AOC is not one of us

I like Alexandria Ocasio-Cortez. I think she's intelligent, a good politician, and not particularly evil. I would definitely pick her for most anything over a bottom-feeder such as Kyrsten Sinema.

But she's not a socialist. She's not even a progressive, at least not in any meaningful sense. She's a bog-standard corporatist Democratic party politician. She's not a bad person, and I think she has done and will do what she can to ameliorate the billionaires' inherent assholiness, but when push comes to shove, she'll take the billionaires' side over the people.

How could she not? She's a member of Congress. If her fundamental loyalty to the billionaire class were in question, she would be completely excluded from the business of Congress until she lost her next election. 

Most importantly, Ocasio-Cortez has no outside institutional support for any kind of socialist or progressive agenda.

Socialists and progressives cannot simply depend on electing "good" people to political office. Socialists exert real power over the state, or take actual state power, by developing institutions outside of the capitalist- or billionaire-oriented official political institutions. 

None of our socialist organizations are developing these institutions.

Marxists should not dismiss MMT

I'm not saying that Marxists should become MMT enthusiasts. Adam Booth is at least partly correct: MMT scholars are mostly not Marxists or socialists, and MMT by itself will not usher in a socialist utopia.

By definition, a truly "communist" society doesn't need anything remotely resembling money: the opportunity cost of producing and consuming the ordinary social product — food, shelter, clothing, communication, entertainment, etc. — is negligible and there is no need to carefully account for its use or ration its consumption.

But any kind of "socialist" society will need something that looks very much like money. By definition, a "socialist" society must manage scarce resources, which means that society must carefully account for the opportunity cost of producing and consuming the social product to ensure that we produce what we want the most, and ration the consumption of the social product. Essentially, anything that does the job of accounting for and rationing the social product is money*.

 *It's pointless to quibble over definitions, a task I have spent far too much time on. We could define the label money as including something unique to capitalism, and then, of course, socialists wouldn't use money. But there still would what we use to account for and ration of social product, which we'll arbitrarily label as gnippa. Then the rest of this article is about gnippa.

People in a socialist society will have very different relations to money than people in a capitalist society. Socialists will use and think about money differently than capitalists use and think about money, but whatever those relations, so long as they account for and ration the social product, they will have some relations to money.

There are two reasons I think Marxists should pay attention to MMT. The first is that at least initially, a socialists society must actually manage money. I can't imagine any benefit for a socialist society to not account for the social product, and try to ration access without using numbers. Once we start slapping numbers on the social product and use those numbers to ration access to the social product, we have what is essentially money. And if we're using money, we need theories about how it works.

And just as capitalist scientists can come up with good theories about how electrons, viruses, cows, and ecosystems work, capitalist economists can come up with good theories about how money works, and how to manage the accounting and rationing of the social product.

As an economist in a capitalist society, I understand that most of my colleagues spend most of their time just providing academic support for capitalist ideology, a task I don't really endorse, but there is a little truth, mostly independent of ideology, in there. And I think that MMT has some of that mostly ideology-independent truth.

The second reason that I think Marxists should pay attention to MMT is that MMT explicitly challenges a critical capitalist myth: the myth that money itself is a scarce resource, and that to get what they want, the masses must get money from those who already have it. 

If the capitalist class had all of the iron in storage, protected by armed guards, then regardless of our social structure, if we wanted to build stuff using iron, we would need to get the iron from those who had it, by persuasion or force. And because iron is really useful in making weapons, control over iron would give the capitalist class an enormous advantage in the exercise of force.

The capitalist class rules because it has control over money. So long as we buy the myth that money itself is a scarce resource, capitalists' control over money gives them as much or more power as they would have if they controlled all the iron. Even if 99% of the people wanted socialism, if the people believed that capitalists controlled a scarce resource they needed, then the capitalists can block socialism.

This myth has real bite. Margaret Thatcher supported her eleven-year rule with little more than the slogan, "The trouble with Socialism is that eventually you run out of other people's money."But if money is not a scarce resource, then we cannot run out of anyone's money. 

The Democratic party in the United States cannot implement even a hint of a progressive, much less a socialist, agenda just because they cannot imagine how they could pry the money out of rich people's hands. Worse, the Democratic electorate, as much as they might want a progressive agenda, falls for the myth that they need rich people's money, and they too cannot imagine how to get at that money, so they don't demand that the party attempt the impossible.

MMT proponents directly challenge the myth of the scarcity of money. Whether or not they realize it, they are fundamentally subverting a fundamental myth of capitalism, really in the same sense that Christian scholars who challenge the historicity of the resurrection fundamentally subvert a fundamental myth of Christianity. 

Capitalism dominates today not just because capitalists successfully argue that capitalism is better, but because capitalism is true, that any sacrifices or privation the people must suffer under capitalism are imposed not by the capitalist system, but by nature: there is only so much money to go around, and if there isn't enough money, we can't get what we want, regardless of the availability of other resources.

So no, MMT is not itself socialist, and a simple restructuring of the Treasury and Fed around MMT theories will not by itself bring about a socialist society. However, MMT subverts a fundamental myth that supports capitalism, and it behooves all anti-capitalists to endorse that subversion.

#WorkersLivesMatter

Standing on one foot, the government acts in the workers' interests, that is the entirety of socialism, and the rest is its interpretation.

Why the workers' interests? Why not humanity's interests? Everyone's interests?

In part, the reasoning is, I think, along the same lines as #BlackLivesMatter. The intent of this slogan is not that only Black lives matter. Instead, everyone already agrees that White lives matter, but no small few seem to believe that Black lives do not matter. White people do not need a political movement to protect their lives because their lives are already protected. Black people do need a political movement because their lives are presently not protected by law and custom.

Similarly with socialism, at least in part: all humanity does matter, but billionaires and their supporters and enablers do not need a political movement to get the government to act in their interests. The government already acts in interests of the billionaires, but acts against workers' interests.

But in part, socialism is dissimilar to BLM. I hold as an article of faith that white people's interests are not fundamentally opposed to black people's interests, however presently entrenched the opposition. In contrast, billionaires' interests are fundamentally opposed to workers' interests. The government cannot act in workers' interests without acting against billionaires' interests. The only final resolution to the conflict is to eliminate the billionaires.

Happily, it is at least theoretically possible to eliminate the billionaires without killing anyone: we need only take away their money, not their lives. The billionaires might fight to the death to preserve their power and privilege, but that's their choice, not ours.

A note on capitalization: I use the capitalized terms White and Black to denote socially constructed racialization. In this sense, White interests are fundamentally opposed to Black interests. I use the uncapitalized terms white and black to denote the physical characteristics that we usually use to socially construct race. I personally am white, but I do not see myself (or I do my best to not see myself) as White. Also, the social construction is not symmetric: Whiteness is intrinsically racist, but Blackness is not, because Blackness is a response to White racism.

Socialism and markets

Much ink has been wasted on the supposed conflict between free markets versus central planning, with free markets supposedly being intrinsic to capitalism and central planning intrinsic to socialism. All nonsense. Sadly, too many socialists retain an irrational and unfounded fear of the word market.

In the broadest sense, a market is a system of voluntary transactional exchanges of goods and services using money tokens.

As a general principle, a society should ban voluntary action only in extreme cases where the voluntary action either imposes uncorrectable externalities, such as going without a mask in a pandemic, or is just completely stupid, such as driving without wearing a seat belt. (I tend to libertarianism in the latter case, but that's not a hill I'm willing to die on.)

Any society facing scarcity must have some numerical way of allocating scarce resources. If a society imposes a numerical limit on consumption, it has money: money is the numbers and the limits.

Different jobs have different average desirability, so it makes sense to somehow make undesirable jobs more desirable by allowing workers in undesirable jobs to consume more per hour of work.

"Market socialism" is, therefore, kind of a redundancy. A truly communist society would not have markets, but only because communism presupposes no material scarcity. Under communism, a transactional accounting method for allocating scarce resources, i.e. money, would be superfluous. Whether we might have unlimited material resources in the future, at present we do not yet have them.

A socialist society could ban voluntary transactions, and some societies have. I have no idea whether those bans were good or bad ideas in those societies under their specific historical circumstances. But such a ban is a tool, not an intrinsic characteristic of socialism.

A more critical investigation of capitalist markets, however, gives socialists a better idea of what is essential to socialism.

First, capitalist markets are not always voluntary. If I must pay rent or freeze to death, the "choice" to pay rent is not voluntary. If I must kiss my boss's ass to keep my job so I can pay my rent and not freeze to death, the "choice" to kiss my boss's ass is not voluntary. Nature does coerce us — we must eat to live — but we can eliminate nature's coercion only with science and engineering, not with law or social construction.

Second, capitalism really does require markets (however involuntary) in everything. We can carve out exceptions, and the exceptions work in practice, but capitalists always offer unrelenting indefatigable opposition to any exceptions to markets. Capitalists exercise power using involuntary capitalist markets; any exceptions diminish their power.

Third, and most important, the driving force behind capitalist markets is the profit motive: each household must do whatever it takes to increase its flow of money tokens, without limit. Capitalist markets are about accumulating power, not the efficient allocation of scarce resources. Just because Elon Musk has accumulated a metric assload of money tokens does not mean that firing a Tesla into space is an efficient use of scarce resources. (I mean, maybe it was, but we can't tell just because Musk had enough money tokens to do so.)

The essential nature of socialism is not to ban voluntary transactions. A socialist society might or might not ban some or perhaps all voluntary transactions, based on specific material circumstances, but such bans are not essential: we cannot say that a society that does not ban voluntary transactions is therefore not socialist.

What is essential to socialism is first being honest about distributing nature's coercion. Human beings must work to live, so a socialist society, unlike capitalist societies, must be honest and direct about saying that each person capable of working must actually work. And once we are honest about nature's coercion, we can tackle the scientific and technical task of freeing ourselves from nature's coercion.

It is also essential to a socialist society to reject the profit motive. The motive for each households should not to accumulate as much wealth as possible, but to offer its scarce resource, labor, and use its demand on the social product efficiently to maximize the happiness of its members.

What is socialism?

Every so often, I talk to people about socialism. Almost always, the first response is, "But what about Stalin/Mao/Castro/Chavez!? If you're a socialist, you must be in favor of gulags, reeducation camps, famines, hyperinflation, and mopery on the high seas."

Bollocks. It's a bad faith argument on its face. The reasoning is obviously unsound: Stalin was a socialist (granted), Stalin sucked (granted arguendo); therefore socialism sucks. Sorry, non-sequitur. You would have to establish that Stalin sucked just because he was a socialist. And people don't do that.

I'm sure there are a few fringe people out there who think that Stalin, Mao, Castro, etc. is the One True Prophet. Fine, whatever. But most people don't think so.

These guys (and others) were real socialists, but they were also human beings, and they were working in very specific historical, economic, social, cultural, and international contexts. A simplistic analysis cannot separate out these various historical influences from the influence of socialist ideology.

It's worth taking a step back, though, and trying to just answer the question, "What is socialism?" There's not one good answer; it's not like the National Institute of Standards and Technology has standardized the term.

The best I can do is take a position that is half historical and half normative: I think what follows is common among socialists and worth keeping.

Socialism consists of three elements:

1. The government acts directly in the material interests of the working class
2. The working class holds and exercises direct economic power
3. The working class holds and exercises direct political power

Feel free to add "should" to the above to go from actually existing socialism to normative socialism.

These elements are continuous, not binary, so there is an overall continuum of socialism.

So, for example, the U.S. federal and state governments provide Social Security, Medicare, and Medicaid, unemployment insurance, workplace safety and health regulations, mass transit and other public goods, so the government does in fact at least partially act in accordance with the first element of socialism.

Most of the workers in the U.S. vote, and we still have (for now!) a political system that resembles a democratic republic, so the U.S. is at least partially socialist in the third element.

Workers have almost no direct (or even indirect) economic power, so the U.S. is almost completely non-socialist on the second element.

Anti-socialism, then, just negates the three elements:

1. The government does not or should not act directly in the material interests of the working class
2. The working class does not and should not hold and exercise direct economic power
3. The working class does not and should not hold and exercise direct political power

Everyone should be aware of long-standing anti-socialist opposition in the U.S. to Social Security, Medicare, and all the socialist measures listed above. The working class has been all but excluded from any sort of economic power (and was almost completely excluded from economic power for most the United States' existence), and the project of neoliberalism has been to place most economic power outside the control of the state. Finally, the Republican Party (and to a lesser extent the Democratic Party) has been dismantling even the appearance of a democratic republic.

If you want to say you're against socialism, I think you have to commit to 100 percent to all three of of the anti-socialist negations. Otherwise, you're at least a little bit socialist, and as they saying goes, I already know what you are, we're just negotiating the price.

Notice that the above elements say nothing about markets, central planning, the structure of the government, reeducation camps, freedom of speech/religion/assembly, etc.

These are important issues, to be sure, but they are not essential to socialism; they are implementation details. Implementation details are important, of course, but we have to agree first on the goals and framework before we can begin implementation.

The elements of socialism also say nothing about racism, sexism, homophobia, transphobia, etc. Someone could be a racist socialist: they would be an asshole, of course, and wrong, but they would be a socialist asshole. It is more productive, I think, to just say, "You shouldn't be racist," than to say, "If you're a racist, you're not a socialist."

MMT and socialism

It's always depressing to read "socialist" polemics against Modern Monetary Theory, and Doug Henwood's essay, Modern Monetary Theory Isn’t Helping in "socialist" Jacobin magazine follows the trope: nothing but bad faith and a Gish gallup of ridiculous capitalist propaanda.

It's clear Henwood is arguing in bad faith. With suitable elisions, Hemwood more or less accurately presents a core concept of MMT:

As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.” . . . Since there is a risk that too much government spending would spark inflation, the government might need to cool things down . . . by raising taxes. Taxes, MMT holds, should be used as tools of economic management, but must never be thought of as “funding” government. To think that would be to indulge in an orthodox superstition.

This seems like a straightforward presentation of an idea that is admitted as true by most economists, even if they don't really want the general public to know about. Let me add back the elisions in bold:

As Wray put it, “The government does not ‘need’ the ‘public’s money’ in order to spend; rather the public needs the ‘government’s money’ in order to pay taxes. Once this is understood, it becomes clear that neither taxes nor government bonds ‘finance’ government spending.” You might be wondering where income earned on the job fits into all of this, but the world of production doesn’t play a large role in the theory.

But having tempted us into thinking that taxes were dispensable, Wray pulls a bait and switch. Since there is a risk that too much government spending would spark inflation, the government might need to cool things down, meaning create a recession — though Wray shies away from using the word — by raising taxes. Taxes, MMT holds, should be used as tools of economic management, but must never be thought of as “funding” government. To think that would be to indulge in an orthodox superstition.

I don't know what is more depressing, Henwood's shameless hatchet job, or how transparently he tries to manipulate his readers. Henwood seems to think that Jacobin readers are as gullible as Fox News viewers. I hope he's wrong.

It's not really useful to go into Henwood's article point by point; instead, I want to highlight a specific capitalist talking point Henwood reproduces, which implies that a popular government — i.e. a socialist government — cannot responsibly manage a fiat currency. The idea starts with the half-truth that MMT theorists think government creating money will magically cure all our problems. According to Henwood, MMT theorists claim, "A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict." The most obvious problem, of course, is inflation. MMT's answer is that taxation (fiscal policy), rather than central bank manipulation of the Federal Funds rate* (monetary policy), is the correct way to curb inflation. The question is, will taxes rather than interest rate manipulation work to control taxes?

*The rate banks charge each other to borrow reserves overnight.

On the one hand, Henwood appears to like taxes: "Taxation may not be full expropriation but it’s the next best thing in this fallen world. It is a form, however mild, of socialization — transforming private investment and consumption into public expenditures. [link original]" I concur, as do many notable MMT scholars. However, Henwood casually insults the "naïve belief in the curative powers of fiscal policy" (i.e. taxes). And Henwood claims the government is far too cumbersome to manage an economy with fiscal policy, "Anyone who’s watched Congress struggle with tax and spending policy has to wonder how anyone could believe that fiscal policy could be fine-tuned with requisite speed and precision." Henwood doesn't answer the question about who should fine-tune the economy. The central bank? The capitalist class? A socialist drum circle? I dunno.

The dead giveaway, however, is the considerable ink Henwood spends on the dreaded bugaboo of hyperinflation, invoking "[t]he extreme inflation of Weimar Germany in the 1920s." He also condemns the fiscal policies of many peripheral states, including Venezuela (!), Chile under Allende (!!), Venezuela, Turkey, and Greece. (Henwood has at least enough sophistication to talk about Greece before the euro.) Hyperinflation is one of the favorite monsters-under-the-bed unsophisticated capitalist propagandist love to invoke. Only the capitalist class can prevent the government from handing free stuff out to everyone. If the capitalist class does not impose the illusion of government fiscal discipline, a socialist government will eventually spend its way into hyperinflation and economic collapse.

Now very economist knows this illusion, this superstition, for what it is: the government does not have a real fiscal constraint. Paul Samuelson himself admits on camera (long before MMT) that the idea that taxes fund government is a superstition. A useful superstition, to be sure, but a superstition nonetheless.

An ordinary person such as myself has a fiscal constraint: I must obtain money through revenue (my paycheck) or borrowing (a bank loan) before I can spend it. Thus, I must persuade someone who already has the social permission to spend — my employer, my bank, or my friends — to give that permission to me before I can actually draw on the social product. The same is true for firms: they must persuade someone to buy their product (generating revenue), lend, or invest before they can spend money.

We like to pretend that the government is the same: it must obtain money by taxes (revenue) or by issuing bonds (borrowing) to obtain the money before it spends that money on public goods and services, and if the government cannot get the money, they cannot spend it. But this constraint is nothing more than pretense. The government can, if it chooses, spend money before it obtains it from others. For me, spending money I don't yet have is impossible; for a government, it might or might not be wise, but but it is possible.

Fiscal constraints differ from real constraints. If there are no cars available (real constraint), I can't get a car, no matter how much money I have. However, if I can't get money (fiscal constraint), I can't get a car, even if there are a thousand sitting on the lot. The trick is to get all these individual fiscal constraints to match up with the overall real constraints.

One point that MMT scholars make is that the present capitalist-managerialist system has already abandoned fiscal constraints in reality, but the system tries its best to bury this fact and make sure that deviations benefit the only capitalist class. One reason MMT scholars dig deep into the accounting is to try to uncover this buried truth. Again the capitalist story is clear: the government can deviate from its fiscal constraint for the benefit of the capitalist class without causing (too much) economic chaos, but do it for the people and bam! we're in Venezuela.

Abandoning even the pretense of a government fiscal constraint does make life more difficult. If we pretend that government has a fiscal constraint, it's easy to put an upper bound on how much the government should spend: only as much as it can convince the citizens to cough up in taxes or are willing to lend. If we drop the pretense, then the upper bound is much more difficult to determine. If we abandon the imaginary fiscal constraint, we have look at what the spending does rather than just ensuring expenditure does not exceed revenue. We want to spend — and spend appropriately — until we have full employment and are at potential output. One way of determining whether we're at full employment is by looking at inflation. If the price level starts rising, either stop spending or increase taxes. Henwood has a point: the above task is much easier said than done. Then again, so is the task of transforming a capitalist-managerialist country such as the United States to socialism.

Socialists face two main dangers. The first danger is that it might not be possible to run a socialist economy with anywhere near the level of comfort and convenience afforded by a capitalist economy. This danger is mitigated by the fact that capitalism-managerialism is lowering standards of living for all but the rich at an accelerating pace. The second danger is that capitalists, who will certainly fight back, will defeat socialism. We cannot avoid these dangers except to abandon the struggle. Socialism is not a Sure Thing: if we fight, we have to accept the possibility that we will fail. We can either admit defeat before we start, or bit the bullet and proceed despite the dangers. Fundamentally if someone believes a government not controlled by the capitalist class cannot effectively manage the economy, then they have no business calling themselves a socialist.

It would be nice to have an economy that doesn't use money, where we had so much that no reasonable person would want more than social product could afford them, where everyone contributed to the social product not to have more of the social product but out of a spirit of self-actualization, altruism, and civic duty. I don't think such an economy is utopian, or at least not impossibly utopian. But we're also not there today, and we won't get there tomorrow. We have a money-mediated market economy today, so we have to start pushing that economy towards our utopian ideal. And MMT is a good place to start pushing.

The objections against MMT are important, but not dispositive. MMT economists (Kelton, Wray, et al.) are not socialists, and MMT is thoroughly left-managerialist, not socialist. Just putting Kelton in charge of the Fed and Wray in charge of the Treasury will not usher in a socialist utopia. So what? Either MMT ideas are true or false; socialists should use the true ideas, regardless of the political orientation of their proponents. MMT scholars make errors, some grievous, and disagree on important points. So what? No one should propose making prophets of Kelton, Wray, etc. following to the letter the dictates of a nonexistent MMT scripture. We should not treat anyone (not even Marx!) as a transcendent authority; we should subject all ideas to ruthless critical scrutiny, not calumny. Like everything else, some of MMT is bullshit, but much of MMT really is true, admitted even by mainstream economists.

MMT is better-developed than Henwood would have us believe: MMT even has its own textbook. If MMT scholars are sometimes vague, well, the details really are complicated. How high should taxes be? How much inflation is acceptable? Where should we spend our money? The answer is the same as any economist would give: it depends. How fast should you go? It depends: are you in a car? a plane? A rocket ship to the Moon? Are you driving a Mercedes on the autobahn or a dynamite truck on an icy mountain road? The details are very different, but the framework, physics, is the same. MMT scholars are first and foremost proposing a framework for answering these questions.

The United States has no reason to worry much about hyperinflation. Wiemar Germany, Chile, Venezuela, Turkey, even Zimbabwe, are very different from use, and facile comparisons have no value. We do have the real capacity to make everything we want in the United States. We can and should worry about countries on the periphery, countries without our economic, social, and military privilege, but that's a different issue, and one we cannot even begin to address without first further advancing the cause of socialism.

The above notwithstanding, MMT gives us important weapons in the fight against capitalism. The first is that we do not need the money of the rich. We should definitely take their money, because they're the enemy, and money is their weapon, but we don't need it. As long as we hold on to the superstition that we need their money to fund socialism, we give the rich leverage: we must appease them, at least to some degree, to get their money. Why give that power away? Don't give the rich the power to hoard their money and crash the economy; instead, create our money to spend on what we need while we're clawing their money away. It's a subtle distinction, but one that is crucial to advancement of socialism.

The other big advantage of MMT is the job guarantee. Sure, a job guarantee (JG) could be implemented poorly, or the capitalist class could force it to be implemented poorly, but it can also be implemented well. The JG is straightforward, has theoretical and empirical support, and can act as a powerful automatic macroeconomic stabilizer. As Henwood admits, it begins to erode the most important tool to maintain capitalist power, the threat of the sack. The JG is not perfect, it does not solve every or even most of the problems facing the working class. But in this case, the perfect is the enemy of the good. The JG is not the end of the journey, but a step in the right direction.

Historical materialism and the calculation problem

Over at A Trivial Knot, the socialism dicussion has turned to the calculation problem and the problem of incentives. I think looking too closely at mechanisms and analytic optimality is at best a red herring.

The economic calculation problem is intractable. Given a sufficiently complex economy, it is not possible in real time to determine even approximately the optimal production, distribution, and consumption of tradable goods and services. Worse yet, even if we have a well-defined and universally agreed-upon objective function, we can tell which of two outcomes is better or worse, but we cannot tell which of two outcomes is "closer to" or "farther away from" the optimum — it is not necessarily the case that the better outcome is closer to the optimum. As any student of calculus knows, a local maximum might be far away from the global maximum.

The calculation problem is intractable even given an objective function; the calculation problem becomes completely irrelevant if we do not have such an objective function, when, as Hayek asserts, "society cannot agree on its most basic ends."

But chasing such an intractable, ill-defined optimum is a fool's errand. People and societies do not actually agree upon some ideal outcome and then define, calculate, and then implement the means to achieve that outcome. What we really do is resolve immediate, concrete conflicts in specific contingent, historical, material contexts. Individuals do this, societies do this, and both an individual and a society is just the accumulated outcomes of all the conflicts thus resolved. It might be fun to speculate on some theoretical ideal and invent castles in the air to exemplify that ideal, and there's no harm and perhaps some value to doing so. But actual social change over time necessarily becomes dominated by the resolution of real conflicts.

The fundamental problem with capitalism is not its mechanisms — money, the price system, the profit motive, income and wealth inequality — and the solution is not some alternative mechanisms — social credit, central planning, the altruistic motive, enforced equality. Solving the fundamental problems will certainly entail new sets of mechanisms, but the specific mechanisms are not the real issue.

We get closer to the fundamental problem of capitalism by observing that rich people make all the important decisions, influenced only slightly if at all by the general welfare. Naturally, their first priority is always that they retain decision-making power.

Closer still, rich people took over decision-making power because 18th and 19th century industrialization favored rich people making decisions. The wealthy capitalists were able to resolve conflicts that the feudal/monarchical ruling class of that era was unable to resolve.

We know from empirical evidence, e.g. the Great Depression and the Global Financial Crisis, that the capitalist class is unable to resolve certain conflicts within capitalism. The professional-managerial class (PMC) temporarily took over decision-making power because the economic conditions of mid-20th century financial capitalism favored them making decisions. The PMC was able to resolve conflicts that the capitalist class was unable to resolve. The PMC did not, however, decisively resolve those conflicts in the same way the capitalists were able to decisively resolve the conflicts of feudalism, and their own inability to resolve conflicts led to a capitalist resurgence.

Now we face a new set of conflicts, conflicts that neither the PMC nor the capitalist class seem able to address, including but not limited to global warming, wealth and income inequality, the precarious economic state of the working and lower professional classes which seems destined to descend into outright immiseration.

Assuming humanity does not simply become extinct, we will resolve these conflicts, because we must. The specific way we resolve these conflicts, the institutions we adapt or create to systematize these resolutions, and the historically contingent path we take to a systematic resolution, will be our future society.

I want to emphasize that we (should) resist capitalism not because we do not want capitalist resolutions to these conflicts, but because capitalists cannot resolve these conflicts and still remain capitalists. (And if the capitalists can resolve these conflicts, they had better get busy, because their time is running out.)

The issue is not what we might do a 1000 years from now in a communist utopia. The question is what we do today to solve the conflicts of today. Theory is useful, but only insofar as it informs our resolutions of today's conflicts, and how we use the resolutions to advance the cause of human liberty.

Some specific advice, seems warranted. Modern Monetary Theory is interesting not because it is some groundbreaking revolution in economic thought (it's not, but that's OK; even Marx was just a "third-rate Ricardian"), but because it brings front and center a truth economists push to the background and that capitalists must fight with every fiber of their beings to deny, that money is a creation of the people, it belongs to the people, and it is a tool for the people — not the capitalists — to get what they want. Nobody can have everything, and very little is obtainable without effort, but there is a vast difference between "we cannot have this or that," and "with sufficient effort, we can have it."

We can, for more concrete examples, have the Green New Deal, Medicare for All, zero involuntary unemployment etc. We will have to work for it, just like we have to work for everything. Indeed, the idea that we can have these things for "free" is not only untrue, but undermines these programs. Hence the assertion that these are "free" comes from opponents, not supporters. All supporters say is that they are possible, which they are. As Stephanie Kelton says, "If it's technically feasible, it's financially feasible."

Money is just the social permission to act. When opponents complain that we cannot afford this or that, they are saying that those who presently have the money forbid us from working for it. And our response must be, "Fuck you. We don't need your permission." The only question is when we will develop the will and power to take what we need; eventually we must, if only out of desperate immiseration.

The exploitation of labor

Siggy at A Trivial Knot has started a discussion about economics, starting with labor exploitation. Hop on over and join the conversation. Siggy is a seriously intelligent person (waaaay smarter than I am) and a good moderator.

Central planning in Star Trek

In my previous post, I talked about how Rick Webb, in his essay, The Economics of Star Trek: The Proto-Post Scarcity Economy, doesn't understand market economics. In addition, Webb also doesn't understand central planning.

Webb believes that the presence of individual choice decisively disproves central planning. He concludes, "The Federation is clearly not a centrally planned economy"* presumably because "[i]ndividual freedom of choice is very obvious." Webb claims to know that individuals have freedom of choice because "[e]veryone chooses their careers." Well, everyone, that is, who has made it in the glamorous and dangerous world of interstellar exploration. Gene Roddenberry et al. are not going to show us all the people who wanted to be starship captains but didn't get into Starfleet Academy.

*Italics omitted

(One hilarious irony is that in Star Trek, like every other military, even in the most fanatical market economy, the United States, Starfleet is most probably a centrally-planned organization. As far as I know, no one has managed a military organization with market economics: the 1st Infantry Division is not a profit-maximizing economic actor. If Webb can see a market economy in a military, he can see a market in anything.)

We cannot conclude that the Federation lacks elements of central planning. Not just because the Federation is a fictional society and has no underlying economic organization at all, but also because we don't know the the actual contingent problems a proto-post scarcity society would have to solve, and we don't know the historical context, i.e. the existing political and economic power relations, they have to solve them under. Even if we were to assume the present-day United States leads the way to a proto-post scarcity society, we cannot reliably project more than a some few tens of years; we definitely cannot predict what would happen three centuries from now.

Still, it's important to be more definite about what we mean by "central planning". There is at least a grain of truth underneath Webb's idea. It's logically impossible to run a market economy without some households making some choices, and it is logically possible to run a centrally planned economy with households having no choices at all. But just because it's logically possible doesn't mean it's necessary or even desirable to run a centrally planned economy exclusively by pointing guns at people's heads and telling them what to do.

How much economic choice people have is dependent first on the wealth of a society. Until the middle of the 20th century, the vast majority of people in the United States were farmers. A person could choose their occupation, so long as almost all of them chose to be farmers. And if we look at the beginnings of our capitalist market economy, most of these farmers had to be rather violently pushed into selling their labor on the market (see, e.g., The Invention of Capitalism by Michael Perelman.) Not having a lot of choices doesn't mean we're not in a market economy. Similarly with the Soviet Union and mid-20th century China. Both were extremely poor societies — immediately after the revolution, Russia was running its entire productive capacity and railway transportation on firewood — so there were just not a lot of choices to be had, regardless of economic organization.

On the other side, in a very rich society, at least some people will have a lot of choices, regardless of economic organization. And rich or poor, people in high status and high demand jobs will be those who want those jobs. Regardless of organization, it's pointless and stupid to force a person to be a doctor if there are 10 other people, just as intelligent and hard-working who want to be doctors. We really can't tell the form of economic organization just by looking at a few people in a high status jobs.

Just as Webb doesn't understand market economics, he doesn't understand central planning. His ignorance is perhaps more understandable: there have been only two societies — the Soviet Union until 1980 and the People's Republic of China until the 1970s — that have engaged in central planning in a big way, and both of them were not only poor, but fighting cold and proxy wars against the United States, so information about their economies is hard to come by, and propaganda about our "enemies" easy to obtain. Still, a little common sense can go a long way.

There are two basic types of central planning: command economics and state ownership. A society can combine these two types and can combine them with a market economy. Central planning and markets are not logically exclusive.

The first type of central planning is a command economy. In a command economy, the government just tells people what to produce and where to distribute it. The precise form of a command economy depends on the specific technology of production and economic problems to be solved. In a very poor mostly subsistence economy, the government will decide they need more tractors, round up a bunch of farmers, tell them to build and operate more tractor factories, and give the tractors to those who are still farmers. If Ivan or Chen doesn't want to leave his farm and build tractors, well, too bad: do it or go to jail. (Note that most modern "market" economies kicked off industrialization just as coercively. They simply dispossessed a bunch of farmers or expropriated the commons necessary for their subsistence viability, and said, "Hey, if y'all want to get money for food, come build and work at this factory over here." Sure, they had a choice: work or starve.) In a richer country, the commanders have a wider range of options, and their actions will depend on the actual problems to be solved.

A country usually employs a mostly command economy when it is fighting a "big" war. i.e. a war that requires the country to employ almost all of its surplus to fight the war. Every country, Allies and Axis, the capitalist United States and the communist Soviet Union, ran the Second Imperialist War as a command economy. This type of command economy works directly at the firm level: the central planners look at the existing productive capacity of firms, and tell each firm, "You produce this many tanks, you produce this many planes, you produce this many bullets, bombs, and shells, etc." There's no point in the central planners telling each individual where to work: each person works at one of the local factories, or they starve or go to jail. Even though there's usually a severe labor shortage in wartime, workers do not engage in market competition for wages. They take the pay and/or rations set by the government. This kind of economic organization appears very desirable. As I note above, every country — capitalist and communist — in a "big" war has employed command economics to a significant degree.

Modern corporations and military organizations have an internal command economy. Although corporations compete with each other in a market economy, internally, almost every corporation in every country is a centrally planned command economy. The employees do what the central planners, i.e. the board of directors and the senior management, tells them to do, and they use the resources the central planners give them to do it. Again, a corporation that tries to structure its internal organization along market lines risks failing as spectacularly as Sears. There are employee- and employee/customer-owned corporations, but that just means the employees (and customers) choose the commanders: these corporations are still internally centrally planned command economies.

The second form of central planning is one where the state owns and operates firms and/or controls a substantial amount of financial capital. One example is Norway, with both state ownership of significant firms and a large sovereign wealth fund.

Market economics in Star Trek

Rick Webb's essay, The Economics of Star Trek: The Proto-Post Scarcity Economy, is kind of dumb. I agree with Webb: we want to transcend our scarcity-based economic paradigms such as capitalism, and it makes little sense to understand economics by "resolving obscure trivia references" in a fictional television show. What we see on the show is dictated not by economic reality but by the demands of narrative: The producers, directors, writers, and actors must put on an entertaining and profitable show in a capitalist economy to capitalist viewers. There is no more underlying economic reality than there is an underlying engineering reality of warp drives and transporters. I don't think the economics of Star Trek make any sense at all, but so what? I don't watch the show as an economist, I watch it as a science fiction fan. I think Webb's whole venture is futile. The best we can do from watching Star Trek is find out what Gene Roddenberry and his successors thought about economics, not about the economics of a real "proto-post scarcity" economy. Unfortunately, Webb does just what he says he wants to avoid, and resolves obscure trivia references to impose a capitalist paradigm on the non-existent non-economy of a fictional television show. It's a confused, incoherent jumble of economic superstition filled with trivial logical fallacies.

*He has since expanded the essay into book form, which I have not read.

For the reasons listed above, it's a waste of my time as an economist to talk about what the Star Trek economy really is, since Star Trek isn't anything more than a surface. And it's not even that useful to talk abstractly about a proto-post scarcity society, i.e. a society where productive technology has advanced to make most ordinary needs abundant, but there are still larger scarcities. (For a fictional treatment of a true post-scarcity society, see Iain M. Banks' Culture series.) The problem is that political-economic systems are fiercely historically contingent. The political economy of any given proto-post scarcity society will depend on the specific historical details of how they got there.

However, I can perhaps correct some of Webb's more egregious misconceptions about political economy.

Webb associate markets with individual choices and central planning with the lack of choice. This association is incorrect. Markets and central planning are both very specific, detailed economic mechanisms. Saying that the Federation economy is market-based because people have choices is like saying that transporters use internal combustion engines like cars because like cars, transporters move people from place to place. So it's worthwhile to talk about how markets actually work in the real 21st century world.

Economics is about the study of scarcity. How can we choose best, as individuals and societies, when choosing to have one thing prevents us from having something else? If there's no trade-off, there's no economics. For example, we simply have no economic system at all for managing the quantity of atmospheric oxygen and carbon dioxide for animal and plant respiration. (Of course, global warming is another matter.) I don't have to buy oxygen in a market, nor is there any government telling me how much oxygen I can consume or how much carbon dioxide I must produce. So most people in Star Trek are just not economic actors in any sense, and there is no need for any economic system, markets, central planning, or anything else.

When we do have systematic scarcity, we have to carefully manage how we allocate what is scarce. The primary and most important scarcity is labor. We have found that human beings can vastly improve productivity by cooperative specialization. Instead of each household making everything they need themselves — growing their own food, building their own houses, weaving and sewing their own clothing, etc. — it is more productive to have individuals each doing one thing, and exchanging their products. Thus, I produce economics education, and I exchange that education for food, shelter, clothing, etc. Unfortunately, the people who consume my education do not grow food, build house, or manufacture clothing, so simple barter will not work. We have to have a more sophisticated system in place to allocate scarce labor, to make sure people specialize in the most productive endeavors.

A market economy is an institution for managing the allocation of labor to production and the allocation of surplus to increase productivity. The critical, essential feature of a market economy is the negotiation of money prices to maximize money income.

The simplest model of a market economy is just the interaction of households. Each household specializes in the production of one commodity for exchange. The households negotiate a money price with other households and exchange their commodity with those other households for money. The households then use the income from selling their own commodity to purchase commodities from other households, also with negotiated money prices. Each household chooses what and how much of its commodity to produce and, more importantly, the price of that commodity, to maximize household income. Stuff that other households produce is scarce, so each household has to carefully ration what they buy from other households to get the most "utility" from their purchases.

Households have a "choice" of what to produce and a "choice" of what price to require in the sense that no one points a gun at their head and tells them what and how much to produce and what price to sell it at. However, because a market economy exists to manage scarcity, a household cannot simply choose to produce whatever they please at whatever price they please, at least not for long. To maximize income, they have to produce the most in-demand commodity they can, and set the price to maximize their income: if the price is too low, everyone will want to buy it, but they won't make enough money; if the price is too high, no one will want to buy it. It turns out that to maximize its income, given its particular endowments (land, climate, skills, quantity of labor) there is usually exactly one commodity that a household "should" produce and exactly one price it "should" negotiate for that commodity.

It's provable that given a few assumptions (which are unrealistic in a complicated economy), this model will always produce a general equilibrium and a Pareto efficient distribution of subjective utility.

We can extend this simple model in various different ways to model things like managing a surplus of subsistence commodities or complicated multi-stage production, but these extensions must keep the negotiation of prices to maximize income (or net income, i.e. profit) to stay market-like.

By definition, when there's no scarcity, people will not use any mechanism, markets or otherwise, to optimize production or consumption. They do not choose what and how much of some commodity to produce in order to maximized their money income. They do not choose what to consume to make the most of their money income. They produce what they want to produce, and they consume what they want to consume. There's no market in a society like the Federation because there's no need for a market.

Living and Dead

Tony Judt, What Is Living and What Is Dead in Social Democracy?

Historical materialism

The scenario imagined not only by the right but by some on the left starts with a good-enough society. There are real problems, some of them quite serious, but on the whole most people are working, eating, having fun, raising families, not rioting in the streets. But the socialists condemn this society as profoundly immoral. So they recruit a few hundred people, and get some guns. They storm the capital, arrest and imprison (or worse) the government, and install themselves as the new government. They then impose a more moral society on the recalcitrant population. Which, of course, completely fails, making society worse off than it was before.

The paradigmatic "real-world" narrative is, of course, the Russian Revolution. Russia has some real problems, some of them quite serious: notably, they are doing quite poorly in WW I under the Kerensky government. However, they are a functioning society. Lenin, however, after being infected by the Marxist brain worm, decides that he cannot tolerate the immorality of Russia's burgeoning capitalism. He assembles and arms a few hundred Bolsheviks, arrests the Kerensky government, and imposes Communism on the recalcitrant Russian people. A successful defense against a Western invasion, conquering an empire starting with only wood for fuel, becoming a nuclear power, developing a somewhat successful space program notwithstanding, Russia under Lenin and his successors starts off a complete failure and only deteriorates from there, proving that anything other than laissez-faire capitalism can do nothing but doom society to poverty and misery.

For those of you who unable to detect the creeping sarcasm, the above is complete and total bullshit. The first paragraph does not represent how any social change, much less a social change to socialism, actually happens. The second paragraph is not at all how the Russian Revolution happened.

There's another scenario: human society is making progress. Not any old progress (which is just the trivially true change over time), but a certain kind of progress. Our society today is better than it was 100 years ago, and that society was better than it was 500 years ago, which was it was a 1000 years ago, and so on. The progress has not been linear of course; there have been interregna and backsliding, but overall society has been progressing. We are not yet at an ideal society, but we are closer than we were. And progress towards an ideal society might be asymptotic, but we should be closer still in another century.

This scenario too is bullshit, albeit more subtle bullshit. There's no objective way to evaluate any society. Most of us like our own society because it's the society we were indoctrinated as children to like. And, of course, those of us with privilege like our society because we have privilege; therefore, we believe we deserve privilege, and it would be an injustice to lose that privilege to those less deserving. We see our society as closer to the ideal than any other kind of society just because it is what we actually have, not because it actually is closer to some mythic ideal.

Historical Materialism

Marx himself believed his great contribution to the world of ideas was not class struggle (Smith and Ricardo precede him) but the idea of historical materialism, which hardly anyone really understands or takes seriously. I take historical materialism seriously. I'm not sure I myself understand it, but I will share my thoughts anyway.

The "materialism" part means that human beings are constantly faced with material (concrete, real-world) problems presented by the environment Which berries are good to eat, and which will cause sickness or death? How can I kill this beast and eat its tasty flesh? What do we do about that asshole who hogs all the good food?

The "historical" part means that we reproduce these solutions in consecutive generations. Our children don't have to think too hard about the solutions their parents came up with, at least the solutions that work well enough. One specific part of these historical solutions are patterns of social relations. Hunter gatherers get used to one pattern of relating to each other, pastoral, horticultural, agricultural, and industrial societies get used to their own specific patterns.

Marx argues* that the material problems of the production (as well as distribution and consumption) of material stuff are of if not exclusive then at least primary importance and these problems "determine" (or at least strongly constrain) historically transmitted social relations. In other words, the means of production determine the social relations of production.

*Marx might not really argue what I say he argues. I put the arguments in his mouth not only to lend them additional authority but also because I present my understanding of Marx's arguments with considerable and possibly undeserved charity.

We have heritable variation and natural selection, so we expect that the "determinism" is in some sense evolutionary. Specifically, patterns of social relations that have relatively better (more or better distributed) material production will have a selective advantage over patterns with relative worse production.

Marx argues that "materialism" means that big changes in the means of production cause big changes in the patterns of social relations rather than the opposite. Marx further argues "historical" means that the the specific character of the pattern of social relations obtaining at any specific time and place as the means of production are undergoing a big change there cause the specific pattern of changes to the social relations of production in response to the changes in the means of production.

(Please remember social scientists look at causality very differently from physical scientists: societies have orders of magnitudes more moving parts than even the most complex engineering projects. I will try to be more precise in more detailed explanations, but for here, causality in the weak sociological sense, as opposed to the the physical or even economic sense, is sufficient.)

Although this basic description is good enough for now, we can improve this theory considerably (notably that social relations can also cause changes to the means of production, hence the alternative label of dialectical materialism). I will also discuss some good and bad criticisms of historical materialism elsewhere. Here, I want here to discuss some implications of Marx's theory assuming he's really on to something worthwhile.

One implication is the denial of idealistic progression as mentioned above. We do not, we cannot, improve society by coming up with radically new and better patterns of social relations. Instead, we change our patterns of social relations in response to changes in the means of production. Briefly, Adam Smith and capitalism did not cause industrialization; industrialization in the specific historical context of late 18th and 19th century Europe, especially Great Britain, caused capitalism and Adam Smith. Similarly, if we end up with something like "socialism", it will not be because we imposed a socialist pattern of social relations on a more-or-less working capitalist society, but because capitalist society has itself created the conditions for revolution.

Revolution

Revolutions happen because of the specific way we create social systems. Human beings rarely think everything through from first principles: that's a prohibitively cognitively expensive way to solve most problems. Instead, we "reason" by habit, analogy, and tradition. If the means of production are relatively stable, then social relations will stabilize and reach a local maximum of productive efficiency. However, when big changes to the means of production happen (whether exogenously or endogenously), the regime of social relations of production are adapted to the old means of production. We retain this old regime out of habit and tradition.

Marx argues that new patterns social relations better adapted to the new means of production emerge within the old pattern. Because social relations generally entail power differentials, those with more power under the old regime are loathe to change it, protecting their power with even the most frightful violence. But because the new regime is more economically efficient, it has a real opportunity to successfully overthrow the old, but usually only after violent struggle.

Coda: The Bolshevik Revolution

In Russia in 1917, the Tsar lost legitimacy and abdicated, Kerensky's bourgeois "democratic republic" lost legitimacy, and everyone else, including the soviets, lacked the power or will to form a government. The Bolsheviks were not just a few (or even a few hundred) people: they had influence and popularity across Russia. Once literally everyone who might have had more power bowed out, only the Bolsheviks had sufficient legitimacy to form a government. So they did. And then they started solving Russia's considerable problems. From that effort arose Soviet communism, with all its pros and cons.

Intractable problems

In In Soviet Union, Optimization Problem Solves You, Cosma Shalizi makes a good case that the optimization problem for a national economy is more-or-less computationally intractable. This news does not come as any kind of a surprise to me.

But so what? Intractable problems are intractable. It doesn't matter if we call this or that heuristic "capitalism" or "socialism"; because we know that it is impossible to calculate what the "optimum" economy looks like, we know that neither capitalism nor central-planning communism (I refuse to call these synonyms) nor anything else is going to deliver an optimum economy.

It's worth repeating for emphasis: intractable problems are intractable: there is no way to find a solution even if it were known that a solution exists. If capitalism could solve the optimization problem, then the optimization problem would not be intractable. But it is intractable, so capitalism can't solve it any better than central-planning communism.

I really don't know much about the actually existing economies of the USSR or of the Maoist PRC. I have very little information: the East wasn't talking, and the West wasn't listening. What little information is available is so obviously biased I can't put together an historical narrative reliable enough to draw general conclusions.

But maybe we can draw some general conclusions from information theory. We can't solve the economy, but we can employ heuristics to make it good enough, and give directions for improvement. The key is, of course, feedback and a dynamic rather than a static view. We need to implement intentional inefficiency, i.e. redundancy and slack (unused capacity).

The Internet, for example, is "ideal" in a sense precisely because it is inefficient. It is inefficient, for example, to have multiple paths from Denver to San Francisco; it would be more efficient to have only one path, which was optimized to provide exactly the required throughput. Instead we have many paths, none of which operate at full capacity.

Capitalists argue that capitalism is such a feedback system, and the "anarchy of capitalism" affords precisely the required redundancy and slack. Partially granted. But capitalism is not the only possible feedback system, and the "anarchy of capitalism" is not the only way to afford redundancy and slack.

Worse yet, Marx and Lenin argue* that even in its ideal form, capitalism, while yes, a dynamic feedback-oriented system, and yes, far better than mercantilism or feudalism, is still a "bad" system, prone to destructive positive feedback (financial crises) and the tendency to monopolism, which destroys beneficial redundancy and slack. (Marx levels many other charges against capitalism, but the above are especially pertinent here.)

*You know what I mean.

I am generally agnostic at an ideological level about "mechanisms". The important differences between capitalism, socialism, and communism are not differences about methods, static or dynamic, feedback-oriented or command-oriented, etc. Static top-down methods are probably not particularly useful, since they are brittle: either exactly right or disastrously wrong. (In what little information I've seen about the economy of the USSR that I don't completely dismiss as hopelessly tendentious, Western economists argued that effective feedback systems did evolve in the supposedly rigid and inviolable Soviet central planning mechanism.)

Any time we're dealing with a heuristic, we have to ask, good enough for whom? Improving for whom? By what measures? What do we mean by "efficiency"? What are the numerator and denominator? The answers to these questions are more easily answered with algorithmic solutions: they're right there in the specification of the problem. They're harder to answer with dynamic feedback systems, because the answers often emerge from the feedback mechanism itself, and emerge in non-obvious ways. Moreover: how does the system provide enough positive feedback to grow, but enough negative feedback to not grow pathologically or self-destructively?

And I think the important differences between capitalism and socialism are that the former answers, good enough for the bourgeoisie, and the latter, good enough for the proletariat. The rest is implementation detail.

Optimization and central planning

In Soviet Union, Optimization Problem Solves You

More on this later. In the meantime, read it!

Socialist economics part 3

part 1
part 2

<tl;dr>

A socialist economy is a temporary and unequal (but less unequal than capitalism) economic system where people receive not just their cost of living, but the more-or-less full value their labor. From this position, we can begin to work towards the precursors of a communist economy discussed in part 2.

</tl;dr>

We presently have a capitalist economy. We want to get to a communist economy, i.e. "from each according to his ability, to each according to his needs." How do we get from point A to point B? And how do we get there without just destroying everything and starting over from scratch, from an subsistence agrarian economy?

We have to start with a bit of theory: Marx's distinction between labor and labor power. Labor is the actual production* that a person performs; labor power is the ability to do that actual production. Labor power requires labor: a person must eat food, live in a house, wear clothes, drink water, dispose of their waste, etc., and people (usually other people) must use their time and effort to produce all of these requirements. Critically, an hour** of labor power takes less than an hour of labor to produce. Surplus labor, then, is the difference between the labor a person can perform and the labor required to generate the ability to perform that labor.

*There's considerably more theory underlying this paragraph, but I think we have a good enough starting point.

**I'm being deliberately vague about my units, but "hour" is sufficient to get the idea across.

The fundamental pillar of capitalism is that the capitalist pays "fair market value" for a worker's labor power, i.e. the social cost of the worker's ability to work, and receives all the labor thus created. The surplus labor is the ultimate source of the capitalist's profit.

Therefore, socialist economics must start by undermining this fundamental pillar of capitalism: a worker should receive, at a first approximation*, the value of their labor, not the cost of their labor power. If I work eight hours to produce stuff for other people, I should receive stuff — including the food, shelter, etc. that I need to generate tomorrow's labor power — that other people expended eight hours to produce.

*Marx offers a more detailed accounting in Gotha ch 1.

Marx claims (again in Gotha) that this change, from a worker receiving the cost of their labor power to receiving the value of their labor, is not enough. A worker who can worker longer with more intensity, or who is privileged to produce more desirable goods will receive more than a worker who cannot work as long, with as much intensity, or who is condemned to produce less desirable goods. Marx argues that this inequality is temporarily unavoidable, because we start with a capitalist economy. However, Marx argues we absolutely should not accept this temporary measure as our ultimate goal: it is just the platform to begin to dismantle "the enslaving subordination of the individual to the division of labor."

Socialist economics part 2 (Communist economics)

In socialist economics, part 1, I raised some concerns with Frederik deBoer's definition of socialism. It behooves me to offer a more useful definition.

<tl;dr>
Marx tells us where we want to end up: "From each according to his ability, to each according to his needs." That is communist economics. But such a society comes only as a result of precursors:

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs! Critique of the Gotha Programme ch. 1

So our task as communists, then is to begin to realize the precursors, to eliminate the "enslaving subordination" etc. I will label here as "socialism" the task of realizing the precursors, which will be the subject of the next post.
</tl;dr>

To understand socialist economics, I want to start with communist economics. Marx's "thousand year" goal is "from each according to his ability, to each according to his needs." A critical feature of this slogan are that a person's demand on the social product is coupled not to their contribution, but to their "needs". Marx can be vague about "needs" precisely because this is a goal, not a plan: part of the implementation of this plan is to more carefully define "need". Another critical feature, where I will again push back against deBoer, is that this definition does specify reciprocity: each person has the social obligation to contribute according their ability.

Marx does not believe that this slogan can be arbitrarily chosen or imposed on a society; he names a number of ideological and structural barriers, mentioned in the passage quoted above. I'll unpack this passage later; the question for now is not would this work? but is this worth striving for? And by "this" I mean not just the banner and slogan, but the precursors. Is it worth striving to eliminate "the enslaving subordination of the individual to the division of labor"? Is it worth striving to eliminate "he antithesis between mental and physical labor"? Should we strive to make labor* "life's prime want"? Should we strive to increase the productive forces, the "all-around development of the individual"? Should we make "all the springs of co-operative wealth flow more abundantly"? Communists answer these questions in the affirmative; indeed, if we have these precursors, the banner and slogan will naturally follow.

*I'll need to talk about Marx's conception of labor another time.

The question then becomes how to begin striving for a communist society, which brings us to socialist economics, the subject of part 3 of this series.

Socialist economics part 1

On further reflection, I want to push back on Frederik deBoer's conception of socialism. deBoer is, of course, free to define these terms as he pleases: I don't claim he is mistaken, since there really isn't a matter of fact at stake; instead, I claim there are more useful definitions of socialism. deBoer's defines socialism thus:

The term “socialism” refers to an economic system in which human goods are removed from the market mechanism and currency exchange and are instead distributed based on need. To socialize an industry means to remove its products (whether medicine, education, housing, etc) from the market model and instead establish some means through which need is assessed and filled without the expectation of reciprocity. Socialism does not change who pays for necessary social services but replaces the very system of exchanging currency for goods entirely. A socialist viewpoint recognizes the impossibility of moral reform from within capitalism. [emphasis added]

The biggest problem is that this definition is vague. First, what is "need"? Do I need anything other than a mud hut, rice and beans, a straw mattress and blanket, a tunic and trousers? Yes, I probably do need more, but although I live frugally, I have a lot of stuff I definitely do not need, and I like having that stuff, and I don't want to give it up. So what do we do about the stuff we don't need but just want? And what precisely are the "some means" to allocate stuff? And what precisely are the "market mechanism" and "currency exchange"? I'm an economist, and I've read my share of Marx, but I don't fully understand either of these terms.

Second, deBoer does not tell us why we would want to replace the "very system of exchanging currency for goods." deBoer seems to imply that this "very system" is what's wrong with capitalism: that if we just replaced this very system with just about anything else (so long as there's no "expectation of reciprocity"), we would fix the problem that is capitalism.

And what about reciprocity? Marx does not abandon reciprocity even in his thousand year goal, "From each according to his ability, to each according to his need." I suspect that deBoer means some sort of direct, immediate and personalized reciprocity (if you don't pay full price up front, you don't get medical treatment), but the issue of reciprocity remains important.

Of course, it would definitely be nice if there were enough stuff that any reasonable empathetic adult could just take whatever they wanted, but if that were the case, we would have no need of any means at all to assess need. And if we restrict socialism to just the provision of needs rather than wants, however socially determined, then why would social democracy, a.k.a. welfare capitalism, not be sufficiently socialist?

I do not think that the system of exchanging currency for goods in itself is per of a problem, much less the fundamental problem of capitalism. So long there are not enough goods for everyone to simply take whatever they want, we have to use numbers to allocate production and consumption, and "currency" literally is nothing but numbers, numbers used to allocate production and consumption. Unless you advocate abandoning using arithmetic in the production and allocation of goods, you have currency.

It's easy to read Marx's charge that capitalism reduces all social relations to the cash nexus as a condemnation of cash. However, I read Marx differently: the key phrase is "reduces all social relations". The problem is not the "market" (another unacceptably vague term), the problem is the totalitarianism of the market. The problem is not that I must somehow exchange currency for stuff, the problem is first that at the limit, I have to dedicate every waking moment, I have to dedicate every choice, to obtaining and managing currency. And, of course, the second problem is the terms of obtaining that currency: Most people have to rent their humanity to the bosses to have enough currency just to live. It's not the currency that matters, but how currency is used as a means of domination and control.

Even as the most basic "ground floor" definition, I think we need more than deBoer's economic definition of socialism. Stay tuned for part 2, where I offer what I think will be a more useful definition.

Socialism, Marxism, and communism

Fredrik deBoer's offers his opinion about what socialism, Marxism, and communism mean. I largely agree.

The term “socialism” refers to an economic system in which human goods are removed from the market mechanism and currency exchange and are instead distributed based on need. . . .

The term “Marxist” refers to the teachings of Karl Marx, Friedrich Engels, and their intellectual descendants. Marxism is commonly also called “dialectical materialism” . . . Marxism is the culmination of Enlightenment thought.

“Communism” is the political program of Marxists . . . Communism is a type of revolutionary socialism which calls for a worldwide workers revolution that destroys capitalism, kills God, and dismantles the state. . . .

deBoer goes into a little more detail; as the saying goes, read the rest.

It is pointless to argue that that's not what socialism, Marxism, and communism "really means"; the best you can do is say that that's not what <insert pseudo-authority here> thinks these things mean.

I personally would stress more the sense of socialism as the establishment of social welfare on the basis of the power of the proletariat rather than the sufferance of the bourgeoisie, but deBoer gets some of that sense in "communism", so I'm cool overall.

You might be bourgeoisie

You might be bourgeoisie from Existential Comics
Check the hovertext too.

Socialism and moral philosophy

Disclaimer: There is no such thing as "socialism". What follows are my own ideas about socialism.

The outrage against children receiving "participation trophies" and related practices such as not keeping score in sportsball, is a common enough trope. But why? I'm no expert in childhood education (I'm in adult education), so why should I or any other non-expert have strong feelings about how teachers teach children? The answer is that people who object to these practices see them as breaking an important moral norm, exactly as if educators were encouraging children to fight or lie. The objection is not to a method but to an outcome, which is a legitimate concern of non-experts. The outcome, the moral norm, is that invidious norms are of considerable importance.

Invidious norms draw distinctions within society. Contrast invidious norms with universal norms, such as the norm against killing. People who violate the universal norm against killing are cut off from ordinary society, either in prison or criminal gangs, or in the insulated and alienated communities of soldiers and police. The distinction is not really between "good" and "bad": people who kill others are not so much "bad" as alien, and people who don't kill others are not really "good", they are just ordinary.

In contrast, invidious norms really do divide people into superior and inferior, without alienating the inferior from society. For example, I consider generosity morally superior to selfishness. I think generous people are morally better than selfish people. But selfish people are still part of society; they are not cut off in the same sense that those who kill are cut off. There's nothing wrong with invidious norms per se, but as with any other element of society, we should think clearly and deeply about them.

Capitalism establishes an invidious norm: the superior should be economically rewarded, and the inferior should be not just not rewarded but economically deprived. This norm, however, is circular: there is no judgment of superior and inferior independent to economic reward: those who are economically rewarded are superior just by virtue of their reward; those who are deprived are inferior just by virtue of their deprivation. Thus, any attempts to reward the deprived is immoral, just as it is immoral to give the gold medal, indeed any medal at all, to the last-place athlete.

Of course, capitalist apologists deny circularity: poor people are inferior not because they are poor; they are poor because they are inferior, i.e. lazy, improvident, and impatient. Rich people are rich because they are superior, i.e. industrious, thrifty, and patient. But ask the apologist how they know that poor people are lazy, and they will answer that if the poor were industrious, they wouldn't be poor. And even if we could independently determine laziness, we cannot be sure that poor people are lazy because they are poor. (See especially recent criticism of the "marshmallow" test.) Just that Donald Trump, for example, is both rich (well, richer than me) and President of the United States is evidence enough that the connection in our capitalist society between merit and reward is completely broken.

A related norm that precedes capitalism is the norm that people do not want to be virtuous; they must be forced to be virtuous. It is the moral duty of the superior to force the inferior to be good. (See Corey Robin's The Reactionary Mind and Bob Altemeyer's The Authoritarians.) It is not the virtue of the superior that makes them superior, it is their power to force the inferior to virtue. Hence we routinely forgive the powerful for their sins, so long as they retain the power to force the powerless to virtue. That no one has the power to force the powerful to be virtuous is a regrettable consequence, but if it were true that virtue must be forced, that consequence would be inescapable.

Hence the inferior must, as mentioned above, be deprived. Partly just because of simple human perversity — it is not enough that I succeed, others must fail — but there's more. It is not sufficient that the superior have more if the inferior still have enough. Only conditions of deprivation place the inferior under the power of the superior. The superior must have that which the inferior desperately need. The subordination of the inferior to the superior is constant across social systems; capitalism is unique in that the mode of this subordination is wage labor.

The moral progress of previous generations has been to refine and distill relations of subordination; hence Marx speaks of society coalescing into two classes: bourgeoisie and proletariat. Capitalism strips the relations of subordination of previous eras of superstition and ignorance. If we commit ourselves to the project of separating the superior from the inferior and placing the inferior in the power of the superior, I can think of no better way of doing so than capitalism. Simply trying to change who is superior and who is inferior must be a step backward into superstition and bullshit.

We have reached the pinnacle of relations of subordination. The only way forward, then, is to eliminate relations of subordination. We must directly acknowledge and confront the underlying idea that it is a moral good to divide people into the superior and inferior, and that it is a moral wrong to reward the inferior at the expense of the superior. No small task, and a task, I think, that no would-be socialist society has successfully confronted.