Policy For The People
August 24, 2017 2:16 PM   Subscribe

Matt Bruenig, creator of The People's Policy Project (a think tank for leftist policy), wrote Common Ownership And The New Antitrust Movement advocating for Market Socialism and common ownership along side stronger anti-trust measures. It stirred debate at Naked Capitalism and Bloomberg, prompting a response: Index Funds Are A Proof Of Concept For Market Socialism. Other PPP posts: The Welfare State Should Be More Than A Safety Net. How the Swedes Addressed Wealth Inequality
posted by The Whelk (12 comments total) 37 users marked this as a favorite
 
The new antitrust movement argues that a long list of negative consequences result from this kind of economic concentration. Consumer prices go up, wages go down, startup activity wanes, innovation slows, and our industrial systems become much more fragile. Advocates of this position have won the enthusiastic endorsement of the Democratic party, which has made antitrust one of the centerpieces of the party’s new agenda.

They probably need to get the word out about that more because I have heard jack about that, pretty much assumed they were beating the same neoliberal centrist drum as usual.
posted by Artw at 2:54 PM on August 24, 2017 [4 favorites]


(Article goes on to explain why this is quite weak anyway)
posted by Artw at 2:56 PM on August 24, 2017


Market socialists have long argued that it would be possible for all of the companies to be collectively owned and yet still be made to simulate competition with one another in order to reap the benefits competition supposedly brings.
Are there any real world examples of simulated competition that resulted in the type of growth and innovation typically attributed to free markets? I am skeptical that capitalism as we practice it in the US actually has those results, but I am also skeptical that actors in a system where they are consciously aware of simulation will behave in a predictable manner.
posted by xyzzy at 3:25 PM on August 24, 2017 [2 favorites]


As a leftist currently in grad school for public policy, this is related to my interests. I'm very curious to read their upcoming paper.
posted by hopeless romantique at 4:47 PM on August 24, 2017 [3 favorites]


Socialist competition or socialist emulation (социалистическое соревнование), perhaps the Soviet version of simulated competition?
posted by XMLicious at 4:55 PM on August 24, 2017 [1 favorite]


I wish you could @ people on Metafilter @"You Can't Tip A Buick"
posted by en forme de poire at 8:02 PM on August 24, 2017 [2 favorites]


when considering progressive policy for the future, i think its past can be inspiring #progressive_forces!

It's Time to Found a New Republic
The prime driver of reform at the end of the 19th century was the progressive movement, itself a reaction to the accelerating technological change and the rise of oligarchs. If America as we know it — or, even better, a renewed, reinvigorated version of it — is to survive for yet another century, it will have to replicate the progressives’ achievements. The first task will be to understand the degree of improvisation which accounted for those successes.
acemoglu and johnson advocate for, among other things, 'rebuilding the social safety as a trampoline, not a net', but i find -- as the FPP links -- bruenig is more compelling:
A better metaphor, both in terms of accuracy and rhetoric, would be the foundation. The welfare foundation provides a universal set of services on top of which people can build their lives. It is a permanent support structure, not a temporary failsafe. The precise mix of welfare benefits individuals get will of course vary depending on what stage of life they are in, but the welfare state as a whole is there for them at all times, giving them the stability to do everything else they want to do with their lives.
as for corralling market power...
-The Market Power Story
-Investment-less Growth: An Empirical Investigation
-A reading list on market power, superstar firms, and inequality
-Evidence for the Effects of Mergers on Market Power and Efficiency*

also btw...
-Nordic Socialism Is Realer Than You Think
-Norway's Social Wealth Fund Grows To $1 Trillion
-Nordic populists struggle with the burdens of power

---
*one way to think about your friendly neighborhood central bank is as a central planner of last resort :P which they're not always great at, but perhaps even more than institutional indexing -- among pension funds, sovereign wealth funds, central banks themselves (like the BOJ, but also, say, the PBOC), and insurance cos with long-term obligations -- they're stewarding the whole economy. as levine notes about indexing:
If you want companies run on Marxist principles, there is always the United States, where people are worried that the rise of index funds has accidentally imposed Marxism on our public companies. It is true that, in the limit, if companies are looking out for their shareholders, and if their shareholders all own all other companies in proportion to their contribution to the economy, then companies really should do what is best for the economy, not for themselves. Doing what is best for the economy is not exactly Marxism, but it is a sort of 21st-century financial-capitalist flavor of Marxism anyway.
is doubly true for CBs. those little (increasingly digital) pieces of paper they issue aren't liabilities per se as much as national equity -- collective ownership -- in the shared output of the nation. accidentally imposed marxism can just as easily be imposed by CBers.
posted by kliuless at 8:26 PM on August 24, 2017 [8 favorites]


all of the companies to be collectively owned and yet still be made to simulate competition with one another

I don't see why the competition needs to be simulated -- as long as the people working in the companies get more if their company does better, there will be a real competition; but a common pool of shareholders might eventually throttle bigger-piece-of-smaller-pie tactics.
posted by clew at 9:05 PM on August 24, 2017 [1 favorite]


So if competitive simulation is not needed, the aim is not to create a classless society. The Apple collective will surely have more luxuries and comforts than the Grocery Store collective. That's fine; I just like to be clear about what type of socialism is being called for by my more economically left comrades.
posted by xyzzy at 1:51 AM on August 25, 2017 [1 favorite]


> I wish you could @ people on Metafilter @"You Can't Tip A Buick"

Hah! I think kliuless is the go-to mefite here, honestly :)

But yeah, the "gradually expropriate industry through state-managed funds" idea seems sound, and thinking through how economic signals are sent is important. The "competition" angle is silly, though; most of the business of running the economy happens within organizations that run on cooperation rather than competition — this is why you find Marxist economists citing business school papers on organization of the firm, and why when competition-obsessed libertarian types take over companies, those companies fail messily (see: every article about Sears for the past five years).

Basically, yes, designing an economy requires figuring out how to send and receive signals about value, and market-determined prices are okay at that. I say "okay" rather than "good" here because of the anti-democratic nature of market economies; the thousands of us posting on mefi have vastly less influence on the market than (for example) the Koch brothers.

> I don't see why the competition needs to be simulated -- as long as the people working in the companies get more if their company does better, there will be a real competition; but a common pool of shareholders might eventually throttle bigger-piece-of-smaller-pie tactics

The differences between the schemes discussed in the articles and what you're discussing is that under these schemes, workers don't get shares of the companies they work for — it's not a stock-options/profit sharing thing — but instead workers get shares of funds that index, insofar as is possible, the entire economy. We're not recapturing the value skimmed off by one employer, we're recapturing the value skimmed off by all employers generally.

Which is to say that this:

> So if competitive simulation is not needed, the aim is not to create a classless society. The Apple collective will surely have more luxuries and comforts than the Grocery Store collective. That's fine; I just like to be clear about what type of socialism is being called for by my more economically left comrades.

Is not how it should work. We are all collectively invested in the success of the system for producing and allocating food. To a lesser extent, we are all collectively invested in the system for producing and allocating kicky fun stylish consumer/prosumer goods. We should learn from the bourgeoisie here; they've realized that money is green even if it comes from unflashy industries. Bourgeoisie in the grocery sector make huge piles of money, just like bourgeoisie in the tech sector; if we take up ownership of those sectors of the economy, we can collectively get rich, regardless of whether the sector we're working in is cool or trendy.

The way I'm going to predictably debbie-downer the discussion on the whole, though, is by stressing how the problems with these schemes aren't whether or not they send the sorts of signals that can be used to run an economy — they do, and they do it better than capitalist markets, because they take input from everyone rather than just a small privileged subset of the population — but are instead rooted in the need to dislodge the capitalists from their positions of control over the market. I refer to how it went down in Sweden; you'll note that the defeat wasn't due to inherent flaws in democratically controlled market systems, but instead because capitalists rather like having the whip hand, and were able to organize to strangle the plan in the cradle:
It goes without saying that employers’ resistance to such a plan was intense, sustained, and effective. In addition, the SAP (the Swedish Social-Democratic party) defeat in the 1976 elections by a right-wing coalition ensured that capital had time to fully mobilize against the proposal. By the time the SAP returned to power in 1983, the proposal had been watered down as a result of retreats and compromises by the labor movement and lukewarm support — even outright opposition — from the SAP leadership. [...]

The Meidner Plan failed. But it is crucial for us to remember that it was a political failure rather than an economic failure. The LO took on the employers and lost, but their plan for a transition to a democratic-socialist economy lives on
So that's the challenge we're faced with; the political challenge of keeping the extant economy running while transferring ownership away from the takers and to everyone, while the takers organize to sabotage everything.
posted by You Can't Tip a Buick at 11:35 AM on August 25, 2017 [4 favorites]


fwiw :P

Money for the People
As its history demonstrates, money is a social and political construct. It is the privatization of money—and not money itself—that has fueled social exploitation and environmental destruction. Money could, by contrast, help advance a Great Transition—but only if it is reclaimed for the public. Contrary to neoliberal assertions, the state can create money free of the debt that drives destructive growth and fosters inequality. Such public money can facilitate the provision of economic security and sustainable livelihoods for all. But for such a system of public money to work, there must be robust democratic control over monetary decision-making along with vigorous oversight of its implementation...

By relieving people of the need to undertake unsustainable and unnecessary work in order to obtain money, it would reduce ecological strain and economic inequality. And by freeing people from a dependence on the market, it would create more time for the avocational, personal, social, and convivial activities that make life worth living.

Neoliberal economics denies that all of this is possible. Indeed, politicians routinely claim that there is “not enough money” for our basic social needs. But despite the claims and strictures of neoliberal ideology, states can and do “print money.” First, it is produced ex nihilo by central banks to provide cash and support for the money-creating activities of the banking sector. Second, money is created and circulated as the government spends, in the same way that banks create money as they lend. States spend money and then offset their expenditures against tax revenue and other income received...

All modern currencies are “fiat money,” created out of nothing, their value sustained by public trust and state authority. So why are states and their citizens shackled in debt? Why can’t the people simply create the money they need free of debt? Why can’t that money be circulated in a not-for-profit social or public sector? Why base the principles that govern our economic system on the butcher, the baker, the candlestick maker, and the hidden hand of the market rather than the doctor, the teacher, the care worker, the artist, and the not-so-hidden hand of a solidarity economy?5 As these questions make clear, freeing ourselves of misconceptions about money opens the door to new possibilities for driving a transition to a just and sustainable economy.

Control of the money supply and, more generally, the monetary system confers a tremendous amount of power. Can we entrust the state with it? Neoliberals warn of the dangers of state intervention in a market-based system. Proponents of social and local economies likewise harbor suspicions of the state, particularly its distant and opaque bureaucratic apparatuses. But without an expanded role for the state, many people will continue to fall through the gaps in the market and voluntary sectors. However, since many states have proven to be inefficient, corrupt, and autocratic, a public money system would be acceptable only if it were more robustly democratic. We cannot assume that public authorities will use money wisely unless they are subject to democratically determined mandates and effective public scrutiny. Exclusive control of the money supply must not simply be put in the hands of the government in power or the state apparatus and left unchecked. Public management of the creation and allocation of money must be transparent and accountable...

Effectively exercising the public’s right to create and spend its money would require a wide range of democratic decision-making. Questions about the level of taxes, redistribution of income and wealth, whether to tax resource use or land, which expenditures should be taxed, etc., would need to be democratically determined. However, given the basic income and extensive public services included in the proposal, there would be much less need for the accumulation of wealth or for investment programs such as pensions, which are major drivers of growth. This, in turn, would justify even greater taxes on existing wealth. Moreover, since there would be less need for investment opportunities, public money could be created and used to purchase natural resources and utilities currently in private hands, bringing them back under public control.
Friedrich Hayek and the Market Algorithm
Our purpose in writing this paper is twofold:

First, we believe that Hayek’s economic vision and critique of equilibrium theory not only remain relevant, but apply with greater force as information has become ever more central to economic activity and the complexity of the information aggregation process has become increasingly apparent. Advances in computational capacity and the growth of online transactions and communication have made the collection and rapid processing of big data feasible and profitable. Many markets now involve algorithmic price-setting and order placement alongside direct human action, raising interesting new questions about the processes by which information is absorbed and transmitted by prices.

Second, we wish to call into question Hayek’s belief that his advocacy of free market policies follows as a matter of logic from his economic vision. The very usefulness of prices (and other economic variables) as informative messages—which is the centerpiece of Hayek’s economics—creates incentives to extract information from signals in ways that can be destabilizing. Markets can promote prosperity but can also generate crises. We will argue, accordingly, that a Hayekian understanding of the economy as an information-processing system does not support the type of policy positions that he favored. Thus, we find considerable lasting value in Hayek’s economic analysis while nonetheless questioning the connection of this analysis to his political philosophy...

In The Constitution of Liberty Hayek argued that “the value of freedom consists mainly in the opportunity that it provides for the growth of the undesigned, and the beneficial functioning of a free society rests largely on the existence of such freely grown institutions.” By this logic, freely grown institutions that constrain the scope of the market in favor of public administration in resource allocation may be presumed to have purpose and value, even if these benefits cannot be deduced by rational reflection.

As it happens, most high-income countries have grown institutions that sharply constrain the operation of markets in many spheres, with the delivery of childhood education, health, and old-age pensions being prime examples. Economies with strong trade unions, large welfare states, and substantial regulation of the economy—all of which Hayek vociferously opposed—score well on measures of democracy, civil liberties, and innovativeness developed by the World Bank, Freedom House, and Bloomberg (World Bank 2017; Freedom House 2017; Jamrisko and Lu 2017). Indeed, the Nordic social democracies do slightly better by these measures, for example, than do the more laissez faire nations such as the United Kingdom and the United States...

On this point we find ourselves agreeing with George Orwell (1944), who tempered an otherwise favorable evaluation of The Road to Serfdom with the caveat: “Professor Hayek ... does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State.”
The “free” economy comes at a cost
Because consumers do not pay for many digital services in cash, beyond the cost of an internet connection, economists cannot treat these exchanges like normal transactions. The economics of free are different.

Unlike conventional merchants, companies like Facebook and Google have their users themselves produce value. Information and pictures uploaded to social networks draw others to the site. Online searches, selections and “likes” teach algorithms what people want. (Now you’ve bought “The Communist Manifesto”, how about a copy of “Das Kapital”?) ...

Users may pay nothing, but companies like Google and Facebook have fixed costs to cover: engineers, data centres, etc. To make money, they squeeze their users indirectly, by charging companies to put appropriate advertisements in front of captive eyeballs. In the second quarter of 2017, Facebook eked an average of $4.65 out of each of its users by peppering screens with ads and promoted posts. (By comparison, just eight cents came from payments and other fees, mainly from people paying for stuff within virtual games.)

In the absence of prices, economists struggle to work out what people are getting back when they barter their data and attention for digital services. Some evidence suggests that they are doing rather well... but it generates problems elsewhere. Take taxes. Professionals are not allowed to evade tax by selling their services for benefits in kind, so why should consumers not be taxed if they are paid for their data in the form of services? Statisticians also struggle in a post-price world. GDP is mostly measured by transactions at market prices... Privacy activists also worry...

The free economy also troubles competition authorities. Excessive market power can be defined as the ability to raise prices above what would be charged in a competitive market. With no prices to compare, and other options only a click away, companies such as Google seem to operate in an environment of cut-throat competition. It is naive to think so. Consumers are more captive than the low cost of switching might imply... In the absence of prices, lack of competition will show up in other ways: demanding more information from users than they want to give, for example; or irritating them by stuffing their service chock-full of adverts.

Opinion is divided on whether the free economy needs fixing, and if so, how. In his book “Who Owns the Future?”, Jaron Lanier suggests that tiny payments for digital contributions might correct yet another problem, a misallocation of labour. If companies paid people for useful data, rather than mopping up what they leave behind as they use online services, then prices could nudge people towards more productive online activity. Others advocate tougher regulation, mandating that consumers have the option of paying for a version of their social-media platforms free of advertisements and digital profiles. Neither seems imminent, and each comes with its own problems. But both would at least force people to start counting the cost of that priceless lunch.
Preparing for Superintelligence: Living the Values of Humanism Today
In my draft book World After Capital, I write that humans having knowledge is what makes us distinctly human and gives us great power (and hence great responsibility). I define knowledge in this context as science, philosophy, art, music, etc. that’s recorded in a medium so that it can be shared across time and space. Such knowledge is at the heart of human progress, because it can be improved through the process of critical inquiry. We can fly in planes and feed seven billion people because we have knowledge...

In World After Capital I write that the existence and power of knowledge provides an objective basis for Humanism. Humanism in turn has key value implications, such as the importance of sustaining the process of critical inquiry through which knowledge improves over time. Another key value implication is that humans are responsible for animals, not vice versa. We have knowledge and so it is our responsibility to help say dolphins as opposed to the other way round... We have a long way to go in being responsible to other species in many other regards (e.g., pollution and outright destruction of many habitats). Doing better here is an important way we should be using the human attention that is freed up through automation.

Even more important though is how we treat other humans. This has two components: how we treat each other today and how we treat the new humans when they arrive. As for how we treat each other today, we again have a long way to go. Much of what I propose in World After Capital is aimed at freeing humans to be able to discover and pursue their personal interests. We are a long way away from that. That also means constructing the Knowledge Age in a way that allows us to overcome, rather than re-enforce, our biological differences (see my post from last week on this topic)... Finally, what about the arrival of the new humans. How will we treat them?
cheers!
posted by kliuless at 10:26 PM on August 28, 2017 [1 favorite]


but wait there's more!

Basically every problem in the US economy is because companies have too much power, new research argues
In a healthy economy, when one company is selling a product for well above what it costs to produce, other companies jump in that market to compete with them, reducing the resulting markup on goods. This is good for consumers and workers alike. Products are cheaper and more widely available, and more workers are needed to produce them.

But what happens if, for whatever reason, competition in an economy dwindles, and companies are able to ratchet up prices much higher than what it costs to produce them? It would have disastrous effects. Workers’ wages and employment rates would decline. People would switch jobs less often. Economic growth would slow.

According to economists Jan De Loecker of Princteon University and Jan Eeckhout of the University College London, this is basically describes the US economy since 1980. In a recently released paper, De Loecker and Eeckhout analyzed the balance sheets of listed companies from 1950 to 2014. (In 2014, these firms accounted for around 40% of all sales.) They found that average markups, defined as the amount above cost at which a product is sold, have shot up since 1980. The average markup was 18% in 1980, but by 2014 it was nearly 70%.

Higher markups suggest an increase in what economists refer to as “market power.” In a perfectly competitive market, in which competitors offer the exact same product, companies have no market power. If one company charges higher prices than others, they will lose all of their business to cheaper competitors. In a perfectly competitive market, the only way to justify a higher markup is to make a product more efficiently.

But most markets are not perfectly competitive, and most firms have some form of market power that allows them to charge a markup. For example, the lone gas station in a small town is able to charge more because people have no other choice. Apple is able to charge a significant markup on iPhones thanks to a combination of the uniqueness of its product and customer loyalty.

If De Loecker and Eeckhout are right that market power is increasing, this has significant downsides. The most profitable thing for a company with market power to do is make less of their product and increase the price—akin to what the OPEC cartel does thanks to its power in the oil market. Reduced production means fewer workers are needed and more of revenue goes to owners instead of labor.
Three radical ideas to transform the post-crisis economy
If private management of the money supply is a recipe for instability, the radical alternative is to nationalise the money supply. This is do-able today: central banks can offer accounts to all members of the public (or make central bank reserves available to everyone). Banks could be restricted to allocating existing savings to investments, rather than creating new credit.

Another imperative is that of economic security. Previous radicals created safety nets where none existed. Today we have ample welfare states, but they still leave large groups in precarious conditions. Sometimes they trap them there, as generous benefits for low earners are withdrawn with rising incomes, creating prohibitive effective marginal tax rates for the modestly paid. The radical solution is a universal basic income, the proposal to pay an unconditional benefit to all citizens, financed by tax rises. The idea is rediscovered by every other generation; the time to put it into practice may now have come.

Finally, revisit the US antitrust policies of the turn of the previous century, when leaders channelled popular resistance to the stranglehold of large oil, industrial and railway companies. Today, internet giants enjoy a similar dominance.

A brave politician would seek to end internet platforms’ ability to skew our markets — and our politics. Internet services with economic functions similar to public utilities should be regulated as such so as to make them behave in the public interest.

Many sensible people will hesitate to embrace these ideas. But what if the alternative is not the status quo, but the nativist authoritarianism now on the rise? The deepest lesson from the Roosevelt era is that liberal centrists should wield their own radicalism lest they have radical illiberalism thrust upon them.
that is all :P
posted by kliuless at 8:18 PM on August 29, 2017 [2 favorites]


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