Wednesday, May 27, 2015

The economics of democratic communism: labor and employment

Under democratic communism, everybody eats, and everybody except infants, the disabled, and the retired works. Each person is required to have enough income to pay at least the same taxes as does a person at the minimum EoLR weekly time. Since any person by definition can get minimum EoLR work, every person can fulfill this requirement.

Employment of Last Resort (EoLR) includes not just adults who cannot find private employment, but other employment as well. Guaranteed work, at the standard EoLR wage, includes infant (full time) and child care (part time) and primary and secondary schooling: children are paid to go to school. (Payment to children goes to their adult guardians, who must spend the money for the benefit of the children. And yes, children have to pay rent.) So, if a family has a child, one adult can stay at home, take care of the child, and the government pays him or her at the standard EoLR wage. Alternatively, the family can hire a child care worker or place the child in daycare, and the government pays for that. Since daycare is probably more economically efficient than individual care, there should be some mechanism to share the efficiency gains between the family and society.

There are three broad categories of employment: EoLR employment (mentioned earlier), private cooperative employment, and public employment (direct employee of the government).

As noted earlier, individuals can form private cooperatives to run profit-making businesses. Employment in private cooperatives is more or less market based. Generally, training and education required for private cooperative employment must be paid for by the cooperatives, to prevent externalization of costs. Training and education is usually considered an investment expense, so cooperatives can seek government investment (on which they must pay capital taxes) to fund training and education. I'll discuss the theory of cooperatives in more detail later. If they can, cooperatives can pay below the EoLR rate, but individuals accepting wages below EoLR must work more hours to pay their minimum taxes.

In addition to EoLR, the government can employ people directly. In contrast to EoLR, individuals cannot simply demand government employment, and the government can pay wages above (or, if they can, below, with the same taxation issues as private cooperatives) the standard EoLR wage. All public employees (including EoLR employees) are members of a union, which negotiates with the people's delegates for wages and working conditions. All public employees have the right to strike. (The right to strike by public workers whose labor is immediately necessary for public health and safety, e.g. firefighters, sanitation workers, emergency medical workers, is a knotty problem that cannot, I believe, be solved structurally. The people and their delegates will have to work this issue out in practice.)

The police and the military are special institutions that have their own structure; since these institutions are primarily political, I'll talk about them when I talk about the political structure of democratic communism.

Tuesday, May 26, 2015

The economics of democratic communism: employer of last resort

As I recall, Brad DeLong guesses* that about 30 percent of total labor is required to produce the necessities of life for all individuals in the United States: food, clothing, shelter, clean water, electricity, communications and media, basic medical care, transportation, etc. These are things that few ordinary people would choose to forego. We'll double that to include public goods. Assuming a 40 hour full time work week (which is, in most cases, the most efficient amount of time a person can work), that means that everyone must work 60 percent of 40 hours, or 24 hours per week.

*On his blog somewhere.
**People can forego some of these necessities, and we should probably find ways to accommodate such people, but I want to deal here with the ordinary case.

The fundamental basis of labor in democratic communism is that the government acts as the employer of last resort (EoLR, also employment of last resort). The government will hire everyone who asks for a job, at a guaranteed wage. We take the price level of necessities for an individual for a week, divide by 12 (30 percent of 40 hours required to produce his or her necessities), and that's the hourly wage. We take 50% for income taxes, so each person* must work for 24 hours per week to support him- or herself. A person is thus required to work at least 24 hours per week, and is entitled to work up to 40 hours per week. Thus an individual may present him- or herself to the government, and the government will give them between 24 and 40 hours of work every week, at the individual's choice.

*Other than the retired and completely disabled.

EoLR sets an effective minimum wage. Worker-owned private cooperatives are free to pay less than this minimum wage, if they can, but an individual can always get a job at this wage.

The government can use its EoLR to staff pure government spending on public goods, or on government businesses that produce no profit (collect no capital tax). Although EoLR employees are required to unionize (as are all government employees) EoLR wages are fixed systematically.

Note that EoLR wages are implicitly indexed to inflation. This indexing runs the risk of creating an inflationary wage-price spiral. However, EoLR should be a relatively small part of the total economy, and cooperative wages should be considerably higher than EoLR wages, so small increases in EoLR wages caused by inflation shouldn't put too much pressure on private wages. Also, because savings are deprecated (I'll write on this topic soon), a democratic communist society can tolerate an inflation rate higher than tolerable in a capitalist society.

To keep the majority of society from exploiting the minority of EoLR workers, the minimum number of hours are constitutionally fixed to 70 percent of the optimum work week, i.e. 28 hours per week. If our society can't get by on everyone working at least 28 hours per week, then we have bigger problems than communism by itself can solve.

Monday, May 25, 2015

The economics of democratic communism: investment

First, democratic communism is democratic. When I say the "government," I mean the people, in a direct or delegated democracy, advised by experts in the civil service. In a truly democratic government, several problems go away, or become much less severe, notably the principal-agent problem and regulatory capture. The "tyranny of the majority" is still possible, but we have enough political theory to ameliorate that, and c.p., the tyranny of the majority is preferable to the tyranny of the minority. Notwithstanding those considerations, a democratic government by definition cannot act against the interests of the majority nor act too strongly against the interests of any minority large enough to resist exploitation. If you don't like democracy in principle, we can talk about that, but most objections against the government doing things are objections fundamentally based in the undemocratic nature of modern republican governments.

Second, democratic communism is, economically, a socialist or transitional communist mode of production: to each according to his or her labor. The goal is to develop the productive forces sufficiently so that we can realize the higher phase of communist society: "From each according to his [or her] ability, to each according to his [or her] needs."

Third, I'm trying for an overview here. If you want clarification or expansion of any of my points here, feel free to ask in comments.

Under democratic communism, the national government is responsible for autonomous government spending (ordinary fiscal policy), autonomous investment, and full employment. Monetary policy mostly becomes trivial, since the interest rate is no longer subject to market forces. The central government just creates and destroys money as needed to stabilize the price level.

The national government creates money for direct government spending, direct investment, and its function as employer of last resort. Again, the people's delegates in the national government, with expert assistance from the civil service, will determine the optimal level of government spending and investment. Its spending as the employer of last resort (EoLR) is determined strictly by the number of people seeking such employment: the national government must hire and pay all applicants. (The administration of EoLR may be delegated to regions (states) and localities (cities, counties and towns.) Government spending and EoLR are pretty much the same as under capitalism, so I won't go into them in detail here. (Ask in comments if you want clarification or expansion.) Instead, I'll focus on autonomous investment.

The national government creates and destroys money freely: the national government is not budget constrained. Regional and local governments, on the other hand, are budget constrained.

The government mostly invests indirectly in worker-owned private cooperative businesses (a.k.a. soviets). The government makes investment capital available to these businesses directly. The national government will allocate investment directly to the few competitive businesses with national scope (e.g. possibly airlines). Most investment, however, will be allocated as money on a rough per capita basis to regional and local governments to distribute to private cooperatives. Individuals will get together and present plans to the the regional and local democratic governments, advised by experts in the civil service. The regional and local governments will decide how to allocate their investment money. Note that no level of government can just invest: some actual people have to create a private cooperative to use investment.

All investment money will carry a national proportional capital tax. Regional and local governments must pay the the national government directly a tax proportional to the total government investment it allocates. Regional and local governments may impose additional taxation, which they can spend or invest locally. Note that if a regional or local government misallocates its investment and cannot pay the national capital tax, the citizens of the region do not have to sacrifice consumption to pay back taxes; instead, the misallocated investment is written off, and the region or locality loses its autonomy over investment to the next larger level, until the region or locality gets its industry in shape to pay its taxes properly.

In addition to paying required capital taxes, cooperatives can optionally pay off the principal capital, thus incurring a smaller tax, and thus allocate more profit to compensate the workers.

The government directly operates productive businesses that have no competitive private alternative, mostly natural monopolies (i.e. production of rival/excludable goods and services with always-declining marginal costs, such as electric power). Unlike private cooperatives, businesses operated by the government are operated by the civil service, and have employees rather than cooperative owners. Government businesses are allowed to employ people as the employer of last resort. Employees of government businesses, including EoLR employees, are required to be unionized, always have the power to strike, and can bargain collectively over working conditions and, for non-EoLR employees, wages.

To prevent the government business sector from overwhelming private cooperatives, government businesses pay no capital taxes to the national, regional or local government. They are always operated at best on a break-even basis. Hence, regions and localities have no pecuniary interest in operating businesses directly. Although financing government operated businesses is technically considered investment, because these businesses produce rival/excludable goods, they operate almost exactly like government spending, which produce non-rival/non-excludable goods.

Thus, the government has three basic tools for managing the economy: government spending (ordinary fiscal policy), autonomous investment, and capital taxes. If the economy is overheated (high inflation, EoLR employment too small), the government can lower spending and investment and raise capital taxes. If the economy is depressed (deflation/low inflation, EoLR employment too high), the government can increase spending and investment, and lower capital taxes. Because some capital taxes are national, regions need not engage in a race to the bottom: if regional revenue is too low, the national government increases capital taxes and recycles the money to regions.

The big objection is the possibility of hyperinflation. Since there is no economic check to the government creating money, it might be tempting to just increase autonomous spending without limit, leading to hyperinflation. It should be noted, however, that a democratic government is not subject to the same kind of principal-agent problems that a republican government is: if the majority of people believe that inflation is too high, they will force the government to lower it; similarly, if the majority believe that the standard of living is too low, they will force the government to increase investment to improve it.

Saturday, May 23, 2015

Culinary modernism and reflections on aesthetics and virtue

A Plea for Culinary Modernism
Modern, fast, processed food is a disaster. That, at least, is the message conveyed by newspapers and magazines, on television cooking programs, and in prizewinning cookbooks. . . .

[But...] As an historian I cannot accept the account of the past implied by Culinary Luddism, a past sharply divided between good and bad, between the sunny rural days of yore and the gray industrial present. . . .

[M]ost men were born to a life of labor in the fields, most women to a life of grinding, chopping, and cooking. “Servitude,” said my mother as she prepared home­cooked breakfast, dinner, and tea for eight to ten people three hundred and sixty five days a year. . . .

For all, Culinary Modernism had provided what was wanted: food that was processed, preservable, industrial, novel, and fast, the food of the elite at a price everyone could afford. Where modern food became available, populations grew taller, stronger, had fewer diseases, and lived longer. Men had choices other than hard agricultural labor, women other than kneeling at the metate five hours a day.

We have to remember, every second of every day, that we have more than seven billion people to feed, and not a single one of those seven billion is expendable. There is a reason why Whole Foods is mockingly referred to as Whole Paycheck. Luddite, artisanal, non-industrial food is expensive: to consume such food exclusively is to consume more of the labor of others than one could ever replace or repay. Only a privileged few can afford to forego industrial food.

It is one of the arguments of every elite that they are the guardians of (expensive and rare) beauty. David Mura expresses the point eloquently: "There is simply no way, when power has acquired the trappings of beauty, to avoid the spiritual wonder and humility such beauty provides." To destroy the elites is to destroy the beauty only they can embody.

Every egalitarian society is portrayed in fiction and nonfiction as dull and dreary, gray, monotonous, devoid of beauty. More importantly, an egalitarian society must necessarily be devoid of virtue; beauty and virtue are not only closely connected, but actually identical, two apparently different ways of talking about the same thing. Elitism is beautiful, therefore virtuous; egalitarianism is ugly, therefore vicious.

Beauty and virtue are dichotomies. There cannot be beauty without ugliness; there cannot be virtue without vice. Beauty and virtue must be rare: only the exceptional, never the common, can be beautiful or virtuous. An egalitarian society thus can be neither beautiful nor virtuous. Egalitarianism does not (cannot, should not) eliminate exceptionalism (while I admire Vonnegut, Harrison Bergeron is an absurd fantasy), but an egalitarian society must resolutely disconnect both beauty and virtue from exceptionalism.

(The connection between exceptionalism and beauty and virtue is, of course, more complicated. The exceptional is not always beautiful and virtuous, but the beautiful and virtuous must always be exceptional.)

It would be a mistake, I think, even as a tactic, to simply reverse the dichotomy, to construct our social reality such that only the common could be beautiful and virtuous. Somehow, these concepts must (should) simply be disconnected. Common or exceptional, the beautiful and virtuous are what make people happy; the ugly and the vicious are what make people suffer.

In a sense too, everyone is, I think, exceptional. And everyone is common, "normal." Everyone is different in some ways, the same in others. It is only the underlying aesthetic and moral distinctions that raise some differences to exceptions.

Tuesday, May 12, 2015

‘The Game Done Changed’: Reconsidering ‘The Wire’ Amidst the Baltimore Uprising

‘The Game Done Changed’: Reconsidering ‘The Wire’ Amidst the Baltimore Uprising

The events of the last two weeks, however, have changed my view of The Wire in a very fundamental way. I have spent most of my time listening to people in Baltimore speak about how this uprising came to be and why the anger runs so deep. I’ve been primarily speaking to black Baltimoreans in grassroots organizations who have, in a state of MSM invisibility, been building movements for years to fight poverty, end street violence, and challenge police brutality. This is humbling to admit, but this experience has made me reassess my favorite show, as if a very dim light bulb was being switched on above my head. I am now seeing what the The Wire was missing, despite its much lauded, painstaking verisimilitude: the voices of people organizing together for change. Everyone on The Wire seeks individual solutions for social problems: the lone cop, the lone criminal, the lone teacher, the lone newspaper reporter. Yes, it is certainly true that when entrenched bureaucracies battle individuals, individuals lose. But when bureaucracies battle social movements, the results can be quite different.

Wednesday, May 06, 2015


The popular quotation, "Winning isn't everything; it's the only thing,"* is not just about sports (where it's manifestly untrue**) is at the very heart of capitalism. The marginal utility of a dollar is usually negative; the marginal value of the dollar that makes someone a "winner" is everything. No matter how many dollars a loser makes, the loser has the negative utility of losing; once a winner has won, and gained the positive utility of winning, there's no point in accumulating more dollars. However, we don't know which dollar is the winning dollar until after the game — and the game of capitalism never ends — so we have to fight over every dollar as if it's the winner.

*Henry Russell "Red" Sanders; incorrectly attributed to Vince Lombardi.
**Sports are not really about winning; they're about entertainment. Winning is just a part of the entertainment.

To the extent that capitalism is "designed" (more precisely, justified ex post), the primacy of winning is by design. Supposedly, we want every firm and every worker to fight to the death over every dollar, which affords the motivation to ruthlessly cut costs and build efficiency. No one gets to rest on his or her laurels; even the richest, most powerful individual or corporation needs to fight off potential challengers.

Capitalism is not about maximizing one's material, economic well-being. If it were, Bill Gates and Warren Buffett would have stopped after a million dollars; maybe two or three million, but not ten thousand times more than that. Empirical evidence has shown that after about $75,000 per year, more money (and more stuff) stops making people happier. If it ever were just about maximizing material, economic well-being, capitalism stopped being about that in the early 19th century.

Capitalism is about winning and losing. Winners are good. Losers are bad. We reward winners, not because we want everyone to be a winner (obviously, everyone can't be a winner), but because winners are good, and that good deserves reward is just what good means. Similarly, we punish losers not because we want no one to lose (we can't have winners without losers), but because losers are bad, and that bad deserves punishment is just what bad means.

I think that Republicans want to punish poor people not because they're evil or sadistic, but because they're moral. If we reward the bad and punish the good, we become immoral; if we do not reward and punish, then we become amoral: we fail to distinguish between good and bad. Poor people are losers, losers are bad, so to not punish them is contradict or abandon morality itself.

I am an atheist for the same reason I'm a communist: because I'm a utilitarian. Utilitarianism (if it is not trivialized to narrow expediency) necessarily rejects the reward/punishment dichotomy. Utilitarianism is not about locating good and bad, and rewarding the good and punishing the bad. It is about making as many people as possible as happy as possible, and making as few people as possible suffer as little as possible. In theory, a good utilitarian wants to reward everyone and punish no one. (In practice, we cannot reward everyone and punish no one, at least not today, which is what make utilitarianism interesting. And, of course, the inventors of Utilitarianism, especially Jeremy Bentham, had some crazy stupidideas about punishment . So what? They were wrong about those points.) If one constructs the reward/punishment duality as inherent to morality, then utilitarianism is necessarily "amoral."

It is both necessary and sufficient to have a reward/punishment view of morality to support any oppressive social relations. So long as the reward/punishment idea exists, those who have "power", who can exercise physical, violent force, will define what is good (to be like those who have power) and bad (to be like those who don't have power). It then naturally follows that the good should be rewarded and the bad punished. Even if some people disagree about what is good and bad, once those with power establish what is good and bad, reward and punishment will follow.

A lot of leftist don't like this idea. It burns the ass of many feminist women that I know that I think that men who use prostitutes shouldn't be punished, that I think (ideally) rapists shouldn't be punished. It's not that I think prostitution is great (or even not bad), or that rape is no big deal (of course it is); it's that, first, I think that punishing rape doesn't eliminate it, and second, so long as we punish a thousand rapists, we implicitly permit the punishment of tens of millions (soon to be hundreds of millions) of poor people.

(To be honest, I do think that because we are in a social context that strongly relies on reward/punishment, it is presently expedient to punish rapists; we have to do the best we can with what we have, and rape is a problem that cannot simply wait until after the revolution. I'm not strictly against expediency ("in the long run, we're all dead"), but I do not see expediency as a moral ideal. And, of course, when punishment is not even expedient, I'm against it, even if I think some underlying activity is harmful.)

So long as we have capitalism, we will have economic winners and losers, and we will believe socially that winners are good and deserve reward and that losers are bad and deserve punishment (whether of the "hard" Republican punishment of poverty and suffering or the "soft" Democratic punishment of servile dependency). Even if we get rid of the idea that winners are good and losers are bad, even if we get rid of the idea of winners and losers, so long as we have the idea that good people should be rewarded and bad people should be punished as an essential (and not merely expedient) component of morality, we will end up replacing the relations of capitalism with some other oppressive, dominating social relations.

Keeping this idea of reward/punishment as essential to morality is, I think, one important reason why (in the small) the Kerista commune failed, and why (in the large) both Soviet and Chinese communism failed. In Kerista, it was good to be "pure," to be perfectly aligned with the explicit and implicit standards and ideals of the commune; it was bad to be "impure," to have reservations or hesitations with the standards. To be pure, to be good, was to be rewarded with inclusion; to be impure, to be bad, was to be punished by expulsion. In the Soviet Union and China, to be "good" was to be a good communist; to be bad was to harbor "capitalist" sentiments. And, of course, those with power constructed good and bad to reproduce and perpetuate their own power.

Fundamentally, communism is, to be moral, not something that simply changes, either at the fundamental economic level or at the social level, what kinds of behavior is good or bad, and deserves reward or punishment. And, technically, we could have (and, arguably did have) "communist" societies that did reward the good and punish the bad. I maintain, however, that any system, communism included, must abandon the idea of reward and punishment, and their connection with good and bad. Building such a society is a much harder task, I think, than just overthrowing capitalism.


There's a good article in Jacobin: Why the Right Loves Privilege Politics.

First, one fundamental characteristic of capitalism is cutthroat winner-take-all competition: "winning isn't everything, it's the only thing." The marginal value of one more point (e.g. one more dollar) is usually negative; however, the marginal value of the winning point is the whole prize: the winner gets everything, and the loser gets nothing. The trouble is, we don't know what the winning point is until the game is over, so we have to fight to the death for every point.

Not only that, but being in the lead confers an advantage. First, there's the gambler's ruin property of statistics: in an interated fair game that's played until one player goes broke, the player with the larger bankroll has a larger probability of winning everything, even though each iteration is perfectly fair (zero expected value for each player). Second, there's the meta-game advantage: if the players make the rules, and the player with the most points/money gets more say in the rules, then players can use a slight advantage to tilt the rules in their favor.

In the context of cutthroat winner-take-all competition, even a tiny advantage is momentous. Regardless of whether the advantage really is "fair" or "unfair" (even granting that "really fair/unfair" is even a coherent concept), it pays to fight to the death to both obtain for one's self or negate for others the tiniest advantage, by any means possible.

Second, historically, capitalist competition has used sex, race, religion, gender, sexual orientation, physical (dis)ability, etc. ad nauseam to confer competitive economic (dis)advantage, and therefore political, social, and cultural (dis)advantage. It doesn't really matter to this analysis whether or not capitalist actually created these distinctions; what matters is that sex, race, etc. has been used for so long to construct competitive (dis)advantage that they are baked deeply into capitalism.

Thus, an important conclusion follows: We cannot eliminate sexism, racism, etc. unless we eliminate capitalism.

I want to be crystal clear about what I am not saying here. I am not saying that if we eliminate capitalism, we will automatically eliminate sexism, racism, etc. And I'm not saying that, within a capitalist system, it is pointless to ameliorate excessive sexism, racism, etc.

I am saying that if the goal is to eliminate sexism, racism, etc., then at some point we will have to eliminate capitalism, and replace capitalism with something (i.e. communism) that is not fundamentally based on cutthroat winner-take-all competition.

A corollary to the above: Even if capitalism were perfectly "fair," it would still be bad.

The fundamental problem is not that capitalism has sexism, racism, etc..* The problem is that cutthroat winner-take-all competition, even if it is perfectly fair, is bad in and of itself.

*Again, I'm not saying that sexism, racism, etc. are not problems; I'm saying that they are not fundamental problems.

I personally use utilitarianism as an ethical framework; therefore, by "bad", I mean that capitalism, and any other cutthroat winner-take-all competitive political economy, increases the suffering of the many for only the most dubious happiness of the few. But that even perfectly "fair" capitalism is bad is not particularly sensitive to one's ethical framework. Indeed, the only ethical framework I can see where capitalism is good is a framework that presupposes the value of cutthroat winner-take-all competition.

The point is, rather than fighting to the death about every small (dis)advantage, we should create a system where every small (dis)advantage is not potentially a matter of winning or losing, of life or death, of dignity or degradation. Dignity, happiness, satisfaction, well-being belong to everyone, not just to an ever-narrowing circle of "winners". When small (dis)advantages are no longer momentous, perhaps then we can work more calmly to actually eliminate them.