- Capitalism and Alternatives -

Chickenshit leader to Pinko central...Operation 'Sowell Food' commencing.

Posted by: Frenchy on January 31, 19100 at 13:39:32:

Sam3 Cont. Managerial ability and entrepreneurial innovation are not the only forms of human
capital. Workers' skills and experience are also major elements of a country's stock. The invisibility of this capital makes it difficult to determine how much of a capitalist
nation's capital stock is in fact owned by the workers. However, the presence and importance of workers' human capital are manifested in various ways. Countries
whose workers lack industrial skills and experience may have massive unemployment or underemployment, and yet be unable to fill jobs created by new
industries-which industries even resort to expensive transportation of workers from distant lands, paying them premium salaries to compensate for the cultural change.
Nor is this human capital merely a matter of skills, narrowly defined. Most job skills can be taught in a matter of months, or at most a few years, but national industrial
backwardness can continue for generations or centuries on end. For what is not so easily taught are cultural habits and olrientations toward work and toward life-
punctuality, perserverance, attentiveness to detail, cooperation among workers and with supervisors. Enormous disparities may exist in these regards, not only among
nations but also among groups within a given nation. The income advantages of experienced over inexperienced workers in a given country can exceed income
differences among racial groups in that country. In this context Marx's ringing use of the term "capitalism" was something of a verbal coup. It implied a system for the
benefit of a small class of people with a unique monopoly of capital assets. But capitalists as thus defined receiuve only a small fraction of the total income received by
labor; yet no one thinks of calling the econimic system "laborism", even though that is where three-quarters or more of the income goes. The fundamental fallacy,
however, is in narrowly conceiving capital to mean physical equipment rather than the human capital which may be nastly more valuable and far more widely dispersed,
so that much of that majority of national income that is statistically counted oa a return to "labor" is in fact a return to human capital that is widely owned. Logically,
Marxian economics did not need to assume that management or other non-labor inputs were of minor importance, even though historically this assumption was made
and had serious practical consequences. It is the private ownership of capital that defines cpitalism, and the capitalist investor rather than the manager who was
deemed superfluous and a hindrance to production. Capital attempted to establish that capital owners had often acquired their wealth, histroically, trough force and fraud
rather than through personal contributions to the economy's production. An enumeration of lurid examples does not of course establish general causation. But more
fundamentally, even if all capital were assumed to have had unproductive retrospective implications this would still leave untouched the prospective policy issue as to
wheather private or public ownership would be more efficient for an economy and its people. Whatever the past may have been, the policy question at any given
juncture is what future results can be expected from current incentives and constraints, campared to other alternatives. The socialist tradition has long assumed that
collectivized production "in the public interest" would in fact serve the masses of people more effectively than private production motivated by a desire for private gain.
But the Marxian part of the socialist tradition can less easily make this assumption, for Marxism emphasizes in many contexts that individual is not the crucial factor in
causation. Capital reminds us that the road to hell is paved with good intentions, that everything that has been done wrong "has been done wrong for the very best of
reasons", and Engels pionted out that "what each individual wills is obstructed by everyone else, and what emerges is something that no one willed." In short, Marxian
analysis is based on systematic interactions, not individual intentions, so the fact that socialists may have nobler intentions than capitalists provides neither a logical nor
an empirical reason to expect better results under socialism. Reasoning systematically, Marx was one of the few socialists to understand that economic competition,
motivated by "greed", was what drove prices down under capitalism, as capitalists ceaselessly searched for more profits by seeking cheaper ways of producing than
those possessed by their fellow capitalist rivals. Mutual competion ensured that capitalists were in no position simply to tack higher profits onto production costs.
Therefore, as production costs were driven down throughout an industry, prices tended to be driven down as well, to the benefit of the consuming public. But Marx never
faced the issue whether socialist managers and central planners would be equally zealous in weeding out inefficiency and seeking new technologies- whose economic
benefits they could not personally reap. Marx understood that capitalis who introduced cost saving innovation were motivated by the extra profits they could reap
temporarily, until their rivals copied them, after which the production cost savings would accrue to the consumers, due to competition among the producers. But without
even this temporary incentive of personal gain, would socialist planners be willing to put forth the same exertions and take on the same risks of disastrous failure that
are inseperable from pioneering innovations? Historically, this has not been the casein the Soviet economy, where even the nations's political leaders have publicly
complained of the enterprise managers' tendency to stick to "safe" established practices and- in Brezhnev's words- to shy away from innovation "as the devil shies
away from incence." Marx pointed out that the original innovators under capitalism were often ruined financially, and only later would other capitalists finally develop an
innovation into a paying proposition. While this may have been meant as a commentary on the individual injustice of rewards and contributions under capitalism, it also
showed what desparate gambles innovators were prepared to take, in hopes of a large profit. A collectivized economy that stifles such profits in the interests of
individual justice may create an even greater injustice to the consuming public by inhibiting economic innovation.

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