Pack It Up

Even if differences in human behavior are accepted as having an important genetic component, society might still choose to focus on improving the environment. Responding to a 1977 comment by hereditarian psychologist Hans Eysenck (1916–1997) that genetic interpretations of a twin study on “earning capacity” suggested that the British Royal Commission on the Distribution of Income and Wealth should “pack up,” the American economist Arthur Goldberger (1930–2009) wittily responded:

If it were shown that a large proportion of the variance in eyesight were due to genetic causes, then the Royal Commission on the Distribution of Eyeglasses might as well pack up. And if it were shown that most of the variation in rainfall is due to natural causes, then the Royal Commission on the Distribution of Umbrellas could pack up too. (Goldberger, 1979, p. 337)

– Jay Joseph in The Trouble With Twin Studies 

Stiglitz on Economic Rent

A basic principle of economics holds that it is highly efficient to tax rents because such taxes don’t cause any distortions. A tax on land rents doesn’t make the land go away. Indeed, the great nineteenth-century progressive Henry George argued that government should rely solely on such a tax. Today, of course, we realize that rents can take many forms – they can be collected not just on land, but on the value of natural resources like oil, gas, minerals, and coal. There are other sources of rents, such as those derived from the exercise of monopoly power. A stiff tax on all such rents would not only reduce inequality but also reduce incentives to engage in the kind of rent-seeking activities that distort our economy and our democracy. 

– Joseph E. Stiglitz The Price of Inequality

[M]inor tweaks in the economic system are not going to solve the problem… The underlying problem is the whole structure of our economy, which has been oriented more at increasing rents than increasing productivity and real economic growth that would be widely shared in our society … one has always to think about issues of shifting so that, for instance, just a tax on capital might be shifted, and a lot of the models have shown this would happen, but a tax on land, rents, would actually address some of the underlying problems. This is the idea that Henry George had more than a hundred years ago, but this analysis that I have done ... goes one step beyond Henry George. Henry George argued that a land tax was nondistortionary, but this analysis says that a land tax actually improves the productivity of the economy because you encourage people to invest in productive capital rather than into rent generating. Well, the result of the shift in the composition of the savings towards more productive investment leads to a more productive economy and in the end leads to a more equal society.

– Joseph E. Stiglitz [Speech in Paris–April 8th, 2015]

The Physical Economy Of Goods & Services

"No financial sleight-of-hand can transfer goods and services from the future to the present. And no debt that we might pile up for the future can reduce the sacrifices of goods and services we must make today."

– Hans Morgenthau in 1942 regarding war "debt"

Labor Is Not A Commodity: It's A Common-Pool Resource

"Labour is a commodity like every other, and rises or falls according to the demand." 

– Edmund Burke

"Labour is not a commodity." 

– International Labour Organization, Declaration of Philadelphia

"We must now examine more closely this peculiar commodity, labour-power." 

– Karl Marx

Organized labor’s millennium lasted exactly six years, two months, two weeks and five days. On October 15, 1914, U.S. President Woodrow Wilson signed the Clayton Antitrust Act. Samuel Gompers, founding president of the American Federation of Labor, hailed the labor provisions of that law as "the most comprehensive and most fundamental legislation in behalf of human liberty that has been enacted anywhere in the world", "the foundation upon which the workers can establish greater liberty and greater opportunity for all those who do the beneficent work of the world" and the "industrial Magna Carta upon which the working people will rear their structure of industrial freedom." Gompers gushed that the words contained in Section 6 of the Act, "That the labor of a human being is not a commodity or article of commerce," were "sledge-hammer blows to the wrongs and injustices so long inflicted on the workers."

On January 3, 1921, in the case of Duplex Printing Press Co. v. Deering, the U.S. Supreme Court ruled that "there is nothing in the section to exempt such an organization [i.e., union] or its members from accountability where it or they depart from its normal and legitimate objects and engage in an actual combination or conspiracy in restraint of trade," thereby confirming an opinion long held by objective observers that the labor provisions of the Clayton Act didn't actually exempt unions from court injunctions. In the meanwhile, Gompers journeyed to Paris to lobby for virtually identical language in the Treaty of Versailles, affirming the official non-commodity status of workers everywhere: "Labour should not be regarded merely as a commodity or article of commerce." In 1944, the International Labour Organization reiterated as the first principle of its Declaration of Philadelphia that "Labor is not a commodity."

The everyday experience of working people, economic policies of governments, bargaining priorities of trade unions and theoretical models of economists refute the idealistic maxim that labor is not a commodity. An early rationale for the proposition was given in 1834 by William Longson of Stockport in his evidence to the House of Commons Select Committee on Hand-Loom Weavers:

…every other commodity when brought to market, if you cannot get the price intended, it may be taken out of the market, and taken home, and brought and sold another day; but if a day's labour is offered on any day, and is not sold on that day, that day's labour is lost to the labourer and to the whole community…

Longson concluded from these observations of labor's peculiarities that, "I can only say I should be as ready to call a verb a substantive as any longer to call labour a commodity."

Karl Marx was emphatic about the peculiar historical nature of labor – or, more precisely, labor-power – as a commodity. Rather than reject the label outright, though, he chose to examine it more closely. Marx observed that for labor-power to appear on the market as a commodity, the sellers must first be free to dispose of it (but only for a definite period) and also must be obliged to offer labor-power for sale because they are not in a position to sell commodities in which their labor is embodied.

Connecting Longson's observation to Marx's, it would seem as though, aside from moral strictures, one of the qualities that most distinguishes labor-power from other commodities – its absolute and immediate perishability – is what compels its seller to submit unconditionally to the vagaries of demand. To paraphrase Joan Robinson, the misery of being regarded as a commodity is nothing compared to the misery of not being regarded at all.

So if labor-power is not a commodity, or is only one due to peculiar and rather disagreeable circumstances, what is it, then? Consider the idea of labor-power as a common-pool resource. Labor-power can be distinguished from labor as the mental and physical capacity to work and produce use-values, notwithstanding whether that labor-power is employed. Labor, then, is what is actually performed as a consequence of the employment of a quantity of labor-power.

Human mental and physical capacities to work have elastic but definite natural limits. Those capacities must be continuously restored and enhanced through nourishment, rest and social interaction. "When we speak of capacity for labour," as Marx put it, "we do not abstract from the necessary means of subsistence." It is the combination of definite limits and of the need for continuous recuperation and replacement that gives labor-power the characteristics of a common-pool resource. As Paul Burkett explains, Marx regarded labor power not merely as a marketable asset of private individuals but as the "reserve fund for the regeneration of the vital force of nations". "From the standpoint of the reproduction and development of society," Burkett elaborates, "labor power is a common pool resource – one with definite (albeit elastic) natural limits."

"Common pool resource" is not the terminology Marx used; Burkett has adopted it from Elinor Ostrom's research. For Ostrom, common pool resources are goods that don't fit tidily into the categories of either private or public property. Some obvious examples are forests, fisheries, aquifers and the atmosphere. Relating the concept to labor is especially apt in that it illuminates, as Burkett points out, "the parallel between capital's extension of work time beyond the limits of human recuperative abilities [including social vitality], and capital's overstretching of the regenerative powers of the land." That parallel debunks the hoary jobs vs. the environment myth.

The basic idea behind common-pool resources has a venerable place in the history of neoclassical economic thought. It can't be dismissed as some socialistic or radical environmentalist heresy. In the second edition of his Principles of Political Economy, Henry Sidgwick observed that "private enterprise may sometimes be socially uneconomical because the undertaker is able to appropriate not less but more than the whole net gain of his enterprise to the community." In fact, from the perspective of the profit-seeking firm, there is no difference between introducing a new, more efficient production process and simply shifting a portion of their costs or risks onto someone else, society or the environment. The opportunities for the latter may be more readily available.

One example Sidgwick used to illustrate this was "the case of certain fisheries, where it is clearly for the general interest that the fish should not be caught at certain times, or in certain places, or with certain instruments; because the increase of actual supply obtained by such captures is much overbalanced by the detriment it causes to prospective supply." Sidgwick admitted that many fishermen may voluntarily agree to limit their catch but even in this circumstance, "the larger the number that thus voluntarily abstain, the stronger inducement is offered to the remaining few to pursue their fishing in the objectionable times, places, and ways, so long as they are under no legal coercion to abstain."

In the case of labor-power, "fishing in the objectionable times, places and ways" manifests itself in the standard practice of employers considering labor as a "variable cost." From the perspective of society as a whole, maintaining labor-power in good stead is an overhead cost. The point is not to preach that firms ought to treat the subsistence of their workforce as an overhead cost. That would no doubt be as effectual as proclaiming that labor is not a commodity. As with Sidgwick's fishery, a greater advantage would accrue to firms that didn't conform to the socially-responsible policy.

Ostrom explained the differences between various kinds of goods by calling attention to two features: whether enjoyment of the good subtracts from the total supply still available for consumption and the difficulty of restricting access to the good. Private goods are typically easy to restrict access to and their use subtracts from total available supply. Public goods are more difficult to restrict access to and their use doesn't subtract from what is available for others. Common-pool goods are similar to private goods in that there use subtracts from the total supply but they are like public goods in that it is more difficult to restrict access to them.

If it were merely a matter of selling to employers, then labor-power would have the uncomplicated characteristics of a private good. Working for one employer at a given time precludes working for another. Hypothetically, the worker can refuse to work for any particular employer thereby restricting access. But here we need also to contend with that peculiarity of labor-power noted by the silk weaver, William Longson that a day's labor not sold on the day it is offered is "lost to the labourer and to the whole community."

"If his capacity for labour remains unsold," Marx concurred, "the labourer derives no benefit from it, but rather he will feel it to be a cruel nature-imposed necessity that this capacity has cost for its production a definite amount of the means of subsistence and that it will continue to do so for its reproduction." This contingency and urgency of employment effectively undermines the worker's option of refusing work, so that in practice labor-power has the features of a common-pool good rather than of a private one. Collectively, the choice of refusing work is further weakened by competition from incrementally more desperate job seekers – a population Marx called "the industrial reserve army."

So is labor a commodity or is it not? The arch, paradoxical answer would be "both." Examined more closely, the capacity for labor – labor-power – reveals itself as a peculiar commodity that exhibits the characteristics of a common-pool resource rather than a private good. An actual Charter of Industrial Freedom must address these peculiar characteristics rather than bask contentedly in the utopian platitude that labor is not a commodity.

Taken from: http://ecologicalheadstand.blogspot.com/2013/02/labor-is-not-commodity_18.html

A Free Gift From Heaven

The power of the human network, as I always say. This guy says it pretty elegantly as well. Again I remind you that the whole is greater than the sum of its parts:

"It is impossible for any man to contribute to the social system the physical equivalent of what it costs that system to sustain him from birth until death–and the higher the physical standard of living the greater the discrepancy. If, in addition to his food, he receives also the product of modern industry, this is due to the fact that material and energy resources happen to be available and, as compared with any contribution he can make, constitute a free gift from heaven."

— M. King Hubbert "Man-Hours and Distribution"

Nasir ad-Din Tusi on Labors Divided

Now, since the Man pivots on mutual aid, while cooperation is realized by men undertaking each other’s important tasks fairly and equally, it follows that the diversity of crafts, which proceeds from the diversity of purposes, demands (a measure of) organization; for if the whole species were to betake themselves in a body to one craft, there would be a return of the situation against which we have just been on guard. For this reason, Divine Wisdom has required that there should be a disparity of aspirations and opinions, so that each desires a different occupation, some noble and others base, in the practice of which they are cheerful and contented.

Likewise, it has been ordained that there should be diversity in their states in such matters as wealth and poverty, quickness and stupidity; for if all be wealthy, they will not serve one another, as equally they will not if all be poor: in the first case, this is on account of their being independent of each other, in the second because of inability to pay anything in return for the service of one to another. Again, since crafts vary in nobility and baseness, if all men be equal in the faculty of discrimination, they will choose one class (of employment), whereby the other classes will remain vacant and the desired end will not be realized. This is what the Philosophers mean when they say: ‘If men were equal, they would all perish’.

However, since some are distinguished by correct management and others by superior strength, one group by great dignity of manner and another by abundant capability (while some, devoid of discrimination and intelligence, are virtually tools and instruments for men so endowed), all tasks are determined in the manner as observed; and from each undertaking his own important duty, the ordering of the universe and the organization of Man’s daily life becomes act.

Now, since it is impossible to conceive the species to exist without cooperation, while cooperation without combination is an absurdity, therefore the human species is naturally in need of combination. This type of combination, of which we have already given an account, is called ‘civilized life’. The term is derived from ‘city’, a city being a place of combination for individuals carrying on, by their various trades and crafts, the cooperation which is the means of procuring a livelihood. Just as we said, concerning Economics, that what was meant by ‘household’ was not a dwelling, but the combination of the inhabitants of a dwelling in a particular way: so here also, what is meant by ‘city’ is not the dwellings of the inhabitants of a city, but a particular association between the inhabitants of a city. This is what the philosophers mean when they say that Man is naturally a city-dweller, i.e. he is naturally in need of the combination called ‘civilized life’.

– Nasir ad-Din Tusi "The Nasirean Ethics"

The Charity of the Poor

When the rich give charity to the poor, it's well publicized. But the charity of the poor to the rich is anonymous. The rich give the poor a little food, drink, shelter, clothes. The poor have given the rich palaces and yachts, almost infinite freedom to indulge their doubtful taste for display.

– Gilbert Seldes "Against Revolution"

Lord Keynes of the Market

Man was not made for the market, but rather, the market was made for man.