Tuesday, January 06, 2009

Objections to socialist economics

DBB (not to be confused with db0) raises some objections to socialist economics.

Hours of labor alone seems a rather poor measure - it doesn't reward innovation or efficiency. Just the opposite.
Grown-ups can innovate and become more efficient because it makes rational sense to do so. We don't need to reward innovation and efficiency with the power to exploit others' labor; we can do it with social prestige and other mechanisms.

Remember too, capitalism primarily rewards price-cost "efficiency" (monetary price divided by monetary cost) by paying labor the cost of their labor power, not the value of their labor. This is not a mutually beneficial sense of efficiency.

Even under a socialist hours-of-labor-limited extended economy, though, use-labor efficiency (use-value divided by socially necessary labor time) should improve over time, although perhaps not as quickly. But we already have an advanced industrial economy; we don't need to put most of our resources into improving productivity.

If I can build a shoe in an hour just as good as the average good-shoemaker can make in five hours, it seems unfair to force both of us to work five hours before we earn a shoe we can keep.
DBB has it backwards here. Under a socialist economy the better shoemaker would indirectly pressure the poorer shoemaker to become more efficient. Because the better shoemaker can make shoes more efficiently, a socialist economy would force him to undercut the poorer shoemaker's price. Since, however, there's not cutthroat competition under socialism, the government would help the poorer shoemaker become more efficient, and the better shoemaker — who is not permitted to exploit his customers' surplus value — wouldn't have a disincentive to keep his competitors from becoming more efficient.

Fundamentally everything in a socialist economy is paid for according to labor time. The subsistence economy comprises those endeavors where the socially necessary labor time is well-understood, easy to calculate, and not easily reduced. The extended economy comprises all endeavors where the socially necessary labor time is not well defined; prices in the extended economy are capped to compensate the individual actual labor time (which is obviously the upper bound on the socially necessary labor time) but can be reduced through truly free market non-cutthroat competition.


  1. I understand better the notion of how prices can be calculated, but I still wonder how you can come to the ultimate number. Is it the average of all shoemakers or just some ideal shoemaker?

    I mean, what if basically every shoemaker takes five hours to make a shoe, but there's some mutant shoemaker out there that actually can make one in an hour that is of the same quality. So it ends up that the price is set to a maximum of five hours (is each hour a "dollar"?) for a shoe.

    Now this mutant shoemaker can, in secret, spend five hours making five shoes and then lie and tell the government inspector that he really took him 25 hours to make those shoes. Now he spent five hours of his own labor and he, after selling his shoes, has 25 hours of labor he can spend on other items. So in essence he just got to charge five times the labor he expended on a shoe. Is that ok in the system? Or is there somehow that could be stopped?

    Also, I wonder generally about wealth - even with a tight communist system, some people could save up their currency of hours, invest it, earn interest on it, while others could blow it all on WWF Pay Per View or whatever. So while no one would be dirt poor, in that everyone would have all of the necessities in life, you could still have rich or even fithly rich people, if not within one generation, within several, as those who save pass on their wealth through inheritence and so on. Would that present a problem?

  2. Super busy lately. I'll discuss your points in a new post, hopefully tomorrow.


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