Socialism: the problem and prescription's of Marx

[Rhyfelwyr]

You know I read once in the shrumpeter coloum I think in the economist that suposedly we cannot properly explain why we actually have companies.

Most suscribe to the idea that it is a modern version of industrial/economic feudalism, I give my service and in return am protected from full market forces by my leige lord ( CEO/Manager )

Otherwise I might have to be self employed which is apparently what there fancy economic models tell them we should be doing.

Well, from a historical perspective, companies have come about through various processes - monopolization, the division of labour, the fact that only a select few had the wealth required to set up industries to begin with.

They may well be in some sense a form of modern feudalism, but I don't think that is why they continue to exist. I think they continue to exist simply because they have able to propagate their existence - they don't actually offer anything to society or the world of employment. Indeed, as I said earlier, I think they are very destructive in that regard.

Now, we just need to figure out how to get rid of them, even when so much of our economic organisation is based around them.

There's something pretty innate about the idea of creating a social hierarchy. I also don't think there's anything inherently bad about that, as long as all parts of the whole respect the needs of the others. I don't think its a stretch to say that a medieval Manor Lord probably cared more about the peasants tending the fields than a modern CEO of a blue chip company cares about his entry-level workers, though.

Yes and no. It depends on how interdependent they are on each other. Just look at how Highland Clearances, when hordes of peasants were chucked off their land and replaced with sheep.

So, ignore all the -isms. Those are problems that require specific fixes, not recommendations from a 19th Century philosopher. Reigning in the excesses of the Rich and Powerful in the 21st Century will require new thinking.

Isms are what give perspective to our decision making process. The economy and how it relates to politics and society is a very complicated business - to treat issues in isolation without a larger framework would cause rather chaotic and disjointed policy making. The old "down with isms" approach always gets some popular support because people are fed up with the stalemate and stagnation of opposing ideologies.

Which is fair enough, but the solution isn't to abandon political or economic theory altogether. Instead, we should challenge it, and why we support it. Do we believe something because our human nature means we want to understand the bigger picture, even if it means being careless and smoothing over any and all cracks? Are we doing it out of partisan commitment?

In such instances, the ideology will be corrupted - but that doesn't mean that ideology (or rather, having a wider take on things) is inherently bad for decision making. IMO, it is essential to it.

[PanzerJaeger]

I think they continue to exist simply because they have able to propagate their existence - they don't actually offer anything to society or the world of employment. Indeed, as I said earlier, I think they are very destructive in that regard.

Now, we just need to figure out how to get rid of them, even when so much of our economic organisation is based around them.

Companies exist because organizational hierarchy is essential to productivity.

[HopAlongBunny]

Marx's concern with alienation.

Under capitalist production the worker must alienate her labour for an abstract wage; the real product of human labour is traded for an abstraction and the person is removed from the most basic and human of endeavours-producing his/her existence.

Socialism intervenes to quibble about the surplus, but leaves the means/relations of production intact. A socialist PoV acknowledges the context where production takes place and appropriates a portion of the surplus to reflect costs which corporate accounting ignores. Pollution is a social cost, poverty, health, safety and regulation. Capitalism is a mode of production; Socialism a debate on the surplus. Neither goes to the heart of solving alienation. Socialism account the costs the capitalist enterprise ignores; costs the corporation inflicts on society, therefore the capitalist enterprise must surrender compensation.

Alienation is preserved.

[gaelic cowboy]

Companies exist because organizational hierarchy is essential to productivity.

Theory of the firm

This is the best explanation for why companies exist and it's essentially about transaction costs.

Except modern economics views the world through perfection and so it has a hard time reconciling companies with it's theories.

[Rhyfelwyr]

Actually, you are misrepresenting it a little there. Ideally, it is 'Social Ownership', such as working collectives, common-ownership, cooperatives and it can include state ownership. Typically, state ownership by a democratic government.

There is also a difference in terminology when applied in the real world too. Socialism is seen as providing minimum wage, higher taxes for higher earners. All in all, trying to rein in the excess of making sure the poor are not completely left out to rot and the rich doesn't simply squander all the money.

So it does come down to what Lemur says. What do you mean by "Socialism" ? Could also even argue with "What do you mean by Capitalism?" I guess the best one-line definitions would be as follows:

Capitalism - Private Ownership of the Means of Production with the goal of producing as much profit as possible.
Socialism - Social Ownership of the Means of Production with the goal of satisfying economic demands and human needs.

Sorry for missing this post before. Of course, the term 'socialism' is used in different ways - but generally speaking, when discussing 'socialism' as an economic model, it has the meaning that you gave it in your last line - social ownership of the means of production. When discussing it in this sense, it is something else entirely from the particular policies of socialist parties. Concepts like the minimum wage and welfare are not in accordance with the socialist model. I guess socialists might argue that they are temporary relief measures. Which is fair enough.

Anyway, I maintain that I have not misrepresented anything, and we seem to agree that the sense in which I discussed socialism was appropriate. But now, I will accuse you of misrepresenting things! Because contrary to your notions of social ownership distinct from the state, such ideas have been very much on the fringe of socialism. State ownership is the norm in socialist theory - not because it happens to be one of many options, but because the acquisition of the means of production by an institution invested with all the powers of government is deemed necessary for their redistribution. It is for this reason that ownership by the state in particular is regarded as a necessary consequence of socialist theory.

Companies exist because organizational hierarchy is essential to productivity.

Yes but the need for that hierarchy is created by the fact that they reduce the vast majority of employees to a form of labour that is so isolated from the production process. So it actually cripples any organizational capacity that these employees could have. When this happens, naturally they need managers to coordinate the production process.

The problems of such a system are manifold - there is a disconnect between the labourer and the organization of labour, the suppression of everything a worker could contribute to the running of the business by reducing him to petty and repetitive tasks, the creation of a managerial class that benefits more from promoting its own significance (red tape etc) rather than the actual profit of the business, the low morale of the worker who has no stake in the business, the hostility that naturally breeds between worker and manager etc.

[InsaneApache]

I blame the parents you know.

[Sarmatian]

[HoreTore]

Because contrary to your notions of social ownership distinct from the state, such ideas have been very much on the fringe of socialism. State ownership is the norm in socialist theory - not because it happens to be one of many options, but because the acquisition of the means of production by an institution invested with all the powers of government is deemed necessary for their redistribution. It is for this reason that ownership by the state in particular is regarded as a necessary consequence of socialist theory.

That's highly Leninist of you, Rhy.

Just because everyone who supported other forms have been shot does not mean they never existed or had an influence on socialist theory.

CNT-FAI, for example, never called for government ownership, at least not in our traditional understanding of the term "government". And they had 500.000 members before Stalin shot 'em, hardly "a fringe".

[Idaho]

Marxist analysis has become particularly significant recently. The great contradiction in capitalism, as Marx saw it, was the need for the capitalist class to reduce costs and maximise profits, while at the same time relying on the same working class they impoverish to spend money and increase their wealth.

These working class run out of money and capitalism stalls. Marx stated that capitalism was endlessly creative in maintaining itself. In the context of the last few years we can see that the latest creativity came in the form of cheap high risk credit. Sub prime mortgages anyone?

So the poor have been squeezed dry and governments are bankrupt. All the while the world's largest companies are sitting on record cash reserves while simultaneously cutting costs... Spot on so far Karl.

[ICantSpellDawg]

The problem is that global workers, from the U.S. to Myanmar, are becoming obsolete after entering the global economy at an unprecedented rate due to an expansion of access to the internet. As jobs in need of human effort go away at an exponential rate and are replaced by new jobs at an arithmetic rate and the amount of people entering the market surges - this will have a catastrophic effect on wages in the developed world and will offer benefits abroad only for a short period of time.

The affluent have figured out a way to generate their own consumption demand not by creating demand in lower classes through the capitalist economy, as had been the means to feed slaves, serfs and commoners for centuries, but by consuming more on their own and producing to that demand using artificial labor. This shift has not created new jobs as the industrial revolution did. As resources become less numerous and the affluent become wealthier, this inertia will continue to build in this direction. It is imperative that lower classes have the means to violently destabilize the security of the affluent. They are losing economic power and must create a counterbalance to this in order to prevent abuse through force and free advanced education. This is literally the only way to avoid the annihilation of the underclasses.

Technology now allows massive population control and destruction. The only reason that civil disobedience or union strikes have worked is because they had traditionally put the economy into a standstill and harmed the affluent as a result. If the lower classes are no longer capable of affecting the economy, they will have no jobs to strike from and their disobedience will not disrupt status quo as they can be dealt with without destabilizing the lives of the people who matter. We are reaching a tipping point in the power of people through words. I'm not encouraging violence, but I am encouraging the lower classes access to an insidious destructive means in order to ensure that this natural and growing temptation for the upper classes is avoided. A cultural "nuclear deterrent". People must be trained and capable of destabilizing those who would destroy or indenture them. If people fail to deter this destructive evolution, there will be no use for them as slaves as there was hundreds of years ago, as technology will do what humans are incapable of doing. When people cannot even be used as slaves, their lives will be viewed as truly meaningless.

Additionally to the need for force resistance, a new use for human beings that are incapable of working at the speed of machines must be developed, as it was in the industrial age. This will not happen on its own unless people realize what the alternative is.

This is not an argument for socialism or for violence, but it is an argument for radical republicanism and civilian access to more serious firepower and education than we currently have access to. The powerful have always desired the destruction of resource competing masses, but have suffered them as they were needed them for their own prosperity. Woe to us when they don't need us anymore.

[Tellos Athenaios]

Companies exist because organizational hierarchy is essential to productivity.

Nope: that is merely a side effect, and it does not apply to the vast majority of companies the world over (the S in SME). Companies exist because people figured out a safe mechanism to pool resources that doesn't involve babies, to deal with loans, assets and collateral. That's how they were invented, that's how they basically still operate to this day, and that is why the particular financial structure underpinning the company matters a great deal. So much so that we tend to require this to be part of their name (LLC, Inc.).

Hierarchy and its effects on productivity are... well things that management might like to tell itself, but not necessarily part of the deal at all.

For example many of the first companies in early modern history were just a bunch of merchants stumping up cash, outfitting a few ships and hiring a captain and crew to do the real work for them. The financial sector hasn't really evolved from that model since (stock market speculation is so 17th century, as is insurance against stock market speculation). Similarly, your typical SME outfit is not nearly as fixated on hierarchy as your average large enterprise (clue: titles), but despite that dominates enterprise in economic output.