This document is being transmitted to several public conferences, most of which I cannot receive locally. Please copy your comments to the author at < mlepore@mcimail.com > * * * * * A production-for-use economic system * * * * * Replies to frequent objections __________________________________ by Mike Lepore Abstract ________ This article is a response to correspondents who have been defending the theories of Ludwig von Mises, the so-called "Libertarians", and their variations. These supporters of laissez faire capitalism assert that marketplace trading and profitability provide necessary functions which democratic planning cannot duplicate, and, therefore, true socialism is not merely undesirable, but is also impossible. My reply demonstrates that it is possible to specify a non-market system which includes all essential functions. Introduction ____________ Various theorists have proposed an economic system based on production directly for social use, as opposed to production for sale and profit. The program requires the replacement of capitalism by social ownership of industry. In the form advocated by this writer, although there would be some general public representation, management would be performed mainly through industrial constituencies. Local and global councils of workers' delegates would be elected from the departments of manufacturing, agriculture, transportation, education, health, and the other occupational subfunctions. According to the program which is sometimes called socialist industrial unionism, the workers must begin while capitalism still exists to build the skeletal framework for democratic self-management. The international working class must organize a large workplace-based association, encompassing workers of all occupations. Political organization of labor is also necessary, so that the management role can be transferred to the workers' association, and done so as peacefully as possible. The author of this article is an advocate of the De Leonist (as opposed to the Leninist) interpretation of Marxism, and is not a member of any political or economic organization. (See the mailing list information at the end of this document.) Regarding the format of this document: In the indented paragraphs, I am paraphrasing some frequent objections to the proposed production-for-use system. The paragraphs which begin in column 1 are my responses. * * * * * Objection: Demand in the marketplace guages the desires of the consumers. However, social planners attempting to perform industrial administration would decide "for us", leaving our real wants unfulfilled. Efficiency in measuring and satisfying the consumers' wants is a technical procedure. It necessarily involves the counting at each sector of pending orders which haven't been filled, identifying the items which move quickly and slowly through inventory, and adjusting schedules accordingly. Some capitalist firms perform such inventory analysis, so that the business owners can enjoy maximum dividends. A collectively owned and democratically administered system will also need to include the technical procedures which ensure efficiency, but without adding the stipulation that the reason for the procedures is to profit a class of absentee owners. As long as the necessary steps are written into the protocol, the steps don't require a capitalist basis for their presence. The reason for having efficiency measures could be because stockholders who have elected the managers want maximum return on equity, or, under social different circumstances, it could be because the workers who have elected the managers want the shortest possible workday for the largest possible income. The background premise of sending dividend checks to remote owners is not a unique solution. It's directly observable whether we have excessive availability of product or service X, while the users keeps asking for Y instead. It's a trivial task for computers to tabulate inventory throughput, by quantity and by part number, and flag the part numbers which fall outside of adjustable guidelines. For example, if the shelves are stocked mostly with 2-head VCRs, while the public mostly requests 4-head VCRs, then the automated accounting system would highlight both types of units, reporting one as overproduced and the other as underproduced. Then the routines which modify production specifications would be invoked directly. * * * * * Objection: Without private profit and loss, there would be mo incentive for the management to correct any inefficiency that is discovered. Each production facility can stipulate that the minimization of the number of overproduced or underproduced part numbers is assigned to be the principal focus of certain coordinating committees. The people who becomes workplace representatives must enjoy being in that position, since only the people who find some fulfillment in that role (a routine of boring meetings and paperwork, in the view of many other people) would nominate themselves to be elected to that office. If a manager is later impeached for incompetance, that would be a negative feedback element. If any inefficiency is discovered, which is synonymous with lower incomes or longer work hours for all the constituent workers, then the workers will be materially motivated to overrule and/or replace their representatives by the democratic process. Since personal material incentives are functioning, therefore, contrary to the popular misconception, socialism requires no increase in altruism, and requires no sacrifice of individual interests. * * * * * Objection: Without pricing based on supply and demand, there would be no way to know the economic value of each product relative to the values of other products. We won't know how many loaves of bread are equivalent in value to an automobile, other than to assign these values arbitrarily. A direct production-for-use system would need an incurred-value algorithm, just as many capitalist corporations do. In the "process center" concept often used today in business accounting, each unit in a production line gradually "incurs" its unit cost, one step at a time, with the repeated addition of cost per operation, per unit, per minute. This gradual accumulation of worth by work-in-progress is more basic than either capitalism and socialism; it's largely what economics itself is. I agree fundamentally with the need for the work time voucher system which was initially proposed by the Marxist-De Leonist movement. In this proposed model of socialism, in place of indefinite units like the "dollar" or "yen", the value of products would be computed in units of time. The total work time embodied in each item would be tabulated. This time summation would include immediately applied work, in addition to the time already crystallized in the materials, tool usage, energy usage, etc. Through the use of a personal credit and debit system, workers would receive incomes that are proportional to their chosen work hours. Proportionality between personal work time and personal income renders irrelevant the stereotype that socialism would be a give-away arrangement which destroys incentive and ambition. With such a program, future improvements in human behavior, although they are anticipated, are not a requirement for functionality. Proportionality between work time and income maximizes our respect for the differences among individuals, even for the extremes in personality type. It satisfies the preference of individuals who prefer much greater than typical incomes, and, to justify it, are willing to work longer hours. On the other hand, it also satisfies the preference of individuals who prefer much shorter than typical work hours, and, to justify it, are willing to accept less than typical incomes. We can see that our terminology is not yet prepared to describe a direct work time voucher system. Our incomes would not be "wages" or "salaries", if we use these terms precisely. A wage or salary is a payment to a worker who does not own the work facilities, who has merely sold his or her working capacities in a labor market. In contrast, the system proposed here makes all workers equal partners in the ownership of their workplaces. Such personal work credits would not be "money", in the historical sense of the word, because: (1) Time units would not have floating magnitudes, whereas money is itself a commodity, fluctuating in value relative to other currencies, and is therefore an object of investor speculation; (2) Whereas money recirculates, work time units would be used to quantify individual consumption only, expiring when used by the individual. These units would not be used in the start-up and operation of industrial enterprises. The resources needed for production and services would be allocated directly by society as a whole. * * * * * Objection: A direct work-time credit system would lack the variations that are called for by individual differences. Such a system wouldn't recognize that some occupations are more valuable than others. This system would fail to reward those who accept dangerous work (such as firefighters), and those who spend years in medical school. Since such a system wouldn't penalize those who merely "put in their time" and goof off, all of us might as well goof off as well, causing all work to come to a halt. It would be counterproductive to classify the people in some occupations as more important or more productive than others, and therefore entitled to higher personal incomes. If the human body were to judge the esophagus as more important than the hand, and respond by sending weaker blood to the hand, the organic wholeness of the body would be destroyed. In a similar way, a holistically structured human society cannot distinguish the "necessary" from the "more necessary" tasks. However, many variations of the concept of work time credit are possible, such as: (1) Society may credit some participants at higher rates than others, to compensate for disabilities or other special needs, or to reward individuals who choose the more dangerous or undesirable occupations. This does not suggest that the dangerous or relatively unpleasant work is more "productive" per hour, but that its mode is not best quantified merely by durations of time. (High priority would be given to the automation of any dangerous or unpleasant types of work.) (2) Society may respond to uncooperative personal activity by crediting some participants with less than actual hours, according to the judgment of collectively elected committees of peers. For example, workers who are caught goofing off may be notified that they aren't going to receive full credit for specific work days. (3) Society may credit each participant with less than one hour of work for each actual hour, to provide services, the unlimited use of which is not charged to individual accounts (free education, free medicine, free transportation, etc.). This idea may be extended to permit unmeasured personal consumption of noncollectable products, such as food and energy, while still measuring the consumption of collectable products (such as recreational equipment). Some occupations today require the participants to bear financial loss during the educational phase, such as the personal debt and the deferred income endured by a student attending medical school. This causes many people to argue that medical workers are morally entitled to receive greater than average incomes. Rather than compensating these workers at greater than average rates, I propose that the education process itself should be classified as work. This would require society to provide, not merely free education, but also work time credits for the hours that students are studying (provided that they maintain acceptable levels of academic achievement). With such a system, there can can be no effective argument for higher incomes to be allocated to doctors or other skilled workers. Various modifications to the system of work time compensation can be adopted, if they adhere to democratically ratified principles. * * * * * Objection: Defining the worth of products according to the total work time embodied in them would require an unwieldy amount of accounting. Today's market systems also require that the the value of all components must be added into the value of each product. Under capitalism, production firms must make sure that the price of a new house includes the price of lumber, and the price of lumber includes the price of sawmill machinery, the price of sawmill machinery includes the price of iron, etc., in endless pregression. All of this bookkeeping is distributed so widely that we usually forget that it's already being done today. Since this effort is already required in every market system, the fact that a non-market and production-for-use system needs to perform an analogous task, the measured accumulation of work time into products and services, is not an effective argument against the production-for-use system. * * * * * Objection: It would be a difficult task for a collectively owned economy to make the daily methodical decisions, such as method A versus method B. While the profit motive takes care of methodical decisions automatically, a socially planned economy would need to make a large number of arbitrary and forced decisions. Economic issues are too complicated to be given by command. The profit motive is notorious for distorting ethical values in its method-A-versus-method-B decisions. Maximized profit is an amoral criterion. Some seekers of which will not hesitate to poison the natural environment, manufacture unsafe products, build obsolescence into goods, or pursue policies which shatter workers' family life, if such paths seem the most profitable. However, I will not focus on the question of good or bad outcomes. In accordance with the intent of the question, I will reply to the suggestion that profit is some sort of "automatic" means of arriving at methodical decisions, and that collective planning is some sort of "forced" approach. First, the notion that collectivism would involve "forced" decisions, and that capitalism doesn't, is the opposite of the truth. To think that industrial policy merely "happens" within the private market system, free of force, displays only the investors' perspective. If an employer orders the shutdown or relocation of a plant which has employed thousands of workers, or if the owners of capital place locked gates between idle machinery and unemployed workers, the employers' choices are being realized only by severe economic force applied against large numbers of people. To those who see only marketplace signals, and not the coercive and violent aspects, the investment process is being modelled as a black box (i.e., a process described only in terms of its terminal input/output characteristics). All of capitalist economics may be viewed as a reductionist model, according to which investments are poured into one end of a tube, causing profits to pop out from the other end. The human beings inside the mechanism are ignored as automatons, although it is the workers' unpaid labor which has provided the investors' profits. Therefore, the platitude that a socially owned economy would be a "command economy" is nonsense. Capitalism is the best example of a "command economy", despite the significant role of marketplace chaos in determining which commands come to be given. Secondly, we need to address the idea that collective planning would be exceedingly complicated. Management under a capitalist market system is the most complicated of all imaginable economic systems. Under capitalism, managers have the additional worries that come, not from technical necessity, but from the business environment itself. Additional business concerns, which are added to the inherent technical concerns, include the prevention the theft of ideas by competitors, manipulation of the tastes of the public through advertising, estimation of whether the increased profits provided by a price increase will more than offset the loss of customers caused by the price increase, speculation about the best day to buy supplies as their prices fluctuate, etc. Because all such concerns will be discontinued, a non-market system will need fewer managers, and less management effort, for it to function. The task of the coordinating committees will be simply to measure user requests at all levels, and to match those wants to available resources. * * * * * Objection: A socially owned system won't be able to distinguish where the jurisdictions in industrial planning should be placed, for example, whether a decision should be made by workers at the shop level, or by a municipality, or by a central all-industry parliament. Each level of economic constituency, whether a department of 10, a plant of 1000, an industry of 1,000,000, or any other, will be able to decide on anything that meets the guidelines previously adopted by larger democratic circles. Out of familiarity, I compare this principle to the federalism in U.S. politics today. A state can pass any law that doesn't contradict federal law. A city can pass any law that doesn't contradict state or federal law. An individual can do anything that doesn't contradict city, state or federal law. Analogously, a collectively-owned economic system must use a federal structure as the way for industrial units to make decisions and schedules. There will be some global decisions; for example, the human race may vote to put a space station into orbit. Each industry will adopt schedules to arrange the necessary mining, manufacturing, transportation, etc. At the local department level, the members will collectively select their own tools and procedures. The individual will have the full range of freedom which is possible within those boundaries. * * * * * Objection: Without the ability to start one's own business, individuals with creative ideas for new products and services would not have the means to materialize them. Innovation would be impossible. Collectivism doesn't imply that individuals or small groups would be automatically prevented from initiating industrial projects, if they find personal fulfillment (other than that of money fetishism) in doing so. If a group of individuals wants to start and operate a new type of production center or service, they can propose the idea to the coordinating office whose job it will be to process such suggestions. Society would have earlier set up criteria for evaluating such proposals. These criteria, like all other social rules, can be modified democratically. It would be incorrect to assume that this procedure would have a built-in conservativism. Ideas would be accepted according to society's experiences with trying out unusual suggestions, and our experience demonstrates the many benefits of frequently transcending our old boundaries and habits. It's capitalism which has plenty of built-in conservativism. Most people with creative ideas have no capital with which to actualize them. To turn your idea over to venture capitalists, you would have to establish, to their satisfaction, not merely that your idea would be socially desirable, but that your idea would be more profitable to them than all other investment alternatives, including such relatively risk-free investments as short-term bonds. Industrial democracy would also be able to test uncertain proposals incrementally. A suggestion to start a new type of product line or consumer outlet might be quickly accepted, but adopted on a small scale, and subject to a trial period. During this initial phase, the dynamic inventory would be measured to indicate whether the community is using the new facility, consuming what it provides. However, a clearly poor idea, like a suggestion to put a shipbuilding yard in the desert, could be rejected at once, because an initial screening could compare proposals to a democratically adopted set of guidelines. Once an idea is approved, society would allocate all the resources to realize it (the building, equipment, energy, etc.) Although the whole society would be the actual owner of the facility, the people who have developed the idea, and who choose to operate the facility, could function with a great degree of independence, selecting their own work procedures. The larger democratic process of society would retain the ability to overrule what the local collective has decided to do, e.g., if the product has inadequate quality or features, or if the manufacturing process causes environmental damage. The fact that such debates and referenda are time-consuming would cause public petitioners to intervene only in consciously-selected cases. * * * * * Objection: Social planning of industry would be a great bureaucracy, slow to get anything positive accomplished, and controlled by a circle of self-serving bosses. People often speak of bureaucracy as though it were a "human tendency" or a behavioral characteristic. In fact, it's a specific type of organizational structure. The most important time in the prevention of bureaucracy is when the constitution is written, because then, the causes of bureaucracy, if they have been correctly identified, can be proscribed. A bureaucracy is a pyramid-shaped hierarchy in which the majority are obedient to a minority who reside at the vertex of power. The middle functionaries are appointed by the office where central power is focused. The first requirement for preventing bureaucracy is to have all levels of the administrators and councils democratically elected and revokable by the entire social unit, whether it's a city, an occupation, or other group. We must inaugurate an industrial democracy with no appointed offices of any kind. Instead, we shall elect volunteers from our own industrial and social units to serve as delegates to committees for both intra-industry and inter-industry representation, and both local and global representation. In a bureaucracy, the few who are near the apex of power view their positions as careers, and they set out to expand their empire for its own sake. They are often permitted to increase their own salaries, and to exempt themselves from the standards which they require the rest of us to obey. However, in an industrial democracy, management will be something that regular people participate in on a rotating basis. Typical workers' incomes will be received for the time we participate in management councils. There will be no limousines or other privileges given to representatives. Those who represent us will not have the ability to increase the range of their authority beyond what their precise job descriptions specify. Bureaucracy thrives on secrecy, which it may rationalize with concepts of "national security", "intellectual property", and so forth. Industrial democracy will require all social and industrial documents and meetings, whether related to policy, research, or other matters, to be open public records. This is not necessarily a complete list of the causes of bureaucracy, and the means to prevent them. This matter will require the intensive study of large workers' groups. * * * * * All individuals and organizations are freely permitted to distribute this document in electronic or printed form, if credit is given to the author. I would appreciate, but do not require, notification of where this document is used. Mike Lepore RR # 1 Box 347 L Stanfordville, NY 12581 USA The proposal that the international working class should form one large industrial union, as the foundation for future self-management, is debated in the 1-UNION mailing list. This is also the main mailing list for ORGANIZED THOUGHTS, a electronic magazine published by the author of this article. To subscribe, submit a request to Internet address LISTSERV@UVMVM.UVM.EDU or Bitnet address LISTSERV@UVMVM . Your message should be a one-line e-mail message of this form: subscribe 1-union YOUR-FIRST-NAME YOUR-LAST-NAME Back issues of O.T. are archived at FTP site red.css.itd.umich.edu directory name = pub/Politics/Organized.Thoughts file names = ot.1 , ot.2 , etc. GEnie subscribers, please contact M.LEPORE A printed version of O.T. is not currently available. < mlepore@mcimail.com > First draft, March 16, 1993