Dark Leviathan

Dark Leviathan [link fixed]: The Silk Road might have started as a libertarian experiment, but it was doomed to end as a fiefdom run by pirate kings.

Ulbricht built the Silk Road marketplace from nothing, pursuing both a political dream and his own self-interest. However, in making a market he found himself building a micro-state, with increasing levels of bureaucracy and rule‑enforcement and, eventually, the threat of violence against the most dangerous rule‑breakers. Trying to build Galt’s Gulch, he ended up reconstructing Hobbes’s Leviathan; he became the very thing he was trying to escape. But this should not have been a surprise.

Institutions and cooperatives

Right after I completed my earlier post, A theory of institutions, I started thinking about cooperatives. Cooperatives don't really fit at all into the theory. I can try to shoehorn them in: they do deliberate and vote, but that isn't their primary motive: members of a cooperative aren't institutionally rewarded or punished for their voting in the same way that politicians are (or should be). They do creative work, i.e. they solve problems big and small, but, again, they aren't rewarded or punished for their creative work in the same sense that a team of engineers would be. (I was, for example, a creative worker in the Kerista commune, but the organization as a whole wasn't primarly involved with problem-solving.) And cooperatives are certainly not self-interested organizations such as capitalism: people are not vying with each other within the organization to maximize their short-term material self-interest.

There are two ways that seem to make sense to define "institution." One is simply any well-defined collection of individuals that reproduces itself, i.e. persists in time and space. The other, of course, is my definition in the earlier post, an organization that uses short-term, local incentives to achieve long-term global goals.

Cooperatives (ideally) just don't do the latter. Everyone in the cooperative acts (or should act) directly on the long-term, global goals. And they not only act directly on those goals, they act to set those goals, and even in setting those goals, they don't (or shouldn't) act just to push their own small goals on the big goals of the cooperative, but try to develop a mutual, cooperative sense of what the organization "should" be. In short, in a cooperative, people (should) actually cooperate, on every level. There's no dialectic between short-term and long-term, local and global. (There are always dialectical processes, of course, just not those particular dialectical processes.) Thus, in the sense of the previous post, cooperatives are just not institutions.

I think this conclusion helps us understand the interaction between capitalism, communism, and "socialism" (in the sense of the transition between capitalism and communism).

Corruption

6 Insane Details of Corrupt Politics That Movies Get Wrong (Original title (which I think is better): "6 Ways Government Corruption Is Way Weirder Than You Think")

#6. Politics Turns Politicians Into Helpless Children
#5. It's All About Fashion and Sucking Up
#4. Legal Bribery Happens All the Time
#3. Lobbyists Are Everywhere, Operating Without Rules
#2. Even Nations Need Lobbyists
#1. Lobbyists Can Destroy Politicians Who Oppose Them

And to no more settle for less than purity

I have been published!

"And to no more settle for less than purity: Reflections on the Kerista Commune." Praxis, 1.1: 58-73.

Check out the whole issue, where you'll read many good articles by my fellow students.

David Graeber (and Daniel Little) on Anarchism

In David Graeber on the anarchist movement, Daniel Little reviews Graeber's book, Direct Action.

We want to see a world that is genuinely committed to some basic principles of social justice, equality, and personal freedom. And we generally acknowledge the point that the modern world can only function on the basis of social, political, and economic structures that have a degree of authority over individual conduct. These two framing ideas are in tension. ... Is social democracy actually a feasible outcome in the conditions of the 21st century?

There is a strand of radical thought that answers these questions in the negative. The "autonomist" theories and practices within the labor movement of the 1950s... represent one thread in this world. Another is the body of thinking, rhetoric, and action that is involved in the anarchist organizations associated with current anti-globalization activism. David Graeber has done an important service to the rest of us by offering an extended ethnography of this loosely connected movement in Direct Action. The book is the first I've seen to offer a nuanced description of the thinking, practices, and networks that have emerged within this movement over the past fifteen years or so.

Activism is important for correcting specific errors or problems, but according to Little,

it doesn't give a basis for creating institutions and structures that really work from the point of view of social justice and participatory democracy. ... In the end, I am more attracted to the kind of work begun by Fung and Wright, which is aimed at creating sustainable institutions of participatory democracy.

Debt and democracy

Debt and Democracy: Has the Link been Broken?

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns.

Delegated democracy

We can identify, both theoretically and historically, some fundamental principles that underlie democratic communism. We have to add the qualifier "democratic" to distinguish democratic communism from "communism of the parties" (i.e. the specific instantiations of communism, especially in the Soviet Union and China) as well as Marxian communism (i.e. Karl Marx's specific conception of communism). Democratic communism is the union of the democratic political process to the communist economic system.

Modern political science tends to consider the contrast between democracy and republicanism as the contrast between direct democracy, where the citizenry is the legislature, and representative democracy, where the citizenry elects the legislature*. Since direct democracy seems at best unwieldy and at worst practically impossible, republicanism is held up as the only viable alternative. But there's another contrast possible, the contrast between the existing trustee model of representation and the delegate model.

*In a parliamentary system, the legislature (usually the majority party in the legislature) elects the executive; in most presidential and semi-presidential systems, the the citizens elect the president directly. The sine qua non of republicanism, therefore, is the election of the legislature.

In the existing trustee model, we elect individuals we trust to make the right decisions, even if those decisions are temporarily unpopular. Because we explicitly privilege representatives to make temporarily unpopular decisions, we must explicitly protect them from the consequences of unpopularity. Thus we elect representatives for fixed terms, and evaluate the totality of their performance at the end of their term. We also allow them to operate secretly or covertly. If we trust someone (and if we have no way of immediately overturning their decisions), it's more efficient to let them make decisions in secret, or make decisions we can discover only after substantial effort.

The trustee model is discussed at some length in the Federalist Papers. One justification for the trustee model was the protection of minorities: a trustee representative, because of his superior wisdom and the necessity of taking a somewhat longer view (at least to the next election) would, the Founders proposed, make "oppression" of the minority by the majority more difficult. Another consideration, perhaps more important, was that a trustee model would protect the position of the capitalist ruling class. (The code phrase, which appears both in the Federalist Papers as well as the Constitution), is a prohibition on the forgiveness of debts.) The trustee model was quickly abandoned as way of protecting against the "tyranny of the majority"; the inclusion of the Bill of Rights places this task firmly in the hands of the judiciary. In reality, the trustee model only protects the ruling class.

But using the trustee model brings up a more fundamental question: why involve the people (at least those people outside the ruling class) at all? If you're going to protect the ruling class, why not do so directly? A simple argument is just that the Founders believed that trustee representation would more efficiently legitimatize the new government. The colonies had, after all, been electing their legislatures for a century. But there's a deeper argument: the capitalist ruling class of the late 18th century did not trust the people, but they also did not trust each other. As much as they wanted to protect capitalism from the people, they wanted to protect capitalism from other capitalists. They did not want the (presently) richest capitalists to unconditionally acquire state power, and set themselves up as a politically, rather than economically, privileged elite. They did not want capitalism to degenerate into de facto monarchism. There was no internal way to avoid this degeneration, so they pushed the resolution of disputes within the capitalist ruling class to (some of) the people.

Lenin, whom I believe was at heart a democrat, favoring a democratic political process, made the fundamental error of not immediately making the legitimacy of members of the Communist Party of the Soviet Union, even as trustees, formally dependent on a democratic process. It is up to historians to determine whether or not his error was excusable or inevitable: he inherited a country compromised by imperialist exploitation, ruined by the First Imperialist War, he had to fight a savage civil war, and had nothing even approaching democratic popular traditions; it is entirely possible that a democratic process would have immediately doomed Russia. I don't think Mao Zedong was at heart a democrat, but the historical, material circumstances were perhaps even more dire in 1949 China than in 1917 Russia; if a democratic process really was untenable, we can fault Mao only for his lack of pious hypocrisy. But, regardless of the inevitability or exusablity of their errors, they did err, and we are not obliged to sanctify or repeat their errors.

It's not terribly difficult to correct the error without reproducing the class privilege inherent in the trustee model: the delegate model of representation.

In the delegate model, where possible, we handle matters of state power by direct democracy. Direct democracy works reasonably well for small groups of people, and we are "naturally" made up of small groups: e.g. neighborhoods, small businesses, interest groups. We can, for many matters, place some state power directly in the hands of the people themselves, and (with some limits) let the majority of the small group directly "rule" the group. This process has the twin advantages of being as "purely" democratic as possible; more importantly it habituates people to the techniques, skills, and special problems of exercising state power.

Where we cannot efficiently implement direct democracy, we resort to delegates. A delegate differs from a trustee in that a delegate's constituency does not trust a delegate to act in their interests. Instead, the constituency continuously evaluates their delegate, and ensures that she acts in accordance with their interests. Unlike a trustee, the delegate serves at the pleasure of her constituency, and therefore the constituency may recall and replace her at will. Second, a delegate must act absolutely transparently; the constituency must know, or be able to easily discover, exactly what she is doing at all times. Finally, the delegate must be absolutely free of conflicts of both personal and third-party interests: she must be beholden only to her constituency; her personal interests should be serving the will of her constituency.

The delegate model of democracy does not solve all political problems. Like any other democratic system, including republicanism, a theory of government that includes a delegate model must generally confront the philosophical and theoretical limitations of majoritarianism. The delegate model still leaves the issue of "tyranny of the majority" unsolved. But neither does the the existing republican model solve the problem; in almost all republics, maintaining the proper rights of the minority is a function of the judiciary. Because it does depend on the people, the delegate model shares the problems inherent to any democratic or semi-democratic system.

Perhaps more critically, the delegate model is by design not as stable as the republican model. We can count on a republican government having the same people in it for the shortest term of office (e.g. two years in the United States); in contrast a delegate government can change arbitrarily. As noted, the delegate model intentionally undermines legislative stability to prevent a minority class from monopolizing state power. An overall model of government that includes delegation must, however, directly address the issue of stability.

A governmental system is complex; it consists of many institutions. Indeed a government that consists of a single institution (such as communism of the parties, which had a single governing institution, the national Communist Party) has a single point of failure, which we engineers consider a Bad Thing. In a complex system, if one institution fails, the other institutions can mitigate the effects; they can also exert pressure to correct the failing institution. The delegate model of democracy specifies only one institution. I will be exploring other institutions of democratic communism in further posts.

The democratic state

When I talk about the state, I mean it Max Weber's sense: an institution or organization with a monopoly on the legitimate exercise of violence. So when I talk about a democratic state, I still mean that we have an well-defined organization, the "government", which has a monopoly on the use of violence. We still have police*, courts, and perhaps even something like prisons; we still apply violence using an institutionalized process. I want to talk here not about whether we should institutionalize the use of violence, but about how to construct institutions that are specifically democratic.

*We also (probably) have an army, but I will arbitrarily define "army" as the organization that uses violence outside the sovereign political unit (the police are inside), and I'm concerned here with the function of the state in a domestic context.

I also want to disambiguate republicanism from democracy. In a republic, the people choose their rulers; in a democracy, the people themselves rule. All modern "democracies" are republics, and almost all political science consists of how to make republics more efficient. There is good evidence in the Federalist papers that the framers of the U. S. Constitution created a republic intentionally to avoid democracy. In this task, they succeeded. I reject the concept of the republic; the republic is an essentially bourgeois institution; I do not believe there can be a stable and humanitarian socialist or communist republic. There is, I think, no channel in the republic between the Scylla of authoritarianism and the Charibdys of plutocracy. The only way out is true democracy.

Fundamental to a true democracy is that everyone has to become accustomed as individuals to the routine, daily exercise of political power as they are to the daily, routine management of money. I used to live in a condo complex with a homeowners' association. With fewer than a hundred households, there was no reason we couldn't have run the association with direct democracy, but the association was instead run with a republican model: we elected officers, who served for a fixed term, and the rest of the residents were occasionally invited to offer "feedback", which was usually ignored. Whoever managed to get elected had free reign to impose their personal hobbyhorses, and use the privilege of their office to maintain their power. Fundamental to a democratic state is that individuals must manage local, neighborhood resources by direct democracy. Without this feature, democracy will collapse to republicanism and ruling class oppression.

It's probably not feasible to have a direct democracy with more than a few hundred or a few thousand individuals. Aside from the purely technical problems of obtaining a reliable vote, the totality of issues facing the governance of a 300 million person country or a seven billion person world are too complex for any individual to grasp. Indeed, besides maintaining bourgeois privilege, this complexity is the principle argument for republicanism. But the republican, trustee model is not the only model possible. There is the delegate model and the franchise model.

In the delegate model, relatively small groups of individuals (no more than about a thousand) choose delegates, whom they can recall at any time. To address larger units of administration, delegates can themselves choose delegates to the next larger level. A delegate cannot act independently of her constituency using her term of office as a shield. It's also important to ensure that a delegate cannot routinely act officially in secret. Everything a delegate does must be transparent. A delegate can condense and summarize the complexity of her tasks to a well-defined constituency, and an independent press can provide alternative sides to the story.

In the franchise model, would-be representatives assemble a "floating" constituency. Each individual would therefore choose someone to represent him at each level of administration: I would have my city council member, my state representative, my federal legislator. Each of these representatives would vote in proportion to her constituency. If I didn't like what my representative was doing, I'd switch my choice to someone else, anytime I liked. A representative who lost too much support would be immediately ejected from the policy-making body.

Both models have advantages and disadvantages, but both models also share the fundamental issue that they are by design less stable than republicanism, and consequently both are potentially more problematic for individual rights. I'll address these issues in future posts.

The state as an institution

Should the use of violence be institutionalized? Should one institution (or a set of institutions with a well-defined mode of cooperation) have a monopoly on violence? Can we have a stateless society in Max Weber's sense of "the state"?

There are, of course, alternative conceptions of "the state". Lenin offers an important conception: the state is the instrument of oppression and exploitation of one class against the rest of society. I suspect that Lenin's conception is definitional: an organization that has a monopoly on the legitimate use of violence that one class does not use to oppress and exploit the rest of society would not be a state in Lenin's sense. Lenin's point in The State and Revolution is, I think, more subtle: the capitalist ruling class has constructed the specific nature of the institutions of governance (i.e. Weber's state) to oppress and exploit the working class; therefore, if well-meaning communists simply occupy those institutions, they cannot create fundamental change. The very nature of the roles and institutional structure ineluctably force office-holders into a capitalist mode of the exercise of violence. Hence Lenin draws the distinctions between socialists and communists: Socialists believe — mistakenly, in Lenin's opinion — that the institutions of governance are, by and large, socially neutral, and we can achieve a socialist society simply by installing socialist individuals in these institutions. Communists, on the other hand, believe we must radically transform the fundamental institutions of governance to have a socialist (in the transitional sense) society.

Similarly, we can also talk about the trustee state vs the delegate state. In the trustee state, individuals who are members of the institutional state have personal power by virtue of their membership; this power is procedurally independent of the will and desire of the rest of the population. It is coherent, for example, for the trustee state to pass an unpopular law. In a delegate state, however, the members of the institutional state merely apply violence in accordance with the wishes of the population; it would be incoherent for a delegate state to pass an unpopular law. A delegate state would still fit Weber's definition, because only the institutional state would actually apply violence.

It seems easy to conflate "state" with "trustee state" because all states in the modern world are trustee states. It's also arguable that even if only the application of violence were delegated to a specific institution, the institution would quickly adopt a sense of privilege to determine when violence ought to be applied; they would consider themselves not delegates but trustees.

If we equate "state" with "trustee state", and call the delegate model something else, then yes, I'm all for abolishing "the state" immediately, and replacing it with a delegate model. If we mean abolishing the institutionalizing the application of violence, I'm much more skeptical. Such abolition might seem desirable, but I suspect it's not presently feasible.

Weber's definition of the state

One advantage of going to college is that I'm learning the "official" definitions of words, words that in my amateur reading have been at best fuzzily defined and at worst shamelessly equivocated. I don't mean to say that the official definitions are correct or even the best, but they often have the advantage of being precise. Better, I think, to use the "wrong" precise definition than a fuzzy one; a fuzzy definition is not even wrong.

I find the official definition of the state to be very useful. The state is the sovereign organization which holds a legitimate monopoly on the legitimate use of violence within a well-defined territory.

To be a state, the organization (or collection of organizations and institutions) must be well-defined: even if part of that organization is secret, all individuals must know whether or not they are part of that organization. The organization might be in some sense beholden to or dependent on particular individuals or other organizations; what is important is that the legitimate use of violence must always "pass through" the organization that is the state.

The state must have sovereignty: there must be no higher legal authority than the organization to use violence. (States can and do go to war against each other, but that's not legal authority.) A state can delegate legal authority (usually by treaty), but as long as the state can in theory rescind that authority, it remains sovereign.

The state must be legitimate: the people against whom the state does or potentially could exercise its violence must recognize the organization as privileged to use violence. No organization — not even the Roman Empire — can rule by brute force; the population must at least passively acquiesce to the rule of the state.

The state must hold a monopoly: if more than one organization actually exercises violence, then those other organizations must have their privilege delegated by the one organization that is the state. In a federalist (e.g. Germany) or pseudo-federalist (e.g. the United States) system, the organizations that use violence (central and provincial governments) must cooperate closely enough to never fight amongst themselves; the collection of organizations forms a state. When Dwight Eisenhower sent federal troops to Little Rock to enforce desegregation, for example, governor Orval Faubus did not command the Arkansas National Guard to actually fight them.

The state must use violence: it can arrest, imprison, harm or kill individuals, without its members and agents facing social sanction (assuming their exercise of violence is validly exercised). It can also use the threat of violence to indirectly coerce individuals.

The state must exercise violence within a well-defined territory. This criterion separates the modern state from its feudal and imperial predecessors.

Given this definition, we can be very specific about alternatives to the modern state: relax or eliminate one or more elements of the definition, and you have an alternative to the state. Feudalism relaxes the monopoly and territoriality conditions; Pre-feudal imperialism lacks well-defined borders: the authority of the state is not uniform within its territory of influence, and regional governors, especially those far away could oppose the imperial government without fear of violent reprisal.

One interesting example of relaxing the territorial definition is in Neal Stephenson's book, Snow Crash, where the authority of franchises, the organizations that use force, extends to individuals, without geographic boundaries. The protagonist (cleverly named "Hiro Protagonist"), for example, is a "citizen" of Mr. Lee's Greater Hong Kong: Hiro can appeal to Mr. Lee for dispute resolution or physical protection from citizens of other franchises. Another interesting example is Eric Frank Russell's short story, "And Then There Were None," where no organization has a monopoly on violence: each individual is responsible for the exercise of violence; the only explicitly social sanction is noncooperation.

Since the state is at least capable of precise definition, I'm becoming even less impressed by anarchists who rail against the state, without being specific about what of the many conditions they would change. The official definition, like all good scientific definitions, is fragile. Because it is intentionally easy to break, that it's not actually broken shows its conformance to reality.

[Update 10/14] I was entirely remiss in mentioning that this definition of the state should be attributed to Max Weber in his work Politics as a Vocation.

An efficent economy

It's a matter of controversy not only how to measure macroeconomic efficiency, but also if the notion of macroeconomic efficiency is even meaningful.

Consider the game of chess as an extended metaphor. From any individual player's perspective (i.e. the "micro" perspective), efficiency seems rather obvious*: efficiency is the number of games won divided by the total number of games. There might be some subtleties, but basically each player wants to win as many games as she can. But what happens when we take an aggregate ("macro") perspective and look at all the players in all the games? No matter what happens to any individual player or sub-group of players, our "aggregate efficiency" is always exactly 50%. For every winner, there's a loser. Considering efficiency as the proportion of games won to games played, there's nothing at all we can do at all to change the aggregate efficiency of chess.

You should, of course, treat my use of "obvious" as a red flag. When I say "obvious", I'm begging you, gentle reader, to carefully examine my assumptions.

Not only does this measure of individual efficiency fail to be interesting at the aggregate level, there is no interesting or meaningful aggregate measure of chess efficiency at all. The smallest aggregate we can look at is both players of a single game. For an individual, there are more or less efficient moves—an efficient move is one that makes winning more probable. But the aggregate efficiency of each move, considered from the perspective of both players simultaneously, is exactly 50%. The purpose of a game of chess is to determine which player is, at least at the moment, the better chess player. The best way to determine the better chess player is to let each player make whatever legal move she decides to make. Any interference, prohibition or compulsion beyond the legal moves actually detracts from the purpose of the game. An "efficient" chess game is one with no outside interference.

Alternatively, consider the art world as another metaphor*. To preserve the analogy with macroeconomics, assume we cannot change the total amount of resources devoted to art. (In macroeconomics, we cannot add any outside resources to the whole economy.) Given a fixed amount of resources, how can we produce art "efficiently"? If we differentiate it from superficially popular entertainment, art is just "for itself"; a work of art serves no purpose other than to just exist. Again, any external interference by definition takes away from the "itselfness"; there can be no useful measure of efficiency.

*I'm not committed here to any particular philosophical theory of philosophy; I'm just trying to use a particular theory of art as a metaphor.

My point here is not to argue that economics really is a zero-sum game like chess, or that it's "for itself" like art. I want instead to understand as charitably as possible how modern economists and modern realist political scientists see the world. With this understanding, I think it's easier to explain the fundamental differences between on the one hand laissez faire economics/political realism and on the other hand communism as an economic and political theory.

Diversity vs. itself

Diversity vs itself:

On the one hand, to increase diversity in a movement, you must make sure that the focus isn't only on the concerns of middle class white men. ... On the other hand, broadening the focus constitutes mission creep, and may reduce the diversity of views allowed under the same tent.

An excellent analysis, with some deep implications for political science and social systems analysis.

Statism

Allen Small defines Statism as

the theory or practice of concentrating economic and political power in the state, usually resulting in a weak position for the individual or community with respect to government

It is too much to expect Allen himself to have more than a superficial, dogmatic attachment to this definition, but this definition is susceptible to substantive analysis.

One problem is that it's ambiguous whether an anti-statist using this definition objects to concentrating political power in general, or concentrating political power in some specific way, i.e. in the state. I don't know which horn of the dilemma Allen wants to get stuck on, so I'll address them both.

The second sense is trivially stupid. A state is a concentration of political and economic power (and the distinction between political and economic is itself only the most superficial distinction; they are two sides of the same coin); when you concentrate power, what you get by definition is a state: a collection of individuals who act to maintain and perpetuate — by force and propaganda — the power that they have concentrated. The only coherent reading of the second sense of anti-statism is that power should not be concentrated democratically; it should be concentrated, rather, in that class of people (i.e. the owners of capital property) who somehow deserve concentrated political-economic power.

(It is instructive to note that Libertarians typically disclaim loyalty to the Republican party, but they denounce Republicans only when they appear to act democratically instead of protecting de facto capitalist privilege. I know many Libertarians who "hold their nose" and vote Republican; I don't know a single one who would vote Democratic even if a Republican government were to start two wars of aggression, bail out the finance monopolists, increase the size of the government and deficit, nakedly interfere with the private individual rights of women over their own bodies, and generally act in the most egregiously "statist" manner possible. But I don't know that many Libertarians, I don't really like any of the ones I know, and I have a smidgen of grudging respect for exactly one.)

The first sense of statism is at least not trivially stupid; indeed I myself tend to prefer more distributed rather than more concentrated political-economic power. But there are two problems with this sense.

The first problem is that our modern technological civilization requires a considerable degree of economic concentration. A Boeing 747 costs about $318 million (about 13 million person-hours at the average wage, or about 127 person-lifetimes). And that's just for one aircraft: the production facilities are a couple of orders of magnitude larger: Boeing's present market capitalization is about $51 billion dollars, or about 20,000 person-lifetimes (and that doesn't count direct external, public costs, such as Boeing's share of academic and scientific research that has been conducted at public expense). That's not a trivial amount of concentration. If one is against concentration per se, must we therefore sacrifice air travel?

The second problem is how to distribute or prevent the concentration of political-economic power. We've been concentrating political-economic power since the dawn of civilization, and we have seen a succession of states that have achieved preeminence by more effectively concentrating political-economic power. This concentration hasn't been imposed by space-aliens landing in their flying saucers and enslaving humanity; this concentration has been always the work of human beings. If, as left anarchists and (some) Libertarians assert, it is somehow "natural" for human beings to cooperate on a large scale without the concentration of political-economic power, then why has it not happened, ever, anywhere on the globe, over at least five millennia? This kind of large-scale voluntary cooperation might be desirable (I myself find the idea appealing) but I really cannot see how it can be called natural in any reasonable sense of the word. Allen demands that I "show [him] an example where [communism] has worked or even partially worked now or in the past." I can ask the same of him: Show me an example where Libertarianism has worked, or even partially worked, now or in the past. Presumably he cannot hold as examples

communists, fascists, NAZI's, socialists (called New Democrats in Canada), Liberals (in Canada), Conservatives (everywhere), Democrats, Republicans, Greens and on and on. They are ALL statists according to that definition and my usage, and they differ only in degree of application.

(Of course the demand itself is nonsensical; on these grounds one would have to denounce human civilization itself.)

When we study economics, political science, sociology, psychology, game theory, anthropology, literature, humanities or any other intellectual field having to do with the behavior of human beings on any scale from the individual to the world, we see that "individualism" and "collectivism" (enforced cooperation) are in an extremely complicated dialectical relationship. Our progress as a world civilization (such as it is) has been not a movement from one to the other, but rather an elaboration of the dialectical relationship between the two. We have been working out precisely what should be in the domain of individualism and what should be in the domain of collectivism. And we cannot work out this trade-off analytically; we have to work it out dialectically, evolutionarily, by trying things and seeing what works and what doesn't work.

I am certainly willing to admit that Lenin, Stalin and Mao's attempts at communism didn't work in the long run. I want to know precisely why they didn't work, and what we can do differently. I have some theories — I think explicitly democratic political institutions are absolutely necessary; neither dictatorial, oligarchal nor republican solutions will work — but simply dismissing anything that has anything in common with these experiments — or, more precisely, anything in common that threatens one's own political, economic and social privilege — as "statism" is uncritically and unskeptically ridiculous.

The Revolutionary Party and the Government

We will need a revolution to overthrow the capitalist class. At some point capitalism as mode of economic relations will cease to relate productively to the actual means of production. But the capitalist class, accustomed to centuries of rule, and having convinced themselves — like every ruling class — that they have an absolute moral right and obligation to rule, will refuse to relinquish political and military power, and will try to hold onto that power by increasingly oppressive and brutal means. (And if you think the modern capitalist class is already brutal and oppressive, you ain't seen nothin' yet.) At some point the people must rise up and take power, and they will have to respond to and defend themselves from the oppression of the capitalist class by force of arms. Any sincere and humane revolutionary would prefer to implement a revolution by the peaceful, democratic means the capitalist ruling class gives lip-service to (and indeed simple decency demands we attempt to do so up until the very moment it becomes patently impossible), but even the most casual student of history cannot hold much hope for a peaceful transition of the magnitude necessary to overthrow capitalism.

So, there will need to be some sort of revolution, which will demand a revolutionary party, or something very much like a revolutionary vanguard party: a nucleus to provide organization, leadership, and discipline to what will be a complicated and protracted struggle. More precisely, as conditions deteriorate, many revolutionary parties will form, and some individuals will pursue revolution without leadership and organization; sooner or later (hopefully sooner) one party will emerge as the obvious leader and seize power. (If the anarchists want to overthrow capitalism without the kind of leadership and discipline provided by a revolutionary vanguard party, they are welcome to try with — if they want it — my unqualified blessing. I just don't think they will be successful.)

I myself am squeamish and sentimental; analytical rather than emotionally persuasive; my weaknesses make me a poor revolutionary. I am much more interested in the question: What is to be done after a successful revolution? Perhaps even more importantly: What do we know definitely should not be done after a successful revolution?

The most important lesson of history is that after a successful revolution, the revolutionary party should not explicitly and structurally privilege itself in the subsequent government and political system.

The qualities that will be necessary for a successful revolutionary party — i.e. a party capable of successfully leading and winning a revolution — are precisely the qualities that make for poor government. A revolutionary party must be tightly disciplined and extremely focused. They must prefer to act decisively, even if some particular decision is wrong: In any struggle, millennia of military history has shown indecision and hesitation more fatal than error. A revolutionary party must be "gung ho"; they must speak with one voice, with all of its members at least pretending not just acquiescence but enthusiastic agreement. A revolutionary party must develop habits of secrecy and obedience. Most importantly, a revolutionary party must, for reasons of social psychology, adopt an uncompromising Utopian vision as the foundation of a mass movement.

A civil government of a free people, however, requires precisely the opposite qualities. The government must be flexible and wide-ranging. Debate must flow freely, with a wide variety of views espoused with the presumption of good will and honest intentions. A government must prefer indecision to error: better to do nothing than act wrongly. A government must develop habits of transparency and toleration of dissent. A government, most especially a democratic government, cannot afford to speak with one voice in the same sense as must a revolutionary party; grudging acquiescence is preferable to phony enthusiasm.

No class of people, however defined, can ever be trusted to rule on behalf of another class. At best, when the aims, habits and interests of a ruling class happen to coincide with those of the ruled, the rulers can maintain the appearance of benevolence. But the interests of the ruling class will soon diverge from those of the ruled — subtly at first, so that the divergence and hostility can be easily rationalized — until the rulers are nakedly oppressing the ruled. If a revolutionary party sets itself up as a ruling class, either de jure or de facto, it will remain the ruling class until the next revolution.

Without commenting on the historical circumstances surrounding the past Communist governments of the Soviet Union and China, we can at least conclude that the rule of a party is not a successful road to democratization. Even with a commitment to some sort of ideological purity (a commitment I'm deeply suspicious of), there is too much scope for those without that commitment to gain power and corrupt the ideology from within. The Communist Parties of both the Soviet Union and China became corrupted by bourgeois ideology; neither party was capable of resisting this corruption. The rule of the party cannot the rule of an ideology; it is the rule of just a name: the rule of the people who call themselves by that name. The only way to rule by ideology is when the people wholeheartedly adopt that ideology, and rule themselves by it. If the ideology is restricted to a ruling class, the ideology will inevitably change to favor the perpetual rule of that class.

It is not just the Communist Parties that have displayed this evolution. Every ideology that has established a privileged class — the religions of the ancient world, Catholic and Protestant Christianity, Islam, feudalism, mercantilism and capitalism and republican "democracy" — all have evolved to justify the perpetual rule of that class, regardless of their actual beneficence to the ruled: If the ruled are unhappy with the actions of the rulers, the ruling class ever believes is the ruled who are in error: it is precisely because the ruled "cannot" rule themselves that they must have a ruling class above them, n'est pas?

It is likely that any revolutionary party will enjoy enormous prestige after a revolution. For a time, at least, there would be no need to structurally privilege the party itself. And the time a structural privilege would be needed is precisely the time when the revolutionary party must give way to the people.

Not only must a revolutionary party not structurally privilege itself after a successful revolution, it must explicitly and officially sow the seeds of its own destruction. It may ride for the time in the passenger seat, but it must decisively give the keys of state to the people, and let the people decide when they no longer desire the advice and guidance of the party.

It may be too much to expect a revolutionary party to accede to this demand, and it may be the case that a new ruling class would be better than the capitalist ruling class. Indeed for a revolution to be successful, almost anything should be better than the capitalist ruling class. Say what you will about the Communist Parties of the Soviet Union and China, it is hard to consider them anything but a profound improvement from the supine victims of Western imperialism, and attempts to establish a Western-style republican bourgeois "democracy" proved entirely ineffectual.

But nevertheless, I feel I must make this demand. If the people are not immediately put in charge after a successful revolution, it will require yet another revolution to put them in charge. And, regardless of my efforts in the first, I will inevitably join the second.

The real Greek economy: owners, rentiers and opportunists

The real Greek economy: owners, rentiers and opportunists

Aristos Doxiadis, 23 September 2010
Aristos Doxiadis is a private equity professional and angel investor based in Athens.

Rebuilding the Greek economy will require creative interaction with the underlying realities of Greek society: the family, the small business, the habits of rentocracy and of low-trust opportunism. (This article was first published in Greek in the Athens Review of Books, June 2010)

DISCOURSE

Formal and demotic language

The way we talk about the economy has changed dramatically in the past few months. Before our own debt crisis erupted, public discourse was not very different from that in western countries. We would discuss the merits of public vs private, of boosting demand vs cutting expenditure, of liberalism vs social democracy.

A few observers did insist on Greek specificities. For example, on how the public sector is not public when it has been captured by private and by ‘syntechnic' interests [there is no English equivalent for the Greek word ‘syntechnia’ in its current usage; it means ‘trade union’, but in the particular sense of defending the common privileges of a certain narrow occupational group, rather than class interests – like guilds used to do in medieval cities]. Or, how the private sector is not private when it lives off the public purse. But these voices were not present in the discourse of political parties and of talking heads, nor did they influence government policy.

Technocrats would plan for the ostensible, rather than for the real. For example, they would decide the official corporate tax rates, but not the taxes that enterprises actually paid; which were much higher than official rates when the tax inspectors descended on honest and cheat alike; and much lower when the business owner could work the system.

There was a great gap between the formal language of government, of politics and of technocracy on the one hand, and what we all felt and discussed in coffeehouses, on the other, but would not articulate in public. In formal speech, we talked about investment, planning, competition, productivity, incentives, regulation, laws. In demotic, about arguments, delays and Greek ingenuity. We knew that official intent would never be realized, but we would say: let’s try, and if we achieve ten percent of the target, OK – so we won’t fall too far back away from “Europe”.

Now public discourse has changed, and it suddenly sounds like coffeehouse talk. The dilemma between public and private has mutated into “are you for the idle bureaucrat or for the tax cheat?.” That between unions and employers has mutated into “shall we crack down on retiring at the age of 52, or on scandalous overpayments for medical devices in the NHS?.” We have begun discussing the real Greece, not some generic mixed economy. Everyday experience has melded into the big picture. This is healthy. It is the start of self-knowledge.

But the economy is a complex system, and our experience is chaotic, diverse and contradictory. It is easy to exaggerate, denounce and talk at cross-purpose; to lose sight of causes and of prospects. Out of coarse experience we must rebuild a learned theory of the Greek economy that will focus on the basics, will explain them and will define our options.

Theories of diversity

A good way to start is to identify how we differ from those developed western economies that we consciously or unconsciously try to imitate. Even when we criticize them, they are the standard to which we compare both private consumption and public services. For this purpose a neo-institutional approach is useful; one that analyses the different national forms of capitalism and links them to the history and institutions of each country.

The concept of institutions is rather general, and it is variously defined. In the broadest of definitions, it includes both formal institutions (the school) and informal (tutorial schools, private teaching). It includes rules (medical legislation), organizations (the hospital) and also common practices (bribing the doctor). In some theories it also includes ideology (‘what is progress?’) and culture (work ethic).

Neo-institutional theory tries to illuminate and explain the micro-behaviors that shape the macro-phenomena. Why have we let the pension system go bankrupt? Why aren’t we paying taxes? Why haven’t we got exportable manufactured goods? Why do high school students take private tutorials? How are we different from the Germans on this level?

An immediate empirical answer consists of a very long list: corruption, clientelism, bureaucracy, familism, cronyism, conspicuous consumption, learning-by-rote at school, mistrust, but also, flexible enterprises, graduates, ambition, mobility, political activism, foreign language proficiency, hard work (sometimes), international outlook. However, such a long list is not very helpful. It is more useful to identify just a few fundamental elements of difference from the more developed economies. I consider that the basic elements of Greek specificity are the following:

• The large number and small size of enterprises, in combination with widely dispersed ownership of real estate (owners)
• The extent and distribution of various forms of rent (rentiers)
• A deficient ethic of cooperation, and a rational response to incentives and disincentives (opportunists)

Greece is a capitalist economy with a welfare state, like many others. And like any other, it has its own dynamic, which is shaped by its specific characteristics in combination with the general elements of capitalism.

OWNERS

A fundamental institution

There is no other European country and no other member of the OECD that has as many self-employed and as many micro-employers as Greece pro rata to its population. In Greece 57% of those employed in the ‘non-financial business economy’ (NFBE) are either self-employed or employed in firms of under 10 employees. The value of this index for EU-27 is 30%. Italy comes second with 47%, Portugal third with 42%. France is at 27%, the UK at 21%, Germany at 18%. Our newest role-model, Denmark, is at 20%.

Agriculture, which is not counted in the NFBE, is even more fragmented. In the region of Corinthia, the average grower of table grapes for export has less than three hectares, and the biggest has less than 20 hectares. The competitors of the Corinthian growers in Murcia, Spain, have over 100 hectares each. It is the same in California, South Africa, Chile, Egypt.

In the economy as a whole, businesses of more than 250 employees employ no more than 9% of the labor force; and this includes banks and utilities.

How did it happen that we have so many small businesses – vineyards, olive presses, rooms-to-let, mini markets, doctors’ practices, theaters, clothes boutiques, clothes makers, IT workshops – and why so few large employers?

We owe it to history, which prevented the primitive accumulation of capital that occurred in the west; to the institutions of our modern state, which assist the survival of small business and hinder enterprise growth; and to our culture which makes it hard for us to cooperate.

Western Europe came into the industrial era with large landholdings and an army of landless workers, the result of feudalism. The new state of Greece was established in a society of smallholders, a result of Ottoman policy which supported the small peasant and discouraged large holdings. Land policy in the new state continued favoring small plots. Even the large chifliks of Thessaly in central Greece were broken up over time. The great majority of families had some land in the country or in town where they set up farms or shops or houses. In this, Greece was very different from all of non-Ottoman Europe. As for our Balkan neighbors, those who had extensive small-holdings lost them in the socialist era.

Small business is still the prevailing form of organization in the private sector after 180 years of modern state, with bourgeois institutions and more or less free markets. This is remarkable, as in a modern economy size is an advantage in a great many business activities. But here enterprises on average are not getting bigger. Let us list the causes.

Families that own a business, even a small one, do not send their offspring to become workers. If they decide to become low-paid white collar employees, this is done only in positions with job security and a good pension – i.e. in the public sector, or in banks. Otherwise, they prefer their parents’ farm or shop. The owner-household resists proletarianization.

Regulations are not uniformly enforced. Taxation, social insurance contributions, labor legislation etc are more of a burden on bigger enterprises, because it is easier for small ones to evade these. If the family handles receipts and payments, it can hide sales and pay uninsured workers. If invoicing and hiring is done through an accounts department, tax and contribution evasion is riskier. So in Greece anomie favors fragmentation. The state as a rule does not go after the smallest.

Foreign direct investment has been discouraged. In other peripheral economies large-scale industry was often created by foreign capital. Here bureaucracy, corruption, resistance by local communities and populist rhetoric have meant that relatively few foreigners have invested in Greece, and even fewer have remained. There are important exceptions in the non-tradable service sectors: banking, telephony, retail trade. In these, foreign capital moved in because the high cost of entry and operation is not prohibitive – it can be recouped by higher prices. In the tradable sectors, where competition is global, this is not possible.

To this list, add the maze of rules and prohibitions that protect the current way of doing business, and the small size of plots of land.

Institutional bias in favor of the small scale is so strong, that neither the 1.5 million of incoming Greek refugees in 1922, nor the huge wave of poor immigrants since 1990 became a permanent proletariat for big employers, as has happened elsewhere. It was small employers who became rich in farms and in building sites on the back of the immigrants.

Self-employment, micro-employment and family business is a stable and fundamental institution in our economy, perhaps the most fundamental. Their share in employment and output will not shrink under normal circumstances. Not even a long and deep recession will change this. Only a revolution in institutions would.

An important point is this: it is institution that determines specialization, not the other way around. That is: because we are a society of small business, we do not build electronic devices; rather than: because we don’t produce such devices we have small businesses. This insight often escapes policy makers. They believe that with the right funding and infrastructure we may grow competitive businesses in industries that require a larger scale. In every era, small businesspeople will do the work that suits them. Yesterday diving for sponges, today letting rooms to tourists, tomorrow what?

Family strategies

In a small-scale economy households make different choices from those in an economy of salaried employees and large organizations. The family will seek stability in polyergy: in having varied sources of income, as many as it can find and appropriate. There is family solidarity: multiple incomes require multiple hands. The father has a petrol station, the son studies information technology for the upside, but if it doesn’t work out he will not starve. The daughter preferably becomes a teacher or a municipal clerk – something secure which leaves free time to care for elderly parents and for the next generation. If the family shop does well, the whole family will work there; if not it will be maintained by one or two members. The system is admirably stable, flexible and long-lasting.

In a small-ownership economy household saving and investment is also different. It is channeled, quite rationally, into real estate and into education. In western economies savings are invested collectively through pension funds, mutual funds and bank deposits. They end up funding industry, technology, infrastructure, and in general, sizeable organizations. In the Greek micro-economy monetary savings have few reliable collective outlets.

Human capital takes a different form. In western economies human capital can develop in standardized career paths – that is, by building relationships inside organizations. Higher education is useful mostly as a first step in a career – if the jobs market does not demand it, the young will not insist on getting it. In small ownership, the value of a person is vested in their individual characteristics. The jobs market does not give clear signals. I want an engineering degree not in order to work at Volkswagen, but because I will have numerous options, as a reseller, contractor, consultant, retailer or just possibly a middle manager. That is why families overinvest in education for the young: in English language tutorial schools, in university exam tutorial schools, in living expenses for out-of-town studies, and even for studies abroad. In national accounts these expenses appear as consumption, but they are investment.
Dynamics

The owner-household is a stable institution as long as it can provide enough income for its members, albeit with crises and mutations. However, there are only a few cases around the world of local small-business economies being internationally competitive – most are in “third Italy”. In Greece, small scale agriculture and tourism have sometimes been competitive; and incomes from working on ships or in western factories made a big contribution to GDP. These were usually not enough, and we complemented those with loans and subsidies from abroad.

Now that the loans have dried out, Greece may need to become competitive in more sectors. Can small businesses achieve that?

Moving into new activities does not seem to be an issue. Greek polyergy is used to that. These are not family businesses where the same activity is carried on over many generations. The young study new disciplines, and parents support them.

There are three major disadvantages in small scale: cost (economies of scale); coordination (transaction costs; economies of scope); and continuity (innovation, updating, succession). If the institutional environment changes in ways that will help small businesses to overcome some of these disadvantages, then we may hope to build an internationally competitive economy on the small scale. If not, we’ll see either persistent poverty or a forced concentration of capital.

RENTIERS

The term political rent denotes various forms of income which enterprises, syntechnies and individuals derive from the state, and which do not correspond to real work or real value. It includes idle employment in the public sector, privileged pensions, subsidies without developmental impact, extraordinary profits of private providers to the state, and graft. It also refers to regulations which allow occupations to overcharge in the market (restricted professions, regulated prices, prohibitions), and, less obviously, to the windfall benefits of breaking the law when your competitors are conforming. It does not include public sector salaries for those who truly work, nor social benefits that are given on the basis of general criteria.

Some say that political rents exploded in the 1980s, as the radical populist PASOK government sought to integrate more strata and new business interests into the process of development. But clientelism and favoritism have been inherent in the modern Greek state since its inception, and the state has always been a major player in the economy. Distributing political rents was a necessary means of legitimation of politicians in the eyes of the electorate, and harvesting rents was a major egoistic reason for becoming a politician.

The state as a whole has been a rentier of inflows from abroad: international loans that were distributed to the populace and never repaid, international development plans, and lately the EU structural funds. These inflows have influenced the economy in depth. “Let the money cross the border, and we’ll figure out how to share it”, a small agribusiness contractor said as we were discussing how to apply for an investment grant.

There are also substantial non-political rents in the private sector. Tourism income includes a major rent component, since visitors pay first for location and then for service. Transfers from ships and emigrants are the fruit of real work abroad, but for the receiving local economies they act as pure rent.

Democratic rent

Rent appropriation mechanisms are quite varied, but they have a common effect on economic culture: almost all Greeks, from large business owners to small landowners in islands and to municipal clerks in villages, believe it is natural to have some income which derives neither from work nor from risking capital. If they cannot have it, they feel wronged.

How was rentocracy reproduced over such a long period? One reason was that “the money is there”, to quote a notorious phrase from last years’ election campaign. The money was there from international transfers; and from milking local productive activities within an economy that adopted technical progress more or less adequately; and more recently from exploiting the immigrants.

The other reason was the democratic nature of the system. Rents were widely distributed. Especially after 1980, most households could get some benefits from the system. Democratic legitimacy was further strengthened by new institutions that made access to rents more impartial: the state started hiring based on standardized examinations (ASEP), and the university entrance mechanism eliminated the possibility of personal favors. If people have to work hard and to compete honestly in order to gain access to a position, nobody questions whether the position itself is parasitical. And the privileges attached are considered fair.
Behavior

Like any mechanism which dominates (or co-dominates) an economy, rentocracy influences behavior and culture in many different ways. Rents may not be a result of specific cultural norms, but they are certainly a cause of such norms.

Zero-sum mentality: rent does not contribute to growth, it only shares in what is there. Therefore, it secured by militant claims, not by productive work. It breeds populism, whose fundamental strategy is to shift responsibility for the whole to the opposite pole, the enemy. In populist discourse citizens identify with the weakest groups, regardless of their actual position in society; so they feel entitled to demand more on grounds of fairness, or even on humanitarian grounds. They do not feel responsible about production of wealth, nor about setting priorities for redistribution to the truly weak. It is others who are responsible for the big picture. Populism differs radically in this from a socialist strategy which starts from the mode of production before the mode of distribution; as well as from a political program of solidarity towards the really poor and excluded.

Business strategy: if businesses can make high profits from government contracts or from other privileges, they will invest more to gain the privileges than to become competitive in an open market. Over time this distorts their whole mode of operation: a good salesman is one who can build personal relationships with bureaucrats, a good engineer is one who can draw out a project to make it more expensive. It is rare for a state-dependent enterprise to be also competitive. This was true for the big so-called ‘national suppliers’, as well as for the small I.T. companies, in which many bright engineers wasted their youth working on useless R&D projects funded by EU Programmes.

Measurement and budgets: rentiers do not need to measure the world; producers do. Rentiers will haggle. Producers will plan inputs and outputs and will try to maximize the margin between the two. The rentocratic state behaves like the rentier. It bargains constantly with various groups (with the ‘non-hired’ for hirings; with farmers for subsidies; with businesspeople for contracts), and always gives a little more than it started out to. It is not constrained by an absolute limit for expenditure or for tax relief. It ends up invariably in deficit, which had not been planned.

Beyond fiscal numbers, society in general does not demand measurements, either for pollution, or for the quality of hospital care, or for the impact of policing on crime. There is no pressure on public services to count and to evaluate. That is how we get to ‘Greek statistics’, long before anybody intentionally tampers with the numbers.

OPPORTUNISTS

Maybe Greeks will work as hard as westerners when given the same set of choices; but they will not collaborate as well.

In game theory an opportunist is one who grasps the chance to make a good profit today, even if that may have negative repercussions tomorrow. Usually, he will break a rule or spoil a collaboration to make the ‘grasp’ (αρπαχτή – ‘arpachti’, from the verb αρπάζω, to grasp).

A taverna owner in Plaka (the district of Athens below the Acropolis) who serves trash food to tourists does exactly that: he breaks the implicit contract between restaurateur and client, so that he can make a good profit per portion, risking that the client will not come back. He acts rationally, because tourists are transient, and they would not be coming back anyway. This spoils the reputation of Athens as a destination, but he is not swayed by that, because reputation is shaped by the acts of all the tavernas, not just his own.

The opposite of opportunism is cooperation. A business that invests in quality, a builder who takes the rubble to the designated distant dump instead of the field next door, the team member who works hard instead of free riding, the professional who declares his taxable income, in the parlance of game theory are all cooperators.

The roots of cooperation

Greeks act more opportunistically than the Swedes or even the French. This behavioral difference is due to multiple causes. There are cultural differences, and there are different incentive structures, which favor opportunism. The two levels (culture and incentives) interact through tolerance (I will not denounce the tax cheat) and distrust (I will cheat on our agreement, because I expect that you will too).

Why are local cultures of cooperation different, and how deep are the causes? Systematic research on the question has begun only recently, in the past twenty years. The most interesting narrative on Greece is that of Stelios Ramfos on ‘unsuccessful individualization’. The anthropology of the person developed differently among the Greeks than in the West. In western (high) culture “the purpose of the individual is to encapsulate in itself, if possible, the totality of social and spiritual development – a sensitive wholeness of being human”. Western man has internalized, i.e. individualized, the rules of society. In Greek society, as medieval collective structures dissolved, we were left with individualism without individualization.

A related but distinct factor is the evolution of political institutions and economic hierarchies. In the West, feudalism, monarchy and the Catholic Church interacted to create the absolutist state which was mandated to rule and guide society. The bourgeoisie inherited this state and reinforced its role of societal guidance. In parallel, during the industrial revolution large business hierarchies were developed, which assigned stable positions to workers and clerks. Such things did not happen in Greece: we overthrew the Ottoman state rather than developing it, and we resisted economic hierarchies.

In other words, advanced western economies were founded not only on free markets and individual incentives. They were founded on hierarchies (vertical rules) and on strategies of cooperation (horizontal rules). Successful and hegemonic capitalism is free markets embedded in a society of rules and responsibility. Otherwise, it is either a jungle, or a community of corner shops. We Greeks have subscribed neither to vertical nor to horizontal rules. We are neither obedient nor cooperative. If we have avoided the jungle, it is because we have kept the corner shops.

Institutions of opportunism

The culture of opportunism explains why cooperatives fail and syntechnies succeed. A cooperative manages a collective good – for example a packing plant for the farm produce of its members, or a government grant for building such a packhouse. Without mutual trust, members will try to gain individually while offloading loses onto the collective. They will send inferior produce to the packhouse, while keeping the best to sell privately; or, they will divide and pocket the grant without investing, because they do not trust each other as business partners.

A syntechnia has no collective assets, it has common demands. Members easily recognize similar interests in their common occupational designation, and will demand privileges that will be common to all, but of a private nature. As collaboration it carries low risk and requires limited personal investment, as befits members of a group with no cooperative ethos.

Within this context, we have developed some admirable economic institutions, which western-educated technocrats find peculiar. Post-dated cheques, with the legal framework that supports them, reinforce trust among transacting parties because they carry immediate sanctions for an issuer who cannot cover the cheque, without involving the bureaucracy of banks as intermediaries. Each party is responsible for the counterparties it chooses. Name and reputation count. It is remarkable that no recipient of post-dated cheques will try to cash them before their designated dates, even though legally he could do so. If he does, he will be effectively expelled from the market. This is an institution of peer-to-peer credit, which developed spontaneously from below and is based on personal responsibility. We should be fostering such institutions, not be thinking how to banish them. Hierarchical credit from banks degrades individual responsibility and encourages opportunism.

The future of cooperation

Opportunists are not inherently crooks. They are ‘rational egoists’. They will conform to rules if they think it is in their interest. In an environment where most people are cooperators and where opportunism is punished, opportunists turn into cooperators. The issue here is vicious versus virtuous circles. If opportunists are a majority, it is very difficult for the group to converge towards cooperative behavior. This is why history matters.

In the West, history bequeathed cooperative norms and practices. Some fear that recently cooperative institutions are being corroded and individualism is on the rise. This is attributed to different causes, such as the corrosion of families, consumerism, social and/or economic liberalism, inequality, rent-seeking. Could it be that Greece is already there, where the West is now going? Could Greece be an image from the West’s dystopic future?

A countervailing tendency derives from technology. Platforms of information exchange and of collaboration render each person’s contribution transparent, and can make much of hierarchy redundant. For the first time in history, goods can be produced collectively and responsibility apportioned individually. These are tools of cooperation for opportunists; e.g. they enable a lone programmer to sell her services all over the world. Further, they can leverage small amounts of voluntary work into major contributions to collective welfare (Wikipedia), and can allow the maintenance of some collective goods without asking for big personal sacrifices. Could it be that Greek individualism can now find a creative role in the world economy?

PROSPECT

To conclude, a brief prologue to a very large discussion.

Development policy can succeed only by focusing on family strategies, on small business, on rentocracy and on opportunism – to build on some elements and to reform others.

A new model of development for Greece should not imitate the ones that have been most successful globally. We start from different initial conditions, and will follow a different route. Let us accept our peculiarity.

Society has developed informal institutions that are widely respected. Private tutorial schools, for example, to which students keep going even when they are shutting down the official schools in protest. Or, post-dated cheques. Let us debate how to make the most of these.

Most of our organized, corporate economy is in non-tradable activities, while tradable industries are for the most part very fragmented. This leads to a paradoxical situation: any improvement in the balance of payments must come from the small units that many politicians and technocrats look down upon, as tax evaders, opportunists and inefficient. Should we encourage concentration of capital in the tradable economy, and by which policy? This is a thorny question, for right and left wing politicians alike, which they have preferred not to address. If yes, how will we avoid rent-seeking and opportunism which plague all large scale efforts in our society?

Small units will always be critical for us. They must become more export-oriented, more competitive and innovative, they must coordinate and collaborate, and they must be free of inordinate regulatory burden. All public sector systems should support these objectives: taxation, social insurance, education, research, infrastructure. Our development discourse must be restated for the small-scale.

‘To each his own weapons’.

[This article was originally published under a Creative Commons license. Please see the original article for copyright and reprint information.]

(via Peter Dorman)

The rhetoric of the preamble

Constitution for the New Socialist Republic in North America (Draft Proposal)
(RCP Publications, Print, October 2010, $8 from Revolution Books)

1. Introduction
2. Republic or democracy?
3. The Preamble
1. Rhetoric

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquillity, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

One can criticize the United States Constitution on a number of grounds, not the least of which is that the Constitution perpetually privileges the capitalist ruling class, albeit indirectly. But one cannot criticize the US Constitution on rhetorical grounds, and its preamble, despite (or perhaps because of) its transparent simplicity, is a masterpiece of rhetoric.

Any society, if it is to be a society with a distinct identity, must have some way of speaking with one voice. The purpose of a Constitution is to define what constitutes that voice, what we can and cannot say with that voice, and how the people are bound to that voice as members of the society. In a time of crisis — such as the imminent failure of the Articles of Confederation or after a communist revolution — a proposal for a new voice must be sold to the population. Any state must maintain at least the passive cooperation of the people; Even the most brutal and oppressive state must still establish the instruments of oppression: the loyalty of the army and police, which must come from the people. As we have seen time and again, even the most oppressive states have fallen when the people are no longer willing or able to cooperate. A candidate state that resolves to end brutality and oppression must therefore pay even more attention to selling its voice. It must gain not just the passive but the active cooperation of the people, not just their acquiescence but their enthusiasm.

I am learning from my experience as a writing tutor that the most important part of any persuasive writing is the hook. The very first sentence must make the reader want to read your paper. If you do everything else exactly correctly but your hook is lifeless, limp, boring, you cannot hope to persuade the reader: She will not be motivated to critically engage in your arguments; she will read it "at a distance" without bothering to link it to her own opinions and attitudes.

Hence the rhetorical brilliance of the preamble to the US Constitution. It gets across two of the three aims of the Constitution quickly, simply and compellingly. First, the voice of society is the voice of the people*. We the people — not the King, not God — ordain and establish the Constitution. And the people speak with this voice "in order to form a more perfect union, establish justice, ensure domestic tranquility," and so forth. These phrases are of course vague as to what specifically constitutes a "perfect union", "justice", etc., but it's important to note that they are not at all vague in the sense that these are things we definitely want. The preamble to the US Constitution definitely "hooks" the reader: it at least offers what we want; the reader is motivated to critically engage with the material.

*At least in theory. In practice, of course, the voice of American society has always been the voice of the economic ruling class, first the slave-owning class, then various capitalist classes. But I'm talking about rhetoric, not substance.

There's a lot of good substance in the preamble to the RCP Constitution, but in contrast to the preamble to the US Constitution, the rhetoric is limpid and boring. I speak with all due humility: I myself am an incompetent rhetorician; indeed I fancy myself an expert at rhetorical incompetence. I can't offer any advice on how to write it, but I know what I want to read: I want to read something uplifting, something that makes me eager with anticipation to join this great new project. There's a time and a place for all the complications and qualifications of communist social and political theory, but the preamble to a draft constitution is not that place. There was no need in the US Constitution to quote Locke, Hobbes, and Rousseau; there's no need to quote Marx and Lenin in a communist Constitution.

The best advice I can give is to lay out the positives simply and clearly: We are going to transform society to bring about true justice, true democracy; we are going to end the systemic oppression of the working class, of racial and ethnic minorities, of non-English cultures, and most especially of women. We are going to bring about not just political democracy, not just political justice, but economic democracy and justice. No longer will the oppression of the capitalist ruling class be able to hide behind the fiction of economic necessity. And — in line with my earlier comments — be explicit: are we establishing a democracy? A republic? A one-party state? A benevolent dictatorship? Whatever form of government is proposed, you're not going to sell it if people don't know what it is. If one were (entirely hypothetically) to think a benevolent dictatorship of a person or a party were necessary, come right out and say so; obfuscation doesn't sell. (And if one were (not just hypothetically but contra-factually) intending to actually deceive the people, obfuscation belongs in the small print of the contract, not the sales brochure.)

If your first sentence, or even your first clause is not compelling, you will lose half your readers. (Hence the preamble to the US Constitution begins with the phrase "We the People", itself stirring, novel and engaging.) If the first paragraph is not compelling, you will lose half of what's left. And if you don't say everything you have to say in two or three paragraphs, you will again lose half. If you don't intend to sell the people on the Constitution, there's no need to keep them, but a people under the grudging acquiescence of a superior constitution will be worse off than a people who enthusiastic embrace an inferior constitution.

Rhetoric matters. The RCP can write to its long-time membership, but I don't believe they can communicate with the people at large. Whether they view this inability as a problem, and how to correct it if they do view it as a problem, is up to them.

Republic or democracy?

Constitution for the New Socialist Republic in North America (Draft Proposal)
(RCP Publications, Print, October 2010, $8 from Revolution Books)

Introduction
Republic or democracy?

Probably the biggest overall criticism I have of the draft Constitution is that at least at first glance it appears to set up a republic instead of a democracy. I used to think the distinction was right-wing bullshit, until I heard Aaron Sorkin put the line in the mouth of fictional President Jed Bartlett: "In a democracy, the people rule; in a republic the people choose their rulers." Regardless of the terminology, I think the ideas are sufficiently well-defined and distinct; I'll use these terms henceforth.

In general, I consider the republican form of government to be one of the quintessential bourgeois institutions. It seems difficult — if not impossible — to prevent those who have a lot of economic power to dominate any republican electoral process. Indeed the framers of the US Constitution more-or-less explicitly choose a republican form of government because it would allow the existing land-owning, slave-owning and capitalist classes to dominate the electoral process and the government. (Indeed Bob Avakian makes a very similar point in Communism and Jeffersonian Democracy.) Whether this was the right choice under the specific historical circumstances is a much larger question than I care to address now, but the historical circumstances in 1787 were very different than they are today or immediately after a successful revolution.

I would very much prefer a form of government modeled — at least in spirit — more closely and explicitly on the Paris Commune. The people must, I believe, be brought directly and intimately into the process of government right from the start. There will, perhaps, be some need of an interim "scaffolding" while the people develop the habits and attitudes necessary to govern a large, industrially, scientifically and economically complex nation, but I think at least the form of a true democracy needs to be present from day one. Lenin's slogan was, "All power to the soviets!" Again, whether this slogan was practical or feasible in 1917, I think it is at least more superficially plausible in 21st century North America.

Keep in mind: I have only just skimmed the draft proposal: You and I, gentle readers, are more-or-less working together on a more detailed and deep reading. It may well be that the Constitution, when read carefully, adequately addresses my objections, either by making the transition to a true democracy compelling or arguing more directly for the benefits of a republican government. And too, I invite commentary, at this point focused on a more philosophical analysis (I'll get to the substantive analysis of the Constitution itself chapter by chapter): If you think the republican form of government has compelling advantages over the democratic.

The most obvious objection to democracy is scale; whether or not it was their original intention, the republican government established in 1789* has scaled from a nation of a few million to a nation of a few hundred million with only one truly catastrophic political failure (which was probably unavoidable by any system of government). So I think it's incumbent on me to offer some ideas as to how a state of many tens of millions (probably the smallest revolutionary state) or possibly many hundreds of millions (especially if Canada and Mexico were to be included) could be governed democratically.

I describe my hypothetical system as "democratic syndicalism". Essentially, it consists of a pyramiding election of delegates (distinct from representatives) from the smallest local level of neighborhoods through cities, states, regions and finally the national government. A neighborhood consists of a couple thousand people in a compact geographical area; each neighborhood elects a delegate to the city (or borough, for very large cities such as New York or Los Angeles) government. If we arbitrarily set the maximum size of a city government at about 100 delegates, then we get the smallest operating local government representing about 200,000 people. Each local government would elect a delegate to a regional government (of at most about 10-20,000,000) and those to a national government of some hundreds of millions.

The members of government would be delegates rather than representatives: they would be immediately recallable, rather than serving for a fixed term. A delegate would have no official power of her own; she must at all times — if she wishes to keep her position — exercise her power on behalf of her constituency. I would add that delegates receive a fixed pay while they serve, at the local level of the median income of their constituency, and at the national level no more than the 1st quartile of income. We might also have to create asset restrictions (which I'll talk about in another post when we get to economic organization).

These local and regional governments would have legislative, executive and administrative power over government services (more on this later) provided exclusively or principally in their their defined geographic areas. These powers — especially executive and administrative — would have to be indivisible: the governments could delegate the work to specific members (e.g. an "executive council"), but they could not delegate official power; the body acts only as a whole. They would have to operate openly: no act could have official or legal standing unless published openly.

This explicitly democratic organization is highly unstable by design. Thus we need to create a countervailing institution to promote stability. I recommend a semi-privileged civil service, which would be constitutionally mandated to carry out the policies of the democratic governments. This civil service would have objective criteria for entry, internal control over promotion, and — absent criminal malfeasance or insubordination to the actual government — a guarantee of lifetime employment. Thus by "executive and administrative" authority above, the local, regional and national governments would in effect constitute the head of the civil service for their respective areas. Rather than trying to fine-tune a single institution with the right balance of stability and change, this separation creates an explicit dialectic between institutions of stability and change, which will (with all good luck) evolve to meet changing circumstances and conditions.

One additional advantage of this model is that it gives an obvious role for the revolutionary party that does not have the kind of pressure to evolve into a permanent and privileged ruling class: The revolutionary party can form the core of the civil service. At first, as the people are unused to self-governance, the civil service can exercise considerable de facto power. But by having at least in name a subordinate position to the people, the people can grow to exercise their own power more directly in a natural, unforced way.