News Spain 1936-1937: Libertarian Socialism & Its Demise

[mikelepore]

I think you're referring to the concept of limited liability which has nothing to do with criminal law, it's about financial liability. It just means that if I own stock in GM, and GM gets sued or otherwise obtains debt, my personal financial liability is limited to the value of my stock. Nobody can sue me for my house because of something I didn't personally do, they can only get what I have invested in the company.

As far as criminal acts, no such law is needed, since no law existed allowing the criminal prosecution of a person for a crime he didn't commit or even know about.

The managers are the agents of the stockholders, where I use the word "agents" in the legal sense. The directive given by the stockholders to the managers is: maximize profits, do whatever you find you have to do in order to maximize profits, don't tell me about it -- just get it done somehow, and then send me the maximized dividend.

This is a reckless arrangement that is similar to being a drunk driver, in that the outcome may not premeditated but there is common knowledge of that the recklessness often leads to certain outcomes.

In the case of the 1971-1976 Ford Pinto -- this was proven in court -- the company's own estimate was that 180 people would be burned to death and another 180 people seriously injured because of the design of the car, leading to an estimated loss to the company of $49.5 million in lawsuits. The managers compared that number to the estimated cost of $137 million to make the car safe, and they made the conscious decision to have their customers burned to death. They were also explicit in saying it. They said to use the exploding gas tank.

It is an act of reckless endangerment to have a business operate with the charter of maximizing profits. Just as the drunk driver usually makes it home without running over anyone, a business sometimes gets lucky and doesn't kill anyone in a given year. That good luck doesn't negate the general recklessness of using the profit motive.

As for not knowing, when the Mafia boss tells the hit man to "take care of that situation", "see to it that that person will no longer a problem for us", the boss doesn't tell the hit man exactly what to do, and yet there is a reasonable conclusion that the situation is as likely to be almost as lethal as running a large manufacturing company based on the profit motive.

At Love Canal, the Hooker Chemical Company, a subsidiary of Occidental, dumped dioxin, one of the most toxic compounds known, into a hole in the ground. The curve on the map where the ooze got into people's basements and wells is the identical curve as the curve on the map where the elevated rates of fatal illnesses were later reported. The company even covered the dump with backfill and then sold the land it to the City of Niagara Falls school district so they could build a school on top of it.

Did the stockholder premeditate the killing of John Doe? Of course not. Just as the drunk driver didn't premeditate running over John Doe. The situation is just one that everyone knows leads to the statistical outcome.

Here's an interesting statistic. When the Chrysler building was constructed in New York, the managers told the workers that they had several years to get the job done, and were somewhat tolerant of delays due to safety reasons. Nevertheless, one worker was killed on the job. When the Empire State Building was constructed, the management kept nagging the workers to work faster and faster, and insisted that the building had to be constructed in 18 months. As a result, 14 workers were killed on the job. (Another rush project, 31 workers were killed during the construction of the Alaska Pipeline.)

The profit motive has to be abolished. It's a form of drunkenness. It kills indirectly, not by premeditation, but with "statistics."

 

[Al68]

I'm taking the position that certain outcomes cannot arise, so to ask what is the penalty is like asking what should be the penalty for cheating at the horse races by going back to yesterday in a time machine after you find out the name of the winner. There is no penalty because the action cannot occur.

This makes no sense to me. If there is no penalty, what would stop people from operating a business for profit, hiring others, working under mutually agreed terms, etc?

Socialists don't want to stop people from selling their labor. They want a system in which, as soon as someone begins to work at any job of their choice, they immediately acquire the rights of full partnership in the management.

They don't "acquire" those rights in capitalism because they have those rights to start with. Those are the rights they are choosing to sell in an employment agreement. Those are the rights that socialists want to deny are owned by each individual worker. Ownership means the right to sell or trade, not just the right to use for himself. Is it not obvious that insisting that a worker keep his "management control" of his labor is the same as denying his right to sell it (ownership)?

Socialists want the workplace to be a republic.

And I object to that because an individual's labor doesn't rightfully belong to others in society, it belongs to that individual.

Note what conclusion follows from the socialist axiom that a profit-based system means that the workers receive only a fraction of the equivalent of their labor. Even if you don't accept that axiom, what does it logically imply? Under capitalism the worker searching for a job may get paid 21 percent with the xxx corporation, or 23 percent with the yyy corporation, or 17 percent with the zzz corporation. Because the worker gets less than 100 percent no matter where he or she goes, there is something called a negotiation process. However, if the system were different such that the worker receives 100 percent no matter where he or chooses to go, then there would be no negotiation, not because it forbidden to negotiate, but because an there would be no fraction to be negotiated.

Even if I accepted that axiom, the actual material wealth that the 100 percent applies to in socialism is not the same material wealth the fraction applies to in capitalism. As I mentioned before, there is a gap between the value of labor to an employer as a result of a capitalist employment agreement and the value of that labor to the worker in the absence of such an agreement. The negotiation takes place within that gap so that both parties benefit. The employer pays less than the value of the labor resulting from the employment, and pays more than the value of the labor in the absence of that employment agreement. You just can't say that 100 percent is better than 23 percent, ignoring the fact that the total wealth that the 100 percent applies to is less than 23 percent of the wealth that the 23 percent applies to. Far, far less, going by past experience with socialism worldwide.

This is all besides the fact that the specific numbers you mention aren't even close to realistic.

But I can't visualize the kind of event that you're talking about, in which someone did something purely economic and it isn't tolerated.

So operating a business for profit would be tolerated? All mutually voluntary employment would be tolerated?

Your newest phasing says "the person(s) who's labor creates the 'tool' being sold." People should have the right to create, use or sell any tool they wish.

Really? That was in response to your statement that certain tools would not be "up for sale"?

Of course, if, in the process of creating that tool, we were to dump cancer-causing pollution into a river that some other people drink from or fish in, then we should get whatever the penalty is for attempted murder. However, you're not prepared to admit that such anti-social consequences are ordinary parts of capitalism.

By that standard, murder is an ordinary part of capitalism and socialism.

You also didn't comprehend my explanation that capitalism cannot exist in an environment in which there is no legal provision to enforce contracts...

I comprehended just fine, and agreed that that legal institutions aided capitalism in that regard. But the point I was making is that in capitalism, the contents of the agreements are determined solely by the parties to the contract, not by a third party.

And when government does get involved, such as enforcing a contract, prosecuting theft or fraud, etc, it does so as an agent of a party to the contract, not as a third party.

 

[mheslep]

The Ford Pinto question has been addressed, here:
http://www.youtube.com/watch?v=iPqdRqacpFk&NR=1"

part 1/2
http://www.youtube.com/watch?v=ev_Uph_TLLo&NR=1

 

[mikelepore]

This makes no sense to me. If there is no penalty, what would stop people from operating a business for profit, hiring others, working under mutually agreed terms, etc?

I can only answer that regarding specific activities.

As for operating a business:

If you mean trade arrangements that anyone can make without having the fortunate access to certain resources (I'll give you dancing lessons if you'll paint my house, I'll give you some garden cucumbers if you'll mow my grass) then no one should have any desire to stop such activities. They are entirely positive.

If you mean business that requires the fortunate access to certain resources, then private ownership of the business my be ensured by not allocating the resources. For example, the building of the Central Pacific Railroad required that someone would own land that was so large that it went from Utah to California. If there had not been such a form of private land ownership, then the railroad could not have been owned by a private company.

As for hiring others:

If you mean one person hiring one person (you hire me to fix your snowblower, or to install your kitchen cabinets), I agree with the same laissez faire principle that you do. It's no one else's concern, it's a private matter among the parties to the agreement, and the fact that it benefits both parties makes it a fully positive tradition.

But the main focus should be on work organizations consisting of many people. Marx, who was one of the first writers to use the word "capitalism", and gave the word its common meaning, the meaning that you don't agree with, wrote:

"Capitalist production only then really begins, as we have already seen, when each individual capitalist employs simultaneously a comparatively large number of labourers; when consequently the labour-process is carried on on an extensive scale and yields,
relatively, large quantities of products. A greater number of labourers working together, at the same time, in one place (or, if you will, in the same field of labour), in order to produce the same sort of commodity under the mastership of one capitalist, constitutes, both historically and logically, the starting-point of capitalist production." ['Capital', chapter 13]

In mechanized mass production carried out by hundreds or thousands of people working side-by-side, the efficiency comes from the scale. An individual cannot do it. You cannot take the simple tools that you have in your garage and make a line of automobiles. Even if you could do it, you would have to give them such a high price that no one else would buy them, and if you needed workers you would have to pay them such low wages that no sane person would take the job. There doesn't have to be any other aspect in a socialist world that will prevent a return to capitalism. The social institution would use automated mass production. In a socialist environment, as a would-be capitalist you would be limited to making clay pots or wooden picnic tables, or some other product that doesn't require a large building full of machines and operated by a large number of people, and even then, the robotic automation of the socially owned industry could do it with so much more efficiently that any attempt to compete with it would be a waste of your own time. Socialism wouldn't need any "penalty" to inhibit the individual who is hammering away out in the backyard. There is no challenge to the social system in those small activities.

 

[Al68]

If you mean business that requires the fortunate access to certain resources, then private ownership of the business my be ensured by not allocating the resources.

Private businesses in the U.S. (in general) aren't "allocated" resources now, yet they exist now. What will prevent people from doing exactly what they do now: build, work at, own, and operate businesses for profit using voluntary agreements?

Here's an example: Someone decides to employ workers, build a factory, make a product, and sell the product to others. Workers decide to accept the employment, and others decide to buy the product. In the absence of force used against them, they could do exactly that. What would stop them?

Simply saying such things wouldn't happen doesn't answer anything. This issue is about what actions are being advocated, not just about a desired resulting situation.

If you mean one person hiring one person (you hire me to fix your snowblower, or to install your kitchen cabinets), I agree with the same laissez faire principle that you do. It's no one else's concern, it's a private matter among the parties to the agreement, and the fact that it benefits both parties makes it a fully positive tradition.

But you reject that same exact principle in other examples.

Marx, who was one of the first writers to use the word "capitalism", and gave the word its common meaning, the meaning that you don't agree with, wrote:

"Capitalist production only then really begins, as we have already seen, when each individual capitalist employs simultaneously a comparatively large number of labourers; when consequently the labour-process is carried on on an extensive scale and yields,
relatively, large quantities of products. A greater number of labourers working together, at the same time, in one place (or, if you will, in the same field of labour), in order to produce the same sort of commodity under the mastership of one capitalist, constitutes, both historically and logically, the starting-point of capitalist production." ['Capital', chapter 13]

This is not the definition I disagreed with. Marx's example here (assuming Marx's definition of "capitalist" to mean "employer" and "mastership" to mean "supervision of work"), is a perfect example of capitalism by my definition. The situation described is a voluntary agreement solely between the parties involved, with no mention of any third party involvement, such as a government, or any "economic system" being imposed.

But that quote is far from representative of Marx's claims about capitalism, as I'm sure you know.

Socialism wouldn't need any "penalty" to inhibit the individual who is hammering away out in the backyard. There is no challenge to the social system in those small activities.

Why are larger activities such a "challenge"? If socialism would be so great for workers, why the desperate need to prevent private employers from offering them an alternative employment agreement? Why the need for an employment "monopoly"?

Why are voluntary (private) employment agreements between people such a threat to socialism?

Why not just establish a socialist society, use whatever land is needed for that purpose, invite whoever wants to join, and leave everyone else alone? Why the need to control those who don't choose socialism voluntarily?

This is an important aspect of libertarianism: People are perfectly free to organize into a socialist society, and make any rules they want, as long as they don't use force against others. Libertarianism doesn't prohibit socialism, it recognizes the right of each individual to own their own labor, which includes the right to use it in a socialist organization.

 

[vertices]

The Ford Pinto question has been addressed, here:
http://www.youtube.com/watch?v=iPqdRqacpFk&NR=1"

part 1/2
http://www.youtube.com/watch?v=ev_Uph_TLLo&NR=1

Just watched the video - thanks for posting.

It seems to me that there is a huge problem with MF's "principle" of attaching a monetary value to a human life because in a capitalist system, this will always be undervalued.

Businesses have an incentive to hide such risks from consumers. Ford never told people they were skimping out on proper reinforcements for their Pinto fuel tanks, and thus consumers were not able to make an informed decision about their purchase.

This illustrates just how important government regulations are in free markets. I do find it rather odd that MF, in the later part of the video, made it a point to implicitly emphasise this - and there was me thinking he's a free market fundamentalist

 

[vertices]

Marx's example here (assuming Marx's definition of "capitalist" to mean "employer" and "mastership" to mean "supervision of work"), is a perfect example of capitalism by my definition. The situation described is a voluntary agreement solely between the parties involved, with no mention of any third party involvement, such as a government, or any "economic system" being imposed.

There is a fundamental problem with the bit in bold.

In a free market (and more so in a idealistic "true" free market), others are involved in and affected by such 'agreements', even if they are not party to them. mheslep posted an interesting video (which I commented on in my previous post) in which Milton Freidman explains the "principle" of attaching a monetary value to a human life: this is an example of the 'economic costs' and systemic 'risks' that are seriously underpriced, when, and if, they are factored into these agreements. This is what makes free markets so very inefficient (and the taxpayers ultimately end socialising these inefficiencies - the most recent example of this being the bank bailouts in the UK and US).

 

[AlexES16]

Well the best economic system will be a mix of capitlaism and socialism. Socialism for the big indsutries such as a energy and for human development industries such as a education and health. Big corporations only care about profits not the human. This capitalist care even less about enviroment. The problem is that everyone associates socialism with USSR, Cuba, China, North Korea and they are examples of what can go wrong with doing things in the name of socialism

 

[AlexES16]

The Whole thing of self interest some times can be good but at the ends makes a minimalistic view of humans, which personally i feel it makes you less human.

 

[AlexES16]

So much talk about the "free market" that is just another ideal, so it fallsl in dellusion just like Commuism fall in the ideal human buda/christ dude.

 

[Vanadium 50]

This capitalist care even less about enviroment.

Ever hear about places like Lake Karachay, Dzerzhinsk or Chernobyl?

The problem is that everyone associates socialism with USSR, Cuba, China, North Korea and they are examples of what can go wrong with doing things in the name of socialism

Don't forget Cambodia.

Funny how everyone who advocates this uses the argument, "OK, it's failed every time we've tried this, it's led to more misery and suffering - but this time, things will be different." If you do the same thing, why expect different results?

 

[eaglezfan187]

Ever hear about places like Lake Karachay, Dzerzhinsk or Chernobyl?



Don't forget Cambodia.

Funny how everyone who advocates this uses the argument, "OK, it's failed every time we've tried this, it's led to more misery and suffering - but this time, things will be different." If you do the same thing, why expect different results?

Fair enough, but were those failed "socialist" states really socialist at all? Do you really think that the leaders of North Korea, Cuba, Russia, and China really wanted a socialist state, or did they disguise it as a socialist state in the attempt to give more power to the state, and as a result those leaders had more power. Last time I checked communism is about equality and the greater good yet none of those failed communist states had any equality at all. In those examples, communism didn't fail, it was the leaders that failed. These states used the name of communism to form totalitarian militant governments which is just as far from democracy as it is communism.

 

[CRGreathouse]

This is what makes free markets so very inefficient (and the taxpayers ultimately end socialising these inefficiencies - the most recent example of this being the bank bailouts in the UK and US).

"An example of the inefficiency of the free market is [example of something anti-free market]."

 

[mheslep]

This capitalist care even less about environment.

Ever hear about places like Lake Karachay, Dzerzhinsk or Chernobyl?

And the http://en.wikipedia.org/wiki/Aral_Sea" , what's left of it.

 

[mheslep]

Just watched the video - thanks for posting.

It seems to me that there is a huge problem with MF's "principle" of attaching a monetary value to a human life because in a capitalist system, this will always be undervalued.

I think you missed his point. By using the term 'undervalued' above, you imply you have some way of knowing the value of a human life. What is it?

 

[vertices]

"An example of the inefficiency of the free market is [example of something anti-free market]."

People pedal the argument that if something is inherently wrong within a free market economy, it has to be because the market isn't truly free. It's like this perfect, flawless, magical system that can never go wrong.

But as I explained in my last post, risks such as environmental damage and other such "externalities" are seriously underpriced (in Milton Friedman's economic terms, not in lovey-dovey-hippy terms) - this risk has to be absorbed somewhere (unless ofcourse you believe in anarchy, because that's exactly what unfettered free markets would necessarily lead to - untold destruction)

 

[vertices]

I think you missed his point. By using the term 'undervalued' above, you imply you have some way of knowing the value of a human life. What is it?

I don't, Milton Friedman does.

 

[mheslep]

But as I explained in my last post, risks such as environmental damage and other such "externalities" are seriously underpriced

Sorry you didn't explain at all. You just asserted this was so.

 

[vertices]

Sorry you didn't explain at all. You just asserted this was so.

It is undervalued, because it is not taken into consideration at all.

 

[mheslep]

I don't, Milton Friedman does.

He makes no such claim in the video. How can you know that 'capitalism will always undervalue' human life, as you posted above, if you don't know the value?

 

[vertices]

He makes no such claim in the video. How can you know that 'capitalism will always undervalue' human life, as you posted above, if you don't know the value?

See my last post.

It's to do with the fact that transactions do not take into account the effect on others who are not party to the transaction.

 

[mheslep]

It is undervalued, because it is not taken into consideration at all.

<shrug>Ok, we're living in two different worlds; no reconciliation possible in this argument.

 

[vertices]

<shrug>Ok, we're living in two different worlds; no reconciliation possible in this argument.

see my last post.

 

[vertices]

He makes no such claim in the video.

he explicitly does. Fast forward to 4:25.

 

[mheslep]

See my last post.

It's to do with the fact that transactions do not take into account the effect on others who are not party to the transaction.

That's another issue (externalities - pollution, etc). For the moment we're talking about parties in the transaction: Ford and the car buyer. For your #319 to be absolutely true, Ford wouldn't have no concern whether or not is product killed every single one of its customers.

 

[vertices]

That's another issue (externalities - pollution, etc). For the moment we're talking about parties in the transaction: Ford and the car buyer. For your #319 to be absolutely true, Ford wouldn't have no concern whether or not is product killed every single one of its customers.

But those are the rules of a free market capitalist system. Ford has an incentive to underprice safety risks, etc (or atleast it has no incentive to price such risks into decisions)

 

[mheslep]

Here's the transcript, as I take it down (hopefully?) correctly from ~3:55 to 4:35 or so, leaving out the audience:

You know that when you buy a car, you know that your chance of being killed in a Pinto is greater than being killed in a Mac Truck.
[...]
Everyone of us separately in this room, could at a cost reduce his risk of dying tomorrow. You don't have to walk across the street.
[...]
The question here is is he willing to pay for it?
[...]
If he [questioner in the audience] wants to raise a question of principle, the principle he should raise is whether Ford wasn't required to attach to this car the statement 'We have made this car $13 cheaper and therefore it is 1% (whatever it is) more risk for you to buy.'

Edit: I don't see anywhere here, or elsewhere in those videos, where Friedman assigns a value to human life.

 

[mheslep]

[...](or at least it has no incentive to price such risks into decisions)

Sure they do. Ford does not want to wipe out its customer base, nor get a reputation as a manufacturer of particularly unsafe products. If you agree that is the case, do you still contend the following is absolutely true:

It is undervalued, because it [value of human life] is not taken into consideration at all.

 

[vertices]

Here's the transcript, as I take it down (hopefully?) correctly from ~3:55 to 4:35 or so, leaving out the audience:

Edit: I don't see anywhere here, or elsewhere in those videos, where Friedman assigns a value to human life.

okay consider:

~2.00: "suppose ford has spent $200million per life saved, should Ford still have spent that 200million dollars?"

I have no problem with him putting forward the idea that a value should be attached to a human life, but in a free market system, it necessarily follows that such risks will be unpriced.

Sure they do. Ford does not want to wipe out its customer base, nor get a reputation as a manufacturer of particularly unsafe products. If you agree that is the case, do you still contend the following is absolutely true:

Yes, but why was there a scandal in the first place? Ford never made it clear to their customers that their Pinto's have fuel tanks that can be easily damaged; their reputation would have remained intact if it wasn't for that leaked memo.

Businesses will always try big up their "Social Responsibility" credentials, whilst trying to find ways to circumvent government regulations to stop them underpricing risk.

 

[mheslep]

okay consider:

~2.00: "suppose ford has spent $200million per life saved, should Ford still have spent that 200million dollars?"

I have no problem with him putting forward the idea that a value should be attached to a human life,

That's a hypothetical ('suppose'), provided to counter the questioners $200,000 thesis. No where in the video does Friedman claim a value on human life, nor would I expect him to do so as it would be meaningless.

but in a free market system, it necessarily follows that such risks will be unpriced.

Again the assertion. I've provided an argument (reputation) as to why this is not so. Arguing at the margin how safety is priced is a reasonable discussion, arguing that it is unpriced is not.

Yes, but why was there a scandal in the first place? Ford never made it clear to their customers that their Pinto's have fuel tanks that can be easily damaged; their reputation would have remained intact if it wasn't for that leaked memo.

How's that? The memo, revealed or not, doesn't change the publicly available information on the number of fatal crashes, which people can compare to other vehicles. When I referred to reputation above, I meant the safety reputation the vendor gets in public from the actual safety performance of its product, not what calculations the business may have done internally. Are all the products poisoning/exploding/breaking? Word gets around, and the reputation once lost, is very difficult to repair, hence the reason businesses value it.

Businesses will always try big up their "Social Responsibility" credentials, whilst trying to find ways to circumvent government regulations to stop them underpricing risk.

Ok, let me play too. Businesses machine gun people in the streets, and like it. Businesses cause tornadoes, hurricanes and dry spells, all while twisting their mustaches. Businesses are in league with aliens to invade and subdue the world, so that they'll be spared.