Is an employer a capitalist?

We — including me — often use the word “capitalist” as a synonym for “employer,” “entrepreneur,” or “businessman.” But on reflection, this is a mistake; or, at best, a problem of ambiguity. Capitalism is a kind of theory, and a “capitalist” should be the name of a person who subscribes to this theory.

To illustrate the linguistic problem here, consider the case of Friedrich Engels, Karl Marx’s doppelganger. Both were arch anti-capitalists. But Engels was the son of an owner of textile factories in Salford, England and in Barmen, Prussia. He was, thus, an employer. And if one uses the word “capitalist” as a synonym for “employer,” than we get the paradoxical result that the arch anti-capitalist was a capitalist!

This apparent paradox is due to the ambiguous use of the term “capitalist.” If we were writing a dictionary, we would have to introduce two meanings for the word: Capitalist-1, an employer; Capitalist-2, someone who subscribes to the politico-economic theory of capitalism.

With that distinction, we could then get rid of the paradox by saying that Engels, the capitalist-1, was an anti-capitalist-2.

Labor Theory of Value

Dr. Richard Wolff debates libertarian Antony Sammeroff on the Labor Theory of Value on the Lions of Liberty Podcast, hosted by Marc Clair. This is a Marxist economist debating a free market libertarian.

I admire Richard Wolff, and his efforts to bring Marx’s views into the evaluation of capitalism. I also use Marx for this purpose. But we approach Marx from different perspectives. Wolff focuses on the labor theory of values, and defines exploitation as the surplus value obtained from an employee by the employer. I cannot dispute the meaning of “exploitation” in this technical, stipulated sense. But the word “exploitation” also carries a negative sense of injustice. Libertarians object to this additional sense of injustice, by pointing out that the employer-employee relation is based on an agreement — a contract. And, as long as both abide by the agreement, no injustice has been done.

There is an injustice, but, in my view, it does not come from the employer and his profits; it comes from the political system which bars people from free access to subsistence land — making land into a sellable and taxable commodity. This forces people into a market economy, and there is no choice here — everyone has to enter the market economy. Both employer and employee are victims from this perspective. Compare this with two gladiators thrown into the arena. One is strong; the other weaker. One wins; the other loses. One is an employer; the other an employee. The injustice is in the fact that both gladiators have been forced into the arena.

I see no reason to bring into considerations anything other than the principle of supply and demand to account for a labor market and wages. For example, in my field of philosophy, there was and is an oversupply of eligible teachers — as there is in most fields of learning; consequently, colleges have found that it is more economical to hire “adjunct” teachers than full-time teachers. Let’s take a look at the salaries at City Colleges in Chicago, where I worked as an adjunct. Full-time teacher salaries range from roughly $60,000 to $100,000 per year. So, let’s say, an average full-time teacher gets $40,000 for teaching four 3-credit courses per semester. From one perspective, this is $10,000 per 3-credit course; while the adjunct will get at most $3,000 for teaching the same course. Furthermore, an adjunct cannot teach more than 3 such courses per semester at this school; so, for 2 semesters, he can make at most, at this rate, $18,000, as contrasted with a full-time teacher who will get $80,000. Is this just? Is this a case of exploitation?

Take other cases of popular entertainers and sports stars. Such people can earn millions — and it has nothing to do with the hours of labor; it has to do with the willingness of a large number of fans and audiences to pay large amounts to view and hear them. Let me cite a recent case. Jordan Peterson recently refused to participate in a debate with Richard Wolff at Boise State University in Idaho. His reason for refusal to participate is that he wanted a minimum of $50,000 for a 1-hour debate, which the students could not pay. Apparently, this is the minimum which he gets for his public appearances. Is this just? By the principle of supply and demand, this is what he can get; and so he takes advantage of his popularity to demand whatever he can get. If he is exploiting, he is exploiting his popularity.

I see employers in this same light of trying to get the most compensation within the market system. They will pay their employees the least they can; so that they can garner the maximum profit. I find it incoherent to think here of injustice. The concept of justice makes sense only relative to a free agreement. But when considering agreements, we must also take note of the circumstances. If there is no access to free subsistence land, what alternative does a person have? Starve, beg, steal, or work at whatever is available. Both the employer and the employee have been thrust into the arena of the market, just like gladiators, and they must do the best in the circumstances. The injustice is that both employers and employees have been forced into the market economy against their will. We have all been barred from a free access to subsistence land by governments.

So, unlike Wolff who focuses on the labor theory of values, I focus in Marx on his discussion of “Primitive Accumulation” (chapter 26) in Part VIII of Capital, where he talks about the conquest and forceful eviction of people from land. It is this barring of people from a free access to land which creates a proletariat class which must work for wages — a class of wage-slaves.

Richard Wolff keeps repeating that most economists celebrate capitalism, and that one must also take into account the critics of capitalism, especially Karl Marx. This reminds me of al-Ghazali who wrote The Incoherence of the Philosophers (Tahafut al-Falasifa) which was critized by Averroes in his The Incoherence of the Incoherence (Tahafut al-Tahafut). If Marx is al-Ghazli, then we have a slew of Averroeses who have criticized portions of Marx.

And the portion of Marx which Richard Wolff emphasizes is the labor theory of values, this is also the portion of Marx which has received the most criticism. I will cite three sources for this criticism. The first is Bertrand Russell in his German Social Democracy (p. 15). The second is Karl Popper in the second volume of his Open Society and Its Enemies (chapter 20, p. 170), the third is Alexander Gray, The Socialist Tradition (chapter 12, p. 310.)


Are worker-owned enterprises antithetical to capitalism?

Richard Wolff objects to capitalism because of the employer-employee relationship which has “exploitation” — meaning that the employer gets more money than the employee. His alternative is to have worker-owned businesses.

From my perspective, although such a co-op as Mondragon makes for a democratic workplace and a desirable place to work at, it does not constitute an antithesis to capitalism — even if all businesses are co-ops. Why? If other things are left as they are (ceteris paribus), then presumably these co-ops will compete as do all businesses for markets, with the resulting consolidation of successful enterprises as occurs now.

But the crucial question which is not answered by a system of co-ops is what happens to the unemployed? Where is the safety-valve? In the United States in mid-nineteenth century, the north-eastern coast of the United States was overpopulated with immigrants. The Homestead Act of 1862 was enacted as such a safety-valve. [Whether it worked or not, is a separate issue.] The point was that giving people a free access to subsistence land was the right solution. And not giving the freed slaves access to 40 acres and a mule in 1865 was the wrong solution.

Richard Wolff, apparently does not see that the necessary condition for capitalism — of whatever form — is the deprivation to people of free access to subsistence land.

If people have access to free subsistence land, they can bargain with employers or co-ops for living conditions preferable to a self-sufficient life on a piece of land

Calling Bullshit

“Calling Bullshit” is a website developed by Carl Bergstrom and Jevin West intended to teach students and the public to be able to spot and evade bullshit. It features videos of 10 1-hour lectures [presented in shorter segments] of a course given by them at the Information School, University of Washington, in Spring 2017.

 

Since their goal coincides with my goal of “Escaping from Bullshit,” I will review and comment on their performance.

Their approach suffers from omissions. One type of bullshit, which their lectures suffer from, is dealing with relatively unimportant topics. What are the important topics which they omit discussing? Institutions. They do talk about one institution — science. In video 7.6, they ask: is science bullshit? But they never talk about other institutions. They never ask questions such as: is capitalism bullshit? or, is liberal democracy bullshit? or, is the U.S. Constitution bullshit?

In video 3.2, they ask: do food stamps cause poverty? And they point out that a correlation does not necessarily mean a causal relation. But they could have gone on to ask: well, what does cause poverty? But they do not.

Anarchist and other strategies for defeating capitalism: views of James Herod

I have just discovered the existence of James Herod, who has a website at [here].

I am in sympathy with all his ideas which I have heard in the videos below. His main book is: James Herod, Getting Free: Creating an Association of Democratic Autonomous Neighborhoods, 2007. pdf file

Below is a talk he gave at Tufts University, Boston, on Nov. 28, 2012: “Introduction to Anarchism”

Here is another of his talks: Anarchist Revolutionary Strategy, Nov. 2011, Boston

Macro or Micro Democracy?

A macro democracy is one in which hundreds, thousands or millions of people vote for either a politician or a law, or both. We have macro democracy in the U.S. on the municipal, state, and national levels; as do all the countries in the world.

As I listen to the complaints about elections, they are about the following.
(1) There is a concern that there are various schemes used to discriminate as to who can vote, or to disqualify votes.
(2) There is a concern that those who have the most money contributions tend to win elections.
(3) There is concern that the media are controlled by the rich, and sway the public with their propaganda.

To offset these problems, the proposed solution for (1), is to extend the vote and to prevent tampering with vote counting; for (2), to limit contributions; for (3), to extend the access to media (as, in fact, the internet has done.)

And the most ambitious proposal is directed at educating the public in critical thinking. For example, this was the aim of Susan Stebbing’s book Thinking to Some Purpose,1939.

Her reasoning was this: Democracy relies on the judgment of the public. Therefore, the public must be trained in critical thinking, if democracy is to be effective.

Stebbing’s book is a call for the need for rational thinking, and I have no quarrel with that. And if we assume that we must work within the democratic institutions as they exist, then, yes, I agree with her prescriptions for educating the public in critical thinking.

All these proposals are on how to ameliorate the workings of the existing (macro) democracy.

I am skeptical that any of these measures — if they could be carried out — would work. Concerning the extent of the vote, women suffragettes agitated for the vote, and when they got it, nothing changed. As to limiting campaign contributions, this will not solve the problem of where the candidates come from or who they are. The public will continue to choose between a Tweedle-dee and a Tweedle-dum. As to the media, money will always be able to capture the audience with better entertainment. As to educating the public to become critical thinkers — that’s just wishful thinking.

What is my alternative?

All the above proposals are about how to work within the present institutions of government. My proposal is that we need to change the institutions of government. We should not be thinking how to change people so that they work within the present institution; rather, we should be thinking how to change the institutions to comply with the nature of people, as they are.

What Stebbing and others miss is that democracy does not have to take the form it has in either England or in the United States. It can take the form, for example, of Swiss democracy. Switzerland, for one, does not have a single leader such as a president or a prime minister; instead it has a Federal Council compose of seven individuals, nominated by four political parties, and conferred by their parliament. In this way it avoids, at least, the institution of a macro election of the executive. In general, Switzerland avoids placing any executive office in the hands of one person, and prefers councils.

Although Switzerland’s democracy is much better than anywhere else, it still relies on macro-democratic practices in electing representatives, and in voting in initiatives and referendums — though I think it is better to have them than not.

My ideal government would be a micro-democracy, in which the unit of government would be a community of some 150 individuals, who elect a council or councils for various purposes, and these councils send delegates to higher level councils. This is the ideal of anarchist communities, as espoused by, for example, Peter Kropotkin and Noam Chomsky.

There are two contemporary authors who have produced similar ideas in modern dress. One is Michael Albert, who has written on participatory economics or Parecon. — The following is a criticism of the writings of Michael Albert for neglecting the writings of anarchists (reinventing the wheel?): The Flawed Vision of Hahnel and Albert. A Critique of “Parecon” for Anarchists — Nov/ 12, 2912, Boston Anarchist Book Fair. Simmons College

Also, see his criticism of Parecon in Getting Free, 2007, p. 130. pdf file


The other is Stephen Shalom, who has written on participatory politics or Parpolity. See: Imagining Self-Governance against Predatory Capitalism and a Centralized State

What is capitalism?

Looking back at my postings, I notice that I keep charging people with not knowing what they are talking about when they talk about capitalism. I made the charge against Stefan Molyneux, against Jordan Peterson, against Peter Joseph, against Slavoj Zizek . . . and I could go on leveling this charge about almost every public intellectual and talking head on the internet.

In the literature on capitalism, various socialists and anarchists understood what capitalism was — including Karl Marx, Max Weber, Franz Oppenheimer, Bernard Shaw . . . Of contemporaries which I have considered, there was only one who clearly understood what capitalism was — this was G. A. Cohen, when he compared Al Cap’s Shmoo to land. [See Criticism of Capitalism by G. A. Cohen, reflecting on Al Capp’s creature, the Shmoo]

What is the source of this ignorance about capitalism? Well, we are all familiar with commerce — the idea of producing something, selling and buying. Or, just the idea of buying, and then reselling at a higher price.

People identify capitalism with commerce. Is this wrong? No, but this is only a necessary component of capitalism — a component which has always existed as far as history can tell us. Given the difference in talents and interests, people have specialized in some craft, and traded or sold their manufactured items or their services.

So why is this not a sufficient characterization of capitalism? For one, this type of activity has existed within and between tribes. It has existed under slavery and under serfdom.

Historically, capitalism is — as a widespread phenomenon — something that came historically after slavery and serfdom, and it came with industrialization, i.e., when machines became available for mass production.

What was needed for industry was workers. But where to get them?

Most people almost everywhere have been peasants, getting a living from planting edibles and keeping domesticated animals.

What was needed was to get these peasants into factories. But how? Deprive people of free access to land, or make it available only for a price.

This can happen, so to say, “accidentally” or as a deliberate political act. The “accidental” deprivation of land to the people occurred in England with the advent of industrial textile machinery. There was a great demand for wool, and consequently landlords evicted the peasants from their lands for the sake of sheep pastures. This created a landless class of people who were then desperate for wages. And there, you have your pool of workers!

The deliberate creation of wage workers is illustrated by the British policy in Africa of introducing a hut tax (today we have a “property” tax), which forced the indigenous people to work on plantations.

The upshot of these reflections is that modern capitalism requires the existence of people who do not have free access to subsistence land.

It is a system which forces you be an employer or an employee.

What is the alternative? Free access to subsistence land, which, incidentally, exists for all so-called primitive people, and for those who have escaped from States.

So, unless you mention that the necessary condition for capitalism is barring people from a free access to subsistence land, you do not know what you are talking about.

Criticism of David Parkman on Socialism

David Parkman, in the videos below, tries to introduce some clarity for the concept of socialism. But his analysis does not touch the core issues, and in that sense is not satisfactory. I will try to do better.

First, socialism is a reaction to and a rejection of capitalism. So, the first step needed for a clarification of socialism is an understanding of capitalism. The essence of capitalism consists of two factors. The first is the existence of a type of government. The second is a law by this government to the effect that no one has a right to free subsistence land. All land, thus, has to be purchased, and is subject to government taxation. The result of such a law is that two classes of people are created: employers and employees; or, the bourgeoisie and the proletariat. And this leads to a third factor or problem: unemployment or underemployment — in short: poverty.

The existence of a market is a necessary condition for capitalism, but a market is not peculiar to capitalism. Markets and barter have existed at all times in all places. It is the combination of a market with the exclusion of free access to subsistence land by a government which is peculiar to capitalism.

In order to oppose capitalism, you must oppose this type of government, or you must oppose this land law, or both.

One approach, favored by social democrats, is to work within the existing government, and try to alleviate the symptoms of this system, which is poverty. And this is done by various social programs. One such law could be that everyone has free access to subsistence land. But such a law, under existing forms of government, will not be passed. However, something equivalent to getting rid of poverty would be a law giving everyone a basic income; what Milton Friedman called a negative income tax, and what Bertrand Russell called a “vagabond wage.” [According to Russell, everyone’s survival needs should be satisfied, but to get “luxuries,” one has to work. See Bertrand Russell, Proposed Roads to Freedom: Socialism, Anarchism and Syndicalism, 1919.]

Another approach is to take control of the government, and have the government run everything. This is state capitalism; or, authoritarian socialism.

Another approach is to change the type of government, as in anarchism (libertarian socialism). It is true that anarchists are against the State, but it is not true that they are against government. A State is a type of centralized government (i.e., centralized in a one-person rule by a president or a prime minister). It is a type of government which is found everywhere in the world, either as a liberal representative democracy or as a dictatorship. A better form of representative democracy is in Switzerland, which does not have either a president or a prime minister, but a Federal Council of seven individuals.

The alternative government could be a decentralized direct democracy consisting of nested councils, grounded in a community of some 150 families.


P.S.: I recommend Alexander Gray’s The Socialist Tradition: Moses to Lenin, 1946. Although he fails, in my eyes, to do justice to anarchism, his coverage is extensive, with very helpful references to relevant works. Here is his disparaging verdict on anarchism: “The fundamental trouble with the anarchist is that, though he may be highly intelligent, he has no sense.” p. 380.

David Parkman and Richard Wolff Debunked: “Socialism has never worked” Why I am not a socialist

Bertrand Russell: “. . . the fundamental concept in social science is Power, in the same sense in which Energy is the fundamental concept in physics.”

Bertrand Russell, Power: A New Social Analysis, 1938.