Friday, March 16, 2012

Competition and Cooperation: the right balance defeats alienation

Vacations are over!  Let´s go back to work.  We are in 2012, the International Year of Cooperatives.  Times are quickly changing, and the population of the welfare states of Western Europe are losing positions against the bureaucrats of the European Central Bank and politicians more interested to ingratiating themselves with the owners of financial capital than with their constituency (when they don´t come directly from the ranks of that K.A.O.S-like organization called Goldman Sachs).  In American shores, things are not faring better, and some workers are thinking about adopting our solution to their plight: namely, becoming a Coop.

Still, I have not seen many valid interpretations of the credit bubble other than the recognition of its existence.  In fact, many voices from the establishment are already claiming that the crisis is over.  For a sober analysis of the main culprit of the current capitalist crisis in scientific terms, I recommend reading the following articles by Steve Keen:
Now, lets go back to our slow crawl towards a theory of Economic Democracy.  This week I will revisit a review of books by Richard Westra, where he analyze different kinds of institutional configurations for post-capitalist societies.

The first model is proposed by Ladislav Rusmich and Stepeh M. Sachs on their book "Lessons From the Failure of the Communist Economic System" (2003).  They propose to operationalize "Adam Smith´s idea of market functioning based on optimizing the division of labor at both intra-firm and society-wide levels"(Westra, p. 356).  They postulate that there is a lack of rationality in the production relationships inside each firm, the same rationality brought by the market when those firms interact with each other.  Their solution? Bring the market into companies, making them open systems (pp. 188-190).

My first impression is that is not compatible with a woc-msoc model.  On Economic Democracy,  companies are a black box that compete in the market to offer the best possible product or service.  Inside each company, workers need to cooperate in a democratic environment, not to compete with each other, or to be continuously menaced by the possibility of their replacement.  It is easy to understand the allure of the market: since it promotes innovation through competition, why not to introduce it inside the productive units? Because it would destroy their functionality as units, just as a biological cell, or an individual human being, are both contained into membranes that separates them from the outside world, and that allows them to function. Rusmick and Sachs are right on criticizing the up-down decision-making process of the modern capitalist firm.  But they are wrong when they refer to it as "monopolistic", when it is in fact "non-democratic".  Democratic decision-making can be seen as a competition of ideas, but finally consensus about policies is reached, and then the productive unit act as one indivisible force. Rusmich and Sachs are afraid of what they call "monopolism", and this fear makes them wish for a highly competitive individualistic society (p. 181).  I fear for dictatorship, and the destruction of communal ties is one powerful way of being subjected to one.

The second model presented in the review is Schweickart´s ED, of which I wrote already its main points in this blog, and will continue to discuss them in the future.  For more information about it, please refer to the few posts before this one.

The third model to be considered is called "Socioeconomic Democracy". Its author, Robley George, presents a series of measures that are not based on the free market to determinate personal income.  The first measure is the Universal Guaranteed Income (UGI), to be determined democratically.  The possible problems of Basic Income models will be discussed in future posts, since I regularly find this kind of proposal on many progressive economic models.  However, I doubt that BI will have the intended effect on poverty reduction once inflation and other readjustments take their toll.

The second measure is called Maximum Allowable Personal Wealth (MAW), which as can be guessed from its name, means that the maximum amount of wealth for every person is also democratically determined.  This measure is counter-productive for an economy based on free-market competition since it stifles innovation based on rewards for individuals, and a similar effect can be obtained with progressive taxes over personal income, existent today and in use in many social-democracies.  Another option utilized in many cooperatives is the democratic determination (by its members) of the ratio of wages between the management of a company and the lowest position in the same.  This policy, if done right, encourages intra-firm competition without affecting cooperation, and recognizes differences in the interest and effort each worker put into the coop.

We need to strike the right balance between cooperation and competition, the point were people can pour their hearts into something not only because of the possibility of future economic reward, but because they like the activity on which they engage every day.  There can be rich people under marksoc, if they provide society with valued services and products, derived from their own work.  Every big project needs the work of many people in cooperation, and even brilliant artists need help from others to bring their work from their heads into the world. 

When the word meritocracy was coined (in 1958), it was intended as a satire about competition in modern society; however, we could take "merit" as some other than general knowledge or academic degrees.  Imagine a world where your place in society depends on the projects that you can generate with your peers, where everybody can be an entrepreneur instead of a little pawn in a machine that came from the sky.  In this world, people will more or less be invested in things that interest them, and if those things are marketable in some form or another, they will be the final product of amazing companies fueled by the work of passionate individuals.  "Merit" then will take his meaning: making the best possible with the things you are good at.  And I don´t see nothing wrong with that.

GEORGE, Robley E. (2002): Socioeconomic Democracy: An Advanced Socioeconomic System, Wesport, CT: Praeger Paperback, 328 pp.

RUSMICH, Ladislav & SACHS, Stephen M. (2003): Lessons from the Failure of the Communist Economic System, Lanham, MD: Lexington Books, 380 pp.

WESTRA, Richard (2008): "Economic Life Beyond Capital" (review of books), Review of Radical Political Economics, 40, pp. 354-363.

For the accumulated Bibliography and the Glossary please click here

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