus is primarily placed on worker-control over how it is produced; the manner in which tasks are allocated and executed as well as the distribution of resources and rewards within the enterprise.

I feel, like Proudhon, that both spheres of worker-control are intrinsically linked to the right to own the fruits of one's own labor which extends from the core libertarian principle of self-ownership. For Proudhon this right was realized through the universal extension of the institution of 'possession' of land and the means of production ('possession' was used to contrast with 'ownership', the capitalist form of private property which was exclusive and in perpetuity as opposed to based on immediate use and occupancy).

It follows from this basis, I think, that placing exchange under control of a commune assembly or a regional federation of communes--or whatever external institution, however democratic it may be--prevents laborers from practicing the necessary vigilance needed to ensure that their social contribution in terms of relatively undesirable labor (work) is rewarded fairly (according to subjective values that are placed on the disutility of social labor vs. the utility of its social reward). Obviously, even if the workers owned the factory in every sense of the word possible they would still freely federate into industrial organizations and develop a system of exchange with other producers and consumer cooperatives based on mutually beneficial (or at least agreeable) terms. If a communist system can’t deal with this “haggling” (as one of us put it), it is rooted in theft!

Perhaps I've rambled a bit. Anyway, my intent was to show that even if the system of production and exchange is communist, if it were to stay together without coercion being used to keep various minority groups in line, it would be based on a constant negotiation of exchanges that could be best understood as a market system. Even if the price mechanism isn't made explicit with a system of currency, an informal economic culture of reciprocity still bears resemblance to a market system based heavily on credit...perhaps its just a credit system with less book-keeping and more stable, trusting economic relationships.

But let's take a step back…before, I asserted that anarchist-communists and left-communists generally agree that the commune ‘owns’ the means of production and the workers ‘control’ the means of production…I think it would make more sense to say that workers and communities practice joint ownership of the means of production, some property rights (control of the day-to-day internal affairs of our hypothetical factory) are held by the workers themselves while another set of property rights (those relating to what is produced and how it is exchanged) is reserved for either an industrial federation or a directly-democratic commune assembly.

I imagine that what I’ve said so far seems to be pretty critical of the viability or desirability of a communist economic system. That is only halfway true…while I do intend to raise questions about the way communism is generally understood and talked about in the anarchist milieu, my overall aim is to deconstruct its general assumptions regarding property and markets in order to apply a new set of concepts to the understanding of what a non-capitalist, non-statist economic system could look like.

I am not an “anarcho-capitalist”, after all…I understand the necessity and desirability of a system of joint worker-community control. State ownership simply results in a new exploiting class while total-worker control (absolute private property rights exercised through internal democracy rather than top-down dictatorship) can result in a breakdown of social accountability and solidarity.

For what its worth, I’d like to indulge in a brief economic ‘state of nature’-type exercise to demonstrate how applying market concepts demonstrates how joint worker-community ownership could be institutionalized without representing encroachment into individual rights and without leading to centralized economic authority.

Earlier, in discussing gift economies, I addressed how a simple exchange of goods can have hidden or implied commodities caught up in it…communism would be no exception as every exchange would assume the continued existence of social support network—a system of insurance and credit which would make any sacrifices seem worthwhile and help to negate the threat of losing one’s livelihood due to unforeseen events.

Let’s assume a free market system without the state. Since there’s no state, there’s no capitalism. It is impossible to acquire or maintain a huge centralization of wealth without the use of state violence (as Proudhon argues, one couldn’t possibly ‘own’ more land than one could personally occupy and plow). In such a society, industrialization would only be possible if folks pooled their resources…and assuming the population is aware that industrialization is possible and has the know-how to make it happen it would be safe to assume they would start organizing themselves to make it happen.

Let’s imagine that a group of weavers wants to start a new textile factory. While the weavers collective may be large enough and skilled enough to control production once the factory is completed, they definitely won’t have the resources or the construction skills needed to build the machines and the structures that house them. The weavers would also be reluctant to put everything they have into building a factory if it could just burn down without notice, leaving them without a livelihood. Moreover, the weavers might not have the ability to communicate with all of the other community members who would have something to say about where the factory ought to be located and how they produce the products (they’d want to keep it from destroying the environment, for instance).

What the weavers need is credit and insurance…things only the larger community can provide.

Imagine that the weavers (who have a passion for cloth but would like to have more free time) begin to excitedly spread the word around their community that they could provide everyone with high-quality low-cost fabric of all kinds if only they get the resources together to build a textile factory. Of course the other folks in the community would become interested in the proposition but by themselves would be unable to make much of a difference. After a few weeks of this information circulating throughout the community an idea starts to spread quickly: the people can organize a voluntary, popular organization which can marshal the resources to spearhead the project. Before long everyone is paying dues and participating in meetings. After a few weeks of deliberation the popular assembly has found a suitable location, organized a construction crew and agreed to provide the weavers with insurance against disaster. In return for these services, the weavers agree to respect the environment and to uphold safe labor practices (which if ignored would incur costs on the community as a whole). Furthermore, in order to get free (or almost free) credit from the community the weavers agree to provide textiles to the community consumers coop at a special price. Still, the weavers are free to organize production as they see fit and couldn’t be stopped from trading with other communities although this type of revenue could be taxed according to the terms of the loans.

The example I’ve laid out fits fairly well with the economic conceptions of mutualist anarchism…a system based on a form of private property based on occupancy and use, with exchanges following free market principles. Nevertheless, if this process of industrialization were to continue this way it is entirely plausible that the outcome would be something very similar to anarchist-communism. Ownership of the means of production would be simultaneously social and individual. The major difference is that in the mutualist model, the community’s claims of certain property rights would be based on the value of the services brought to the productive process through the community’s role in land management, extending credit and providing insurance. These roles would also enable communities to have a significant hand in planning how the economy develops even while the free market continues to exist.

Finally, this example highlights how the claims of community can actually be directly tied to the contributions of community. According to the communist system of property, ‘the what’ of production is the domain of the community while ‘the how’ is a matter for the workers themselves. This division is arbitrary and creates unnecessary conflicts between individual groups of workers and the larger community. I feel there is an underlying tension that must be brought to the surface: either the workers are self-owning individuals or they are owned by the community. If they are self-owning they ought to be free to assert total autonomy in the spheres of production and exchange limited only by free and fair agreements made with other organs of the social body. If they are owned by the community than they may be trusted to organize their own servitude but the community has the right to take (by force if necessary) whatever is produced by ‘its citizens’.

I’d sum it up thusly:

when we talk about anarchist society being characterized by common ownership of the means of production it means something entirely different than most communists (because we don't have a state to enforce the distribution system). Taking into account that the new communist form of property probably isn't going to be purely communal in the sense that some people--let's say the workers of a particular factory--will have privileged rights to access, occupy, use the machines. Since any free society ought to be based on the idea of self-ownership and as such ownership over the product of one's labor, 'the community' doesn't necessarily have claims on what the workers of this factory produce. This is to say, that a community assembly may request that the factory workers send all their widgets to public storehouse-A but it doesn't mean that they have any coercive power to make the workers give up control of their product...indeed (I hope)they could be expected to fiercely guard their right to exchange the fruits of their labor as they see fit. If the terms of the community assembly...or the industrial federation or whatever do not appear to be fair, the workers are free to choose better terms or they are being robbed by the state (even if this or that popular organization temporarily creates an army just to keep this group of workers in line).

So, in my opinion, a system of free, uncoerced exchange is an inevitable and desirable result of anarchist conditions. This isn't to say, however, that every workplace will become a collective of cutthroat capitalists. If the group of workers in question sees that their participation in the commune would allow them free access to the goods and services all the other participating workers were producing, surely they would drop all objections and be willing to do their part to keep the system going.

Still, this type of arrangement may not be available immediately...in fact, it may not even be possible in some/most/all modern contexts (who knows? its a very different world than it was 150 years ago!). What would happen if a free-access communist economy didn't immediately spring into being (and I don't think it could)? Well, I believe we would immediately see a market system of exchange develop relatively quickly based on credit (if not on a new currency). Social bonds would be created (as Bakunin repeatedly pointed out) because of the necessity for trustworthy people who honor their contracts. Individual firms/worker's collectives would voluntarily 'tax' themselves to provide for social services (for themselves and their families and friends). They would even create their own banking system to fund expansion and upkeep--and to provide for the needs of higher order industrial organizations. If these higher-order industrial organizations...or even some sort of more general federation of communities were responsible for extending credit and insurance, they would automatically be creating a form of property that combines community control and worker control in a very interesting and organic way: workers have control of their daily lives because they run the workplace democratically yet the large-scale decisions are made considering a number of inputs: community and industrial organizations (creditors and insurers) as well as the workers themselves.

So we have in this model, developing naturally out of a complex network of negotiations and exchanges, a system of joint worker-community ownership which balances the tension between individuals and communities (one group of workers and the larger society). Furthermore, it utilizes the best parts of markets and planning to create a harmoniously functioning, self-sustaining socioeconomic system.

I’m excited to hear what ya’ll think!

Solidarity!

This is so much good stuff to sort through. Such a stimulus to read outside stuff. The chance to eavesdrop on this kind of argument is why I joined.

I'm a dilettante, a dabbler in theory, though I knew when I first encountered anarchism, fifteen or twenty years ago, that as an ideal, it sounded good. I've done a little activism of an ineffectual nature, but my fundamental attitude is one of despair and skepticism. My cross, eh.

I intend to read robbo's piece, so I can't comment yet. It's probably over my head. But I will say I think antieverything deals with the place of the market in a free society well. I've always wondered how a phenomenon such as the marketplace could be eliminated. Perhaps it simply needs to be judged and guided on a higher aesthetic plane.

robbo: "For example, I take it as given that in a communist society one of the first things we will want to do is eliminate global hunger . So the production of food and agricultural technologies will take priority over the production of , say, lesiure goods."

who is this "we"? how is this priority decided? and what is a "leisure" good? and how do "we" decide which is which? are you assuming some worldwide system of central planning to implement this "priority" or what? Your vagueness here is unacceptable.

robbo: "You say that I "don't indicate how allocation in an economy is to be tied to preferences or desires". But i think I have! In the the first place there are collective preferences in this is expressed in the hierarchy of social goals adumbrated in the article iitself."

There's no way to tell what the actual priorities for production will be until such a society exists. To try to state this now is either paternalistic -- you know what is best -- or baseless mind-reading. There would be collective preferences decided through institutions such as neighborhood assemblies. But this only pertains to preferences for public goods, not preferences for private consumption goods.

robbo: "Secondly, there are individual preferences for consumer goods. Far from taking a paternalistic line the article very much recognises the importance of "self-management over consumption in the sense of linking people's decisions about what they want to allocation".
This is what free access to goods and services is all about. You taking according to self-defined need and give according to your abilities and inclinations. When you take something from the store, that good needs replenishing and the signal to do that is transmitted via a self regulating system of stock control to the the various producers of said good."

Sorry, but this is nonsense. That's because merely taking something does not express a preference. A preference is expressed when a person must make a choice between A and B where you can't have both A and B. This presupposes that each person has a finite budget and can only state their preference up to the limit of that budget. If a person doesn't have to give up anything in taking something that is free, no preference is being expressed. You may say "Why would they take something if they don't want it?" But a want is not a preference. A preference is relational, it tells us about how much people prefer one thing to another.

We need to know HOW MUCH people want things. That's because there is inevitable scarcity. Our labor time is a scarce resource. If we have houses built, that construction time and materials can't be used to build schools or other things. Everything that we didn't build using the labor and materials that went into the house is the social opportunity cost of the house. Your free access scheme has no way to measure social opportunity costs. This means it will inevitably be wasteful and ineffective in its use of our labor time and other scarce resources.

Having everything be available for free access also encourages selfish individualism because people who are socially irresponsible will win in that they will take more things and people who are socially responsible and who take fewer things will lose. Morever, a person can't be socially responsible because they won't have any idea of how costly to society it was to produce the things they take.

Also, taking things for free only tells us whether someone wants what is there. It doesn't tell us anything about other possible things we could produce. What if people would prefer them? How is this uncovered? What if the things people take from the free access centers are actually things people prefer much less than things that aren't there? And don't tell me that community assemblies will uncover this. Community assemblies can only measure collective preferences for public goods, not personal preferences for private consumption goods.

Antieverything: "I feel, like Proudhon, that both spheres of worker-control are intrinsically linked to the right to own the fruits of one's own labor which extends from the core libertarian principle of self-ownership."

The so-called principle of "self-ownership" is a right-wing libertarian principle. People are not social atoms in the social anarchist view. The problem with the "fruits of your labor" argument is that the productivity of the workplace is affected by social inputs like education. Your productivity isn't due only to you, but to your training, equipment, who you're working with.

And if you're talking about a market system, then you have the problem you can't get prices that will accurately measure social opportunity costs because (1) unequal incomes in society mean that you have no way to accurately measure relative preferences, and (2) cost-shifting
by firms and uncompensated external effects like pollution will mean that prices will not reflect actual social costs. Revenue of a firm in a market will reflect things like bargaining power, market share, effectiveness at shifting costs onto others, and other things. Markets enable those who are more powerful to take advantage of that power. People with more expertise, connections, etc. will use these and any other personal advantages to pressure firms to give them more pay and internal decision-making power, and before long you'll have a class system once again.

t.

Hi, I am new to this site and this is my first post.

I was delighted to read Robbo’s interesting article on the economic calculation argument (see link on first article in this thread), especially the section where he describes how a socialist society might function without being dependant on central planning.

I studied economics in school and university for four years and it was a good foundation for understanding how society is ordered. I was not mature enough in school to see that some of the axioms in classical economic theory are not really a true representation of the real world, that homus economicus is a parody of mankind, and that all this is used to build an incredibly powerful ideology of the free market. My first inkling of a different route, other than Keynesian economics, was on reading about anarcho-syndicalism. Clearly from a libertarian philosophy there was a distrust of central planning, and I came across terms such as free exchange, free association and federation as theoretical concepts in the administration of things on the basis of “to each according to his needs, from each according to his ability”. However, there was very little, if anything, on the nuts and bolts of the exchange mechanism, which Robbo addresses in his last section.

Robbo’s conceptualisation of signals passing along what I call “nodes” of exchange is the key, in my opinion. Shop keepers keep a tally of what is demanded and signal these to wholesalers, who signal to producers – factories, workshops, farmers, and to transport workers. If more labour is needed this is signalled by each node in the exchange network to a labour exchange. What is produced is ultimately a function of infrastructure,technical knowledge, raw materials and willingness to work.

The most explicit description of something like this that I have previously seen was in Voline’s “The Unknown Revolution” where Voline is invited to a factory meeting in Petrograd in 1917 after the Soviets have organised themselves, but the Bolsheviks are trying to force their plans on them. They want to close the factory and a government (Bolshevik) minister comes to explain why. In a wonderful passage Voline speaks to the workers in reply to the minister, and says something to the effect (and I am writing only from memory) “who better than you knows how to run your factory, you know the machines, the suppliers, the trades, the transport workers and other factories through all your personal connections. Form committees to liaise with these workers, send out to look for supplies and raw materials, and keep producing. That the government wants to close you down just shows that they cannot technically organise this factory, they who aspire to plan the whole economy. Russia needs what you produce, and you want to work and do it, so just do it.” I apologise for this paraphrase, but I hope it captures the effect of Voline’s words. The wonder of this passage in Voline is that it is simple, obvious, and in a real situation.

And that is just the problem with our economics. I think Robbo’s effort is laudatory, his dismantling of the ideology and his laying out of the solution, but we must find words and concepts to make this as readily accessible to people as possible. Perhaps if we can get it into the public consciousness, it might eventually get into economics education. I have had some success in persuading individuals in pubs on the idea of “free exchange”, people who believed that there are only three systems – the free market, state planning, or primitive barter. I put it in the form of a “thought experiment”. Imagine you wake up and find that money has disappeared, or become worthless. What do you do? After the initial shock I go to the corner shop for bread and milk. If the shop-keeper has got over his shock, he will serve me. When he sends his order to the dairy and the bakery, they will respond if their workers and supplies are coming in. Let’s assume that everyone goes to work, and that everything keeps going around. We see that every exchange is now only one transaction, instead of two in the world of money. But accounts are kept, real demand tallied, and signals are sent back and forward. We can see immediately that this is a market. Indeed it is a free market. And it is a way of ordering a highly technical and sophisticated economy. It will naturally lead to alterations in the structure of what is demanded, and who does the work. Lots of work will disappear, work just to make money or serve the money market, for example. People usually counter “what about shortages?” Well, my shopkeeper knows daily demand for his milk, and he knows how much he has had delivered, so he says, “sorry John, only half a litre for you today”. Rationing will naturally happen from all the nodes of exchange. Eventually the signals to the farmers will put more resources into milk production.

I cannot for the life of me understand how sophisticated economists do not see how obvious all this is. Our task should be to make it blindingly obvious, and for that we need theory and models, simple demonstrations, and most of all we need examples. By the way I wrote up a critique of money exchange in the Graswurzelrevolution, an anarchist newspaper in Germany in about 1992. I laid out my “thought experiment” and called the system a “signal economy”. We need to relate this theory to any examples we can find in Russia, Spain, and anywhere, perhaps more recently in Argentina.

Responding to robbo's points:

(1) "I am loathe to be too specific however much you say my vagueness is unacceptable for the simple reason that it is up to the people of a communist society themselves to elaborate ways of arriving at some kind of agreement about what needs to be done first. I strongly suspect the elimination of global hunger will be amongst the top priorities and although i cannot say this for certain I think it is not an unreasonable claim. But then I am in an impossible dilemma - if I stick my neck out and make a guess you accuse me of being paternalistic; if I withhold judgement you accuse me of being unacceptably vague. Which is it to be?"

We don't need to say what people's preferences are going to be. The real issue for us is the proposal of a set of institutions that eliminate the class system and facilitate people being able to ensure production of what they most prefer, in a system that develops everyone's potential instead of stultifying it. What I was asking for was greater clarity about the institutions of allocation, not the preferences. We can be clear about how resources are to be allocated without trying to predict what people will in fact most prefer.

(2) "I cant eat both a fish dish and a meat dish at the same time, that is true, but they are both available to me as alternative options and in choosing a fish dish over a meat dish I am indubitably expressing a preference".

I was talking about how to make preferences effective in determining what is produced. Your response here doesn't respond to my point because you're already assuming things someone has acquired for consumption.

Further: "But of course if everybody just took from the distribution stores without limit sooner or later some people are not going to be able to get what they want. This is analogous to your limit budget claim except that it applies at the social level not the individual level - that is to say we are talking a finite amount of stock items in the distribution stores

So taking a methodological collectivist postion rather than a methodological individualist postion it is quite reasonable to talk about individuals expressing a preference in what they consume in a anarchist communist society. Granted this is the summation of individual decisions about consumption which express what people want but in terms of producer units the aggregate demand schedule they have to deal with has to do with the overall pattern of consumer preferences in relation to finite supplies."

Community assemblies, with finite budgets, can effectively decide preferences for public goods. But they are not a means to the expression of personal preferences for private consumption goods. In the above quote your fallacy is in attempting to reduce personal preferences for private consumption goods to community preferences, which can only be effective for public (shared) goods.

Human beings have both preferences for public goods and private goods. Capitalism grossly under-produces public goods because it has no effective way to make preferences for public goods effective. But you are mistaken in thinking that there is no such thing as preferences for private consumption goods. Saying that there is does not presuppose "methodological individualism".
Failing to have a realm where individuals can distribute a personal entitlement to consume among things they want simply as invididuals, without getting community agreement, is tyrannical. It also makes it impossible for individuals to gain access to materials they would need to defend themselves politically. It fails to allow for the existence of minority cultural preferences.

(3) "You say "Your free access scheme has no way to measure social opportunity costs. This means it will inevitably be wasteful and ineffective in its use of our labor time and other scarce resources." This is untrue. I dealt with precisely this point in the article I posted. It is possible to calculate the opportunity costs of allocating 10 units of factor X to produce good M as opposed to good N . The increased output of N that you forego by deciding to allocate 10 units of X to M is the opportunity cost of your decision."

No. You've not shown how social opportunity costs are accounted for. That's because something is a social cost only in relation to what people prefer. Your statement doesn't tell us how social opportunity costs are calculated in the economy because it doesn't link the choice of N over M to preferences of indivduals and communities.

Continuing: "But in any case if what you arguing here is the need for a system of market prices - capitalism - then i have to tell you that under capitalism what counts is accounting costs not opportunity costs."

Fallacy of false dichotomy. You're assuming that your "free access" scheme and "capitalist market prices" are the only allocational alternatives. They're not. Prices can be formed through a non-market system of participatory planning, which registers individual and community preferences through an interactive process of negotiation between individual consumers and community assemblies, on the one hand, and producer organizations, on the other hand. I'm not advocating markets. I'm a market abolitionist. What I advocate is participatory social planning. But this presupposes that individuals have a finite consumption budget, and that able-bodied adults earn their consumption entitlement for private consumption goods thru socially useful work effort.

Your argument about free access solving the waste problem is a non-sequitur. To show that your economy won't be wasteful, you need to show that our labor time won't be wasted which means you need to show how it can ensure production of what people most prefer. That presupposes you have a way of effectively measuring preferences and making them effective in determining what is produced. I've argued that you have no way to do that.

(4) Your claim that people want private consumption goods solely for "conspicuous consumption" and not rationally is paternalistic bullshit. People have wants. Some of these wants are for oneself, some are for larger community benefits, or collectivities one identifies with. This is part of human nature. There are inevitable limits to what each can consume, due to scarce resources, both ecologically and in terms of labor time. This means that inevitably people can happen to want more than their fair share, based on their work effort.

t.

You are right, but the Russian peasantry (and even the industrial workers) that Bakunin and Kropotkin observed were operating in very different situation than the workers today...part of what I was doing was trying out a synthesis of social anarchism and distinctly American individualist anarchism. The history of working-class libertarian anti-capitalism reveals a somewhat unique aesthetic in the States. This isn't to say its been Tuckerite, but has definitely been predicated on the assumption that the workers in the factory own the factory and it was up to them after that. Of course, in any industrialized country at this point in time we're often talking about one "employer" "supporting" an entire town...so worker control is pretty much inseparable from community control. It wouldn't be hard to imagine a syndicalist system springing into place. In the current phase of industrial society, it seems much likely that such a system could freely emerge. The huge diversity in industry and hence in the work force and the increasingly unequal, global economy makes it very unlikely that one single movement could unite all producers and consumers under one umbrella--free access or otherwise. And besides, even if we see some bona-fide communes spring up here and there, it's a tall task to expect people to immediately develop a full-fledged gift economy on a national or global scale. At some level of society this market mechanism will come into play if only temporarily while folks develop strong economic relationships.

Right again! Trust me, I'm a big defender of social anarchism on these exact grounds...but I also feel the need to mediate these ideals with a practical economic system.

Education? Even if we are assuming absolutely private ownership on the part of the cooperatives, workers would without a doubt immediately mobilize resources to provide for the education of the children...whether they are their own children or the children of relatives, friends or neighbors. Same goes for health care, infrastructure, etc.

Optimally, all the producers would voluntarily contribute for a variety of free social services available to all. Another option would be for community credit unions to mandate such an arrangement in the terms of its loans while a popular assembly could attach fees to the use of land and natural resources, particularly land and resources in high demand/short supply.

Furthermore, as far as job training goes, we can expect it to be funded by the producers organizations themselves. Cooperatives in Spain have their own technical universities. If specialized workers were needed (we can safely assume they would be needed far less under worker-control than under capitalism) they would come directly from the ranks. Moreover, since the education system wouldn't be regulated/monopolized by the state or its wealthy cronies, 'degrees' would be freely available to all based on talent and commitment rather than class background as under capitalism. Still, even with these limits on inequality, if a scarcity of a certain type of 'skilled labor' exists it would allow those workers to demand better compensation (we can't stop them from going somewhere else that would agree to better terms). Luckily, the market mechanism would take care of that...hell, it would be in the collective interest of a cooperative to make adjustments (expanding job-training, streamlining operations) in order to equalize compensation.

You also correctly noted that the 'equipment' a worker uses was not built by her or him but, indeed, represents a social contribution to said worker's production of value. That's true. (man, you are on a roll!) However, remember the hypothetical example I developed in my first post? The weavers collective couldn't possibly get off the ground without the larger community extending credit...credit with some stipulations (sell to us and do it close to cost...don't fuck the environment...don't operate in an unsafe fashion). Furthermore, the loan would be payed back (albeit with little or no interest)...the result is that the collective ends up completely paying off the 'community' for its contribution. However, in communism a collective of workers is tied to the community's terms forever...even if it means they are forced to pay back the community several times over. Like I said before, infrastructure would work in a similar way. Either producers would voluntarily build roads and set aside funds for their upkeep or the roads could be built by the community and payed for with use fees.

I'm all for recognizing the social contribution to all economic activity, no matter how individualized and self-directed. What I don't approve of is a specific group of people (a tyranny of the majority) laying claim to this contribution on ultimately arbitrary terms. A popular assembly, no matter how directly democratic, can never rightfully claim it represents the productive contribution of "society" as a whole. Not only do communists seem to be saying that such an organization can make such a claim, but that it has the right to everything produced within the reach of its "popular" militias.

How unequal do you suppose incomes would be under such a system? The relatively small inequalities that would exist would be based on an individual performing work that is in demand. Certain types of work could be in demand either because the education system hasn't adapted yet--and the existence of this inequality would ensure that it would adapt--or because the tasks are downright unpleasant. I seriously doubt such a small income inequality would skew the market to the extent you claim.

I'm not familiar with 'cost-shifting' though I can imagine it has something to do with the next point:

'External effects like pollution'...would be dealt with, as I've already pointed out, by the terms of the loans imposed by community credit unions. Besides, workers would be much less likely to pollute their own communities...the incentive to exploit others is greatly reduced under worker-control anyhow. (If one capitalist makes $100 screwing someone over, the 100 employees would only make $1 each)

A competitive, free market will naturally tend to reduce prices to cost. That's just an economic fact. In capitalism this means the capitalist maintains a rate of profit by putting downward pressure on wages. In worker control it just means that workers get payed according to their own subjective valuation of their contribution (otherwise they would go somewhere else).

Any institution, no matter how directly democratic, must maintain constant vigilance in order to equalize power relations. Expertise, connections, prestige, good looks, etc. allow individuals to assert a degree of influence in any democratic forum...even in a workplace. I've already spoken about why internal income differentials would be minimal. As far as decision making power goes, if the workers in question aren't a bunch of chumps, they would be really reluctant to dilute their own power within the organization. If specialized decision-makers exist, they would be recallable and elected from the rank-and-file according to their ability and loyalty to the organization.

PS, I've enjoyed watching this discussion develop, on all sides.

Solidarity

Your idea of what community credit unions can get us are naive. Look at the Caja Laboral
in the Basque country. Over time it has come to behave more and more like a capitalist institution, including investing in non-coop, exploitative ventures in the 3rd World. Pollution is only one of a myriad of forms of cost-shifting behavior. In a market each firm must always work to iminimize its market costs. The easiest way to do so is to shift costs onto others, such as training costs, health care costs, pollution costs, and so on. In a market system, the only costs that are captured by the workings of the economy are those that are reflected in prices. These are prices based on a seller's private ownership of something. But market transactions always have costs that affect other parties than the buyer and seller. Agribusiness doesn't have to pay if its pumping helps to destroy an acquifer, or if its use of petrochemical herbicides, pesticides and fertillizers pollutes the groundwater, or if its use ot genetically modified corn is killing off the honeybee population (as actual present situation). Another example of cost-shifting is the destruction of world fisheries due to overfishing (another actual situation).

Your community credit union would be presumably the basis of investment of nominally social funds. But these will not be invested in socially efficient ways unless the community actually controls effectively the actual investment plan. But in a market, market criteria tend to dominate and push aside social criteria, as the example of the Basque Caja Laboral shows. The bank will want to ensure for example that a firm doesn't default on its loans. What if firm A can use cost-shifting to undercut firm B? Then disallowing firm A to pollute or do whatever cost-shifting B is doing will cause A to go under, and the community bank will lose its loan capital.

Moreover, how do you measure the cost from pollution? In other words, how much should a community be willing to invest in pollution reduction or prevention? To know this, you need to know the social cost of pollution. A market has no way to determine this.

There will in fact be great wage differentials in your market collectivist scheme, tho less so than under capitalism, due to the social power of the coordinator class in such a system. A merely formal system of democracy in the coops is not sufficient to prevent class domination. The examples of both Yugoslav "market self-management" and the Mondragon coops show this. In the Mondragon coops there are annual membership meetings where workers can in theory challenge the plans of the financial professionals and managers. But if you're working 40 hours a week running a machine in a stove factory,you need have the opportunity to learn the necessary skills needed to understand the financial and engineering planning and you're an easy mark to be snowed by the professional elite. A labor market will force firms to retain a capitalist styel detail division of labor, which will empower a managerial/professional elite. In countries dominated by the coordinator class there is significant income differentials but less than under capitalism. But it's not a classless system. The working class remains a subjugated and exploited class. This is inevitable in a market system.

I sympathize with your desire to have a politics that fits with the popular libertarian culture of the USA, but I'd suggest that the form this takes among the working class does not necessarily require buying into the religion of the market. It does take an anti-bureaucratic and anti-statist form, but that suggests an emphasis on self-management and a decentralized economy based on direct particpation.

t.

Robbo: "I have maintained that communism will be a largely decentralised self regulating system of production. This answers your point about the institutions of allocation to a large degree: it will be the production units themselves interacting with each other and the various distributions points at which final goods are made available to the public."

Your reply tells us nothing. Free market fundamentalists also describe their conception of laissez faire capitalism as a "largely decentralized self-regulating system of production." You refer here to "we" deciding things but you don't talk about the institutional context. But allocational institutions are those institutions that enable wants of the population to determine allocation of resources to produce things to satisfy those wants. We can't evaluate whether your proposal would be effecive or not if we don't know how this link is made, that is, how what people want determines the allocation of resources.

You continue to claim that people taking things that are free in stores tells us what they want and this is supposed to be what determines allocation of resources. Your assumption is false. It does not really tell us what their real preferences are....precisely because everything is free! They don't have to give up anything to get the items they take. They are not required to stay within some finite budget.

So George goes to the distribution center and takes some very expensive book, like an anatomy book, because he's always been curious about that, and maybe it ends up being used as a door stop, and Fred does so too, and so on, and Cecilia takes 30 pairs of shoes because she's got a thing for shoes and likes variety in her appearance, and Mary does so too, so on. So, what happens is that, if we're to keep up with all this "demand" expressed by disappearance of stock, it turns out we'd all have to work 14 hour days. "Demand" will simply outstrip production very quickly. The dea of an economy is that there is a way to *economize* on the use of resources in producing what people want. Let's say there are two ways to produce shoes. To be able to choose between them, you need a way to evaluate how important to us the different resources are that would be used. You have no effective way to do that. Economizing on the scarcest item isn't an answer because X could be somewhat scarcer than Y but Y is much more important to us, maybe because it has a wider variety of potential uses, or its use has more severe social impacts.

People need to be required to link their decision to take something from the store to things like how much they want to work, or things like demand for trees to print books and magazines and provide for people's computer printers and so on, which then places a demand on land for the trees, and labor to cut them and make paper, and use of electricity to make the paper, and so on. To do this means we need a way of comparing different possible inputs of production and different possible outputs in terms of how important they are to us, which means we need a common measure of their value to us. This is why a price system is needed.

Your free access scheme would immediately run up against out of control demand that we can't meet because you have no way to economize on labor and resources based on this scheme where people can get things without them being required to provide anything, such as entitlement to consume based on a certain amount of work effort in producing this stuff. Sometimes, at this point in the argument, advocates of this "moneyless communism" scheme start talking about rationing. but that just says that limits are imposed on how much one can take of something. but it doesn't tell us how it can be decided how much of the different things to produce. if rationing is used, it will be completely arbitrary if you have no way to measure intensity of desire for different outcomes.

In response to your claim that people taking things for free shows their preferences:

me: "I was talking about how to make preferences effective in determining what is produced. Your response here doesn't respond to my point because you're already assuming things someone has acquired for consumption.

You:

You're missing the point, again. When you talk about people taking things from stores, you're already assuming that there is a variety of things in the stores. That means that decisions were already made about what to produce, and thus about the allocation of resources to produce them. How do you know that what was produced is what people want? You have no way to tell that. When someone takes something from a stoe, that only tells us they selected that item from the items available, not that that item is what they would have most preferred to have. What they most preferred to have might not be available.

robbo: "Also, I think you are misunderstanding the significance of a hierarchy of production priorities. All though this involves collective decisionmaking it has to do with all kinds of goods, both public (shared) goods and private consumptions goods. But - and this is the important point - it is not about what should or should not be produced. As I explained before, it is nothing to do with central planning which determines what is produced. It is rather, about the priorities of allocating factors of production where these are scarce in relation to the multivarious demands placed on them. Individuals may want for example certain luxury goods and there is no intrinsic reason why these should not be produced in a communst society but by collectively deciding to prioritise resource allocation to the production of other goods higher up in production hierarchy, individuals are indicating their preference for the latter as a
priority. But that does not prevent the former from being produced or being appropriated by individuals insofar as resources stretch to them being produced"

how do you define a "luxury good"? a hierarchy of priorities only makes sense if these are determined by the desires of the population. You've not given a plausible account of how your scheme is going to ensure that the priorities that govern production is determined by what the population most desire. From the fact that A is scarcer than B in numerical terms it does NOT follow that A is more important to people than B. The economy must be able to first determine what the actual desires of the population are in relation to potential products.

re: social opportunity costs:

Robbo: "No, once again you have misread my position. The opportunity cost of something is the best alternative you forego as a result of your decision. There are two aspects to be considered here. The first is qualitative - what is the next best option to allocating 10 units of X to M. This is where preferences come into play. It could be P , Q or N but we decide that it is N. How do we decide it? Well one way might be how we categorise N within the broad hierarchy of production priorities and where we see N within the hierachy in relation to P and Q. The second aspect is quantitative - the calculation of the opportunity costs. If you know the technical ratio of inputs to output it is relatively simple to calculate changes in output from a change in inputs. Of course this depends on other facts such as whether X is the limiting factor. If it is not then a hypothetical increase in N may require some modification of the technical ratio of inputs. But I digress. The thing about opportunity costs is that they already imply some kind of preference but remember also that opportunity costs are only hypothetical; in practice what counts is accounting costs not opportunity costs. Furthermore opportunity costs are notoriously difficult to pin down in reality because we often do not know the full extent of the opportunity costs of our actions. In no way am I denying the reality of opportunity costs, only its applicability in real world decisionmaking"

This blather doesn't tell us what social opportunity costs are or how your scheme would measure them, and make this information effective in selecting what and how to produce. Social opportunity costs are a measure of how important to people the various inputs and outputs to production are. The only way this can be revealed is if people have to make choices where they are forced to give up something, such as a part of their finite budget for consumption.

robbo: "Firstly your "fallacy of false dichotomy" is a bit misleading because I was talking about opportunity costs vis-a-vis accounting costs and this is quite a different matter to the issue of free aacces versus capitalist market prices."

Again, you simply repeat the same fallacy of false dichotomy in your reply. Capitalist market prices and your free access scheme aren't the only alternatives.

me: "Your argument about free access solving the waste problem is a non-sequitur. To show that your economy won't be wasteful, you need to show that our labor time won't be wasted which means you need to show how it can ensure production of what people most prefer. That presupposes you have a way of effectively measuring preferences and making them effective in determining what is produced. I've argued that you have no way to do that."

Robbo: "No you are mixing up two separate arguments here. The structural waste argument doesnt have anything to do with the argument about how to ensure production of what people most prefer which I have already dealt with"

You're simply repeating the same mistake. Continuing to beg the question means you're still begging the question. Your "structural waste" argument ASSUMED AS A PREMISE that your free access scheme is efficient and not wasteful. But I'm arguing that your scheme would be horribly wasteful because you have no way to tie allocation of resources effectively to the desires of the population. you have no way to economize on resources in ways that reflect the relative importance of those resources to the population, based on what they want.

robbo:

We need a price system, yes.

robbo:

Allocation isn't determined by revenue of competing firms. When you use a part of your entitlement to consume to acquire something, it doesn't go as revenue to the production group. People earn an entitlement to consume, using the socially owned means of production, based on the total sacrifices in making the things we have determined are socially useful, via the participatory planning process. There are no competing firms. Production is determined by a social plan. The negotiation process is part of a planning process, not a market. Markets determine what people get based on bargaining power, using whatever advantages the competitors have. Under participatory planning, prices and allocation are not determined by bargaining power, but by the social planning process. Production groups get allocated resources -- job slots, equipment, land etc. -- based on evaluation of the proposed outputs by consumers in a process of social negotiation to determine a plan. In this process production groups put forward proposals, and consumers and communities put forward requests, and people then refine and modify their requests based on summaries of the consequences of the intitial set of requests. For example, if the initial set of requests would require everyone to work 14 hour days and we don't want to do that, then people would winnow down their requests.

robbo:

There is no tyranny of the community because individuals make there own requests for their private consumption goods during the planning process. This is who we know before production begins what things we should make in order to satisfy people's wants.

Prices are not set by community meetings or something like that. Prices are determined by a socially interactive process of negotiation. Both individuals and community organizations make requests. Let's say that the total of all requests for construction that would use concrete are increased from last year but the worker organizations making concrete have not proposed to increase production. Then scarce resources would have to be allocated to expand the concrete industry's capacity if we are really serious about expanding construction in this way. There might be a rule that says "if projected demand goes up by N percent relative to projected supply, raise the projected price by N percent." But notice that everyone's requests are aggregated together...we're not saying that only community organizations can make requests.

The individuals and groups who made requests requiring concrete then need to revise their requests because they have to keep their total requests within budget. Either they must reduce their demand for concrete, or their demand for something else. Which they decide will register just how important the construction projects are.

Altho prices are determined by supply and demand, using rules in the planning process (which the society has agreed on), it isn't a market because we're talking about interaction in the course of a process of social planning. The quantitative entitlement to consume that people earn thru work cannot exist as money-capital because money-capital presupposes markets where someone can go out and buy labor power and other resources, make things, and then sell them for a profit on a commodity market. But in participatory self-management, as I call it, quantitative entitlements to consume can't do that because resources are allocated in production only thru the social planning process, not thru markets. There is no labor market or other factor markets.

Of course, that is the case in every economic system. Including Parecon. The question how do you decide to produce new goods and get feedback on existing ones. Most libertarian communists argue for consumer feeback in this process.

As for "prices," a communist society will need to know the costs in producing some item in order to evaluate whether it is wise to do so and what would be the best way of doing so. That means there has to be an agreed schema for collecting and analysing costs. A method is suggested in section I of "An Anarchist FAQ".

A communist system does not imply the non-communication of costs (in terms of hours of work, its desirability, input resources and environmental impact). Nor does it imply no processes for comparing this information.

gatorojinegro, these William Morris/SPGB style economics, that you’ve built such a fantastic case against, exist only to distract us from developing the positive meaningful action required to implement the system of production and power you advocate.

the same could be said of Castoriadis, no doubt

Not too sure. At least Castoriadis understood that the point of having an economic "policy" is to develop meaningful action in the present, beyond futile calls for a general strike or for our moral rehabilitation. But as you say, the proof of the pudding and all that.

me: "How do you know that what was produced is what people want? You have no way to tell that. When someone takes something from a stoe, that only tells us they selected that item from the items available, not that that item is what they would have most preferred to have. What they most preferred to have might not be available."

Anarcho: "Of course, that is the case in every economic system. Including Parecon."

Nope. In participatory self-management using participatory planning (parecon), individual consumers make proposals for what they want produced, as do neighborhood assemblies, and regional federations of neighborhood assemblies. Consumers are thus involved directly in the planning of what is to be produced. Because the requests from consumers and communities determines the values of the possible items we could produce, it enables us to assign prices that reflect these values, and from this we can derive social opportunity costs. And these direct requests are what determine what is produced. That is how we ensure that what is produced is what people want.

Anarcho:

i did look at section I of your Anarchist FAQ. One problem with it is that it assumes -- falsely -- that the only form of price formation is via markets. The only thing i could find that seems to respond to the issue of social opportunity costs is this:

Same problem as robbo. Something is a cost only in relation to what people want. If we are thinking of building houses, this requires so much carpentry labor, so much labor of electricians, so much wood, so much piping and so on. These resources could be used to make other things, such as health clinics or schools or whatever. The value to us, in terms of our wants, of all the things we could have produced with the things we use up to make the house is the social opportunity cost of the houses. Just referring to kinds, such as labor, energy, raw materials, doesn't tell us the cost. For example, different kinds of labor skills can produce different kinds of things. These things may vary in value to us, that is, how much we want them. What a brain or heart surgeon can do in an hour has more value to us than the labor that produces shirts in the same time. This means that not all labor is of the same value to us.

Your critique of prices in the FAQ seems to be only a critique of market prices. You don't seem to realize that there could be a participatory planning system that generates prices, which do reflect things that market prices leave out like externalities. A problem with your own proposals is that you seem to envision the production groups ("syndicates") making their decisions unilaterally. If so, this will inevitably degenerate into a market system because this means they have effective possession of the means of production, in which case the means of production are not really socialized.

t.

Am I the only one who finds this style of debate inflammatory?

gatorojinegro, I'm wondering if you swallow Parecon hook, line and sinker or if you've any criticism of, say, balanced job complexes, Parecon style remuneration, and the like.

Well, I would take Parecon seriously if its inventors and advocates addressed the slight problem that it would never work. The information processing required is, literally, impossible. There is simply no way that six billion people could create a plan which gave them any idea what they were actually voting. Either it would be pretty detailed and so be impossibility huge and so un-understandable or it would be so vague as to be meaningless. Assuming, of course, that those six billion people could provide consumption and production schedules in the first place and that the bureaucracy would actually produce half a dozen possible plans in the first place. Which they could not.

Until the information gathering and processing problem is understood and addressed by Parecon, I do not think that anarchists should waste time advocating or defending it. Sadly, its defenders do not seem to comprehend the problem. Which makes sense, for if they did comprehend it they would see that Michael Albert has spent decades advocating an impossible model.