Sam Webb's latest foray on socialism appears to be a continuing series of his imagining the society that happens after capitalism, but that must evolve from it. Its a practice all writers on the left should emulate, in my view. Engels late 1880’s encouragement to American socialists to “be the future in the movements of the present” seems a timely inspiration to each generation, including this one, to re-envision the rise and fulfillment of the socialist ideal from the conditions of their own lives and times.
Sam opens with a classic Northern New England folk tale about a stranger asking directions of a a native. The native's reply after some contemplation on the topic is: "you can't get there from here". The story has variations in Maine, New Hampshire and Vermont. His point is that we need to be a bit better than that advice on the questions of socialism, and all conceptions of post capitalist, or post - commodity-based economic and social relations.
In Vermont, the tale has a useful extension (only they are Vermonters, of course). After the native Vermonters observe that they think "you can't get there from here", the irritated traveler seeking directions – in Vermont lore, usually called a "flatlander" – barks back: "Don't you know anything??"
"Why yes! We ain't lost, friend," the Vermonters reply.
The folk tale brings to mind the borderland between what we know, and don't know but need to know better, to move both the democratic-progressive, and socialist, visions closer to reality, and how close the problems confronting both agendas are to each other.
Not starting from ground zero
Knowing "we ain't lost" means we understand some basics for both democratic and socialist economic development. The first law and bottom line metric of progress vs going backwards is this: working class income and wealth should be rising in proportion to productivity. Period. That has to happen or disorder spreads beyond control. And there does not appear to be an option to NOT raise productivity, at least in the industrial era. It is not an accident that this principle, officially endorsed the chief index of equity by all but the most whacked-out economic policy trends, is an abbreviated version of the governing socialist principle enunciated by Marx and Engels, the guide for the transition from capitalist to an advanced society: "from each according to their ability; to each according to their work."
The correspondence between mean (working-class) incomes and productivity must hold, or bring instability, regardless the particular proportion of public vs. private that is favored in a particular country at a given time, regardless which coalition of classes is in political power. In addition, history is very persuasive that it takes the working class and its friends' organized and mass political power to achieve this principle. The bosses, even if they were in principle to agree, and no matter how liberal-minded they may be – and some actually do agree – cannot get this done.
This necessity for mass, independent, self-aware mobilization of working people to effect social change has been verified repeatedly in our own history. The American revolution required the mobilization of farmers into militia, their terms being economic and political liberty and enfranchisement – what the more elite Founders like Adams and Hamilton considered "mob republicanism."
The Civil War would have persisted unresolved without the liberation and mobilization of enslaved peoples and their allies.
Social collapse threatened in the Great Depression and earlier in the century if labor and anti-monopoly reforms were not passed. But only Roosevelt's coalition with labor – and labor's ability to organize the multitudes into motion – made it doable, an act for which the corporations and reactionaries never forgave him, even though, in the words of Jim Matles, founder of the UE, "he [Roosevelt] saved the system for them!!"
Stuff we know that we don't have to worry about
We know a lot about how we got where we are today. Beyond that, there are some other matters that could be put in the category of: we know that we don't know, and don't need to spend too much time thinking about. I put all the left-wing debates about revolution vs reform in this category, along with who is the purest Marxist. Our history teaches both 1) that modest reforms can demand rebellion, and 2) that changes that radically shift class alignments and power can also take place within a constitutional and (relatively) peaceful bourgeois democratic government. We don't know what course events will take. But we know what we favor! To the extent that meaningful reforms can be enforced through constitutional means, it strengthens all democratic institutions from unions to the management of entitlements, to equality before law, to civil liberties honored by courts, to the right to vote, to institutions sustaining a more equitable distribution of wealth (education, health care, retirement).
Stuff we don't know, but need to know
Despite not being lost, there are many matters very pertinent to debates about recovery from the current crisis that also have big implications for the path, or paths to socialist society, and the viability of a society seeking to realize the socialist principles of equity.
Public goods and human capital
Two of the most immediate challenges, and yet also the most complex and profound for socialist or any post-capitalist theory, I raise here: “public goods” and “human capital.”
1. What are public goods? What is their value beyond the cost of production? What kind of "economy" can be sustained by their production?
The term "public goods" has two meanings. The first is the obvious and intuitive one: products and services provided by government financed primarily through taxes. The second is a technical, economic definition devised by Paul Samuelson in a famous paper (see more here). It partially overlaps with the intuitive definition. Wikipedia provides a concise version:
a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability that no one can be effectively excluded from using the good.
To give a sense of the scope of commodities and enterprises involved in providing mostly non-rival, not excludable public goods, consider: a) all software (can be, and is, copied and distributed free at very low cost); b) pharmaceuticals (are 98 percent composed of research in the public domain); c) all copyrighted material in the digital universe; d) all intellectual property.
When added to the host of public works and institutions which have evolved, including other goods and services that were market failures when they needed to be universal (electric power, e.g.), its possible that a majority of capital in the US is essentially more “public”, or public controlled, than private, and a large part of the private – all those technical “public goods” that remain dressed as commodities solely by virtue of extensive public protection (e.g. patents, copyrights, licensing) – constitute assets that can walk out the door in an employee’s thumb drive, or merely inside his or her head. Can a capitalist economy be sustained on such "commodities." No one knows. Most software corporations have changed their business model from licensed software to software services (i.e. pure labor), a move arguably reflecting the unacceptable risks of believing intellectual property can survive as a viable market commodity.
Economic recovery from the Great Recession must include an even larger public and non-profit sector engaged in the production of economic public goods: universal health care, big investments in education, green and high-tech manufacturing development – all items where science, best advice, and working class interests coincide and agree. These are things and services for which there is "strong demand" but which a market economy comprised of profit maximizing firms cannot deliver in sufficient scale. Further, when binges, monopolies, oligopolies, over-financialization, manias, crashes become more of a rule than efficiency and innovation, the demand for public goods rises, as we are seeing now, and rarely subsides.
But there is a big and growing problem in making a solid case for these expanded public goods and services. That problem is: There is no agreement on how to assign public goods an economic value above and beyond the cost of their inputs.
Firm profitability in physical commodity producing enterprises, combined with market price, determines a more or less reliable measure for productivity and thus economic efficiency: the increase in value added by labor, the most important input. Conversely its hard to determine public goods and non-profits successes, from the not-successes. The problem suggests the need for a new thinking on accountability for programs. But incentives in public bureaucracies are hard to structure. For example, a department budget in federal government that is unspent at years end is usually not rewarded with a bonus. Instead legislators will use the surplus as an argument to cut the agency’s budget for the following year. Thus department managers have an actual disincentive to save money. The truth is, that the added value of public goods is essentially political. Together the providers and consumers of public goods and services should constitute the most important voices in their life-cycle.
For example, inefficient or not, the first bridge built from public funds to connect formerly separated Minneapolis and St Paul was a public good of immense economic value. If only there were a way to enumerate all the economic activity it engendered, we could put to bed any and all arguments about waste! But no numbers beyond guesses exist, even though we intuitively know the value far exceeds the original inputs. In the case of each of the bridges now linking Minneapolis-St Paul, the taxpayers got full value and many times more, including a physical asset worth billions.
Some economists argue persuasively that because public goods are not usually marketed, they have no economic value that can be reflected in a price. So what is their value? Another way to consider this question is from the point of view of the consumer of a public good. If I live in a modest rent controlled apartment, and I have access to a public pool, public arts, educational and cultural programs, public parks and museums of great natural and artistic, public transportation and quality public health care, I might need several hundred thousand dollars of annual income to purchase all these goods and services privately.
Currently we have only legislators to decide if expensive public goods are successful, or not, and when they should be retired or renewed. That is a very cumbersome, slow-moving, un-scalable and likely unsustainable means of managing public goods. The demands for public goods are complex and multi-faceted and frequently reflect conflicting efforts to remedy environmental, class, race, nationality and gender offenses.
Finding ways to manage public goods
There are some successful models for autonomous public goods that use donated labor and have a relatively short lifespan. Witness the umpteen iterations and variations in open source software that have come and gone. There are also some sustained success stories: the Apache Software Foundation, for example.
The public goods arguments around how to measure their value permeates the entire debate around health care and education reforms within the Obama administraton and its allies.
We talk a lot about health outcomes vs. "piece-work" incentives in health care, but how do we quantify health outcomes, which in any real world scenario, with finite resources, must be prioritized – prioritized by who? How do the obstacles to transforming health care for profit into a Mayo Clinic style outcomes based care get overcome on a national scale? What mechanism can determine the value of the public goods provided? Is there a business model – that cannot rely on a pricing mechanism – for firms or organizations providing public goods that links their income to the satisfaction of the public they serve?
Likewise in education, how do desirable educational outcomes – public goods – get measured and best incentivized? This is the entire challenge of the administration’s “Race to the Top” program. Teachers, principals and students/parents are the biggest stakeholders in education. The taxpayers as a whole are the 4th leg of the chair. But most critical questions at the root of educational challenges in many states and cities require the full commitment and agreement of all stakeholders to succeed. The big question is: What expanded democratic institutions or organizations or assemblies are needed to move forward. In Wisconsin, public unions had to step way beyond collective bargaining toward a political coalition with those they serve to push back attempts to solve education with “issuing orders” to teachers.
Extensions of democracy are the only way to evaluate public goods. Happily, finding that path is the only way to understand a big unanswered question about “socialist economics”: can society prosper and satisfy all legitimate aspirations through the production of ONLY public goods? I think not at this time. But it will become an ever more important question, especially if an “efficient” means of determining good vs bad public goods, and how they may be terminated or replaced, is found.
Human capital
2. What is “human capital”?
Wikipedia offers the following definition: “the stock of competences, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience.”
One of the many interesting aspects of a worker considered as, in part, “human capital” is that as a capital input into a firm, it should be entitled to a return on the investment, a division of the firm’s capital in proportion to the its value-creating potential,like any other capital input. The proportions of occupations requiring a college degree is steadily rising in every area of the economy. Even bigger proportions if two-year college requirement is included. Employment is contracting not just labor power, but for capital too, for the set of specialized tools this "investment" brings – witness the largely unenforcible non-disclosure agreements demanded everywhere.
But treating “your capital input” like it deserves no return on investment, only a wage rate, is an invitation to it being withdrawn and applied against, instead of for, your interests. Laws enhancing the rights of the owners of human capital would be important, income-enhancing reforms in employee compensation in many occupations, as well as huge productivity incentive if they are credible. Stock options granted employees under current law can be erased and diluted to nothing by the largest holders.
Of course the value of “human capital,” somewhat analogous to that of “public goods,” must be accounted greater on average than the costs of its production (education, family support, health, preparation, etc). But how much greater? Especially if the content of the work itself is also engaged in the production of public, or quasi-public goods? Labor markets supposedly provide the answer, and at some level competing services (a market) can be a very democratic means of determining the values of both public goods (a la open source) or “human capital.” But they are not applicable to many scenarios without a change in "political efficiency" of employing labor in public institutions. How that market should be structured to enhance equity and balance, to take a “more socialist,” more working class empowered direction – its an unknown.
There are of course many other questions linking the current struggle to the future, all involving a mix of “we ain’t lost,” and working on some unknowns. How to approach the unknowns:
With curiosity. With imagination. Collectively – more minds will get to solutions faster. With humility. With as rich an historical knowledge as you can muster. With a mind prepared to be persuaded, and to persuade others, by evidence, and good faith.
Thanks to Sam for essays on socialism. I think every one should write one they can believe in and sustain us in what may be some dark nights ahead.
Photo by Antony Adolf/ cc by 2.0/Flickr
