In the following blog post, I respond directly to a comment, which was written in response to my post on democratic socialism:
I would think the main reason self-proclaimed liberals don’t go as far as they dream, is because they deep down know it doesn’t work. Take the very first settlers of our country. They did try the socialist/commune idea of everyone gets an equal share, shares the rewards and labor of everyone else. At first it did work. But just as then as it is today, you forget the human element of “why do the work when someone else can do it for me?” Soon, groups of people didn’t do as much, or any at all work as the others yet still got the same benefits. Only after people were given their own parcels of land to reap what the sowed, did the colony flourish. The same can be seen today. The less regulations and red tape a business, individual, or group of people have, the more productive they are.
Unions for example were there for a need in a certain time and place. But they are not needed anymore today. Do you really think if certain regulations, the minimum wage taken away for example, that people would be forced to work for $!/hr again? I don’t think so. In this age of information and the power of the media bias, no company would ever dare to do such a thing again. Plus, if you don’t want the job, don’t work there. If anything, it would just be funny to watch these types of businesses pretty much commit suicide.
Is capitalism bad in some ways? Of course. When in anything the human element is injected to the equation, things like self-satisfaction and greed to come to be, but not rampantly. Compared to the other alternatives, it is the best option we have. As long as you have people with a sense of entitlement, resentment, and demand for equality by robbing others that are willing to put the work forth, you are never going to achieve the utopia of socialism that is desired. Jealousy: the mane fuel for leftist ideals.
In the first paragraph, the commentator states that only when people own the land or the means of production that they will begin to work hard and produce wealth. It is certainly true that the Soviet Union and the other forms of really existing socialism, where the government owned all of the means of production, were less than ideal circumstances to develop the enthusiasm of the workers to contribute to the wealth of the society. But it is equally wrong to presume that our current capitalist society allows ordinary workers to own the means of production. They are owned by holders of private property- the very wealthy- who constantly have to look for ways to force other people- working people- to contribute their labor, maximize productivity and reap as much private profits as possible.
The capitalist utopia is always predicated on the assumption that everyone, whether a worker or a capitalist, have the same degree of freedom. The capitalist has the freedom to make investments and dispose of his machinery and labor as he sees fit, while the workers have the choice to find the kind of employment that fits their needs and interests. But behind this apparent freedom lurks a great power imbalance between the workers and the capitalists. Adam Smith correctly pointed out that while workers barely have enough savings to subsist even for a week, many capitalists have enough wealth to survive for more than a year. In a capitalist system, alienation of the workers is a design of the system, and is no more greater than under state-dominated, authoritarian socialism. If we want to create a better society, we need to acknowledge the weaknesses and problems with both and discuss better solutions.
The mantra of “less regulation and red tape” becomes then not a means to achieve greater freedom for everybody, but merely greater freedom for the capitalist class to advance the exploitation of the working people. Regulation and red tape, as expressed in environmental and labor regulation as well as social welfare benefits for the public, are designed to protect workers from the worst kinds of abuses from their employers, who want to hold the reservation wage (the wage at which workers begin to sell their labor services) as low as possible, such that workers are desperate enough to look for low-income jobs.
This description is a good segway into the point that the commentator made in the second paragraph, where he is skeptical that workers can be living in dire poverty if regulations like the minimum wage are lifted. I would like to share the optimism of the commentator, but I think that he/she fundamentally underestimates the power of the capitalist to lower workers’ reservation wages. Why is that? Let us think about it this way: there are about 4.7% of workers who earned the minimum wage of $7.25 or less per hour in 2012. This sounds like a small percentage, and the percentages naturally increase as we go up the income ladder. The median hourly wage is $17.09 as of May 2014.
But what is revealing here is that there are quite a substantial number of people, who are not really far away from the minimum wage, and if we took that minimum wage away, employers would exploit the situation by reducing their base wages, which could have a ripple effect on higher paid employees, whose employers now know that they will not have to fear losing workers to other industries, when the base level wages are substantially lowered.
The capitalists and the right-wing media try to convince the public that we all can only be paid as much as we are worth, but the reality is that workers can, and in many cases, are paid less than they are worth, otherwise we should not really have anybody who earns at, below or slightly above the minimum wage.
The commentator’s remark that the worker has the freedom to not work with an exploitative employer is emblematic of the false sense of freedom that he ascribes to the workers. My question hereby is, if workers had so much freedom to choose another job, then why is this not happening? Workers don’t have all the available information, and the job search is made complicated not only by the fact that workers are not educated enough to search for it, but by the lack of availability of good jobs. The evidence are the many very well educated people, who are still unable to find good jobs.
To make my point even clearer, we should now imagine an economy, where most jobs are paying very highly, where there is a significant labor shortage. In such an economy, it is then easier for people to reject current job offers, and take on another job, where they can earn more income. The fact that this does not happen is a reflection of the inner workings of a capitalist economy, which relies on a continuous labor surplus to function.
Under communism, there was a permanent shortage of goods, because the administrators set the prices below marginal cost, which made the production of goods uneconomic. But at the same time, the economy suffered from a constant labor shortage as well, because plan targets kept on increasing, while the level of technology remained obsolete because of low levels of innovation. So hire as many workers as possible to fulfill the plan target. On the other hand, capitalism is an economy of surpluses, which is good for consumers, who can often find ten different types of chips and twenty different types of cereals on the supermarket shelves, but it is potentially bad for workers too, because the phases of greatest capital accumulation and profit are those where wages are low, unions are weak, and unemployment is high (all three correlated, of course).
Paying attention to the aggregate employment picture requires quite some leap of thinking, and is not as straightforward as the belief that everyone is free to make his/her choices of investments or job search, but for workers, who know that they tend to be on the weaker side of the bargaining table, it is absolutely essential to grasp the aggregate employment situation.
The commentator’s final point is that communism is all about stealing money from the real producers, but we know that is precisely the essence of capitalism, not communism. The essence of capitalism is the generation of surplus value from the workforce, and paying off the capitalist class, which puts some of the money in their own pocket, and the rest is reinvested to create more profits in the next cycle. To the extent, that the commentator does not want one person to exploit the next person, I absolutely agree with his/her sentiment, and would welcome a struggle for a non-exploitative world, where workers can produce what they need to produce, and then find ways to share the fruits of their labor.
Do I believe in perfect equality? Yes, in the ideal world, but I will concede on one point, where I appreciate the reality of human psychology. Of course, if all workers are paid the same amount of money, then all workers want to crowd in the least strenuous and socially useless jobs, while nobody will do the strenuous and socially useful jobs. So, we would have many janitors (easy) and few doctors (difficult). That would be a social disaster. What would we do with all the sick people?
I, therefore, do not advocate for the equal payment of wages for all people, but agree that we need to increase incentives for more difficult jobs that require extensive training and expertise. But the regulation of payment for different workers is different compared to the regulation of payment for investors, landlords and capitalists, who gobble up the society’s wealth via rents. The commentator confuses the (unearned) rents with (earned) wages, and by fatally lumping both together, he/she can claim that perfect equality must be bad, so we should allow inequality in both the spheres of wages and rents, while moderate socialists might agree with inequality in the former, but certainly not in the latter.