It seems like we are doomed to repeat these cycles because the necessary tension between labor and capital.
I'd love to hear any ideas on how we could shorten this feedback loop so we don't have to so closely approach the precipice.
This falls apart immediately. Executive compensation is radically transparent at every publicly traded company and yet people are just ok with the Grand Canyon sized gap that has grown between average worker and executives over the last 40 years.
There's two types of systems you can choose to live under: one that makes it comfortable to be a mean producer, or one that incentives extreme output. It's fine to argue that the mean producer deserves more but let's not pretend that's not a tradeoff.
Extremely productive workers would not want pay transparency because that paints a target on their backs.
Evidence? I would argue it's more likely that everyone benefits if pay transparency exists, especially the workers that provide the most benefit.
If you remove the ability of the manager to obfuscate where an employee's earnings stack up in the absolute rank, or how much additional pay is on the table, then the only thing to argue about is how much value the worker brings. The worker will always be able to claim that they deliver unmeasured value, or that their tangible contributions are not properly valued. Multiply this conversation out across 50% of your work force, and quickly the only rational thing to do, as a manager, is to bring down the top earner's pay to a level that will not generate complaints from the mean worker.
This is the aim of all collectivism frankly, to appease the mean producer at the expense of society ultimately.
If you don't believe this, explain please the chain of reasoning that would lead a lower paid worker to conclude their pay is fair and that they should not try to argue for more money.
You're speaking of this hierarchy of "obfuscated" value brought to the table and then comparing it to a somewhat simplistic ( rank 1 is 1x valuable, rank 2 is 2x,...nx valuable) image of compensation. that's not how the real world works. You're abstracting to the spherical cow level of understanding of reality, there isn't "the worker" and "the manager" there are positions and responsibilities, if a manager lost all their workers tomorrow, they would be more out of luck than if a set of workers lost their manager, on balance, the workers have the implicit understanding that they formulate the important core of whatever network they support. It's really only the social scaffolding we construct that maintains that hiearchy.
Managers can and do stack rank their employees, and pay them differentially according to that ranking, I'm sorry if you're learning this just now. If anything, you've validated my point by agreeing that employee value is a holistic assessment -- i.e. it has non-quantitative elements.
That understanding is what makes it possible for someone who produces less value for the company to argue that they actually produce more. Once they understand exactly how much is available to bargain over, the manager has no leverage to push back, and there is no reason not to make the case that one's non-quantitative competences are worth all of that gap. It costs approximately nothing to keep asking for more money.
If you see a bunch of people who are paid more than you, you can judge that you'll be able to find another employer who will pay you what you want, but only if you have a reasonable overview of what the salaries are in the system.
Same goes in the boss side, he can decide whether he wants to hit or stick.
Information is absolutely crucial in markets.
He can argue for more money and management then has to justify why there is a difference. That's not different from some people being promoted (and paid better) faster than others.
All of this is somewhat of a moot argument though as individuals hold very little bargaining power in the general work force. You might have some leverage when applying for a C-level position (but let's be honest, you don't go through a regular hiring process for positions like that) but if you want anything that's a significantly deviation from what the company will happily give you, you'll get nowhere without collective bargaining (and in fact you will more likely just get replaced). Individual workers don't hold much power, even if they're made to feel like celebrity athletes with foosball tables, fruit bowls and free drinks on tap.
Companies that pay workers what they're worth is rare as fuck.
How do you determine 'what they're worth' in the abstract? Wouldn't the best guess as to any service's 'worth' be the price currently being paid for it?
It's you who is unfamiliar with actual human nature. There are plenty of places with pay transparency (Congress staffers for example). There are huge differences in pay and people are OK with that.
Imagine thinking Congressional staffer, a job
- whose main value are the connections and opportunities available immediately after finishing a successful tour, and
- for which your current employer is approximately the only possible employer for you (if you want to be rep X's staffer you need a connection and endorsement to rep X, it won't help you much to have worked for rep Y unless Y is endorsing you to X)
imagine thinking these dynamics have anything to do with the common person's (or even a software engineer's) working situation. The pay is transparent precisely because there is nothing you can (or would) do about it, and the salary is not the point of the job anyhow. The reward is a lifetime of milking valuable connections and endorsements, and getting to one day feed at the same publicly funded trough as the other pigs, not a $3,500 salary increase.
You do that job because it's a pipeline to lobbying and other influence-peddling scumbaggery, not because you get rich or even make a reasonable living.
Yeah, that's a job. Even if you are doing it for experience, it is still a job.
Many, if not most jobs don't let you become rich or make a reasonable living, and they aren't non-jobs even if people try to say they aren't.
The entire point of the argument is that transparency in pay creates incentive to argue your pay, and weakens the incentive to increase your output. Here, there is a strong, shared understanding that the compensation received is not the salary, and therefore one is not underpaid in a true sense.
Pay transparency wouldn't tell you much about the actual value of the job. If instead, your congressional rep helped a lazy coworker get placed at an extremely selective top lobbying firm, but only helped you (the hard worker) to get placed with the manure farmers of America -- then you might suddenly feel that you were unfairly treated.
Show me that level of transparency and I could change my mind.
Not true. Congress is full of staffers who view as a regular job and do it for decades. The people who go to lobbying are a very small group.
But, second, it doesn't take a majority to make that motivation a characterizing element of the job. Maybe some people are motivated by love of country or whatever to go earn $35,000 as a college graduate. But it doesn't mean that access to exclusive opportunity is not the well understood perk of the job, whether or not you avail yourself of it.
Of all the strange stands to make in favor of radical pay transparency... I personal would think that having to defend the honor of Congressional staffers would be a strong indication that the plot has been lost.
I know that we like to make bold claims of 10x or 0.1x developers sometimes but imagined "extremely productive workers" don't exist in the absolute, businesses are not meritocratic and the people being paid 10x, 100x, or 1,000x that of the lowest earning worker or even the median earning worker in the company don't contribute in proportion to the company's income.
> You have to be completely unfamiliar with human nature to believe otherwise.
"Their" ideology is always unreasonable and superstitious while "our" ideology is always common sense and based on familiarity with human nature. Of course "our" ideology isn't an ideology to begin with, because our politics are fact-based and free of the constraints of ideology, they're just based on premises we hold to be self-evident. Did I get that about right?
That's an important point in any negotiation: Knowledge is power. Without knowledge you are probably the loser even if you think otherwise.
How many Wall Street execs have had to go to the Rust Belt and see the consequences of their actions first hand? Instead they just call it flyover country and don't have to see it.
Same applies to Silicon Valley honestly, I know a therapist who works for Google and they struggle with the job because of how entitled most Google employees are. Vast majority of them have no clue how good they have it compared to 99% of the population
This is also ignoring the externalities that Wall Street ignored, like the impact of China now having a bigger economy than the US because we literally built them up. Short term thinking in the name of profit is the root cause. The government should be the check on that type of thinking, but the major corporations have bought off most of the government
And they don't see the irony of their own position?
As opposed to Stanford grads having a nervous breakdown or raging because they only make 500K and their friends make 700K or have a successful startup
> As opposed to Stanford grads having a nervous breakdown or raging because they only make 500K and their friends make 700K or have a successful startup
Chastising or berating people for struggling regardless of their circumstances is an incredibly shitty thing to do.
Basically set a floor on compensation that's liveable.
I'm a little confused, generally healthcare and retirement are good things to have at work, so from where I see it, everyone should get it from their employer regardless of job or you're advocating using it to disburse to a healthcare for all scenario (EDIT: via the gov't) (which I'm all for).
Side Note: For whoever is not the last one to the party like me, I just listened to a fascinating podcast (bbc) on David Ricardo's impact in economic theory, and a lot of the ills of today pretty much lay at his narcissistic feet. I would highly recommend taking a deep dive into how his economic policies actually make any mathematical sense and have influenced (conscious or not, the absurdity of modern markets and by extension modern business practices). /aside.
Retirement is similar - retirement benefits are used in manipulative ways by employers to make the labor market less competitive (vesting schedules, match timing and amounts, etc.). And for 401k-style plans, there's no reason your employer should decide for you which terrible high-fee investments you can use.
EDIT: I think retirement is similar, for basically the same reasons, yes, we all want to be the smart free spirited libertarian, but on net..what is this some sort of darwinian contest. boring yawn
why not just bump the minimum wage? It's effectively the same thing.
Lasting help on this cannot be had in any short time, because cultural change is required: A citizenry engaged with and learning about government at a practical, local level -- rather than playing games to maximize the volume and audience of their own ranting.
Schools would have to teach concepts like "regulatory capture", "rule of law rather than of men", "plausible deniability" -- along with the fundamental math, economics, and cultural history needed to apply them.
And parents would have to inspire their children to some effort in outward, altruistic directions, rather than inward, to their own immediate pleasure.
It starts with families, and with schools.
What are the Marxist incentives for new business creation as opposed to just reforming an existing capitalist company?
I also am not very familiar with Marxism so all I can tell you is that humans, generally, are driven by many things and not just by profit.
I'm not sure I understand your question. Capitalism is fairly recent. In fact "businesses" are fairly recent. Humanity didn't idle until someone came up with the idea of corporations, so I don't think you're asking how production or innovation can happen under models compatible with Marxism without reforming existing companies.
Under capitalism, the incentives for new worker coops are the same as for working for an existing company, i.e. not starving to death (or avoiding poverty). Capitalism aside, humans have many incentives for productive work. Research actually shows that intrinsic motivation can greatly exceed extrinsic motivation (e.g. being paid) but adding the latter can almost entirely eliminate the former, chronically: introducing money makes it a transaction rather than a favor.
If your question is why anyone would found a new fruit juice company under Marxist philosophy to compete with the existing reformed ex-capitalist fruit juice companies and claim some of their market share, I think you're still thinking in capitalism.
The question is: why are co-ops relatively uncommon?
For anyone that's interested there's a new coop startup accelerator https://www.start.coop/
What if it is structured as a private LLC owned 100% by a holding co-op, and the LLC borrows money?
Or is the problem that there are other risks for the bank?
OK, but what are the criteria for that? If the measurement is "most money, fastest, for the owners", than we aren't even talking about the same things. I live in the country where my utilities are all provided by small local co-ops. There are co-op grocery stores, too. As a customer, they all work quite well. They wouldn't impress an investor, but that isn't the point - they get the job done to support our community. Getting the job done is my measuring stick.
Co-ops will find it much harder to compete in sectors where a new model is expected every few months, such as smartphones.
The biggest problem is that a sustainable smartphone product wouldn't sell very well and the market is heavily based on selling incremental changes and flashy non-features as groundbreaking innovations.
I'd say one of the biggest differences between sectors where coops do well and where they don't is that the latter tend to be sectors where the value proposition of the product is almost entirely driven by marketing and the products are only profitable because they're disposable.
Apple doesn't make a profit from selling you an iPhone every five years. Apple makes a profit from selling (lowercase-i) influencers an iPhone at least once a year to convince everyone else they should really cycle out their current model long before it's actually obsolete.
Another important factor of course is that coops tend to focus on local communities and smartphones are almost entirely manufactured overseas at this point (speaking from an American or European POV). It's hardly a coop if 99% of the workers involved are working for non-coop subcontractors in a different country.
If this sense of community is lacking and people think about themselves mainly (as it normally happens), you can't make any meaningful decision. So in this case a more traditional business is likely to give much better results.
Unpopular take: co-ops will not be able to behave in sociopathic ways shareholder value driven corporations can and will be outcompeted because of that. The fact this arrangement is not sustainable in the long term doesn’t prevent corporations from being successful in the short run.
All are still profitable today and in relatively good health.
That's exactly what happened in Eastern block countries. Most of the people exploited the system for personal gain. (source: living there). Marxism is pure utopia.
You're conflating Soviet style socialism for all forms of socialism (though it's hard to blame you as the Soviet Union didn't really care to make that distinction either) much like some critics of capitalism are conflating utopian anarcho-capitalism or extreme laissez-faire capitalism for all forms of capitalism (which is how you get political pundits fluctuating between calling social market economies in Europe "socialist" or "capitalist" within the same sentence depending on whether they talk about aspects they like or not). Worker democracy is actually closer to anarchism (which for most Westerners sadly evokes images of angsty teenagers in black hoodies throwing molotovs or spray painting buildings, rather than community organizing and radical democracy).
Soviet style socialism was heavily based on a fixed hierarchy (the infamous communist bureaucracy) and centralization. Especially near its decline (i.e. 1980s) it was heavily plagued with corruption and shortages of "non-essential" goods because of structural issues but also the dual stresses of trying to compete with capitalist economies through production for exports and trying to compete with capitalist militaries through production for weapons and supplies for strategic partners. All this while also starting from the disadvantage of not only having been an agricultural economy until fairly recently but also having suffered massive losses in a world war while still recovering from their own civil war.
Ironically, the Soviets were actually a bad example of organizing around "soviets" (worker councils) and the Bolshevist revolution involved disempowering and purging a lot of worker democracies and trade unions as "counter-revolutionary" because the founders thought they had to lay the groundwork for socialism from the top down (ironically often using pre-existing capitalist structures and stakeholders) rather than build from the ground up.
There are many thinkers outside the Marxist-Leninist and Marxist-Leninist-Maoist spheres like Bakunin, Bookchin, Kropotkin or Malatesta. The reason these names tend to be less familiar is not only that the Soviet and Maoist traditions tended to heavily suppress anarchism but also that anarchism by its nature puts less emphasis on individuals than ideas so you rarely find self-identifying "Bookchinists" or "Malatestaists".
> Most people want to be told what to do, get paid for it and go home.
Voter turnout in many country has been as low as less than 50%. One could say that in those countries "most people" want to be told what to do and not bother with politics. Would you argue this means they should therefore not be allowed to vote?
You can participate in a worker democracy led company without participating in elections or any of the decision-making processes. The important point is that if you do care or an issue arises that affects you more strongly, you can. Under a hierarchical company the best you can hope for unless you have a union is to raise the issue with HR or management and hope doing so will not affect you negatively.
To add some background I'm running sizable division in a company hiring about 100 people. We're very flat and open to suggestions no matter what is your title. Some people actually use that opportunity, but it's maybe a half. And we're actually targeting for that when hiring! More than that - over the years we had some people left us, because they wanted narrower responsibility, without bothering them with bigger picture.
As for the discussion about "true Marxism" - sorry. Hard pass.
Because if we wanted our governments to work like businesses, we'd have to ban elections. Businesses deciding to offer some leeway towards employees in their decision making process doesn't turn them into democracies the same way as a dictatorship doing opinion polls wouldn't be a democracy.
> As for the discussion about "true Marxism" - sorry. Hard pass.
Nobody said anything about "true Marxism". Marx neither invented the ideas of socialism, nor do I care for his opinion on it in particular.
If anything my point is that the Soviets (and their related states) tried to sell their actions as "real socialism" but that this is like calling America's actions "real capitalism" despite other forms like social market economies (e.g. half of Europe) existing.
I don't care if anarchism is any truer of a Scotsman than Bolshevism, I only care that anarchism is more communal and less oppressive.
This statement has no connection to my comments. I am not expressing any opinion how I want business or government to operate. I'm just sharing my observations, about why people do not form cooperatives.
Because they have access to capital problems, because the people who disproportionately control capital also prefer that capital, not labor, controls the business.
I don't think anyone has an argument in favour of a committee making every single decision. The advantage of the co-op model is that the shareholders are all domain experts and the workforce would be maximally incentivised to pursue profits.
The idea of worker democracy is not to vote on every single decision. You can still delegate tactical decision making and even overall strategic planning to individuals and in fact usually this is what happens. The difference is the power dynamic when a disagreement arises. The idea is consent, not compromise.
In hierarchical companies, the hierarchy decides everything and if anyone from below disagrees they can either fall in line or leave. This incentivizes those at the top to chase the profitability that benefits themselves most, which can often mean high bonuses short-term before moving on to a different company or aiming to sell off the company rather than build a sustainable business.
Cooperatives are actually fairly resilient and often also aim to strengthen their local communities.
> empirically inefficient
This doesn't mean anything if you don't qualify your metric. If you define efficiency in terms of profitability you're defining it in terms of surplus value after expenses including salaries that can be paid out to shareholders. Using that metric is nonsensical as the workers ARE the shareholders. If you mean for manufacturing coops the goods tend to be more expensive you're probably not accounting for externalities.
> other organizational structures very effectively outcompete them
This isn't really true either, unless you define success in terms of growth rather than sustainability, in which case the claim becomes almost tautological: coops tend to be designed to focus on sustainability almost by definition, so of course they'll perform worse when you measure them by growth rather than sustainable profitability.
What are the "externalities" in this case? I doubt an oil extraction coop is going to be paying carbon offsets.
Also, the metric that you failed to consider (other than profit/price) is market share.
>the claim becomes almost tautological: coops tend to be designed to focus on sustainability almost by definition
How is it "by definition"? I get that workers don't want their coop to go under, but I doubt that capitalist investors want their investments to go under either.
In an economy where almost all companies are hierarchical capitalist corporations, most of the market share is going to be owned by these corporation regardless of how successful a few alternative models are. This is by simple statistics and the regression to the mean.
On top of that, in the current capitalist economy wealth naturally accumulates on a handful of companies (this is also a natural statistical phenomenon) and in the absence anti-trust and monopoly enforcement the biggest companies have an easier time driving any corporation out having a chance to out-compete them. This is also regardless of company structure.
Market share is not a good metric to evaluate efficiency for this reason. There are simply too many unrelated dynamics affecting the who will become market dominant.
But surely there would be at least one or two industries where coops rein supreme? If 5% of companies were coop, you'd at least expect 5% of leaders to be coop, or they control 5% of the market share.
>On top of that, in the current capitalist economy wealth naturally accumulates on a handful of companies (this is also a natural statistical phenomenon) and in the absence anti-trust and monopoly enforcement the biggest companies have an easier time driving any corporation out having a chance to out-compete them. This is also regardless of company structure.
why can't coops do the same? consolidate, gain economies of scale, making all of their members better off?
This not how hegemony works in statistics. If you have 10.000 companies and 9.500 are capitalist hierarchical corporations, all else being equal, if you take the top 300 companies by profit (assuming profit is not uniformly distributed), the chances of the sample of 300 having the same distribution as the total 10.000 is very slim.
Think about it this way: Take two normal curves. Align them so that they have the same mean and variance. Now shrink one of them so that it is only 5% of mass of the other. Now go to the right extreme of the unmodified curve (say 2 standard deviations where 2.3% of the unmodified samples are), do you think you’ll get the same proportion of the smaller curve or do you think it will be much smaller?
> why can't coops do the same? consolidate, gain economies of scale, making all of their members better off?
Now this is a more interesting question. The answer is not statistical but sociological, because statistically accumulation of wealth happens regardless of the system, and would happen also if most corporations were worker owned (I believe I even stated it above). However this question is also a bit of a distraction since the claim here is that market share is a poor metric to evaluate efficiency. And whether wealth accumulates in a primerly socialist economy like it does in a capitalist one takes nothing from that claim. A worker owned monopoly earning most of the profit can afford to be just as inefficient as a company earning it’s shareholders the pretty buck.
That being said, worker coops are a good thing and are often more stable and efficient than conventional businesses^1 (not to mention leading to better outcomes for the workers). The problem comes with economy of scale when it comes to competing against accumulated labour (startup capital is a problem, and by the nature of taking startup capital you are working to multiply the exchange value of accumulated labour). The living labour of the worker coop will still likely be at work to maximize the exchange value of some other's accumulated labour (loans, contracts, etc) or become of the M-C-M model themselves, siding with accumulated labour class (bourgeoisie). That's capital for you.
1: https://www.democracyatwork.info/what_do_we_really_know_abou...
You can do that but can't force customers to buy from you.