A socialist alternative to a vcommand economy

[Kidlicious]

Originally posted by Kuciwalker

You can actually make yourself happy by making a sacrifice for someone.

So? You're still acting to maximize your utility function (your happiness), so it's self-interested.

Utility only comes from goods and services or something you can trade for them. What you're talking about isn't economics.

Originally posted by Kuciwalker

The idea of people acting in their own self-interest is simply an assumption that is made to make policy.

No, it's the definition of a rational agent. Only (some) insane people do not act in their perceived self-interest. This does not necessarily mean maximizing one's money.

It's not insane. Most everyone does it occasionally.

And yes this got boring very fast.

[Agathon]

How do you define welfare? Certainly everyone acts in their self-interest in that they take the course of action that they believe will maximize their happiness.

No they don't. Parents often sacrifice their own welfare for that of their children. The case of wills also invalidates your position since it expresses interests which a person cannot possibly hope to benefit from.

Either that or they're insane (in fact, the definition of a rational agent is one that attempts to maximize its utility function).

That's a mindlessly idiotic definition. See... this is why people need philosophy.

[Bosh]

skipping over the thread-jacks...

Originally posted by Oerdin
Yugoslavia tried using government owned but worker run companies during the 1960s through to the 1980s. The Yugoslav economy did out proform the rest of the eastern block through that period but they suffered from sever undercapitalization and as a result their economy underperformed the west.

Well of course. If you have one group own something ("society" or, de facto, the state) and another group manage it (the workers more or less) then of course the people managing it have an incentive to grab money instead of investing long-term (since they'd basically be throwing the money down a whole) so you'd get under-capitalization. The problem gets solved if the people managing and owning a company are the same people, so if they spend the money on long-term investment rather than pocketing it, it remains their money.

i dont get this... can't it be assumed that the workers do not have business administration and management skills?

It can't be assumed that shareholders in American companies have these skills either, and they hold ultimate power over the policy of corporations today. Hell, I'm SURE that replacing random investors with employees would result in a MASSIVE increase in the amount of useful knowledge about the company in the body that's ultimately responsible for how its run (the owners).

In the Russian Revolution, workers managed their factories and work places quite effectively at first (things changed during the Civil War for various reasons).

Well like I said before its silly to have workers manage state/"society" property since you get all kinds of inefficiency. What you need to do to maximize efficiency is have the owners/workers/managers be pretty much the same people so that their interests line up.

[Az]

Well of course. If you have one group own something ("society" or, de facto, the state) and another group manage it (the workers more or less) then of course the people managing it have an incentive to grab money instead of investing long-term (since they'd basically be throwing the money down a whole) so you'd get under-capitalization. The problem gets solved if the people managing and owning a company are the same people, so if they spend the money on long-term investment rather than pocketing it, it remains their money.

So you still get all the bad sides of capitalism. Now it will be one group of workers exploiting another one.

[Bosh]

OK let me explain a useful economic concept called X-inefficiency (or agency problems). Basically its the problem that happens when people say "why the hell should I work hard when if I do other people gain for my hard work and I don't get ****." Or, in other words, how badly does the interest of people actually doing the work line up with the interests of those who will benefit from the work getting done.

Simple tought experiment so see which kind of economic system does the best at minimzing this kind of inefficiency (you're never going to eliminate it since people will always be lazy):

-Corporate Capitalism. The shareholders tell the CEO to work hard to make them rich, who tells the managers, who tell the workers. Now the managers' and CEO's interests don't line up exactly with the shareholders (despite massively-expensive stock option plans that attempt to make this happen) and the workers' interests don't line up with the managers (ie working really hard so their manager gets a promotion isn't on the top of their list of interests). Basically think of the bit in Office Space where the workers are told to think all the time about "Does This Help the Company?" but because their managers' interests don't line up with the shareholders and the workers' interests don't line up with the managers there's not much in the way of motivate to actually follow the slogan. Of course there's all kind of carrot/stick things to paper over the problem but they're still just ways of papering over the problem that that the worker wants to do isn't what the shareholder wants him to be doing.
In more extreme examples of x-inefficiency, (like me at my last job) you have workers actively trying to to sabotague the business they're working for (in my case was because I wasn't getting paid and because of visa complications that made it possible for me to be kept out of the country where I very very much wanted to be for months if I quit and other fun stuff along those lines), workers probably wouldn't do this in a worker-controlled company (unless they're idiots) because they'd be shooting themselves in the foot.

-Command Economy. Command economy is even messier. It goes The People -> The State -> the company chief manager -> lower level management -> workers. That's an awful lot of steps to go from the people who benefit from work getting done to the people who actually have to do the work. I'm sure you know enough about the basics of command economies to know how inefficiency can creep in at every step.

Worker-controlled Companies. Well this one is a lot simplier. The people who do the work and the people who benefit from the work getting done are *gasp* exactly the same people (collectively of course so you still get some Free Rider problems). So if you work your ass off its you and your co-workers who benefit from it. That means that if someone is slacking off, everyone arround him are losing money because of it (not some investor a thousand miles away who nobody gives a **** about) and everyone around him has a direct incentive to get him to stop slacking off. Also people know that they're in their for the long haul since the company isn't going to close up shop and move to China in order to make investors more money, since the investors (the workers) would be out on the street if that happened so everyone has more of an incentive to be there for the long haul.

There are of course plenty of other kinds of inefficiency, but minimizing this kind is very very important.

[Bosh]

So you still get all the bad sides of capitalism. Now it will be one group of workers exploiting another one.

Depends what you mean by exploitation. The people doing the work are getting the profits, so in a narrow Marxian definition of exploitation, no exploitation is occuring. But also, keep in mind that this is just one part of the institutions that would be needed for a good economy (you'd also need various consumer co-ops and egalitarian financial institutions and well as Syndicalist labor unions), but at the very least Worker Capitalism (ie workers owning companies in an otherwise capitalist environment) is a big step up from what we have now.

[Az]

It is, sure, but that's not a democratic economy.

[Bosh]

Originally posted by Azazel
It is, sure, but that's not a democratic economy.

Of course not.

[Dinner]

Nobody wants to talk about how Tito tried to do this kind of set up?

[Az]

Oerdin: I do.

Boshko: it's important to point out, though, that although there are more "steps", more links in the chain, bigger systems enjoy the benefits of scale, and so does the entire economy. It is known that the efficiency of a complex system isn't necessarily at max when each and everyone of the parts of the systems in optimised. There is a general optimum,under which, individual components aren't necessarily at their optimum.

[Kidlicious]

Boshko,

Society has to have some control over the work that is done, because it is a stakeholder. It consumes what is produced. While I strongly agree with you that workers need to have incentive, and that they should be organized in efficient groups based on the industry that they are in, I can still see that the interests of the workers will sometimes clash with that of society. A democratic govt is the best measure to give workers incentive and protect societies interests.

[Kuciwalker]

Originally posted by Agathon
No they don't. Parents often sacrifice their own welfare for that of their children. The case of wills also invalidates your position since it expresses interests which a person cannot possibly hope to benefit from.

They do it because it makes them happier! Duh! They do it because they would rather have to outcome of "oh, I lose some stuff but my children gain some" than "they don't get the best stuff I can provide them, even though I have some more fun".

That's a mindlessly idiotic definition. See... this is why people need philosophy.

No, that's the only meaningful definition. See any decent AI textbook.

[Kuciwalker]

Originally posted by Kidicious
Society has to have some control over the work that is done, because it is a stakeholder. It consumes what is produced.

Rather, individuals do, and they HAVE this control by deciding which products to by and which ones not to buy. In this case, no one is able to use undue power to provent others from doing what they want with their own property.

[Kidlicious]

Originally posted by Kuciwalker

Originally posted by Kidicious
Society has to have some control over the work that is done, because it is a stakeholder. It consumes what is produced.

Rather, individuals do, and they HAVE this control by deciding which products to by and which ones not to buy. In this case, no one is able to use undue power to provent others from doing what they want with their own property.

I was speaking in regards to the topic of the thread.

[Kuciwalker]

So am I. I was saying that society does have control over it, but through individuals. "Society" has no collective rights, individuals do.