- Capitalism and Alternatives -

Prisoner's Lemmas

Posted by: Gideon Hallett ( UK ) on October 04, 1999 at 14:05:13:

In Reply to: yes posted by Gee on October 04, 1999 at 13:28:09:

: : Does worker ownership of business (e.g. as practiced in the several IWW "job shops" around the USA) demonstrate an avoidance of struggle or is it a means of strengthening the position of workers?

: I would say its a strenghtening - if the business is owned *exclusively* by people who work in it then they will find that their incomes and wealth are very much affected by what they do. Struggle related more to outcome.

: If their productivity was owned by some nebulous *everybody* then whatever they did they would get back only an average based upon the sum of everyones effort. Struggle related less to outcome.

: Ever played the prisoners dilemma?

Yup. As Axelrod showed, the optimal strategy in a repeated-iteration Prisoner's Dilemma is tit-for-tat starting with co-operation, not competition.

Many game theorists have pointed out that similar interaction occurs in the natural world; society-based animals can survive better by all co-operating than they can as individuals; even if individual one-off results are maximised by selfishness.

Interestingly enough; in a human parallel, the OECD's employment group recently concluded that "...inequality and unemployment are positively correlated - rising wage inequality and rising unemployment go hand in hand." - in other words, the standard economic doctrine that says labour market flexibility is the way to high employment is utterly wrong.

James Galbraith (University of Texas) and Pedro Conceição and Pedro Ferreira (both of Instituto Superior Tecnico in Lisbon) concluded this after studying industrial earnings from the EU and US over the last 20 years.

To quote;

"Today, national unemployment rates are systematically lower in the richer and more equal countries of Europe where wages are high and social welfare systems are strong. Meanwhile, it is the lower-income countries with the weakest social welfare systems and the most inequality, such as Spain, where unemployment is highest in today's Europe."

By the same token, unemployment in the US should have fallen in the 1980s as the impact of Reaganite policies led to an increase in inequality, while the reduction in inequality during the late 1990s should have led to lengthening dole queues. Again, not so. Further, those parts of the US which have seen the largest increases in income inequality - California and New York - should have created the most jobs. Wrong again. Non-farm payroll employment rose 1.6% a year in the US as a whole between 1989 and 1997: in California it climbed just 0.9% a year, in New York it fell 0.3% a year.

- In other words, in a repeated-iteration Prisoner's Dilemma (the marketplace), mutual co-operation is a more successful strategy than defection at the expense of others.

Interesting, no?


(The data in this article was unashamedly cribbed from today's Guardian; you can find it here)

Follow Ups:

The Debating Room Post a Followup