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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Friday, September 22, 2006

Weekly Link Digest, Part II

1. The liberal establishment's embarrassing itself, falling all over each other to denounce Hugo Chavez's "anti-American rhetoric." If he criticized baseball or jazz, I must have mentioned it. As far as I could tell, all he criticized was that beady-eyed little turd, Dumb W. Ass. Charlie Rangel and CNN's Curmudgeonly Populist (TM) Frank Cafferty both repeated, in almost identical terms, that only Americans were entitled to an opinion on George Bush, and that it crossed some kind of line for Hugo Chavez to come here and insult "our" government and "our" leaders. I wonder if Rangel and Cafferty think only Germans were entitled to an opinion on Hitler?

Nancy Pelosi, showing just how marginal the differences are within the bipartisan foreign policy establishment, referred to Chavez as a "simple thug." Chavez has certainly earned that epithet at times. But when has the U.S. foreign policy establishment ever objected to thuggishness per se? Foreign leaders only get targeted as "thugs" in the official propaganda mill when they stop taking orders from Washington. I suspect the real objection to Chavez is that he isn't taking orders from the native landed oligarchy and the American oil companies, like the thugs Otto Reich and Roger Noriega tried to replace him with.

2. Progressive Review's Sam Smith brilliantly captures the sense of entitlement of our global masters, aka the purveyors of "market democracy":

If you deconstruct the language of those who Bush would have us believe form the axis of evil, one finds not so much megalomania as insecurity, hurt feelings, and bitterness over their global inferiority....

At the core, the language and behavior of a Bush or Blair is based on notions of purportedly deserved power and how the less powerful are supposed to behave towards their betters.

Anyone who doubts this should consider Thomas Barnett's discussion of "connectivity," and the white man's burden of imposing it on the world. Interestingly, his map of the "unconnected" world coincides almost exactly with Emmanuel Goldstein's description of the equatorial quadrangle that Oceania, Eurasia and Eastasia fought over.

3. Via Progressive Review. Ahmadinejab at the CFR.

Mr. Ahmadinejad's habit of answering every question about Iranian policy with a question about American policy was clearly wearing on some of the members....

And as he left, it was with a jab to his hosts. "At the beginning of the session, you said you were an independent group," he said. "But almost everything that I was asked came from a government position."

4. Atrios, of all people, bashes technocratic centrist liberalism. He starts with this godawful quote from Brad DeLong, who apparently has ikons of J.K. Galbraith and Bob McNamara in his home prayer chapel:

I am, as I said above, a reality-based center-left technocrat. I am pragmatically interested in government policies that work: that are good for America and for the world. My natural home is in the bipartisan center, arguing with center-right reality-based technocrats about whether it is center-left or center-right policies that have the best odds of moving us toward goals that we all share--world peace, world prosperity, equality of opportunity, safety nets, long and happy lifespans, rapid scientific and technological progress, and personal safety. The aim of governance, I think, is to achieve a rough consensus among the reality-based technocrats and then to frame the issues in a way that attracts the ideologues on one (or, ideally, both) wings in order to create an effective governing coalition.

Here's Atrios's take on the issue:

This, in a nutshell, is the worldview of the Sensible Liberal. It's the belief that there are Sensible Policies concocted by Wise Men (and women), preferably ones with advanced degrees, which are Right and True and Good. Wise Men may disagree a bit about the means, and we should throw a few conferences to hash these differences out. Politics and ideologues who do not share the ideology of the Wise Men, who of course are not really tainted by ideology, get in the way of enacting policies which are Sensible.

It's a dangerously wrong view of the world.

My own reaction, when seeing the "centrist reality-based technocrats" on the talking head shows, is to wonder why there's never a crazed gunman around when you really need him. There's some good in the libertarians and decentralists of the right- and left-wing fringes. I sympathize with both the home-schoolers and gun-rights people, and the people involved in LETS systems and organic farming. But the corporate suits dominating the center establishments of both parties are nothing but the spawn of Satan.

5. Matt Taibbi is similarly unkind to the Democratic establishment:

The unspoken subtext of this increasingly bitter debate between the Democratic Party establishment and the supporters of people like Ned Lamont and Hillary Clinton's antiwar challenger, Jonathan Tasini, is a referendum ordinary people have unexpectedly decided to hold on the kingmaker's role of the holy trinity of the American political establishment -- big business, the major political parties and the commercial media....

It's been an essentially oligarchic system of government, where all the important decision-makers have been institutions, with any attempts by ordinary people to circumvent the system coldly repressed.

6. But it's not like the Republicans are any better. Via Progressive Review, a Zogby poll finds that Republicans, in far greater numbers than Democrats, would support random roadblocks, searches of homes, purses, and vehicles (all warrantless), and warrantless domestic wiretaps and random opening of mail. Republican tolerance of such measures ranges from 50% to 66%, compared to 20-45% for Democrats. I understand that if Janet Reno were in power, and the terrorism in the news were carried out by right-wing "militias," the numbers would probably be considerably different. But still... It seems most of the Freepers who used to sport "I love my country, but fear my government" bumper stickers have not just ceased to fear the government, but have gone into full-blown fuhrer-worship. Anyone who still thinks the Republicans are the party of limited government and strict constitutionalism is an idiot.

7. Via Presto's Ramblings and Wendy McElroy, Crispin Sartwell has a great new archive of Josiah Warren material.

8. Via Economist's View. The New York Times gives us the Big Picture on factor payments:

The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity - the amount that an average worker produces in an hour and the basic wellspring of a nation's living standards - has risen steadily over the same period. As a result, wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's. UBS, the investment bank, recently described the current period as "the golden era of profitability."

I'd guess that housing payments are also at their highest share in a long time.

9. Fred Foldvary at least partially explains what's happened, in terms of that last "factor":

Economics too has its invisible dark matter. There are phenomena in the economy which cannot be explained by the visible spectrum of transactions. For example, from 1975 to 2005, the gross domestic product (GDP) of the USA grew by more than three percent per year, after adjusting for inflation. Yet the median family income (where half are higher and half lower) only grew at a .8 percent rate. Where to did the rest of the growth go?...

....It turns out that the dark matter that soaks up the surplus and much of the gain from economic growth is the economic rent of land.

10. Via Dave Taylor on Distributism list. Kennety J. Arrow. "Why People Go Hungry."

....most people are convinced that the basic cause of a famine is not poverty but a failure of food supply relative to the population. A localized famine is commonly thought of as resulting from a local failure of crops that is not mitigated by importing food.... Countries where hunger is widespread are frequently blamed, moreover, for allowing excessive population growth....

...[Amartya Sen] argues that famine results from the working of the economic system in allocating the ability of people to acquire goods. Famine cannot be explained by a simple relation between food supply and population....

People will starve, then, when their entitlement is not sufficient to buy the food necessary to keep them alive. The food available to them, in short, is a question of income distribution and, more fundamentally, of their ability to provide services that others in the economy are willing to pay for.

11. Via Meir Israelowitz, a Newsweek review of a new by Joseph Stiglitz.

In his new book, "Making Globalization Work," out this week, Stiglitz offers a searing critique of the conventional wisdom. While he is a proponent of free markets, he attacks the assumption that globalization is in fact operating according to Adam Smith's principles....

Stiglitz takes particular aim at the hypocrisy of rich countries professing to want to help emerging nations. He says, for example, that the Doha "Development" Round, which is now at a standstill, always had less to do with development than with rich countries' gaining access to Third World markets and protection for their companies' patents.

12. Dmytri Kleiner writes an article critical of the "creative commons" concept from a P2P standpoint, because it enables producer control of content at the expense of consumers: "WOS4: The Creative Anti-Commons and the Poverty of Networks."

13. Via Progressive Review. The FAA, on the heels of a Lexington crash caused by understaffing, wants to slash air traffic controller staffing by another ten percent:

...one [change] in particular may have safety implications, controllers and some outside experts said. That is the ending of contractual protection against being kept working on a radar screen controlling traffic for more than two hours without a break.

14. Via Progressive Review. This is not your father's E. coli. It's another Frankenstein's monster unleashed by factory farming.

E. coli is abundant in the digestive systems of healthy cattle and humans, and if your potato salad happened to be carrying the average E. coli, the acid in your gut is usually enough to kill it.

But the villain in this outbreak, E. coli O157:H7, is far scarier....

Where does this particularly virulent strain come from? It's not found in the intestinal tracts of cattle raised on their natural diet of grass, hay and other fibrous forage. No, O157 thrives in a new... biological niche: the unnaturally acidic stomachs of beef and dairy cattle fed on grain, the typical ration on most industrial farms. It's the infected manure from these grain-fed cattle that contaminates the groundwater and spreads the bacteria to produce, like spinach, growing on neighboring farms....

....When cows were switched from a grain diet to hay for only
five days, O157 declined 1,000-fold.

Thursday, September 21, 2006

E.F. Schumacher vs. Liberal Technocrats on Third World Development

Techocratic liberals, in their analysis of American economic history, have tended to assume that large enterprises possess inherent efficiencies, and that such "economies of scale" explain their growth. Interestingly, their assumptions are mirrored even by some Austrians, who seem to think that capital-intensiveness (or "roundabout" production methods) involve unlimited, or almost unlimited efficiencies.

E. F. Schumacher effectively demolished similar assumptions by technocratic liberals in the context of Third World development. He cited the argument of Kaldor and others that

The amount of available capital is given. Now, you may concentrate it on a small number of highly capitalised workplaces, or you may spread it thinly over a large number of cheap workplaces. If you do the latter, you obtain less total output than if you do the former.

He went on to quote directly Kaldor's assertion that "research has shown that the most modern machinery produces much more output per unit of capital invested than less sophisticated machinery which employs more people." And since the amount of capital is assumed to be fixed, this quantity sets "the limits on wages employment in any country at any given time." Kaldor's argument continues, at length:

If we can employ only a limited number of people in wage labour, then let us employ them in the most productive way, so that they make the biggest possible contribution to the national output, because that will also give the quickest rate of economic growth. You should not go deliberately out of your way to reduce productivity in order to reduce the amount of capital per worker. This seems to me nonsense because you may find that by increasing capital per worker tenfold you increase the output per worker twentyfold. There is no question from every point of view of the superiority of the latest and more capitalistic technologies. [Industrialisation in Developing Countries, edited by Ronald Robinson (Cambridge University Overseas Study Committee, Cambridge, 1965), quoted in Small is Beautiful, p. 182]

Notice, right off, Kaldor's implicit assumption that capital is to be invested in "wage labor," rather than (say) making self-employment or small-scale cooperative production more efficient. And notice his assumption that "we" are employing "them." Needless to say, even the most "liberal" of technocratic liberals views the recent centuries' history of primitive accumulation and top-down industrialization from the standpoint of the victor. The standpoint of "liberal" development economists is essentially that of the old colonial powers: Third World countries are seen mainly as sources of raw materials and other export goods, rather than in terms of domestic production for the internal market. [Schumacher, Small is Beautiful, p. 216]

Schumacher administered a well-deserved intellectual beating to Kaldor, pointing out that the quantity of available capital was not in fact static, and that bringing unemployed labor into productive use, even in labor-intensive forms of production, would increase the total pool of income from which investment capital might be saved.

The output of an idle man is nil, whereas the output of even a poorly equipped man can be a positive contribution, and this contribution can be to "capital" as well as to "wages goods." [Ibid., pp. 182-83]

The question is whether investment capital is to be obtained through the traditional method of "primitive accumulation"--i.e., robbing the laboring classes of their small property and squeezing them dry--or by enabling labor to keep its full output, and cooperatively pool its own surplus income as an investment fund to increase its standard of living over time.

Schumacher also argued that the ratio of output to capital investment was irrelevant in itself, unless one addressed the most effective ratio of capital to labor in the context of large quantities of unused labor. The ratio of output to labor might be maximized with production methods that resulted in a less than optimum ratio of output to capital investment. The goal is not the maximum return on capital investment, but to enable labor to produce the maximum possible output to support itself. [Ibid., pp. 182-84] In fact, the goal of capital investment, from the capitalist's point of view, it not necessarily to increase the return per unit of capital, but to substitute capital for labor power even when the total output is not thereby increased. The substitution of capital-intensive for labor intensive forms of production is often aimed, not at any abstract criterion of "efficiency," but at reducing the employer's dependence on wage labor. [Ibid, p. 183]

It also matters, I should add, where the "output" goes. It makes little difference to the dispossessed peasant how "efficient" industry is, if he is unemployed and therefore unable to buy its output under any circumstances. On the other hand, if he is employed, even in more labor-intensive (and thus less "productive" by Kaldor's standard) industry, he will be able to buy a larger portion (infinitely larger, compared to zero) of the resulting output. The products of intermediate technology more than likely are not intended for the export market, but for local consumption by those who could not afford the output of "modern" industry in any case.

And even by the standards of Galbraithian technocracy, it turns out that centralized, capital-intensive industry is by no means as "productive" as the technocrats think. When reduced distribution costs are taken into consideration, and transportation subsidies do not artificially increase the division of labor past the point of diminishing returns, we find that small-scale production for local markets, using labor-intensive techniques or multi-purpose machinery, may actually be cheaper per unit of output. Schumacher pointed out that

a considerable number of design studies and costings, made for specific products in specific districts, have universally demonstrated that the products of an intelligently chosen intermediate technology could actually be cheaper than those of modern factories in the nearest big city. [Ibid., pp. 185-86]

Another, related argument Schumacher demolished is that centralized, large-scale industry is necessary to make optimal use of a limited supply of entrepreneurial skill--supposedly quite scarce in the Third World. Like capital, entrepreneurial skill should be concentrated in a few blockbuster projects. Schumacher responded, quite sensibly, that no such thing as generic "entrepreneurial ability" existed outside the context of the specific form of technology being used.

Men quite incapable of acting as entrepreneurs on the level of modern technology may nonetheless be fully capable of making a success of a small-scale enterprise set up on the basis of intermediate technology.... [Ibid., p. 185]

According to Schumacher, native development officials in the Third World mirror the assumptions of Western technocrats. The manager of an African textile mill, for example, explained that it was highly automated because

African labour, unused to industrial work, would make mistakes, whereas automated machinery does not make mistakes. The quality standards demanded today... are such that my product must be perfect to be able to find a market." [Ibid., p. 194]

On the other hand, the capital-intensiveness of such production is an effective entry barrier such that production is dominated by a few blockbuster projects, likely funded with foreign aid money or World Bank loans. And the relatively small number of workers employed, concentrated in urban areas, means that the vast majority of the population will lack the purchasing power needed to buy the factory's output. Hence the manager's assumption, which he never stops for a minute to examine, that his "perfect" product is being produced for the demanding standards of the export market, or for a small urban luxury market of the comprador bourgeoisie. Were intermediate-scale production technology used, with local labor employed in much larger quantities, the more widely distributed purchasing power would likely result in a ready local market for goods produced to somewhat less exacting standards.

Elsewhere, Schumacher cited a discussion in a World Bank study of the prospects for developing small and medium-sized towns. The study made short work of the issue, dismissing the possibility on the grounds that such localities "lack[ed] the basic infrastructure of transport and services," and that "[m]anagement and professional staff [were] unwilling to move from the major cities." As Schumacher crowed,

the proposition, evidently, is to transplant into a small place the technology which has been developed in such a way that it fits only a very large place. [Good Work, p. 48]

Wednesday, September 20, 2006

I Wish You Wouldn't Be So Good to Me, Cap'n (or, Executive Compensation and Ass-Kicking)

At Postivie Sharing, Alex Kjerulf cites the lamest argument ever for astronomical executive compensation:

The ugly truth is that your boss is probably overpaid–and it’s for your benefit, not his. Why? It might be because he isn’t being paid for the work he does but, rather, to inspire you. In other words, we work our socks off in underpaying jobs in the hope that one day we’ll win the rat race and become overpaid fat cats ourselves. Economists call this “tournament theory.”

So paying someone else for your hard work will inspire you to work harder? GMAFB. Reminds me of some stupid asshole talking head I saw on CNBC at the beginning of the Iraq war who argued that "Americans" didn't want the extra weeks of vacaction time or the shorter work weeks enjoyed by Europeans, because "we" preferred to be able to build more carrier groups to advance "our" interests. Yeah, increasing my choco-rations from 30 to 20 grams a week is doubleplusgood, as long as I know "our boys" have another floating fortress at the Malabar front. What do you mean "we," paleface?

One of the commenters, JACH, wrote:

There are many “corporate wisdom” phrases that seem more like a justification to how things are done than a real explanation. Here’s the last one I heard from a guy that has been manager for 20 years: “people don’t work if you’re not constantly kicking their ass.”

Of course. A corporate hierarchy substitutes administrative for market incentives. The producer doesn't internalize his productivity gains; the costs and benefits of change are artifically divorced from each other and assigned to different people, so that management gets the bonus for increased productivity and labor gets harder work for the same pay. As one of my coworkers jokingly told me recently, "anything is possible as long as you're not the one who has to do it." What's more, a wage worker accepting someone else's priorities and assignments is robbed of another intrinsic motivation: the innate satisfaction of using one's own skills and judgment in creative labor. The only possible alternative is to substitute extrinsic motivation, like not getting your ass kicked. The people at the top figure out new ways to get more output from fewer people, for lower wages, in order to increase their own bonuses and stock options. And those at the bottom, who know the most about how to rationally improve production, have absolutely no incentive to do so because they know it will just result in speedups and downsizing, and all the productivity gains will go to stockholders or management featherbedding.

One of the characters in Ursula LeGuin's The Dispossessed observed that the hierarchical, authoritarian culture of the military was absolutely necessary for an organization designed to force people to do inherently irrational things stuff that they couldn't be motivated to do through legitimate self-interest. A guerrilla army could operate with elected officers and decentralized organization, because its soldiers were carrying out a mission that was rational and meaningful from their individual standpoints--defending their own homes and communities. But an army whose mission is to visit death and destruction on foreign populations, or to turn its weapons against an insurrection by the local civilian population, can only be motivated (as PM Lawrence commented on an earlier post) by a fear of its own officers that's greater than the fear of the enemy.

The great majority of people are doing work that is utterly meaningless to them, that they have no control over, and in which their personal values and judgment are left at the door. A work shift is an eight- or twelve-hour chunk of their life that they surrender control of to be a puppet on somebody else's string, a piece of their life that they essentially flush down the toilet, in order to get the money they need to support their real lives in the outside world--i.e., the part of their lives where they are in control, where they are ends rather than means. So obviously, they can only be motivated by fear: a fear of unemployment, bankruptcy, and homelessness that outweighs the dread of the job itself.

Fake "Small Government," "Privatization," "Deregulation": A Compendium of Posts

I Guess the Mixed Economy Can't Be All Bad
The Neoliberal Myth of Small Government
More Small Government Conservatism: Deregulation, Texas-Style
More Looting (er, "Free Market Reform") in Iraq
Sean Gabb Gives the Corporatists Nine Kinds of Free Market Hell
The Nature of the Ruling Class (Faux Private Interests)
Faux Private Interests, Part II: Privatizing the Police State
Faux Private Interests, Part III: Sean Gabb on ASI-Style "Privatization"
Claire Wolfe on Economic Fascism
Maxspeak on the Myth of Small Government Conservatism
More Corporate Looting in Iraq
Selective "Market Reform"
Faux Private Interests, Revisited
Butler Shaffer on Phony Privatization
Two Guardian Stories on Fake "Privatization"
Ownership Societies, Fake and Real

Weekly (more or less) Link Digest

Good news, everybody! Benjamin Darrington of Beijing informs me I've fallen afoul of the pigs at Animal Farm. Mutualist.Org is blocked in China. Must be doing something right to piss off the bloody-handed, parasitic functionaries of that so-called "workers' state."

An interesting post by Jon Husband of Wirearchy on "The Mass Customization of *Work*." I don't know how real any prospective changes will be outside the information economy; I suspect that, until the corporate walls are finally knocked down by forces outside the control of corporate management, any such "liberatory" changes will translate in practice into "management by stress" with a touchy-feely face. From what I've seen, every "empowering" management fad winds up being new-and-improved Taylorism in practice (how could it not be, when it's implemented by bosses?). But still, it's an interesting angle on what might come about after those walls are knocked down.

Michael J. Smith's article at Counterpunch, wonderfully titled "Intellectual Property is Intellectual Theft ... at Gun Point":

[A broadcast flag] is a flag or tag or attribute, or whatever you want to call it, embedded in a digital audio or video stream, that says "don't copy me without permission." This is the "broadcast flag" in the literal sense.

Which might seem harmless. It's like an electronic version of the copyright notice on a book, or that goofy thing about the FBI that leads off every video you rent. But if the government ever got serious about enforcing it.... that's where the Inquisition would come tiptoeing into your TV room, and maybe right onto your lap, as we will see a little later....

The broadcast-flag initiative now before the Senate resuscitates an attempt by the FCC, back in 2003, to mandate broadcast flag compliance by all digital media devices.... The Flag just sailed through the Senate's commerce committee without a recorded vote, a pretty sure sign of bipartisan ownage by the relevant lobby....

The 2003 FCC rule, written to order for the Motion Picture Association of American (MPAA), Recording Industry Association of America (RIAA), the National Football League and other copyright rentiers, is a thicket of obscure, rebarbative language, vague definitions, cross-references, and cabbalistic terms of art. But if you stare at it for a while, the crux becomes pretty clear: "demodulators" must comply with the broadcast flag. And what is a demodulator? It is any device or component that takes a digital TV or audio signal and turns that signal into a stream of bits that can be written to a CD, or shown on a screen, or downloaded to your iPod....

Obviously, you won't be able to buy a digital TV, or any other digital media device, whose manufacturers haven't certified to the Feds that it honors the Flag. Perhaps they will have to give the Feds the schematics, or the source code for their "firmware" -- the embedded programming that enables the device to operate. And if you want to get around this restriction, and load software onto your laptop that ignores the Flag, then technically, that software is probably contraband and you will have probably committed a federal crime. But will the law be enforced in such cases?

I think, sooner or later, it will....

Intellectual property enforcement, in other words, will lead to a kind of de facto government software regulation. The software police won't entirely succeed in suppressing contraband software -- we'll have an eternal war, a little like the Drug War, which suits the police just fine, of course. But certainly they will succeed to some extent; the prospect of a midnight raid will keep all but the bold and heedless safely inside the sheepfold of approved software, produced by Microsoft or Apple or Sony or some other large corporation.

You know what the next step will be. The approved software manufacturers will be approached, just the way the NSA recently approached the telephone companies. Kiddie porn -- terrorism -- video piracy -- bad things, right? Surely you'll help us defeat terrorism and put child molesters behind bars? Your techies have probably left some back doors into that movie software, right? Tell us more.

Michel Bauwens on "A P2P Theory for Social Change":

The key hypothesis of P2P Theory is this: we witness the emergence of a new form of Communal Shareholding, associated with the peer to peer relational dynamic at work in distributed networks, and giving rise to such processes as peer production, peer governance, and peer property modes. Our preferred hypothesis is that we have a major opportunity to move towards a `Commons-based civilization within a reformed market and a reformed state’. Alternatives are that the present market form incorporates the P2P dynamic, or that our energy-intensive civilization collapses into Authority Ranking once more....

A credible strategy for political and social change... would combine fourfold substrategies:

1) strategies aimed at strengthening the Commons and P2P modes

2) strategies aimed at strengthening personalized gift economies in areas where market exchange is inappropriate or dysfunctional (elderly care in Japan, LETS systems)

3) a reform towards an equitable market which does not externalize environmental and social costs (natural capitalism approach); reform of the scarcity-based monetary system (a la Bernard Lietaer), multiple currencies for localized markets (open money schemes); multistakeholder framing of market exchange (Decaillot)

4) reform of the state form and change of hierarchical modes using multistakeholdership and peer governance

Via Nigel Meek, Libertarian Alliance Forum. Terence Kealey, "The Empress loved mauve: how today's chemical industry was invented":

When governments really want to foster society’s interests, they overrule patents. The Wright brothers, for example, patented the airplane in 1904, and they consequently blocked any further development of aircraft in America. But European aviation flourished. So in 1917, on declaring war, Washington suspended all aviation patents in America — a suspension that was lifted only in 1975 by the Justice Department

Via Meir Israelowitz. "Big Cooperative Push in Venezuela: Incentives are helping to spur the wealth-sharing business model. Some question its viability." The title pretty much says it all.

The hotel is among 100,000 cooperatives formed in Venezuela in the last two years that are the centerpiece of President Hugo Chavez's new socialist model to create jobs and redistribute this oil-rich country's wealth. They now employ 7% of the country's workforce, a number that could grow to 30% in a few years, government officials say.

Chavez is spending hundreds of millions of dollars in oil and tax revenue on the cooperatives. Although there have been allegations of gross inefficiency and graft, cooperatives have become a powerful part of the economy and society....

Skeptics inside and outside Venezuela question whether the cooperatives, heavily dependent as they are on government subsidies, can survive the first serious drop in oil prices....

As I've argued before, the present favortism toward cooperatives is no more statist than the old neoliberal favortism toward big corporations. I certainly disagree with it in principle, but I won't lose any tears over it. The question is whether, after the pro-cooperative statism and the pro-corporate statism have cancelled each other out and Chavismo has come and gone, the cooperative sector will be able to exist on a stable and sustainable basis.

Couple of good ones by Stephen Carson at Mises Blog. "Chords on a Napkin" is on the IP lockdown of guitar tablature. The other one is "Crushing Innovation: The Case of FM Radio":

In short, the FCC and established big businessmen (naming names: David Sarnoff of RCA) kept FM buried for decades and devastated its inventor.

Sunday, September 17, 2006

Blaming Workers for the Results of Mismanagement

"Employee error," increasingly, is scapegoated for whatever goes wrong in today's downsized, understaffed, sped-up workplace. Four items on the same theme:

(Via Progressive Review).

JEFFREY MCMURRAY, ABC NEWS - Months before the Comair jet crash that killed 49 people, air traffic controllers at the Lexington airport wrote to federal officials complaining about a hostile working environment in the tower and short-staffing on the overnight shift, according to letters obtained by The Associated Press. In identical letters sent April 4 to Kentucky's senators, Republicans Mitch McConnell and Jim Bunning, a control tower worker said the overnight shift, or "mid," is staffed with two people "only when convenient to management."

The Federal Aviation Administration's guidelines called for two people to be there the morning of the Aug. 27 crash, but only one was present. "We had a controller retire last month and now we are back to single man mids," wrote Faron Collins, a union leader for the Lexington control tower workers. "I ask you one simple question. Are two people needed on the mids for safety or not? If they are, why are they not scheduled?" . . . Besides the letter to the senators, another Lexington control tower operator wrote to the FAA's Accountability Board on Dec. 1, 2005, complaining about a hostile work environment in the tower. That employee requested anonymity, fearing discipline against him.

2. Dian Hardison. "I F-ing Warned Them!"

I told them that the technicians and engineers were overworked. I told them that there were too many managers and too many meetings and "dog-and-pony" shows. I told them that their senior "face time" play games, while they spent all their time plotting how to give each other pay raises, and left the guys on the floor to struggle day to day with obsolete and overpriced and unqualified equipment, was going to result in another Challenger.

I was there for Challenger.

I saw the same exact conditions happening again. Overpaid, lazy, irresponsible managers concerned solely with their climbing up their ladders.

I told them they were skimping on inspections. I told them that the ground crews were asleep on their feet from exhaustion. I made as much noise as I knew how to make about the top-heavy bureaucracy sitting around in their fancy panelled offices, giving whorish press interviews in their smugness, while they did not have a clue what was going on in the real world where I was working....

Like Challenger, those who are most guilty are the ones who will attempt to make the most political capital out of it. But the blame for Columbia lies entirely and totally with the NASA administrators. They should all be investigated for their criminal negligence. They should all serve time in jail.

3. MSHA Makes The "Wrong Decision" To Blame Workers For Accidents
(Reprinted From Confined Space)

That management likes to blame worker behavior for accidents will come as no surprise to American workers. That this "blame the worker" theory is not consistent with the facts, that it doesn't get to the root causes of workplace incidents is also not a surprise to American workers.

So this new Mine Safety and Health Administration program comes as a great surprise to all of us.

MSHA Launches New Safety and Health Initiative

ARLINGTON, Va.- The U.S. Department of Labor's Mine Safety and Health Administration (MSHA) today launched "Make the Right Decision," a safety and health initiative that helps miners and mine operators focus on human factors, such as decision-making, when at work. The campaign encourages miners and mine management to work together on safety and health issues.

"MSHA will increase its focus on safety decisions during this campaign, which is not a limited-time initiative," said David G. Dye, deputy assistant secretary of labor for mine safety and health. "We want miners and management to make the right decisions to ensure the safety and health of America's miners."

So what's the problem with encouraging workers to make the right decision?

First, the assumption of this program is that most accident happen because workers make the wrong decisions. In other words, all you need is a little education, training and enlightenment and all will be well. If accidents continue to happen, they're caused by worker carelessness, incompetence, stupidity, suicidal tendencies -- and just plain dumb decisions.

In other words, "Make the Right Decision" is just your same old "behavioral safety" program under a new name. Behavioral safety theories say that worker carelessness or misconduct is the cause of most accidents, and disciplining workers is the answer. But behavioral theories don't hold up to a closer look at the root causes of most workplace accidents: generally management system and organizational problems that lead to unsafe conditions....

So what about these two "unavoidable accidents" reported last year? Would they be alive today if they had just made the right decision?

Two miners killed in pair of incidents

After badly burning his hands in a coal-mining accident earlier this year in Perry County, Edwin Pennington said he was finished with mining work, but he returned for the money, his father said yesterday.

On Wednesday night, Pennington, 25, of Harlan County, was crushed to death in a rock fall at a Bell County Coal Corp. mine — one of two underground mining deaths hours apart in Eastern Kentucky.

Eric Chaney, 26, of Pike County, was crushed in a roof collapse early yesterday at a Dags Branch Coal Corp. mine in Fedscreek in Pike County, officials said.

The deaths were the second and third fatal mining accidents in Kentucky this year, and the first underground fatalities. Nationally, 14 miners have died in accidents this year.


Bill Caylor, president of the Kentucky Coal Association, an industry group, said the two deaths were unavoidable accidents. "We don't want things like this to happen, but they will," Caylor said. "Mining is very safe, but you have to be careful because you're working around big pieces of equipment."

Or maybe Kevin Lupardus died because he made a bad decision:

Investigation of fatal accident at Boone mine continues

CHARLESTON, W.Va.- State and federal authorities are trying to determine what caused a section of high wall to fall onto an excavator at a Boone County surface mine, killing the machine's operator. The accident occurred at about 2 a.m. Saturday November 21, at Independence Coal's Red Cedar Surface Mine near Clothier. Independence Coal, a subsidiary of Richmond, Va.-based Massey Energy, operates the mine as Endurance Mining, according to federal Mine Safety and Health Administration records. Kevin Lee Lupardus, 41, of Mabscott, was operating the excavator when a "large section" of the highwall fell onto the machine's cab, said Terry Farley, an administrator with the state Office of Miners' Health Safety and Training.

It is somewhat ironic that this program is starting now. Clearly acting Assistant Secretary Dye hasn't read the June 2005 issue of Occupational Health & Safety which contains an article by Fred Manuele entitled "Serious Injury Prevention."

Manuele cites experts who point out that what may look like "human error" are actually system errors:

R. B. Whittingham, in his book The Blame Machine: Why Human Error Causes Accidents, describes how disasters and serious accidents result from recurring, but potentially avoidable, human errors. He shows that such errors are preventable because they result from defective systems within a company.

Whittingham identifies the common causes of human error and the typical system deficiencies that lead to those errors. They are principally organizational, cultural, and management system deficiencies. Whittingham says that in some organizations, a "blame culture" exists whereby the focus in incident investigation is on individual human error, and the corrective action is limited to that level. He writes: "Organizations, and sometimes whole industries, become unwilling to look too closely at the system faults which caused the error"

He notes that although humans may be involved in the errors that lead to accidents, James Reason and Alan Hobbs, in Managing Maintenance Error: A Practical Guide point out that one needs to look deeper:

Errors are consequences not just causes. They are shaped by local circumstances: by the task, the tools and equipment and the workplace in general. If we are to understand the significance of these factors, we have to stand back from what went on in the error maker's head and consider the nature of the system as a whole . . . this book has a constant theme . . . that situations and systems are easier to change than the human condition

In other words, look at the safety systems and find the root causes. If managers (and MSHA)continue to attempt to prevent accidents by focusing on human errors and "wrong decisions," the same accidents, injuries and deaths will continue to happen.

4. Labor Relations in the Health Care Industry for Nurses
More Nurses Needed

* Understaffing: There are not enough nurses to do what needs to be done on any given shift and the nurses who are on duty are exhausted and stressed. A 2003 study by the Institute of Medicine (IOM) found the environment in which nurses work a breeding ground for medical errors which will continue to threaten patient safety until substantially reformed. The IOM points to numerous studies showing that increased infections, bleeding and cardiac and respiratory failure are associated with inadequate numbers of nurses. A 2002 report by the Joint Commission on Accreditation of Healthcare Organizations called the nursing shortage “a prescription for danger” and found that a shortage of nurses contributed to nearly a quarter of the anticipated problems that result in death or injury to hospital patients.

* Low Nurse-to-Patient Ratios: With managed care restructuring the health care industry in the 1990s, hospitals reduced staffing levels to lower costs. Nurses care for more patients and patients who are more acutely ill due to shorter hospital stays. One study of hospital staffing found that decreases in the number of LPN/LVNs added to RNs’ patient load. Studies have linked low nurse-to-patient ratios to medical errors and to poorer patient outcomes, as well as to nurses leaving patient care. A 2002 study by Linda Aiken, et al., found that for each additional patient over four in an RN’s workload, the risk of death increases by 7% for hospital patients. Patients in hospitals with eight patients per nurse have a 31% higher risk of dying than those in hospitals with four patients per nurse. The IOM study recommends that nurse staffing levels be raised in all health care facilities.

* Mandatory Overtime and Floating: Because of the nursing shortage, many hospitals routinely require nurses to work unplanned or mandatory overtime and to “float” to departments outside their expertise. On average, RNs work 8.5 weeks of overtime per year according to a recent union survey. Mandatory overtime was an issue in several recent strikes and 77% of RNs favor a law banning it except when an emergency is declared.

* Burnout: Among nurses there are high rates of emotional exhaustion and job dissatisfaction which are strongly associated with inadequate staffing and low nurse-to-patient ratios. The Aiken study found each additional patient per nurse corresponds to a 23% increased risk of burnout, as well as a 15% increase in the risk of job dissatisfaction.

What's even worse, management's penny-wise, pound-foolish policies, which attempt to cut costs by deliberate understaffing, don't really even save money:

Statistical model shows [sic] that when nursing units are understaffed the additional costs associated with patients who develop complications are greater than the labor savings due to understaffing....

While immediate personnel costs are less with short staffing, long term costs were higher because patients with complications often stay longer in the hospital and require other expensive treatments....

Institutions attempting to decrease costs through health care worker reductions may, in the final analysis, incur higher costs as a result of higher rates of nosocomial infection, longer hospital stays and use of expensive antimicrobials and increased mortality.
It's just another example of the MBA disease: stripping organizations of productive assets and milking them in order to inflate short-term returns. I swear, there must be a special class in management school where they clean half the grey matter out of your head and replace it with shit.

By the way: the healthcare industry has its very own "behavioral safety" approach to hospital-acquired infections, directly analogous to the "human error" approach described above in the mining industry. The spread of MRSA and other infections in hospitals is the direct result of downsizing and understaffing--also the primary cause of patient falls, medication errors, wrong site surgery, etc., etc., etc., etc., ad nauseam. Healthcare workers know they need to wash their hands--but knowing and being able to do are two different things when you're literally running from one call light to another, and you've got three patients sitting on bedside commodes at the same time as two other fall-risk patients are setting off their bed alarms. Rather than deal with the root cause--the dangerous levels of understaffing that have resulted from the downsizings of the past decade--hospital administrators resort to asinine gimmicks like the "Partners in Your Care" program (designed by a manufacturer of hand disinfectants):
Patients and families are asked to be Partners in Your Care by asking all healthcare workers that have direct contact with their family member patient “Did You Wash Your Hands?” or “Did You Sanitize Your Hands?”

Dilbert effectively parodied a similar program: the company response to on-the-job accidents was a "safety dog" who admonished "Woof, woof! Don't use scissors!"

Attempts to deal with safety issues through such behavioral approaches, rather than by addressing the structural and process causes, are what Peter Drucker called "management by drives" and Deming dismissed as "slogans, exhortations, and revival meetings." But in the modern workplace, such slogans and gimmicks are likely to appear on the very same bulletin board as kwality jargon from Six Sigma or ISO-9000.

So if you're wondering why patient deaths are so high, the fault lies not within hospital administration, dear reader--oh, no!--but within ourselves. And the solution is as simple as "Woof, woof! Wash your hands!"

Thursday, September 14, 2006

Michel Bauwens: P2P as Organizing Principle for the Physical Economy?

At P2P blog, Michel Bauwens writes on "Expanding peer production to the physical realm."

A crucial aspect of peer to peer theory... is whether peer producton, the common production through communities, as evidenced in free software, linux and wikipedia, can be expanded to the physical sphere, and additionally, whether that expansion can be enclosed in the money economy....

My own take at the P2P Foundation is of the more expansive school of thought, we think that peer to peer has the potential, and even likelyhood, of becoming the new core of the next political economy, the one that will arise to save us from the very success of capitalism, and its corollary: the destruction and depletion of the biosphere....

If we ask ourselves, through what strategies and trends could we see an expansion of peer production to the material sphere, I usually give two answers, one is the ‘distribution of everything’. To the degree we succeed in expanding the distributed format, in intellect, productive capital, financial capital, we expand the space where peer production can thrive. Additionally, if we can envisage a process whereby the design phase of industrial production is separated from its physical production space, there is no limit to the use of open source methodologies in the design phase. We can easily imagine for example, the design of a car that would be vastly superior to the car designs by corporations. But the question remains on how to finance its physical construction. But we already see companies in the software industry, who successfully link their market-based aims and behaviour, with a dependence on a intellectual commons and an open source community, fruitfully building a ecology from which all parties profit. It’s a model that can be expanded to other sectors of the economy.

Sam Rose, in the comments, has this to add:

Let me say that, if we can co-design a car, or a house, or a machine, or another similar structure online right now, we can also design it in a way that would allow people to physically construct it for less money, and within the means of general fabrication industries available to the average person right now. Basically, we can co-design the construction process of the car as well. The actual construction could be done by a combination of different independent fabricators....

To peer-design a car like we are talking about would be no small task, though. It has taken http://www.theoscarproject.org/index.php 6 years and they are still in the concept phase....

When I look at this: http://www.osgv.org/cdv1.php

And the question [is] “How much will it cost?” their answer is: “Preliminary analysis indicates that such car can be built for under USD$15,000 in large quantities. Actual production cost could be higher, depending on the supply of materials.”

But here again, the costs can be brought down in the design, and through research of fabrication costs and materials. This research can be done in a peer to peer way. So can the whole administration of ordering the cars, and manufacturing them.

And Richard Poynder has followed up with the second part of his interview with Bauwens.

MB: ...What is also incontrovertible is that immaterial production is becoming an ever-larger part of our economy and, within that sphere, it is increasingly apparent that peer production is more productive and more efficient than the traditional model — in so far as it creates more value than for-profit alternatives.

These things guarantee that P2P processes will continue to grow, and demonstrate that it is more than a transient phenomenon....

...[T]he key question today is a simple one: will P2P remain a subsystem within a capitalist economy, or will the market at some point become a subsystem within a pluralist economy that revolves around a core of peer production.

RP: What is your answer to that question?

MB: My expectation is that the market will eventually become a subsystem with a P2P economy. So in the system I foresee we would have:

* a core of non-material production using peer-to-peer principles in their pure format (non-reciprocal peer production);

* a surrounding sphere of reciprocity-based gift economy, for services in the West, and for the protection of the remaining traditional world in the South;

* a market that is divorced from the obligation of endless accumulation, and so becomes 'natural capitalism' (as envisaged by Hazel Henderson, David Korten and Paul Hawken.) In other words, it would no longer be obliged to destroy the biosphere, and it would have a market that is subject to peer arbitrage, not just power play — as is the case today with fair trade;

* States and governance enriched with multi-stakeholder principles (e.g. states subjected to peer arbitrage as well).

* * *

MB: We can no longer afford a system that externalises the true costs of things. So I am attracted to the notion of a market without capitalism — i.e. a free market but not based on infinite accumulation.

MB: ...Essentially, I see three main ways in which P2P might migrate to the physical sphere:

* In industrial processes, as I previously mentioned, we could see the design phase being separated from the material production phase. I see no objection in theory or practice, for instance, why cars cannot be designed by Open Source communities, and then produced by a third party who has access to the necessary capital.

* I can also see further expansion of distributed models, particularly in the field of financial capital. I mentioned, for instance, the "distributed capital" model being promoted by Open Capital schemes.

* Finally, we could start to make physical items freely available under Open Source licences — artworks say, or bicycles; or indeed books, as already happens with the Book Crossing project. The licensed item could then be linked to a digital address so that it can be monitored, and protected from private appropriation or theft. This strategy offers a tremendous opportunity for creating a wide variety of different physical commons.

Saturday, September 09, 2006

Vulgar Libertarianism, Neoliberalism, and Corporate Welfare: A Compendium of Posts

Vulgar Libertarianism Watch, Part I
Vulgar Libertarianism Watch, Part 2
Vulgar Libertarianism Watch, Part 3
Maxspeak on the March of Democracy
I Guess the Mixed Economy Can't Be All Bad
Vulgar Libertarianism Watch, Part 4 (Or Eamon Butler Phones It In)
More Wonderful "Free Market" Reforms From Those Corporate Pirates
Vulgar Libertarianism Watch, Part 5
The Neoliberal Myth of Small Government
Vulgar Libertarianism Watch, Part 6 (John Stossel)
Neocon "Democracy" in Iraq
Vulgar Libertarianism Watch, Part 7: Those Big Government Progressives at the ASI
Vulgar Libertarian Smackdown
Vulgar Libertarianism Watch, Part 8: Intellectual Whoring for the Planter Aristocracy
I'd Hate to See What Malevolent Hegemony Would Look Like
Move Over, Maggie and Ron
Lormand on Vulgar Libertarians
More Looting (er, "Free Market Reform") in Iraq
More on the World Bank
Strawman Alert
On the Other Hand....
The Nature of the Ruling Class
Corporations, State Capitalism, and International Trade
Faux Private Interests, Part II: Privatizing the Police State
Faux Private Interests, Part III: Sean Gabb on ASI-Style "Privatization"
Vulgar Libertarianism Watch: Part 9 (or is it Part 1 Redux?)
Monbiot Gets It Right This Time
Glenn Reynolds' Upside-Down Version of History
Maxspeak on Thomas Friedman
More Corporate Looting in Iraq
Fair and Balanced
Vulgar Libertarianism Watch, Part 10
Buermann on CAFTA
Vulgar Libertarianism Watch, Part 11
Lindy Davies on Economic Growth
Venezuelan Oligarchy's War Against Land Reform: Death Squads Target Peasant Organizers
Chomsky: Neoliberalism as Statism
Vulgar Libertarianism Watch, Part 12 (but this ought to count for two or three, at least)
Broken Window Fallacy
Thanks for Givin' Me That Job, Massa!
Corporate Funding of Phony "Free Market" Think Tanks
Follow-Up: Broken Window Fallacy
Vulgar Libertarianism Watch, Part 13
Socialism for the Rich, Redux
GDP Again
Vulgar Libertarianism Watch, Part 14
Sympathy for the Devil
Monbiot: Two Steps Forward....
Them Pore Ole Bosses Need All the Help They Can Get
Selective "Market Reform"
Vulgar Libertarianism Watch, Part 15: Lula and Chavez and Morales, Oh My!
OK, No More Stealing, Starting.... NOW!
Faux Private Interests, Revisited
Fake Reform and Class Warfare
Vulgar Libertarian Watch, Part 16 (Misoids take on distributism)
Free Trade vs. "Free Trade"
Crunchy Con Talk
A Free For All on Drug Patents: Or, Ron Bailey's Principled Libertarianism
If It's Got a "Y" in It, It's Wal-Mart Day at Mises.Org
The More Things Change... (critics of labor theory of value)
Libertarian Death Wishes
A Free Market Attack on Sweatshops
Vulgar Libertarianism Watch, Part 17
Vulgar Libertarianism at the NYT--And the Usual Suspects Are Tickled Pink
Free-for-All on South Central Farmers
Privatization is Theft
Smarter Wal-Mart Defenders, Please
Smarter Critics of Environmentalism, Please
Big Business's Role in Creating the Interstate Highway System
Vulgar Libertarianism Watch, Part 18
Kirklin Follow-up to Wal-Mart Piece
More Efficient Corporate Welfare

Thursday, September 07, 2006

Weekly Link Digest

A motley collection of good material, so I'm not even going to try to group it under subject headings.

Sheldon Richman, at the Foundation for Economic Education, discloses the real agenda of so-called "free trade" agreements:

In recent talks, bilateral and multilateral, it's become more and more evident that the American negotiators' real purpose is to impose U.S. patent and copyright laws on the developing world as the price of access to U.S. markets.

Via All-Spin Zone, a federal regulatory proposal to allow drug testing on prison inmates:

An influential federal panel of medical advisers has recommended the government loosen regulations that severely limit the testing of pharmaceuticals on prison inmates, a practice that was all but stopped three decades ago after revelations of abuse....

Until the early 1970s, about 90 percent of all pharmaceutical products were tested on prison inmates, federal officials say....

Alvin Bronstein, a Washington lawyer who helped found the National Prison Project, an American Civil Liberties Union program, said he did not believe altering the regulations risked a return to the days of Holmesburg.

“With the help of external review boards that would include a prisoner advocate,” Bronstein said, “I do believe that the potential benefits of biomedical research outweigh the potential risks.”...

The discussion comes as the biomedical industry is facing a shortage of testing subjects. In the last two years, several pain medications, including Vioxx and Bextra, have been pulled off the market because early testing did not include large enough numbers of patients to catch dangerous problems.

This is not a complicated issue, folks. This is the "best available alternative" paradigm, but on steroids. The state is limiting the "available alternatives" in the most blatant and direct way possible, and then colluding with drug companies to present "voluntary" testing as an alternative. And don't forget, probably half of these inmates are imprisoned for consensual market transactions that shouldn't even be crimes in the first place. This stinks to high heaven.

Economist's View links to "Things Fall Apart: Fixing America’s Crumbling Infrastructure," by Nicholas Kulish:

The report noted different problems in every sector, but a few kept popping up almost across the board: A growing population, and growing demand that is overtaxing aging, inadequate systems....

There’s also increased international trade and movement of goods within the country. That means more and more commercial trucks prowling the interstates at all hours. Whether you’re talking about seaports, airports, railroads, canals, or highways, our transport systems need to expand to keep up with our economic activity.

But we haven’t been keeping up....

Another example of the kind of mainstream liberal goo-goo who thinks the Interstate Highway System was some great example of "progressive" government intervention--despite the fact that it was built for "defense" purposes under the direction of a former GM president, the same guy responsible for that "What's good for America is good for GM" quote. Apparently it never occurred to Kulish that subsidized transport systems can never "expand to keep up with economic activity," precisely because the divorce of consumption from the cost principle generates demand faster than they can accommodate it.

Jesse Walker writes on the increased size of the welfare state a decade after "welfare reform," and notes (with the great quote below from Piven and Cloward's Regulating the Poor) that there's little direct relationship between the amount of spending and tangible benefits to the poor:

...social welfare activity has not greatly aided the poor, precisely because the poor ordinarily have very little influence on government. Indeed, 'social welfare' programs designed for other groups frequently ride roughshod over the poor, as when New Deal agricultural subsidies resulted in the displacement of great numbers of tenant farmers and sharecroppers, or when urban renewal schemes deprived blacks of their urban neighborhoods.

Indeed, as I often like to say, a vulgar libertarian is someone who thinks the food stamp program came about through the massive political influence of unemployed single mothers, rather than the agribusiness lobby.

This gem from Chris Dillow at Stumbling and Mumbling:

[Do we really want young people] to know that our capitalist prosperity is founded upon a brutal process of "primitive accumulation" that entailed the theft of monastic and common land; the repression of those market forces that would have helped working people; the criminalization of the unemployed; and the exploitation of the weak?

What sort of political views would this lead to?

Probably a citizenry more skeptical of goo-goo claims that "government is just all of us," for one thing.

Via Alex Kjerulf, evidence that atronomical CEO pay is based on a kind of religious faith:

...Rakesh may have found an instance of Lovaglia’s Law: "The more important the outcome of a decision, the more people will resist using evidence to make it."...

Rakesh described how directors of huge companies had enormous faith in the power of CEOs that went beyond anything that could be justified by any research, how they spent vast amounts of money and time searching for new corporate saviors, and paid out huge sums to executive search firms and to the CEOs they ultimately hired. Following Lovaglia’s Law, perhaps because these decisions were so important, Rakesh found that when he asked corporate directors if CEOs are worth all that money, they reacted with anger and surprise, as if he had raised a taboo subject. He found that they had “virtually religious” convictions on the subject, which led them to dismiss any evidence showing that CEO quality is not a primary and powerful cause of company performance.

Atrios posts an enlightening graph of housing prices in real dollars over the past century. In all the booms and busts before the 1990s, prices gravitated back to the same value. In the past decade, the price of real estate has exploded beyond anything we've ever seen. A hard rain's agonna fall.

At In the Libertarian Labyrinth, Shawn Wilbur announces he has completed a pdf version of Bolton Hall's Things as They Are, and also links to a good new anarchist history site (Dead Anarchists.Org) focusing on Voltairine de Cleyre, among others. Finally, in these two posts, he links to a lot of new Alfred Westrup material online.

I previously linked, in an earlier weekly digest, to a Bob Murphy article critical of an agribusiness critic, and Carlton Hobbs' comments in response. Hobbs developed his critique of Murphy's article into an article of his own. He also has some insightful comments on the possibility that an outside hostile government could manipulate the markets of a free market anarchy in order to undermine its independence.

Michel Bauwens: An Economy Organized on P2P Principles

Two items. The first, a post at P2P Blog, is an overview of the various forms of peer governance.

In the second (which sheds considerable light on the categories briefly listed in the previous item), Bauwens is interviewed at length by Richard Poynder. I've excerpted some of the most important sections, from my perspective:

RP: There was back then a view that the Web — and the rash of dotcom companies — would force traditional companies to reinvent themselves or perish wasn’t there?

MB: Sure, but it became clear to me that attempts to graft the Internet and the Web onto the corporate world had largely failed — as evidenced by the dotcom crash.

It was also clear that the belief that change would come from corporations — as envisaged by the stakeholder concept of the late seventies — had also proved wrong. Finally, it occurred to me that all the social and ecological indicators were moving in the wrong direction.

RP: How do you mean?

MB: I could see that despite the dotcom crash, the social dynamism of the Internet had not died, but had simply continued in the social sphere, in civil society. At the same time, corporations had become worse places to work in than they had ever been, and poverty and environmental destruction was growing at an unprecedented scale.

* * *

RP: So what are the implications of this P2P dynamic in terms of enabling the social and political changes that you want to see?

MB: The P2P phenomenon gives rise to three new social processes: peer production (which is best explained by Yochai Benkler in his book The Wealth of Networks); peer governance (i.e. how these groups manage themselves) and peer property (i.e. commonly-owned property).

RP: What is it that is new and distinctive about these three new social processes?

MB: Well, the interesting thing about peer production is that while it is embedded in the market, it is managed by neither pricing nor corporate hierarchies. As Benkler points out, it has therefore introduced a third mode of production, one organised by neither markets nor the state.

Similarly, non-hierarchical governance represents a third mode of governance, one based on civil society rather than on representational democracy; in other words, non-representational democracy.

Finally, P2P gives rise to non-exclusionary property forms. These are based on both free and open access, and they seek to prevent the private appropriation of commonly produced work arising from peer production.

* * *

RP: On your web site you say that the general principles behind movements like Open Source software and Open Access provide models that can be used in "other areas of social and productive life". Does this include material production in any way?

MB: Sure. While these principles naturally apply to any form of immaterial production, we believe they also have relevance in the sphere of physical production. After all, although physical production requires large amounts of capital, the manufacturing process also includes an immaterial design phase.

RP: So while physical products like, say, washing machines and television sets, will always need to be sold at a price that reflects the cost of the raw material and the labour that went into producing them, the knowledge about how to produce and design them should be made freely available for anyone to make us of?

MB: That's right. Essentially, P2P expands democracy from the political sphere, to all spheres of life. I would add that P2P's strength is that, as a mode of production, it is more efficient than the for-profit and state-centralised modes in many areas of production.

The other point to make is that in many cases the capital (be it financial or industrial) required to produce material products will also be distributed, and so P2P principles can be applied in the distribution of capital too.

RP: Can you explain that?

MB: I mean that it would be wrong to think that material production will not be affected by the P2P paradigm, so we need methods whereby, instead of having one or several large investors, or shareholders interested in short-term profit, capital can be obtained in distributed ways, from the producing communities and their customers themselves for instance.

That means that we need 'distributed capital'. The UK-based Limited Liability Partnerships and other Open Capital schemes could be a step in that direction for instance. User-built networks and P2P-exchange projects like Prosper and Zopa also point in that direction.