Tragedy of the commons

[duncan]

wooh

[Paul]

tayssir: "Planned economies can use price systems."

How can they? I think you're missing the point of the pricing mechanism.

By being parasites on the free(r) economies. Quoting Economics for Real People:

Soviet planners even copied commodity prices out of The Wall Street Journal to use in their calculations. Lew Rockwell told a wonderful story about Gorbachev’s press secretary. When asked about his dream for mankind, the secretary replied that he hoped to see all of the world embrace socialism, except for New Zealand. “But why not New Zealand?” a reporter wondered. “Well,” the secretary responded, “we will need someone to get the prices from.”

[tayssir]

tayssir: "Planned economies can use price systems."

How can they? I think you're missing the point of the pricing mechanism.

The example I gave, Parecon, is a decentralized form of planned economy which happens to use a price mechanism, supply and demand curves, features worker self-management, etc. I already offered a link, and googling for "parecon prices" offers some readable sources.

I should note that people influenced by neoliberal doctrine tend to find this surprising. Because such lit uses the term "planned economy" with a peculiar technical meaning: a centralized state-run command economy like in the old Soviet Union. (When really, outside such narrow technical definitions, my understanding is that a mom 'n pop store is a "command economy.")

These discussions can be difficult because when it comes to societal matters, words lose their traditional meanings. Take "liberal," "conservative," "libertarian" and "anarchist." It's hard to even talk about these things, because words aren't allowed to retain their sane meanings. (Like when radical statist Republican politicians call themselves "conservative." Words don't have to mean anything anymore.)

[duncan]

tayssir: "Planned economies can use price systems."

How can they? I think you're missing the point of the pricing mechanism.

The example I gave, Parecon, is a decentralized form of planned economy which happens to use a price mechanism, supply and demand curves, features worker self-management, etc. I already offered a link, and googling for "parecon prices" offers some readable sources.

I should note that people influenced by neoliberal doctrine tend to find this surprising. Because such lit uses the term "planned economy" with a peculiar technical meaning: a centralized state-run command economy like in the old Soviet Union. (When really, outside such narrow technical definitions, my understanding is that a mom 'n pop store is a "command economy.")

These discussions can be difficult because when it comes to societal matters, words lose their traditional meanings. Take "liberal," "conservative," "libertarian" and "anarchist." It's hard to even talk about these things, because words aren't allowed to retain their sane meanings. (Like when radical statist Republican politicians call themselves "conservative." Words don't have to mean anything anymore.)

Well, I'd certainly agree with your l;ast statement. I've always sort of considered my temperament to lean toward the radical, but it may be that I was just confusing being young with having a radical temperament. I've certainly become more conservative over the years- but I don't generally describe myself as a conservative because I have very little in common with what is called conservatism in the US. I'd certainly agree that an awful lot of so-called American conservatives are mostly defined by their desire to upset the apple-cart to such a degree that they should be described as radical, not conservative. And it's a commonplace that so-called liberals, in the US sense of the word, are generally pretty illiberal. And to try to define what is or is not libertarian or anarchist is to enter a semantic tar-pit.

But I'm not sure I would describe parecon's ideal as a planned economy. It would certainly not be "centrally planned." I'd also argue that parecon is unworkable because it has a broken pricing mechanism for labor. I also question whether or not it could do a reasonable job of allocating capital- in particular it seems unlikely, to me, that it would allocate an optimal amount of capital to speculative endeavors.

But I am not unbiased here- there are two questions that should be asked first about an economic system. One is whether or not it could be made to work, and the other is whether or not the aims it seeks to achieve are aims worth trying to achieve. I'm afraid that poarecon fails the second test for me. I find it ethically, maybe even morally untenable. Its ideals seem basically Rawlsian to me, and I've never liked the the Rawlsian point of view much.

There is a third question that I like to apply to any proposed system. I like to ask- does this system assume that I own myself, or does it assume that I am owned by some other entity? As you can probably guess I would prefer the former. I'm afraid that parecon fails this test in my eyes. Beyond that it is actually quite inconsistent when it comes to the principle that makes it fail this test.

I accept the Rawlsian idea that we are not in any real way responsible for who we are. There's a good deal of debate over whether we are more formed by nature or by nurture, but we can't really take credit for either. So, if you happen to have the capacity to do something really valuable it's not, in the end, really to your credit. You got the right genes, or you had the right upbringing, or... whatever. Even if you worked your way out of really unfortunate circumstances there must have been something in your genes or in your environment that allowed you to do that. Something lacking in the nature or nurture of the people around you who weren't able to do what you did. I'd go so far as to say that I don't think that anyone is at all responsible for anything they do- I really doubt that people have much choice in the matter of who they are. But I'd also say that it is essential to treat people as if they are responsible for their actions, because how you deal with this question is actually part of the environment that causes people to act in certain ways. The rapist and the murderer are probably not actually culpable- they are what they are through no fault of their own. But if you act as if they are not culpable you will, ironically, create more murderers and rapists.

The parecon view of things says that people should not be able to benefit from things they are not directly responsible for. For instance, if you're a smart guy, well- that's just the luck of the draw. You got the right genes, or the right upbringing, or some combination of the two, so you're smart. But you don't deserve to benefit from something that is, in the end, just a matter of luck. This is intuitively appealing in some ways, but I'd argue that implicit in this view is the idea that you do not own yourself, but are instead owned by others. In a way it is an even more radical rejection of the idea of property than the Communist ideal, in that it does not even allow you to own your own capacities.

But parecon is also inconsistent. It says that you should be rewarded to the degree that you do a job that is "unpleasant." But this is a very subjective measure. What I find unpleasant you might like. I grew up in what I think could be fairly called abject poverty, at least by first-world standards. So I wound up doing a lot of hard work as a young man. I worked in a factory for a while. My first job there was cutting fiberglass- and almost anyone would have thought that an unpleasant job, because the fiberglass wound up getting all over you. I moved on to a job assembling motor mounts after a while. I found it intolerably dull. But a lot of the people I worked with did not find it dull. So how would you characterize a job like that, in a parecon system? Some people pretty much like it.. others wind up so bored that they want to set fire to the damned factory... not that I did that, but I sure wanted to .

Well, you could decide to pay people based on a combination of factors- how many people are there who are willing to do the job, who can also do the job... but I think if you do that you are coming perilously close to traditional market economics. What parecon misses is that the ability to do an "unpleasant" job without suffering unduly is as much an unearned character trait as high intelligence is. I have a friend who is about as bright as anyone I've ever known (and I have known a few people who are renowned for their brightness) but who has been eking out a living for himself and his kids by waiting tables for the last 20 years. I was talking to him one day and I suggested that maybe he ought to become a programmer. I mean- he has the brains for it, and I suspect he could quickly become a better programmer than most of the people out there plying the trade. His response was instructive: "I would F***ing hate that," he said. And, thinking about his temperament, I'm sure he's right. He couldn't sit in front of a screen all day. So I guess I work in a very unpleasant profession- except that I do like sitting in front of a screen all day. But I would never admit that if I were up before the parecon collective- I would argue that my job sucked more than any other job, so I should be paid more. And then someone else might get up and plead their case- my job sucks more than his. And then a decision might get made, but- well, when I consider that scenario I am thankful for the system we have, as flawed as it is.

[findinglisp]

@findinglisp: sorry if i was a little harsh at you. I am not capitalist, but i see capitalism as a tool that should be used to make society function.

I believe that society does quite well on its own without people trying to engineer it. In fact, the people trying to engineer it are typically the ones I least would want to do that. Simply, I do not believe that social engineering works. People always seem to want to force people to do something according to some master plan developed by the social engineers. Of course, the master plan is always presented as being The Right Thing, and quite benevolent by the engineers, but then you end up with Nazi Germany, Stalinist Russia, Cambodia under the Kmer Rouge, etc.

The fact that capitalism springs up, quite on its own, thank you very much, in virtually every society (even communist ones in the form of black markets) shows that capitalism is the natural state of affairs beyond the small tribe or family group level. Just let it work and allow people the free will and liberty to choose their own destinies.

The argument for free market usually goes like this: If something is desired, people can make more profit, and so make more, since more people/more is available, when there is too much, they cannot ask as much, and the production/availability of a service goes down. And that way, the supply always meets demand as much as possible.

Frankly this argument is overrated, although it is right to like a simple theory with a simple consequence, it is not right to overgeneralize it. It is not like a mathematical statement, absolutely true when you assume the axioms, and sometimes it plain doesn't apply. Frankly industries in the US abuse it's popularity because they profit from it's flaws. That is part of why i called findinglisp 'dogmatic', what you said are often handles for this sort of thing. Still i was strongly exaggerating for doing so, at that point at least, also abuse of an idea is no argument against an idea.

Overrated? How? You haven't shown that it doesn't work. In fact, I think history and all the evidence around you of markets working shows that it in fact does work quite well.

But the cattle holders and field demonstrates a way that it doesn't work. If there is more demand and supply and too little field, each cattle holder is still enticed to having more cattle, even though that would decrease the total production of the field, decreasing supply. Of course this particular example is solvable, there is probably a reasonably fair way to divide the land, like by divisioning it over the population and allowing the population to sell it to each other, or by doing the same over licensing a number of cows. (Both of these having their advantages.)

The cattle and field example is not an example of capitalism. If the field is unowned (or owned by "everyone") that is the flaw. If the field was owned by somebody, they would not allow it to be overgrazed. Or if they did they would simply suffer the consequences and that would be that. In fact, I would argue that the tragedy of the commons is actually a quite good proof of pricing theory. If the price is zero, consumers will consume all of the commodity. So, your "solution" of dividing the land is exactly the capitalist model. People tend to take care of resources that they own. They tend to not take care of resources that they don't own.

This, of course also needs some authority that is obligated too.

Ah, yes, the authority. Therein lies the rub. Who has the perfect wisdom to run the world "correctly?" And "correct" according to whom?

So much for stuff analogous to the cattle in this post, now for things to which the argument for free market does not apply.

There is no such thing as the free market not applying. There are results of a free market that you find objectionable, but the market doesn't care about your objections. It applies in all cases. I may not find the idea of gravity very appealing, too, because I have fantasies that weightlessness would be very fun and cool, but there it is in spite of my ideas.

For instance, if the competition is mostly over quality, the customers must actually recognize it. Sometimes, when it is really technical, this is very difficult for them/they don't do it. An example would be MS near monopoly on the desktop, people just don't compare Linux and Windows.

You assume that people aren't comparing things. Perhaps they are, but not in the ways that you would. In other words, my Mom thinks that exchanging documents with her friends in MS Office format is a prime consideration for her choice in operating systems. MS Office doesn't run on Linux. Yes, OpenOffice does, but it's not MS Office and she worries about perfect compatibility. Further, she'd like an operating system that my brother has been trained in because he'll be supporting her. My brother has learned about Windows but doesn't know a lick about Linux. Thus, she chooses Windows. Her criteria is quite rational and sane to her. While she might be open to exploring other operating systems (in fact, my Mom is a big Macintosh user, but that's quite another discussion) your definition of "quality" may never enter into her calculus. Nor should it have to.

In no way is this a failure of free market economics. You can't look at people's choices and say, "They made the wrong choice because it wasn't the choice I would have made."

Although anticompetitive tactics likely also play a role, of course any (reasonable)regulation against these would also be against the liberty of some persons/organizations, and ones probably exist that most people find fair.

It depends what you mean by "anticompetitive tactics." For some, that means things like tieing products and all-or-nothing agreements that specifically exclude competitors (e.g. Microsoft's past practice that you only got a certain price if you agreed to ship Windows exclusively, or to pay them for all computers shipped regardless of the operating system it actually shipped with). Those are definitely anti-competitive and it is not a restriction of somebody's liberty to restrict those practices in the same way that it's not a problem regulating bribery and shakedown rackets. If by "anticompetitive tactics" you mean that Microsoft or others are simply large corporations and guilty of "anticompetitive" tactics simply because they are large, then I completely disagree with you.

Mobile phones is also an example, these are often bundled with service. I am referring to the useless proliferation of power connectors. Luckily the EU is fixing this. In general, i don't think capitalism promotes compatibility, any competitor wants his product compatible with others but not vice versa.

I simply don't agree with you. There are numerous examples of industries coming together on their own to create standards. Yes, there are people that typically don't want to participate (the market leaders at the time), but over time, the axis of competition will shift from one set of features to another. At some point, if the industry is trying to standardize something that isn't a competitive feature, everybody will end up complying. The power adapter one is a good example. I don't know that any mobile phone company thinks that shipping incompatible power adapters is a way to lock customers in (Apple's original iPod connector might be the one counter-example I can think of). More likely, they simply use whatever fits the space in the phone and provides the correct power levels for the hardware design. Thus, the EU "fixing" this is really not a big deal. I do think that governments can play the role of standard-setters. As long as those standards are generally optional, then the market will determine whether the standard is useful or not.

(Aside)As an example where EU restricting something is more dubious: the efficiency of lights (Often erroneously called ban on lightbulbs, that is just an effect of lightbulbs inefficiency.) The problem is that the quality of the light really is different, non-lightbulb light might look white, but doesn't have a smooth spectrum, but such that the cones in our eyes see white. Materials, however, do absorb differently over other frequencies then our cones, so we see the object differently based on other parts of the spectrum.
Still, the regulation might be incentive for creation of more efficient lights that actually do have the quality of the lightbulb.

Ah, but here you have an example of your people with good intentions. You live by the sword, you die by the sword. You want to tell everybody else how to design cell phones with the "right" power adapter, but you don't want somebody forcing a lightbulb on you. You cannot have it both ways. Once you open the door to regulation, you should only expect more of this. That is why I reject it.

Another example where things can well be too complicated for consumers, is insurance, insurance companies can put all sort of stuff in small lettering for consumers to fall over. The overall sum of things for consumer to track can also be too high.

Don't sign contracts that you don't read. If you don't read them, then expect to get tripped up by the fine print. Again, this is not a fault of capitalism, it is simply that people are clueless and lazy. If you aren't capable of understanding a contract yourself, they invented these things called lawyers who will gladly advise you. That, my friend, is capitalism.

And there is the question how long it takes to settle into a place where supply and demand meet.

Why is that a problem? It's certainly not a failure of capitalism that supply and demand take some time to reconverge. You may not like it, but again, the market is not obliged to care what you like.

There is the issue whether some projects are too large to be funded by anyone in particular.

Who says those are worthy projects?

There is the problem of labor also being a part of supply and demand, and the disparity of the ones doing the work and the ones in control and getting the profit.

Why is that a problem? The workers are always free to start out on their own and form their own firm, right? If they don't feel that they would be successful in managing a firm, and they don't want to take that risk, well then we know that they are not suited for management or for ownership of a firm. So why should the people who are suited for management or ownership (who took the risk) not benefit more that somebody who walks in after the firm is a going concern and just wants a job?

If there is too much labor, there is poverty in 'pure' capitalism, and there is no reason to assume that there is always more work to be invented.

If there is too much labor, there is poverty in socialism. With capitalism, the price of labor will fall to the point where some people decide just what you say below: For that price, I'd rather stay home and enjoy more free time.

Also, there is the question whether it is desirable to invent ever more work. Isn't the point to get the work done, and to work to live?

Here's the great thing: In a free market system, you are allowed to determine exactly how much you should work given the current salary that you can command. If you want to work less and earn less, you are absolutely free to do so. If not, then you are absolutely free to work harder. The choice is yours. Not so with a socialist/capitalist system. In these systems, the productive are always carrying the unproductive.

And is supply and demand really a fair way of determining what the earnings of a person should be? Only up to a point i'd say. More egreous is what education people can get from their money, as that affects their chances to change their position. (And 'commercial scholarships' are bound to come with shackles.)

What would be more fair? I mean, we tried letting Comrade Stalin decide what people's salaries would be, but we saw how that turned out...

Further, there might be a limited supply of educated people, and if they follow greed those will do the more profitable problems of the rich first. Still if a government wanted less-profitable problems solved, incentivising it and using capitalism is a way. However, universities working not exactly via capitalism have proven their worth in many many things.

I actually dispute that. It's a long conversation, but I think government needs to be out of the education business. In fact, many of the best universities in the USA are private institutions that do run (mostly) via capitalism (the "mostly" part being that government is still involved with education funding through grants and loans that distort the price of education, allowing universities to raise it beyond the actual market price).

Only liberty and capitalism, expressed as the free trade among individuals, have demonstrated consistent results of raising the standards of living.

Sure, there is free trading between individuals. Corporations are simply collections of individuals who come together to run a (generally larger) business. The workers (and even "management" is a "worker") are freely trading their time and energy to the corporation.

Note the tone though, "individuals expressing themselves by freely trading" vs most of reality; people working for corporations they have no control and possibly no bargaining power over,mostly following it's orders.

You have a view of individuals that is very poor. You describe them as sheep in need of tending and care. Somehow, the person running the corporation is an evil master, who has bargaining power, while the worker doesn't. In the same way that the evil corporation owner cannot compel customers to buy his product, he cannot compel workers to work for him. And workers cannot compel him to give them whatever salaries they desire. Every transaction is a free trade. If you don't like your salary, go start a business and become an evil head of a corporation.

As for Einstein, i hope i didn't imply 'look here is Einstein, he must be right'. I do think is insight of the consequences of social things, and overestimate the selflessness of people. . (Well, smart people nearly always project other people as being smarter then they actually are.) Any 'system of society' shouldn't focus on changing people, in finding a way to let them interact such that resulting system is stable and desirable. But i think he was thinking about consequences of the free market applied everywhere, and seeing that it was naive to think that that would always work.

I'm sorry, so what was the point of saying that Einstein wrote an article about socialism, if not to imply that because Einstein wrote it he must be right? Clearly, there are better sources to cite than Einstein in advancing socialism, no? Or is he the pinnacle of socialist thought?

Edit: and oh, yeah current stock exchange, relative variation in month scale: Monsanto ~30%, Philips ~25%, Intel ~25% McDonalds ~10%, these numbers are ridiculous and completely not related to the actual position of the corporations. I have no clue why these fluctuate so much.

Then I suggest that you don't actually UNDERSTAND capitalism and free trade.

Stock exchanges grew from something useful, investing in an enterprise repaying itself if the investor was correct in thinking the idea would work, by contrast stock exchanges seem mostly for milking, while fluctuating (presumably)completely due to speculation.
I am not against investment, and even people selling their investment to other people, but something is wrong..

Okay, what is wrong? I see innuendo, but no real specifics. You say that stock exchanges were useful (at some point, a long, long time ago), and you say that it's okay for people to invest in companies and to sell those investments to other companies. When were stock exchanges useful, and what made them not useful in the intervening time? Finally, what is wrong with with different companies fluctuating at different rates and rapidly? That fact that you don't understand it doesn't mean it's wrong.

The fact is, rapid fluctuations on a market are symptoms of the free market rapidly finding the right price for a good. In fact, you previously said that it was a problem that markets sometimes take too long to find equilibrium. Which is it? Too slow or too fast?

And it isn't investment if a company is just chugging along with no real growth, then the company didn't need external money in the first place, and is just screwing over it's customers buy having to pay the 'investment' back plus a little.

Then as a customer, you're free to buy from the myriad of other suppliers for the same good. That's the great thing about a free-trading society: you aren't locked in. Don't like how a company runs it's business? No problem, buy from somebody else? Want to start a competing firm and drive the existing firm out of business because they are such dunderheads? Sure, go for it! It's all up to you.

[findinglisp]

I have a colleague at work who has described himself as a left-libertarian who also thinks it's okay for the government to ban transfats.

It's a nutritionless poison...

I think you're stretching things. It's a nutritionless poison in the same sense as tobacco, potato chips, gin, and any number of other things that we allow people to consume. That's far different from something like cyanide which I what I think of when I see "poison."

Note that I'm not arguing for transfats. I think they are bad just like you do. I'm arguing for the freedom for people to create products and to consume whatever they want, whether healthy or unhealthy. If transfats are so bad, I could see a labeling requirement, but not an outright ban.

[findinglisp]

I don't buy the "corporations are evil" thing spouted by many people (not necessarily you). Corporations can be bad in the same way that individuals can be bad. Corporations by themselves are simply organizational and legal structures for how groups of people can work together; they are inert by themselves. They reflect the attitudes of the people that populate them. Can organizations do bad things? Yup, sure. Can individuals do bad things? Yup, sure. Neither of those facts suggests that individuals involved with a corporation are not trading freely as individuals at all levels.

Corporations can very easily do things no one within them wants, if the bylaws aren't set up strictly and it's publically traded.

Sure, but why is that a problem? Presumably they do something that somebody within them wants? If something is actively done, somebody must be actively doing it.

If you, as an employee disagree with the activities of the corporation, you are free to leave. If it's really illegal, as opposed to merely objectionable, you can report the corporation into the authorities. I see no difference in any of this between a large corporation with 100,000 employees and a small sole-proprietorship with 10 employees.

[findinglisp]

By the same token, world powers like the US, Germany, Japan, etc, have mixed economies which depend crucially on massive state intervention. (As the US State Dept. explained.)

Yes, but that doesn't necessarily have to be the case. That is, the USA, Japan, Germany, etc. are not great examples of capitalism. As you rightly point out, they are a mix. The question is, must they be that way, or is it just a fact that they are? Would they, for instance, work better, if they rejected state intervention, and would technologies have actually been developed faster if the government was not involved? I would argue that we would be better off without state intervention. I have worked for startups for > 10 years, however, and believe that a private system of venture capital (not necessarily the VC industry as we know it today) and entrepreneurs works better than any central planning mechanism, not matter how benevolent or benign.

To be ontopic, Lisp is a great example; it was developed on the public dime through DARPA subsidy,

And we see how successful Lisp has been as a result...

just like computing and the internet more broadly.

Yes, but realize that computing and the Internet were funded because the government wanted to deploy these technologies, not simply as an act of state fostering development for development's sake. Specifically, the US DoD wanted both computers (for ballistics calculations) and the Internet (for a distributed, decentralized communications system that would survive a nuclear strike). In this sense, they are simply a consumer like any other, though with very deep pockets. But this is not unlike a large, private financial services firm funding the development of various technologies that would deliver a better, state-of-the-art trading system that would make their firm more competitive. In other words, while the US government did fund both computers and the Internet, that funding and intervention was completely different than say the USSR's centrally planned economy.

[TheGZeus]

I don't buy the "corporations are evil" thing spouted by many people (not necessarily you). Corporations can be bad in the same way that individuals can be bad. Corporations by themselves are simply organizational and legal structures for how groups of people can work together; they are inert by themselves. They reflect the attitudes of the people that populate them. Can organizations do bad things? Yup, sure. Can individuals do bad things? Yup, sure. Neither of those facts suggests that individuals involved with a corporation are not trading freely as individuals at all levels.

Corporations can very easily do things no one within them wants, if the bylaws aren't set up strictly and it's publically traded.

Sure, but why is that a problem? Presumably they do something that somebody within them wants? If something is actively done, somebody must be actively doing it.

If you, as an employee disagree with the activities of the corporation, you are free to leave. If it's really illegal, as opposed to merely objectionable, you can report the corporation into the authorities. I see no difference in any of this between a large corporation with 100,000 employees and a small sole-proprietorship with 10 employees.

Actually, no, no one person has to be actively doing it.
It's been shown time and again. Most employees wouldn't know about objectionable practices, nor would they believe it if they'd heard.
I'm not arguing against corporations, just for stronger ethical things in the bylaws, and against laws that let shareholders lobby/sue for more short-term gains(yeah, that legal precendent exists).

And there's a big difference between a sole proprietership and a corporation. A sole proprietor, or even a non-traded corporation, can do what it wants to, hopefully for its customers' and employee's benefit.
A publically traded one doesn't even have the option. Short-term returns for the shareholders, or they sue. And the shareholders will win.
Privately owned companies serve the owner, employees, and customers. What comes first to them is their choice.
Publically traded companies serve the shareholders, always.

[TheGZeus]

[quote="findinglisp"

I think you're stretching things. It's a nutritionless poison in the same sense as tobacco, potato chips, gin, and any number of other things that we allow people to consume. That's far different from something like cyanide which I what I think of when I see "poison."

Note that I'm not arguing for transfats. I think they are bad just like you do. I'm arguing for the freedom for people to create products and to consume whatever they want, whether healthy or unhealthy. If transfats are so bad, I could see a labeling requirement, but not an outright ban.

Hmm..
Point taken.