A three-part interview of Michael Albert to Paul Jay and Greg Wilpert on his book, ‘No Bosses: A New Economy for a Better World’.
Part 1:
Long-time activist and author Michael Albert outlines his vision for a post-capitalist and classless economic system, known as participatory economics and based on his most recent book, No Bosses (Zer0 Books, 2021). In this first part, Paul Jay and Michael Albert talk about the importance of economic vision and the rationale behind re-organizing the workplace on the basis of self-management and a non-corporate division of labor.
Part 2:
How would remuneration and the allocation of goods and services look like in a post-capitalist participatory economic system? In this second part of our discussion with Michael Albert, the author of the book, No Bosses (Zer0 Books, 2021), he talks to Greg Wilpert about the contours of an economic vision that fulfills the values of self-management, solidarity, diversity, equity, sustainability, and participation.
Part 3:
Michael Albert responds to some common objections and concerns that Greg Wilpert raises about his vision for a participatory economy, such as how to avoid the spontaneous formation of black markets, whether his proposal should be considered socialist or anarchist, and whether his proposal can be a considered a blueprint.
TRANSCRIPT / Part 1:
Paul Jay
Hi, welcome to theAnalysis.news. I’m Paul Jay, and we’ll be back in a few seconds to talk about what a new, a different, a better society actually look like. I’m certainly one that’s convinced that to fight against the sort of distortion or depravity, as our next guest calls our current system, you also have to have a vision to fight for. So we’re going to be doing that discussion soon with Michael Albert and talk about his new book, No Bosses: A New Economy for a Better World.
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In the preface to the book No Bosses by Michael Albert, Noam Chomsky writes the following.
Excerpt
“The chapters do not provide a complete blueprint, but rather the essentials, or what Albert calls a “scaffold,” for future experience to fill out. The scaffold describes and advocates a natural and built Commons, workers’ and consumers’ self-managing councils, a division of labor that balances empowering tasks among all workers, a norm that apportions income for duration, intensity, and onerousness of socially valued labor, and finally, not markets or essential planning, but instead participatory planning by workers and consumers of what is produced, by what means, to what ends. It makes a compelling case that these features can be brought together in a spirit of solidarity to establish a self-managing, equitable, sustainable, participatory, new economy, with a rich artistic and intellectual culture as well.”
Paul Jay
Now join us to talk about this new book, No Bosses. Now joining us is Michael Albert. He’s a longtime activist, author of 20 books and hundreds of articles, and founder and staff at zcomm.org/znet. For our purposes today, most relevant, the co-author of a vision called Participatory Economics, sometimes Participatory Socialism, and as I said, his new book, No Bosses. Thanks for joining us, Michael.
Michael Albert
Thank you very much for having me. I really appreciate it.
Paul Jay
So, first of all, I have to admit something which most hosts, I don’t think, like to admit, but I’m going to admit it. I haven’t read the whole book yet. I’ve read, I think, significant pieces of it. I get a sense of the argument, but it’s really quite an in-depth analysis of what a new, different kind of society could look like. So we’re going to talk about some of the features of it.
Before I get you to lay out the very broad vision of what the scaffold is, why, at this point in history, did you decide this was the book you needed to write?
Michael Albert
I suppose the honest answer is I didn’t. This vision emerged at the end of the ’60s during that period of upheaval. So the impetus to talk about vision came then. I guess the easiest way to describe how that happened was that myself and Robin Hahnel, who was my partner in developing this vision, constantly ran into the question, sort of put this way, we get what you don’t like. We understand what you don’t like, but what are you for?
Oftentimes it felt like the person who was asking that, and sometimes it was true, was basically saying, if you don’t have an answer to that question, shut up. You have no right being so critical. It’s the kind of thing that a parent might say to you, but you could also run into it in organizing, and we did.
Our response was basically, you don’t have to have a full alternative to slavery in order to be an abolitionist. I don’t have to understand everything about what a new economy is going to look like to oppose capitalism. After a while, we began to feel like that was a justified answer. It was sort of an accurate, true answer, but it was strategically dumb because a lot of the people who were asking really meant it. They really meant, okay, yeah, this sucks. This is terrible, but is there anything better? What are you for? So that kicked off the experience of trying to come up with an economic vision that was viable and worthy. Then we come to the present, and it’s not the first offering on that, but it’s an attempt that I hope is more succinct, tightly argued, and maybe better over this period of time. So I wrote it now to do something better than in the past.
Paul Jay
Well, as I said in the intro, I’m a big believer that one needs a vision to fight for, not just against. In the 1930s, in the ’40s, even to some extent in the ’50s, but less so, the Soviet Union was that model for millions and millions of people. Rightly or wrongly, whether they really understood what was going on there, the state was at least a workers’ state. It certainly had full employment, health care and a very good educational system. It turned out that a lot of the accusations against it that it had become more or less a kind of centralized police state turned out to be true. A lot of people didn’t want to believe it.
That didn’t mean that one, that vision wasn’t something to fight for, at least in a broad sense. When that vision collapsed, it left a real gaping hole in the progressive movement around the world. Okay, now, sort of what you just said, we know what we don’t like, but what are we actually fighting for? I think this is a critical question in terms of organizing and the movement. The thing, too, is people wonder what’s going on with the support for [Donald] Trump and this kind of right-wing politics because, in some ways, it’s filling a void. The traditional American narrative is espoused either by corporate Democrats, or old-styled Republicans is quite discredited, and it’s not a vision that people will fight for.
So I think it’s very important to have this debate and discussion. It’s one of the things I’ve always wanted to do with theAnalysis.news. I’m glad we’re doing it, and I’m going to do a lot more of it, and of course, there isn’t one vision of what we’re going to fight for, but it’s sort of in the same ballpark. So give us a sense of what that scaffolding is.
Michael Albert
I’ll do that in a second. Let me just say that I agree with you completely about the importance of it, and I’d even like to add an element. If you’re fighting against something that’s good, if the thing you’re fighting against is horrible as it is, how do you fight? How do you know what to do? How do you know what to reveal and what to argue for? How do you plant the seeds of the future in the present? So that’s one reason why vision matters. It’s because strategy isn’t rooted only at one end in the present. It also has to lead to where you want to go.
The other reason is the reason I think you were driving at, which is you could almost say psychological, but I think it’s more than that, which is that absent the positive, we’re entirely negative. Negativity has a kind of a tone, dynamic and culture associated with it, which is very off-putting. So we don’t attract people because they feel like, well, I’m supposed to make sacrifices, struggle and reorient myself, and you won’t even tell me what for? They also feel like, well, I’m supposed to do all those things, and the sort of vibes that you give off is so negative, and I don’t want to do it. So we need vision in order to grow now, not just because it would be nice to have it down the road when there’s something to implement.
Okay, so what’s the scaffold, you asked? Well, first of all, what’s the logic of it? It’s those things which we can say confidently now are needed, are necessary, if the future— and this is an economy we’re talking about in the book, No Bosses. Other things are also important: kinship, the political system, community, and culture, but the book is about the economy mostly.
What things can we say are needed and essential if this future economy is going to have the attributes we want it to have? Not a full blueprint for the reasons Noam gives and one more. One, we don’t know enough to do a blueprint. We’re going to learn all sorts of new things as time passes. You can’t blueprint them in advance. That’s a point that Noam makes when he makes this argument.
But there’s another reason, I think that I feel, which is not our place. It’s not our place to tell future citizens the details of how they’re going to function. The only thing that is our place to do is to try to hand them a world in which they can function the way they want to, in which they can manage their own lives, in which they do have equity, in which they do have solidarity, and so on. So the scaffold is those components of a new society which are essential and without which you’re not going to have that.
The most obvious one is the one that has been pronounced or argued for forever, for a long time, which is that you can’t have private ownership of the means of production. You can’t have capitalists. You can’t have 1% who own everything and who therefore administer everything and determine the outcomes for everything. In place of that, participatory economics says, let’s have a Commons of productive assets.
It really sets aside ownership completely. It’s not capitalists who own it. It’s not anybody who owns it. It’s this Commons of productive assets. The question then becomes, well, how do you get to use it? How does a workplace get to use the resources and the tools and so on? The idea is productive Commons.
Paul Jay
So what you’re about to describe, the scaffolding, is a building that’s going to get erected after there’s been a transition, we don’t know for how long, from existing capitalism to essentially the abolition of private ownership to ownership by the Commons. So there’s quite a transition that’s going to have to take place, but that’s not what the book is about. The book is about what this might look like once you have had this transition. Am I right in that?
Michael Albert
Basically, yes. Over on the side here, there’s a file called Transition. It’s the next project. Yes, we now have what we have. We now have what? Private ownership, the means of production; we have what we call a corporate division of labour. That’s a division of labour in which about 20% of the workforce does empowering tasks, and 80% does disempowering tasks. We have remuneration income for property, for bargaining power, and to an extent, for output, and we have markets and or central planning. We really do have both in the United States. Amazon is essentially planned, and Amazon is as big as many economies. So we do have central planning, and we do have markets and a combination. Each of those key components annihilate things that I feel— and this is a value question— things that I feel that Robin and I felt at the beginning characterize a good economy. We characterize a good economy as people controlling their own lives. We call it self-management, diversity rather than homogenization. Solidarity, people actually being concerned with one another’s wellbeing, instead of a rat race in which you get ahead at the expense of somebody else, and instead of remuneration for power and property, remuneration for how long you work, how hard you work, and the onerousness of the conditions under which you work during socially valued labour and then participatory planning.
Those are the scaffold things. So the scaffold isn’t the whole building. The whole building is even longer in the future. You describe transition and then a situation where you’re creating the new society or creating the new economy and other elements of the society. Okay, the scaffold is really the key component that you have to get so that that thing that you’re creating, that whole new society, is going to have the attributes you want it to have. In the case of the economy, it’s going to be classless, and it’s going to be self-managing, et cetera.
Paul Jay
Well, if it’s classless, then in terms of [Karl] Marx, Engelism, essentially what does communism look like? What Marx and [Friedrich] Engels envisioned after this period of socialism, where you still have classes, a state, and you still have laws and cops and armies, you’re envisioning, what does it look like after that?
Michael Albert
Well, yeah, but you just lined up a bunch of things, cops and state and so on, and those are additional discussions. I don’t think that a good society doesn’t have a political system. If you don’t want to call that a state because the word state implies fierce hierarchy, okay, but a political system I think it does have.
I even think it’s probably not something good to go off on, but in a good economy, planes would fly, let’s say, let’s assume that’s the case. You wouldn’t have random people as pilots. You would have the people who are piloting the plane have to be trained and able to pilot the plane. Well, now there’s more that you would have in a good economy. They would be remunerated like everybody else, and they would have a balanced job. They would do disempowering as well as empowering work. But part of what they would do is fly the plane. You wouldn’t say, well, the pilot has a lot of power while flying, which is true. The pilot has the lives of 500 people in his hands or her hands.
Paul Jay
Yeah, I hope they’re not going to have a big discussion about how to fly the plane while they’re 3,000 ft up in the air.
Michael Albert
No, so you want a good pilot who’s capable of—
Paul Jay
I don’t know about participatory—
Michael Albert
No, the participatory part will get to, but it’s not that, clearly, and it shouldn’t be that about policing either. That is to say, the idea that everybody is going to deal with the kinds of violations that occur. We don’t assume all of a sudden that everybody is Mother Teresa. People are still people. There will still be drunkenness. There will still be abuse. There will still be less of everything, but it doesn’t disappear. So, if it doesn’t disappear, the way that society deals with it has to be skilled, it has to be learned, it has to be capable, and it has to be under control.
So lots of things that exist now, for example, there are some people who would say, look, factories pollute. They are undignified in what they do, so let’s get rid of them. Okay, that’s just silly, I think. You’re going to have workplaces. You’re going to have places where people come together and do work. What you want to do is make it humane, self-managed and all the other things.
So back to the pilot. The pilot in a participatory economy pilots, does it well, is trained and is capable, but also does, at other points in time while not piloting other activities. Let’s say tending to the people on the plane, going up and down the aisles and helping people out or maybe tending to cleaning up the airport. I don’t know, but a mixed combination of tasks.
Why? Well, one of the key themes of participatory economics is that between labor and capital, there’s another class, a coordinator class. People who, by virtue of their circumstances in the economy— so in that sense, it’s a sort of a Marxist argument— by virtue of the circumstances in the economy have more empowering work. Their work gives them a degree of knowledge, awareness, confidence, connections to other people, and access to decision-making levers, and 80% are the opposite. Their work deadens, exhausts, reduces skills, and disconnects. So you get a situation where the 20% become a new ruling class over the 80%.
The solution to that in participatory economics, or part of the solution to that, is that you don’t give 20% of the workforce all the empowering work. You instead define jobs. This is the new division of labour. Define jobs in such a way that everybody has a mix of responsibilities and tasks which are comparably empowering. So everybody is prepared to participate in the workers’ Council and also in the consumers’ Council in a self-managing way, rather than 80% being so exhausted, deadened, devoid of information about what’s going on and lacking confidence that they don’t want to participate and after a while don’t. Twenty percent who set the agendas, do the debating, the arguing and make all the decisions and rules. That’s a piece of participatory economics which is connected to and motivated by the desire to get rid of not just an owning class on top but to get rid of a class of empowered employees on top by having that empowerment spread out. So that’s one of the key scaffolding features.
The argument is if you don’t do that, if you keep the old corporate division of labor, no matter what people’s will is, no matter what people’s inclinations and their heartfelt desires are, that’s not the issue. The structure will impose a class division and class rule. So you need to change the corporate division of labour to balance job complexes.
Paul Jay
Well, they kind of route this in where we are and might be. The world you’re describing only comes into being if there’s, as I said before, a kind of transition from a primarily privately owned economy to a socially owned economy, whatever form that might take. To some extent, it’s a different discussion because you still have classes, and you still have probably a mix of public ownership and private ownership.
To get where you’re at, and I don’t know if, in the book, I’m not sure it goes there, but assuming humanity survives our current circumstances of the climate threat and nuclear threat and so on, you’re at a whole other stage of human society. At this point, aren’t you into artificial intelligence and robotics? The whole nature of work is going to have changed. I don’t know if there are any brain-dead menial jobs anymore.
Michael Albert
Yeah, I have to admit, I’m not too impressed with that kind of formulation. But let’s go 20 years into the past.
Paul Jay
No, what do you mean you’re not impressed with that? What aren’t you impressed by?
Michael Albert
I am not impressed with what’s attributed to artificial intelligence and what it’s going to be able to do. I’m not impressed with the notion that there’ll be no onerous work. There will be, and it will have to be shared. But if there isn’t, great. Let me go 20 years into the past because I think what we’re talking about here is relevant now.
In Argentina, when there was an economic crisis and tons of factories were taken over by the workforce, they actually weren’t taken over by the workforce in the way we think of it. What happened was the capitalist punted. The capitalist decided this thing was no longer working for me, and they left. The coordinator class inside those workplaces said to themselves it was already failing without the owner, it sure as hell going to fail, I’m going too. They left also.
So you had all these workplaces of diverse kinds that were void of their ownership sector and void of their coordinator class sector, but the workers couldn’t go anyplace, so they took over. That was a remarkable kind of situation. When the workers took over, interestingly, they formed workers assemblies or workers councils, I like to call them, and instituted a kind of democratic decision-making voting. Not exactly what we call self-management in participatory economics, but effectively a long ways toward it. They also pretty much levelled the wages. So they went a long ways toward equitable incomes. They even, in some cases, took into account people’s personal circumstances. So they did that, too.
I was in a room with about 50 representatives from around Argentina, from occupied workplaces, and I’ve told this story before because, to me, it’s so powerful. Before the sort of formal section, I was there to speak. Before the formal section, people are just chatting and talking with each other, and it was very light and upbeat. People from across the country are meeting other people, and they are all members of this small group of people who have taken over factories.
We start, and I say, let’s go around the room, and we start doing that with a little bit of reporting on their circumstances. By the time the 7th person, and it was literally the 7th person, they’re making this brief report, not only was the room no longer upbeat, but it was maudlin, and some people were crying. They literally have tears in their eyes. The 7th person said this, I would never have thought. I could never imagine that I would say maybe Margaret Thatcher was right. We took over the workplace, we instituted democracy, we made our wages fair, and we began to work and not only that, we made the workplace succeed. We got it back on track, but now all the old crap is coming back. And that’s what one through seven said, also in various ways.
At that point, I interrupted and said when you took over, what did you do about the various jobs? What did you do to deal with the fact that the engineers and the finance people had left? They said, well, obviously we had to do the jobs. So people took responsibility for doing the jobs. So I said, so you had a new person who was, for example, doing the accounting and the financial officer. They said yes. They didn’t really understand the question because it seemed like it was the only possible thing you could do. Then I argued, and I think it’s the case that what happened was not what they thought, and they admitted that what they thought was human nature was destroying their experiment, that human nature was at fault for bringing back all the alienation and bringing back the hierarchy against their desires.
I argued that, no, that’s not what happened. What happened was you maintained the old division of labor, and even though you populated those jobs with working people whose backgrounds were the same as everybody else’s backgrounds, nonetheless, over time and not very long, those people filling those jobs by virtue of what they were doing and the responsibility that they saw themselves as having begun to see themselves as more worthy, as deserving, more. They also came to the meetings with more information and knowledge, and confidence. They started doing the agendas, and they just kept nodding. Then they said, yeah, that’s exactly it. I don’t even go to the meeting anymore, one of them said, and that’s an institution at work.
That’s what it means to talk about an institution mattering. This institution, the corporate division of labor, was overthrowing the will of the workplace. They really wanted justice. They really wanted equity. They really wanted their experiment to be different, and all the old crap was coming back. So participatory economics mattered right then. In other words, what would they have done differently? Is that what you’re going to ask?
Paul Jay
Well, first of all, let’s parse this out for a second. This kind of worker’s ownership, worker’s collective in this day and age, it happens. You have an enormous one in Spain called Mondragon, and there are smaller experiments, but they’re still operating within essentially a capitalist world, and they don’t change the nature of that. Even though Mondragon in Spain is enormous, it’s one of the larger companies, I think, in Spain. It has not changed the fundamental character of Spanish capitalism. Although that being said, it’s far more democratic for the workers. They’re much more careful if they have layoffs. They keep paying people and so on. So it’s better, but it’s not where your book is at by any means.
Now, that being said, whether it’s now or later, how do you deal with the fact that someone’s going to have to keep the books and know something about bookkeeping? So what are you going to change about the division of labor?
Michael Albert
So it’s true that somebody has to know something about bookkeeping, but it’s not true that somebody has to do only bookkeeping and somebody else has to do only cleaning the floors. It could be the case that we essentially, it’s what we did at South End press years and years and years ago. It could be the case that the workforce says, here are our tasks. These tasks all have to get done, that’s true. Here’s how we’re going to divide them up. We’re going to divide them up in such a way that each person has a mix of tasks and responsibilities such that their work conveys to them comparable empowerment to the other workers. You can look at it in their case or in a hospital. It means, okay, the surgeon no longer does only surgery. I mean, it’s clear what it means. It’s sort of contrary to our expectations that people should do a mix of things, and some of them are empowering, and some of them are not. Some of them are disempowering even.
Paul Jay
Yeah, but hang on here. A surgeon can go clean floors. I don’t think it’s a particularly good use of all those years of training, but somebody who has been trained to clean floors can’t go do surgery.
Michael Albert
Correct, so that’s your transition. I want to address both of those things. Is it a good use of the surgeon’s time to do something other than surgery? If you look at just the surgeon and you look at just the patience of that one surgeon, the answer is no. It’s idiotic. I agree with you. But if you look at the whole economic system, no, it is a good use of time.
Why? Because the surgeon, and that is to say, everybody who does empowered work, also doing disempowering work means that the 80% of the population whose upbringing, circumstances, schooling and situation at work deny their capacity to do anything empowering and thus gets no empowering work out of them is undone, and we unleash the capabilities of those people.
Paul Jay
The society you’re talking about, anyone with the skill and inclination to go to medical school can go. You’re not going to have the barriers to medical school we have now.
Michael Albert
What you’re not going to have is, you go to medical school, and you become a doctor, but you’re not just a doctor. You’re also a nurse or custodian or whatever. You’re doing a mix of things. You say to yourself— I’ll let you off the hook for being the foil here. Margaret Thatcher would say, Michael, you’re crazy.
The doctor, let’s say the surgeon is doing 40 hours of surgery, and you’re telling me it makes sense to have a situation in which that talented individual, instead of doing 40 hours of surgery, does, let’s make it simple, 20 hours and does 20 hours of nursing, cleaning and whatever else. I say back, yes, and she says to me, but we lose half of our surgery, and I say back, yeah. You’d be right if the reason why the people who aren’t doing empowering work aren’t doing it is that they are genetically incapable of doing it, which is what you think, Margaret, but that’s not the case.
To make this argument in front of, say, an audience speaking or something, I say, think back 50 years and put all the surgeons in a stadium. It’s a big stadium. Put all the surgeons in the stadium and look around. What do you see? Right away, somebody says, well, they’re almost all white men. I say, yes, why do those surgeons say that they are in the stadium and the rest of us aren’t? The women aren’t in particular, and the Blacks aren’t, Latinos aren’t. What do they give as their answer? They say it’s because we’re good at it, and they’re not. We’re capable of it, and they’re not. Of course, that was nonsense. It’s nonsense now that the coordinator class is good at empowering tasks and capable of empowering tasks, and the working class isn’t. The working class is downtrodden and prevented in the same way that women and Blacks were, of different dynamics, but to the same degree as women and Blacks were before.
Let me just say one last story.
Paul Jay
I think you’re mixing up time periods here.
Michael Albert
Well, I certainly am. I’m comparing now and then.
Paul Jay
No, but in imagining this future, it would be more like if you’re talking would stay within hospitals and doctors, it’d be more like what the Cubans have done where you have way more doctors and way more accessibility to medical school. In fact, being a doctor is practically an ordinary job because it’s so easy to get a medical education. You don’t need to tell those doctors to go wash some floors. You open up the doors of the medical school, so anyone that has the inclination and ability becomes a doctor. It doesn’t have to be a special privilege job.
Michael Albert
That last step there was if everybody. Not everybody has the capacity. I couldn’t be a doctor. Not everybody can be a doctor.
Paul Jay
I don’t want to be a doctor. Nor could I. I’m terrible at math.
Michael Albert
But there’s 80% of the population that’s not doing empowering work, and there’s 20% that is. If it’s the case, as I think it is, that in the 80%, I don’t know what to call it, the spectrum, the spread, the distribution of capacities is marginally different from the distribution of capacities in the 20%. Then if you open the doors to them doing the empowering tasks they’re capable of, there is nobody available to do disempowering work.
Paul Jay
Well, we don’t have too much time in this segment. We are going to do more segments because we’re going to keep talking and even increasingly fighting, I hope. What do you mean by empowering work? What does that mean? Like I used to work on the railroad, I worked on the railroad for five years. I fixed freight cars. Is that empowering work? Fixing a freight car?
Michael Albert
I don’t know. Here’s the answer, though.
Paul Jay
Because I loved it. I loved doing it, but I don’t know what’s empowering about it.
Michael Albert
Well, here’s the answer.
Paul Jay
I’ll tell you one thing it was because we had a union and because we fought for our rights.
Michael Albert
It was better than if you didn’t.
Paul Jay
It was dignified because we made it so.
Michael Albert
If we have a workplace and we have a whole lot of tasks that have to get done, the empowering tasks are the ones that convey to the person doing it, attributes which contribute to being able to express their will and their desire, argue for it, participate and have the inclination to do so. The disempowered tasks have the opposite implications for the people doing them.
So in the Argentine example, I gave you, the subset of the workforce and the workers were from the same backgrounds. The subset of the workforce doing those empowering tasks became elevated. It began to dominate the meetings. It set the agendas. It was the one doing the talking, and the disempowered workers were the ones who basically had to choose among them who they would support or something. It sounds a little like U.S. elections. Then they would stop doing it, they would back off, and the empowered workers would start paying themselves more.
Coordinated class consciousness and working-class consciousness are maybe important to talk about. You brought up one other thing that I just want to address for a second because a lot of people might feel like, come on, Michael. You’re saying here that everybody can do a set of empowering tasks efficiently to have an overall balanced job. Isn’t that a big assumption?
Back to Argentina. I’m talking to a woman in a glass factory. Remember, they kept the old division of labour. She was now essentially the Chief Financial Officer. She was doing the accounting, and she was keeping the books. So I asked her what she had been doing before, and she had been functioning at this glass furnace, and she showed it to me. I would have lasted maybe one day, probably two hours. Incredible heat, just ridiculous. Doing the same motions over and over again. Then the owner left. The accountants left. The engineers left, and she became the accountant.
How did you do that? I asked, what was the hardest thing to learn? It was your question in a very narrow time frame and in a very precise case. I said, what was the hardest thing to learn? She didn’t want to tell me. She didn’t want to talk about that. So I said, well, was it learning accounting concepts? No. Was it learning how to use the computer? No. Was it learning how to use a spreadsheet? No. Well, was it learning how to present the case? No. So I said, well, please tell me. So she said, first, I had to learn to read.
So this person went from being a working-class person doing the same rote movements over and over in front of a furnace, which is probably taking years off her life, to being the person who was doing the accounting, the books and reporting on it in a period of a few months while having to learn to read on the way.
Now, I admit it was much for me to believe, but it was there. The capacity of people is a lot greater than we let on. You and I couldn’t be a doctor or surgeons for a lot of reasons. Not wanting to, probably not having the dexterity, not having the, whatever, but everybody can do empowering tasks. Everybody can do empowering tasks. The number of people who work on assembly lines—
Paul Jay
I think you’re putting too much onus, too much emphasis on the job as opposed to the relationship to power in the enterprise.
Michael Albert
That’s just because it’s what we’re talking about.
Paul Jay
Well, no, maybe you are, but I wasn’t. I’m saying that you could be the person in charge of picking up garbage cans, but you could also be a member of the management committee. At the same time, you could be a member of the HR committee.
Michael Albert
That’s a balanced job complex.
Paul Jay
That’s what?
Michael Albert
In other words, what participatory economics is saying is that—
Paul Jay
I don’t have to be a part-time accountant. I need to be on a decision-making body that has power, and I can still have my job picking up garbage cans.
Michael Albert
Fine, absolutely, just like the doctor can be a surgeon and pick up garbage cans, agreed?
Paul Jay
No, I’m not saying that. The surgeon should be a surgeon, but the cleaner should also be on the management committee, not just picking up garbage cans. I’d frankly be quite happy if the surgeon just kept doing surgery.
Michael Albert
Yeah, most of the nurses wouldn’t be happy. Did you notice the strikes that are going on right now in the hospitals? One of the most notable things is that doctors—
Paul Jay
It’s not collectively owned. The power starts from the ownership and then the structure of how that ownership is managed and that powers executed.
Michael Albert
This is our dispute.
Paul Jay
Not the nature of the job description.
Michael Albert
This is our dispute. Our dispute seems to be— correct me if I’m wrong. On the one hand, power flows from ownership, explicit control, et cetera, which is true in existing firms. It’s not true in, say, Soviet factories under the prior system; there was no owner. So it didn’t flow from ownership; it flowed from something else. I’m saying it flowed from the distribution of circumstances, and we’re talking about this entirely. There’s also the allocation system to talk about, and there’s also the fact that there is no ownership anymore. There are also self-managed decision-making procedures by the Council inside the workplace.
All I’m saying is that all that can be subverted by private ownership. You’re saying that, and I’m agreeing with you. I’m saying it can additionally be subverted by a distribution of tasks, a division of labour, which causes some people to be in a position to make decisions, inclined to make decisions and have the information to make decisions, and other people not. You’re saying back to me, okay, wait a second. If somebody is doing some rote task, a repetitive task and picking up garbage, whatever it is, they could be on the decision-making board or whatever. You had a name for it. I forget what you called it.
Paul Jay
A management committee, leadership committee, whatever you want to call it.
Michael Albert
So they could be on the leadership committee. Alright, so here’s the problem with that, I think. On the one hand, you’re saying the same thing as me. If the person has a mix of responsibilities that caused them to be prepared to participate and make good decisions and make them well, or at least to participate in making good decisions, they’re not [Joesph] Stalin, to participate in making good decisions well, then that’s a balanced job complex, but what you’re describing, I don’t think, does that.
First of all, it has this management committee, which apparently has a lot of power over everybody else but second of all, it has somebody who is doing this rote stuff all the time, then making decisions about the workplace. They have to have information about the whole workplace. They have to have the confidence to access that information, et cetera, et cetera. If you just take somebody and you invite them to a meeting at which there are 14 lawyers and 14 engineers and accountants and so on, and then there’s somebody sitting there who spends all day doing stuff that gives them no particular knowledge relevant to the decision making, and you say, okay, you can attend. It does nothing.
Paul Jay
Actually, I don’t agree with that. We’re getting long here now. You should watch these interviews I did with Jane McAlevey on how she does bargaining now, not in the future. Where when she meets with the employer, and she’s either advising or in the leadership of the negotiations on behalf of the union, she invites the entire workplace.
Michael Albert
Which is fine. I would, too.
Paul Jay
In the end, there are representatives to get elected, and they do choose who’s going to speak. There is going to be a certain level of practicality where you need some kind of decision-making that isn’t going to involve everybody.
Michael Albert
Well, wait a minute. What do you mean decision-making isn’t going to involve everybody?
Paul Jay
Well, let’s say should we hire so and so. You’re not going to have a factory of 5,000 people where 5,000 people meet to decide if you’re going to hire somebody.
Michael Albert
Exactly right, and who would hire? The people who are most affected would be the ones who would be most involved in that decision. For instance, we’re hiring to be on a team that you and I are on. Well, then you and I are going to have a lot of say because if we don’t like that guy, the team is going to pop.
Paul Jay
Of course, but you also have to have an overview of the entire enterprise. So you’re going to have to have an elected body that has an overview of the whole enterprise.
Michael Albert
Maybe everybody should have a significant overview of the whole enterprise. Let’s say we’re going to have a decision about the hours of work. What time work starts, what times it ends, how the workplace, et cetera, et cetera. Some decisions affect overwhelmingly just everybody. Those are the kinds of decisions that everybody is involved in. Those are big policies. Then there are decisions that affect a relatively small; this is self-management. There are decisions that affect overwhelmingly a smaller group subject to those prior decisions. So they’re working within those globally made decisions, and they’re making decisions that affect themselves much more. So they do that, that’s fine. The point is—
Paul Jay
Before we get more granular about this, because it’s a little bit of one foot in today and one foot in tomorrow, as part of the argument here, we’re going to do another segment about this because we are going to have a fight about how you have a modern economy without some kind of planning. I know you’re saying you don’t need—
Michael Albert
It’s called participatory planning. Absolutely you do need planning.
Paul Jay
Okay, well, let’s find out in the next segment what that’s going to look like.
Michael Albert
Okay.
Paul Jay
Anyway, write in, send us your questions and comments, and pick up Michael’s book. It’s called No Bosses. And where do they get your book?
Michael Albert
As far as I’m aware, I’m so isolated because of COVID. It’s in stores, and it’s online, on Amazon, all the various online purchase places. It’s available everywhere. I know what you’re pointing to. Let me point them to one thing. There’s a site called nobossesbook.com, and all the reviews are there that have come out so far. The book has only been out two months, basically, exactly. There are, I think, about 15-16 reviews there. There are a lot of interviews. There are all sorts of stuff there. So people could look there and get a feeling for, well, do I really want to read this book or not? Then if you do, you get it, and if you don’t, you don’t.
Paul Jay
Okay, cool. Alright, thanks, Michael. Thank you for joining us on theAnalysis.news.
Michael Albert
Thank you.
TRANSCRIPT: Part 2
Greg Wilpert
Welcome to theAnalysis.news. I’m Greg Wilpert. Today we’re going to take a look at a vision of what a better society might look like. This is actually a continuation of a conversation that Paul Jay started with Michael Albert. So I’m going to urge our audience to take a look at that first segment with the two of them because this one will continue where that previous conversation left off.
The book we’re going to discuss today is called No Bosses: A New Economy for a Better World by Michael Albert and published by Zero Books at the end of last year in 2021. Again, I highly recommend that people check out our first interview with Michael. As a reminder, the book outlines what a post-capitalist and classless economy would look like, one that is based on worker and consumer councils, remuneration based on duration, intensity, and onerous of socially valued labor, balanced job complexes, and participatory economic planning.
Michael is a longtime activist, author of 20 books and hundreds of articles, cofounder of ZNet and Z magazine, and also of many other media projects. Also, he’s the co-author of a vision called Participatory Economics, or Parecon for short.
Thanks for joining me today, Michael.
Michael Albert
Thank you for having me, Greg.
Greg Wilpert
So in the previous segment, when you and Paul discussed your book, he went over the issue of balanced job complexes, which is a central feature of participatory economics. I’d like to move on from there to look at other aspects of the vision. Let’s take a closer look, first at remuneration and then at participatory planning. We’ll close off with a variety of miscellaneous questions that I have. So now, just to continue basically on this vision that you outlined in No Bosses, why is the issue of remuneration so central? That is, assuming we achieve a society in which no one is rewarded simply for owning productive property, and I think most people on the Left, at least, would agree with that idea that you shouldn’t be rewarded just for owning property. What’s wrong with rewarding people or remunerating people on the basis of supply and demand market forces? How do you propose to determine remuneration or income differently?
Michael Albert
It’s a big question, especially since it takes us into allocation, and I think maybe you wanted to save that for a little bit later. So let me start off with the sort of; I suppose you could almost call it a value question. If you get rid of income for property, isn’t it sort of simple? Don’t you have to come up with something in place of it? You do have to have something in place of it, clearly. I mean, you and I are working in the economy, and we go home, and we consume stuff. Our budget or our income is what governs how much we can consume. What determines how much we earn? How much do we get from the economy, assuming that we work? If we didn’t work, then that’s a whole different story. It’s going to be some kind of generalized income for everybody. We can get to that later. Okay, so we work. And if we’re not going to get paid for our property, and we’re not going to get paid the way a market pays us, which is really for bargaining power. The way a market system works is, and everybody has experienced it; if you have more bargaining power, you can take more. If you have less bargaining power, you wind up taking less. So that’s another thing we could reward.
It’s arguably a stance we could have. Let’s reward bargaining power. Most people on the Left, and actually, I think most people, period, are going to recognize that’s despicable. I mean, that’s basically saying that we should all be thugs, try and take as much as we can, and if we’re stronger, we get more, and if we’re weaker, we get less. If you’re not going to do that, then what?
Socialists, a lot of them have historically said, well, okay, there’s an obvious and simple answer to that question. The answer is let’s have people get back in proportion to what they put in. So, in other words, if I produce a certain amount, I should get back— I mean, maybe society puts a certain amount of the social output to investment, puts a certain amount to free goods, but whatever is the amount that’s going to go to personal consumption or collective consumption, group consumption, my income for that should be a function of how much I produce. On the face of it, that sounds perfectly reasonable because, after all, if I’m getting less than that, somebody else is getting some of what I did. If I get more than that, I’m getting some of what somebody else did. So it seems fair, but it’s not. Why isn’t it?
Well, it isn’t because what determines, let’s say, you and I are working in the economy, what determines how much we make? How much we add to the social product relative to one another? Well, it can depend on a lot of variables. It may be that you were born with certain genetic endowments, certain characteristics which are very productive. Or it may be that I am using some tools, some equipment that you don’t have access to that’s very productive. Or it may be that one of us has workmates who are more productive. It may be that just one of us is producing an item that’s more valuable. In any of these cases, you and I work, let’s say, the same number of hours. So we put in four hours of work. One of us is going to be producing a greater amount of output by value in that four hours. Okay, so the socialist who favors this might say, yeah, sure, that’s sort of warranted, and it’s not such a big deal anyway.
Well, so there are two questions. Is it warranted? Is it ethically fine? The second question is, is it a big deal? Does it make such big differences that those differences are going to matter throughout the whole society? The third question is, does it work well regarding allocation, which you want to get to eventually? So take the first two. I don’t think it’s ethically warranted. I don’t think it should be the case. These are values, so I can’t say this is the reality. I can only say this is a value that I favor. I don’t think that it ought to be the case that if I’m lucky in the genetic lottery, if I have LeBron James’s body or Adele’s voice or Chomsky’s brain, and I’m born with this stuff, I should then have, on top of that, great income. I should be showered with wealth on top of that. To me, that makes no ethical sense whatsoever. Similarly, I don’t think it makes ethical sense if I have better tools or if I have if I’m lucky. That’s basically what it is. Does it matter? Is the difference very much?
When some socialists would say that to me, I would say back, well, okay, do you think that it’s proper for, let’s say, LeBron James, Steph Curry, or whoever, the right to earn 40 or $50 million a year? They would say, no, of course not. I would say, why not? They would say, well, it’s too much, and they would have various reasons. I would say, yeah, but they’re underpaid. They’re not overpaid. They’re underpaid by your standard because your standard says, let’s remunerate, let’s provide income in proportion to the degree of the value of what they contribute to society. The public— you may not like it if you’re a socialist— the public likes watching LeBron James play basketball a whole lot, so much that he’s being underpaid because Nike is taking some of it, and the owner of his team is taking some of it.
I think that rules out that norm also. If that norm is ruled out, then we need a different one. What participatory economics proposes is that we should get income for how hard we work, for how long we work, and for the onerousness of the conditions under which we work. If the work we do is socially valuable, and that’s a norm, that applies to everybody. It applies to everybody in the same way. It doesn’t generate huge disparities, and it’s ethically sound. I also think it’s economically sound, but we can come to that when you ask about it.
Greg Wilpert
Yeah, I actually have a couple of follow-up questions on that, but I think maybe I should leave those until after we discuss the issue of allocation. Actually, I do want to have one follow-up question, which is, of course, the process by which, and this might lead to the question of allocation and planning, that is, how do you determine these kinds of very intangible factors of onerousness and intensity and things like that? Who gets to decide that? What’s the process?
Michael Albert
First off, the last phrase, who gets to decide that? The answer to that is always the same in participatory economics because participatory economics is an economy which purports to generate self-management. So if we work in the workplace, the workers’ council is the ultimate arbiter of everything. It’s the decision-making body. So the workers’ council inside of a workplace is doing that. How? That question remains, obviously. How is it doing it? Well, what did I say were the variables? How long do you work? That’s easy. I don’t think there’s a big issue with that. How hard do you work? Well, the answer to that is, (A), the people you work with know how hard you work, and (B), there is an indicator. So while you’re not remunerated for your output, that doesn’t mean your output has no bearing. Your output indicates whether or not you have worked long, hard, et cetera. As far as the onerousness of conditions, again, the workers’ council has to go along.
If you and I work in a workplace and we each put in, let’s say the work week is 30 hours, so we each put in 30 hours a week, and we’re working. I say to the group, I think I should be remunerated more, or you say you think I should be remunerated less. The workplace is responsible for how it does this. So that means that workplace one— maybe I would want to be in this workplace— says we’re going to be pretty lax about this. We’re going to have average remuneration one level above, maybe a second level above, one level below, maybe a second level below. Another workplace might decide, and it’s up to the workplace and the workers’ council that they’re going to operate somewhat differently. They’re going to operate with ten levels much more highly refined above, ten levels more highly refined below. So you can see the second one has a much more exacting task to determine where one is on that spectrum. The first workplace is pretty simple. The second workplace might favor that precision over the amount of time that is lost doing it. The first workplace prefers saving the time.
I don’t think honestly that— this is why I favored the first one, I guess. I don’t think that there’s a real problem here at this level. There’s a different question to ask, which then starts to be more difficult. At this level, I think we work on work teams, we have a plan for the workplace, and we’re trying to fulfill that plan. The workforce is basically dividing up the income that is allotted to the workplace. So the workplace is allotted an income, a total income, to apportion to its workers. The workforce now apportions that income. So if somebody is going to get more, somebody else is going to get less because the total is for the workplace, and the workers are then deciding whether or not somebody has worked less time or less effort. I like to sing while I work, I don’t know, something and so on.
Is it perfect? No. Of course, it’s not perfect. Nothing social is perfect. Can one do it acceptably to all the workers? Can one have a procedure that the workers agree on? Can one then enact that in a manner that the workers like, especially when the workers have chosen the procedure? I think the answer to that is yes. The question that arises, I mean if you want to ask something else first, the question that arises is, well, what determines that amount that goes to the workplace as a whole? What determines the total amount?
Greg Wilpert
Well, maybe that gets us to participatory planning, which is actually the largest chapter in your book. I think it actually opens up a whole bunch of related questions not only to the process of production of goods and services but also to the remuneration issue. So let’s focus on that, and then I have some follow-up questions on remuneration as well. How would you outline how participatory planning would work and what would make it better than markets or central planning? Now that’s a huge question and let’s see if we can—
Michael Albert
Let me start from where we were, and then maybe we can hone in on other parts if that’s okay. So we’ve got this workplace. You and I work there, and I don’t know, 100 or 1,000 other people work there. We now know, internally, we have workers’ self-management. We make decisions via the workers’ council. Sometimes it allots the decisions to a team because it mostly affects the team. Sometimes it’s the whole workplace. We have the balance jobs that we talked about earlier. That’s a big deal. That makes a difference in all of this, simplifying things. Then we’re apportioning that allotted income.
So what determines that allotted income? Why is that allotted income higher or lower? Well, participatory economics says that productive assets— that’s the thing that capitalists own, basically. Productive assets are not owned by individuals. They are part of a commons. Our workplace, let’s say we make bicycles, whatever, our workplace is basically saying to the society we would like to use a certain share, a certain part of the productive assets in the commons. That’s a part of our plan. We’re saying let us use those productive assets, and we will produce these bicycles. Let’s say that the plan is accepted. We haven’t talked about that at all but let’s say that it is. We have a socially accepted, a socially responsible amount of output to produce. That’s what we’ve agreed on. In terms of bicycles, given the equipment we have to make bicycles, the number of workers that we have who are working, and so on.
Let’s suppose, for a minute, what do we want our allocation system to do? Let’s suppose for a minute that our workforce, the 100 or 1,000 of us, or whatever it is, produces at a socially responsible average level, average duration, average intensity, average onerousness, because that’s the nature of our workplace, let’s say. So then our workplace would be allotted 100 or 1,000, the number of workers times what is allotted to be the average income. Let’s say that we don’t. Let’s say that, in fact, this is how it happens, in other words. A subset of us are working less hard. A subset of us are working less hard. So as a result, our workplace is not, in fact, producing commensurate to the productive assets that we’re utilizing. We’re producing less.
What does that mean when you look at people? It means somebody is exerting, but it’s not socially responsible, or they’re not exerting, and therefore it’s less work. So, in other words, the total duration, intensity, and onerousness that the workplace is generating, which is what’s remunerated, is less than the total number of workers times the average. Some of us are not working up to capacity. We’re not working well, or we’re literally not working for the duration, et cetera. Somehow the allocation system has to apportion the right total bundle of income to the workplace. It’s a two-step deal. The allocation system says to our workplace, here’s your income for your workforce. Then our workers’ council says, Greg, here’s your income. Michael, here’s your income to everybody in the place. The simplest solution, maybe we even decide that we all trust each other and everybody gets the same, but we don’t have to decide that. The total that’s allotted to the workplace should be the total that’s warranted. The total duration, intensity, and onerousness. That’s a high demand on the allocation system, only one of many high demands that are placed on a good allocation system as compared to markets or central planning, which just don’t— they generate results, but the results don’t correspond to any kind of positive, virtuous values that we might have. They just generate results that are distorted relative to equity and self-management.
So it’s not that it gets technical, but it gets detailed. So the allocation system has to sort of ascertain well, in the case of a workplace, is it living up to its proposal or is it falling short regarding the social responsibility aspect? Obviously, it pays attention to output to do that. You’re not remunerating for output, but that doesn’t mean output doesn’t matter. Output matters. It’s just that you don’t get income for it. You get income for this other thing, but output matters to determining whether or not you’re doing socially valued labor, whether or not you’re using the equipment and using your own talents and your capacities consistent with getting an average income or more than an average income.
Greg Wilpert
So how would the participatory planning aspect work? Who gets to decide whether or not how many assets are allocated or remunerated to the workplace?
Michael Albert
Participatory planning says something like this. It says the workplace has a workers’ council. The neighborhood has a consumer council. So the consumer council is basically all the people who consume in the neighborhood, and it does partly collective consumption and partly individual consumption.
What is allocation? Allocation is a process by which what people are consuming and what people are producing are brought into proximity of each other. If they’re not in proximity, if much more is being produced than consumed, you got all this waste. It’s not being done. If you are short, well, then the consumers are being inadequately fulfilled, I suppose you could say. So you want these things to be in proximity to each other. You don’t want waste, you don’t want surplus, and you don’t want shortage. So that’s part of what allocation does, and you can accomplish that.
One way to accomplish that is with central planning. Ostensibly very smart or well-equipped people decide the outcome and instruct people what to do. That’s the essence of it. So that’s one option.
Another option is markets in which this can have many sorts of wrinkles, but in which the consumers and the producers are competing and which they’re all trying to get the best that they can. They try to arrive at outcomes that they prefer by applying the power that they have at their disposal. So, that’s another option.
So participatory economics says there is a third option. There’s a way to do this which is cooperative, not competitive, and which has no top and no bottom, no center, no elite imposing its will upon the process. So what’s the process? The process is the consumer councils are making proposals. What are they proposing? They’re proposing collective consumption and individual consumption, the sum of it. All told, they’re proposing what society wants to consume, but each individual is proposing for its constituency, and the producer councils are proposing what society wants to produce in light of the productive assets that are available. Each workplace is proposing that, and you sum it all up in an industry, and you get the proposal for all total bicycles, not just our workplaces bicycles, and then for the whole economy.
If you just did that, they wouldn’t match. So that’s the allocation problem. There’s no particular reason to think that the sum total of what everybody was proposing to produce and everybody’s proposing to consume would be in proximity of each other. Why should that be? It wouldn’t be. So what you have to have is a process that brings them into proximity.
The process is that there are what the economists call iterations. There are rounds of planning. So the workers’ councils make a proposal, and the consumers’ councils make a proposal. What are they making it based upon? Well, they’re making it based upon prices. If I’m a consumer, I know that ultimately I can consume consistent with my budget. In other words, my income in light of prices. If I was only consuming bicycles, I could consume 47 bicycles or $400— because it sums up to my income. I know what my income is. This is not unfamiliar. This is true in any economy. I know what my income is, or I know what it’s likely to be at the end of the planning process. I know what prices are or are likely to be at the end of the planning process. So we’ll come to how I know them in a minute. So I make a proposal based upon that. On the producers’ side, it’s rather similar. I know what my workplace is utilizing, I know again what the costs are, and I know what the price of my output is.
Now it’s a little different than being within my budget on the consumer side. On the producer side, I have to have the value of my product commensurate to the cost of everything that I’m putting into it. That’s what’s socially responsible. It’s not socially responsible for me as a workplace to be using lots of equipment and have lots of workers and produce nothing. That’s socially irresponsible in the same way as it would be socially irresponsible for me as a consumer to consume a ton and not have done anything to warrant it.
The planning process has a second component. It has workers councils and consumers councils, and now it has something that’s called an iteration facilitation board. What’s that? That’s a bunch of people, or it could be a bunch of equipment that looks at prior activity and proposes a guess; that’s what it is. It’s called indicative prices. It proposes a guess as to what prices are going to wind up. So when we make our first proposal, when I sit down to say, to make my first consumption proposal, I know what I did last year, I know what my expected income is, I know what my expected prices are, and I make a proposal. At the workers’ council side, it’s pretty much the same thing. I know what prices are, I know what costs are, I know what I did last year. I have all these sorts of— so I make a proposal for what to do this year. My workers’ council makes a proposal. They don’t match.
In the first iteration, we don’t have a plan; we have some information. That’s what we have. I get some information that the thing I’m producing is in undersupply. People want more of it, let’s say. I get a new set of prices for the second iteration. For the second round of planning, I get updated prices and guesses at what the final price is going to be. Same thing on the consumer side. This goes on for a number of rounds, not 200, ballpark seven-six in about there, and we arrive at a plan.
Now, why is this any good? Well, if the prices are drastically weird and wrong then it’s not good. If the prices are a reflection of what we could call full social costs and benefits, personal, collective, and ecological, so it takes into account what are called externalities. If the prices do that and if the producers are arriving at a responsible proposal, they’re properly utilizing their assets to provide what’s socially desired, and the consumers are arriving at a socially responsible proposal, a proper level of consumption, then we have a good plan.
In fact, economists have various ways of figuring out whether something is desirable or not. Honestly, mostly I’m not particularly partisan to those things. If you use those approaches, then this does as well as the idealized market system, except much better because the prices are actually real. Now, this would introduce new problems. How do you get that ecological thing in there? We still have this question of where in this came the determination of the amount of income that each workplace gets.
Greg Wilpert
Well, I wanted to follow up on the question of how this is actually different from markets. Aren’t markets an iteration process between supply and demand? How is what you’re proposing actually different? Of course, you end up with a plan, but that’s kind of like you could say, well, the company that’s making the widgets has a plan for making x number of widgets based on the information they got from the market.
There’s a sense in which— one way to extrapolate from that question is to say what do we have to do to markets to make them an acceptable mechanism process, allocation mechanism for getting consumption and production to be in proximity to each other and to fulfill our values. Remember what our values were? Self-management, solidarity, diversity, equity, and so on.
Well, you’d have to do quite a lot to markets. In fact, I think you’d have to turn it into participatory planning. That’s what would wind up happening if God could come down and, step by step, tinker with markets and make them fairer and fairer and fairer. Why? Well, this gets us into markets, but I guess you want to do that. What’s wrong with markets is multiple things. So one thing that’s wrong with markets is that they are a system in which my benefit is your loss and vice versa. When I’m selling or buying, I’m trying to— what is it? Sell cheap and buy dear. In other words, each participant is trying to do the best they can for themselves in a manner, so it produces a kind of individuality. It’s producing a kind of competitiveness.
Now, that might sound abstract, and who cares? But look around, look at society and ask yourself, this is a big deal. This is a fundamentally important institution in society, causing people to be narrow, to be individualist, to not give a damn about the other person. Not because they’re evil, but because that’s the way the system works. That’s the way markets work. They don’t work if you behave otherwise. Nice guys finish last, basically. So that’s one feature.
Another feature in markets is that markets don’t— in markets, there’s a buyer and a seller. The buyer and the seller are entering into the transaction. The will of the buyer and the will of the seller are entering into the transaction. So one problem is that they’re out for themselves in a narrow, individualist way, but that’s not the only problem. Another problem is that it’s not the case that the buyer and the seller are the only people who are affected by a transaction. When we do a transaction, and I don’t know, you get a car, okay, so you’re affected, and you get the car. The producers are affected; they sell the car. Everybody who breathes the pollution that your car spits out is also affected. That is not the only way people are affected. They’re also affected because, for instance, the steel that went into the car didn’t go into something else. So now, let’s assume that we collectively consume guided missiles. The guided-missile steel didn’t go into building transit or whatever. It’s partly external, what are called externalities, implications for those beyond the immediate transaction. It’s partly that, even more than that, every transaction in some sense affects everyone. In any transaction, in any producing and then consuming stuff is being used. It’s put to a certain purpose, and it’s not put to another purpose. So everybody is sort of impacted by this choice. We want self-management. So we want people to have a say in decisions in proportion to the degree they’re affected. Again, an outrageously, seemingly too demanding demand to put on the institution. We believe in it.
So what we’re saying is that the process of these workers and consumers councils making proposals; you’re proposing your consumption, you’re proposing your production. I’m not dictating it. Nobody is. Then mediating that and refining that in light of information that returns is, in fact, taking into account other people’s inclinations and other people’s desires. It’s not arriving at it by the amount of power that you have. It’s not arriving at it by ignoring the environmental effects. It’s taking all this stuff into account, and it’s all sort of playing back into your choice as you modify your choice.
If you say a market is just people producing stuff and getting stuff with a budget and with attention to impact, then every allocation system is a market. That’s what people in society say to us. So it removes the issue of are markets good or bad. Can we do better than markets? Well, there’s no such thing. If that’s what a market is, then every economy is going to have that. A market is not that. A market is buyers and sellers competing, trying to get ahead at the expense of the other, all based on short-term valuations, all based on prices that are a product of bargaining power. As a result, it has various negative effects, which we can see all around us.
Does participatory planning do better? Well, that’s an open question, I suppose until maybe it exists. Its advocates argue that, yes, participatory planning manages to create an allocation process that’s consistent with the other institutions.
Let me just go on one second more to give an example of what it means for an allocation process to not be consistent. In the earlier session that was done, we talked about balanced jobs. The purpose of that was to get rid of a class division between those who monopolize empowering circumstances and those who are doing the opposite. They’re in work roles that are disempowering. The claim is that that’s not just any old class division, but it can become a fundamental class division, where one class, the empowered classes, is the ruling class, and the other class, disempowered classes, subordinate class, let’s say 20 over 80. Okay, so we don’t want that, so we have balanced job complexes so that our activity in the economy does not distinguish us into two groups, one that’s empowered and one that isn’t empowered. It instead leaves us all comparably empowered.
Let’s say on top of that we put central planning or we put markets. If we put these kinds of allocation on top of balanced job complexes, there’s a contradiction. This is not compatible. Why not? Well, with central planning, it’s sort of obvious. The central planners don’t want to negotiate with the workforce. They want to impose on the workforce. The whole logic of the thing is that the central planners are authorities and that they want authorities inside the workplace to negotiate with because they sure as hell don’t want to negotiate with a whole workers council. They’re sending instructions, and they want the instructions to be met.
So we know historically that’s sort of what happens. The more interesting one is the market. Why would markets be inconsistent with balanced job complexes? I think it goes something like this. If you have markets, then you have competition. If we produce bicycles and somebody else produces bicycles, we’re competing for market share. We’re competing to become the larger bicycle firm, the firm that can generate more income. Remember, income with markets is a function not of duration, intensity, and onerousness but basically of what you can take. If the bicycle firm can engineer its way into getting more gross revenues and essentially surplus, then it does better. So its workforce wants to do that.
How do you do that? Well, a workplace across town is producing bicycles, and your workplace is producing bicycles. You do things that let you get ahead. What kind of thing lets you get ahead? Dumping your waste on your neighborhood, speeding up, not having child care, not having air conditioning for anybody except maybe a few, and so on. I’m not sure everybody agrees with me about this, but I think that what happens in this kind of circumstance is that the workplace— let’s say we even have workers councils. So we have markets and workers councils and balanced job complexes. Still in all, my workplace has to compete because of its markets. So it has to make these sort of horrible decisions, decisions that hurt the workforce.
Well, who’s going to make those decisions? Who’s good at making those decisions, and who’s going to make them? If we don’t make them and somebody else does, we get screwed. If we do make them, we screw ourselves. I think what happens is we have to find people who are well adjusted and who are poorly adjusted, I suppose I should say, who are of a mindset and of a skill set to make those kinds of choices, to cut costs, to increase output regardless of the impact on the workforce.
So we hire people like that. So we go to the—nowadays, we would go to the Wharton School or the Harvard Business School or something, and we hire somebody who has been socialized into not caring about fucking other people over. We hire them, we put them in offices, and we say, okay, screw us because it’s in our interest. Screw us at work to get us more income and to keep us alive and competing with other firms, so we don’t go under. The logic of markets disrupts the equity of income, but it also disrupts the classlessness of self-management. That’s how an allocation system can screw up your aspirations.
Greg Wilpert
Let me get back to the question of how you incorporate values at this point because I could imagine a situation where, let’s say, you’re a bicycle factory or whatever. You mentioned earlier that you wouldn’t want them to dump their waste in the community. Obviously, the community has an interest in preventing that. In the process of coming up with a plan, presumably, they would take that into account. What if, let’s say, that factory just dumps it in a different community, shifts it abroad or who knows? How do you then take the ecological value, for example, into account?
Michael Albert
Why is the fact that—
Greg Wilpert
Presumably to offer a lower price and to perhaps get more income?
Michael Albert
Why?
Greg Wilpert
Because everybody wants to have more stuff.
Michael Albert
But they’re not going to get more stuff. This is one of the peculiarities, I suppose you could say, of participatory planning or of participatory economics. There are these two things. There’s your productivity, and there’s your duration, intensity, and onerousness of socially valued labor. They’re not the same. So let’s say that you have a balance job complex, but a part of that is, I don’t know, doing brain surgery. I have a balanced job complex, and a part of it is, I don’t know, inside of a workplace, being involved in planning the allocation of stuff during the workday or making something that is empowering but in no way as socially valuable as brain surgery. So you’re going to get, in some systems, you’re going to get a higher income because your brain surgery is so valuable, and I’m going to get a lower income because the violins that I’m working on are less valuable. In participatory economics, that isn’t the case. I’m going to get income for the duration, intensity, and onerous. You’re going to get income for the duration, intensity, and onerous.
Greg Wilpert
Wait, isn’t that allocated by the workplace? In other words, depending on how much income that workplace generates, on the whole, isn’t it?
Michael Albert
That was the thing in the last little section that we did, and I left for last. There is no such thing as me getting twice as much for the similar duration, intensity, and onerousness, or at least that’s the claim. In other words, there’s no way to aggrandize self. There’s no way to enlarge one’s income beyond the norm that is stipulated.
Now, you’re right. If society misallocates to a workplace, if society were to allocate— I’m in one bicycle factory, and you’re in another bicycle factory. So your bicycle factory dumps its crap on the neighborhood, or maybe it takes it around the corner and dumps it, and mine doesn’t. The idea here is your factory is in a position to get a greater income allotment from the allocation system than mine is. The answer is no. First of all, this gets us to another step, but we probably shouldn’t have used dumping. In any case, in the guise of dumping, you get charged for the dumping. So, in other words, that’s part of your cost. In the same way, you use some input steel. So your workplace is charged for the steel that you use that you get from someplace else. Your workplace generates some pollution. Your workplace is charged for that also. It’s not like a product where you’re benefiting from the product. It’s a product of pollution. The product is a negative thing, and you’re charged for that. Indeed, the income goes to the people who are suffering the pollution. It’s a little bit difficult. The idea is the planning process arrives at— let’s look at it now as a whole. So the planning process arrives at a plan. That means it’s arrived at essentially an average income. It now has to apportion, say to the bicycle industry as compared to some other industries. Well, if everything is just level, then the bicycle industry gets the total number of people in the bicycle industry times the average income, and so does the violin industry. If it’s not level, let’s say the bicycle industry is more onerous than you’d get an added element to your income, to your industry income. Or let’s say that during the course of the year, the bicycle industry fails to fulfill its plan. So it’s not doing the socially valued amount of labor that was the average; it’s doing less. So then it gets less again. It’s not that you, Greg, did less; it’s the whole damn industry that did less. So now the industry, so the society is basically, in a sense, you could say the planned society is apportioning to industries income allotment. That has to all add up to the total for the whole society.
Michael Albert
Now, inside your industry, there’s an industry federation of councils. Inside your industry, again, there’s an apportionment. To what? To all the factories in the industry. Once again, now the industry has a certain amount that’s allotted to it. And let’s just, for the sake of discussion, say it’s average or whatever. It’s a total amount. Now, the industry is allotting to every factory inside the industry or every workplace inside the industry. Again, if some workplaces are under producing, are under utilizing the productive assets of the social commons, then they’re going to get less income on the grounds that they’re not fully doing socially valued labor. They’re either not working or they’re working poorly, one or the other. So they would get less.
Then the next step is— it’s a similar kind of step at the total level, there’s an apportionment to industries, and the total level has to have some notion. None of this is perfect, but it can’t be. The total level has some notion if some of the industries are more onerous or less onerous.
Now, at the industry level, there might be that too. Maybe there’s a bicycle factory in, I don’t know, Alabama where the temperature is really hot, and there’s a bicycle factory in Ohio where the temperature isn’t that hot, and maybe that’s a real issue. The one is more onerous than the other. Anyway, the industry has to apportion among workplaces, and then the workplace apportions among its workforce. At every step, it’s the same criteria: remuneration for duration, intensity, and onerousness of socially valued labor.
You don’t have a situation where as an individual— now let’s look at the individual level. You want to aggrandize yourself. So how do you do that? Well, you can claim to do stuff that you didn’t do. So you can cheat. Try and cheat somehow, or you can do a whole lot. Well, you can’t do a whole lot unless your workmates agree because it affects them. You can’t take on all the work in the workplace. You can’t do that. You have to get an agreement. You can’t cheat because your workplace is going to know. Maybe you can cheat a little bit, I don’t know, but the workplace is going to know if you’re just exaggerating. You’re saying, I did 60 hours, you all did 30 hours, and everybody can see you didn’t do 60 hours. Not only that, even if you did do 60 hours, you didn’t generate double the output of everybody else.
So there are a lot of indicators that preclude, and this presumes that just solidarity wouldn’t preclude it, which I think it would. These kinds of behaviors, it’s a little like it’s a whole different thing. What if you’re a tennis player and you’re as good as Roger Federer? So you look around, and you say to yourself, well, this is nice, but let’s get real. I’m special, and I want more income, so I’m going to set up a black market. I’m going to sell my tennis capacity on the side, and I’m going to try and aggrandize myself.
Well, what happens in a participatory economy? First of all, you have to have tennis courts, you have to have tennis balls, you have to have, et cetera, not so simple because all work is done in a workers council. You’re going to do it on the side, on the sly. The next thing that’s the problem is how do you get this income? Where is it coming from? Notice income was coming from the plan. It’s not coming from a bunch of people who are coming and paying you. So you say to a bunch of people, pay me, and you can play with me. There are a lot of people who want to play, and they want to play with Roger Federer because you’re so damn good. So they’re willing to give you stuff. So they give you chickens and whatever.
Greg Wilpert
But don’t they also have their own money that they get?
Michael Albert
Not particularly, not in the modern version. In other words, they have an income. Everybody has an income. So I have an income, let’s call it 100, and I can spend my 100 on stuff, and I’ve planned on what to spend on. Another feature is that that changes over the course of the year. So the system has to be able to accommodate that, but it does. So I have that amount of spending capacity, but it’s probably just on a computer. It’s not like a credit card. So I can’t pay you with a credit card, but it doesn’t really matter, even if I can transfer to you, which I don’t think I’d be able to, but let’s say I can transfer to you a piece of my bargaining, I mean, a piece of my income. So now you, Roger, have a big income. You don’t have Roger’s capitalist world income, but let’s say you have twice what you would have had, or three times what you would have had even. Now, what do you do?
Well, in our current society, being rich is no big deal. That is to say, you can do whatever you want with that income because when you drive around in your Ferrari or whatever it is that you’re doing, it’s no big deal. Lots of people do that. In a participatory economy, that’s not true. If you spend a really high income publicly, everybody knows you cheated. Everybody knows you did something wrong. I don’t even think you could get to that point. If you got to that point, it’s still hard. You have to enjoy it in your basement because it’s clearly a violation. So there are things like that. For instance, we didn’t put that in participatory economics. We just discovered that after we had this picture of what this thing was in our head, we discovered this peculiar and interesting attribute. It sort of makes it hard to cheat. It isn’t just that it’s oriented against that. It isn’t just that it sort of tries to create social relations and solidarity. Contrary to that, it even makes it hard to do. It’s true inside the workplace also. So you and your fellow workers, I mean, if you’re going to be an asshole, how do you get away with that? It’s not obvious. These are all minuscule— just as a sidebar— these are all small negatives compared to what’s normal and commonplace in existing allocation systems and economies. Even these small negatives are very hard to implement and have—
Greg Wilpert
I want to ask a whole bunch of follow-up questions, but we’ve gone on for pretty long now. So I want to conclude this part, and we’ll do another segment where we cover the follow-up questions that I have. So, first of all, I just want to remind people to take a look at the first part that was done with Paul Jay. This is part two. We’re going to conclude that now. I’m speaking to Michael Albert, author of the book No Bosses: A New Economy for a Better World. Thanks again, Michael, for having joined me today. I urge you to tune in, everybody, for the third part, which is going to follow right after this one.
Michael Albert
Thank you.
Greg Wilpert
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Greeks and other southern Europeans could now be feeling schadenfreude as Germany faces the collapse of its economic model in the face of the Ukraine war and the new cold war with China. But with a democratic Europe in the balance, this is no time to gloat.
It is never easy to wake up to the news that your country’s business model is busted. It is difficult to acknowledge the obvious: that your political leaders had either been deluded or lying to you when they assured you for decades that your hard-earned living standards were safe. That your immediate future now relies on the kindness of foreigners determined to crush you. That the European Union, in which you had placed your trust, had been engaging in a permanent concealment exercise. That your EU partners, to whom you are now appealing for help, look at you as a villain whose comeuppance is long overdue. That economic elites in your country and beyond are seeking novel ways to ensure that your country remains stuck. That you must endure massive, painful changes to ensure that nothing changes.
Greeks know this feeling. We experienced it in our bones in early 2010. Today, it is the Germans who are facing a wall of condescension, antipathy, and even mockery. Ironic as it may seem, no Europeans are better placed than the Greeks to understand that the Germans deserve better; that their current predicament is the result of our collective, European failure; and that no one – least of all the long-suffering Greeks, southern Italians, Spaniards, and Portuguese (the PIGS as we were once called) – benefits from schadenfreude.
The tables have been turned on Germany because its economic model relied on repressed wages, cheap Russian gas, and excellence in mid-tech mechanical engineering – particularly manufacturing cars with internal combustion engines. This resulted in massive trade surpluses during four distinct post-World War II phases: under the US-led Bretton Woods system, which provided fixed exchange rates and market access to Europe, Asia, and the Americas; then, after the collapse of Bretton Woods, when the single European market proved highly lucrative for German exports; again following the introduction of the euro, when vendor financing opened the floodgates for both goods and capital flowing from Germany to Europe’s periphery; and, finally, when China’s hunger for intermediate and final manufacturing products took up the slack after the euro crisis dampened demand for German goods in southern Europe.
Germans are now slowly coming to terms with the demise of their economic model and are beginning to see through the multifaceted Big Lie their elites were repeating for three decades: Fiscal surpluses were not prudence in action, but rather a monumental failure, during the long years of ultra-low interest rates, to invest in clean energy, critical infrastructure, and the two crucial technologies of the future: batteries and artificial intelligence. Germany’s dependence on Russian gas and Chinese demand was never sustainable in the long term; and they are not mere bugs that can be ironed out.
The claim that the German model was compatible with Europe’s monetary union is also being exposed as false. Lacking a fiscal and a political union, the EU was always going to saddle Club Med governments, banks, and corporations with unpayable debts, which eventually would force the European Central Bank to choose between letting the euro die and embarking upon a permanent bankruptcy-concealment project.
Germans are realizing this today as they observe a hamstrung ECB which is damned if it raises interest rates substantially (causing Italy and others to implode) and damned if it doesn’t (allowing runaway inflation). While it never should have been the ECB’s job to save the euro from its flawed foundations, Germans can see that their politicians lied to them that their economic model could survive the 2008 crisis as long as other eurozone countries practiced enough austerity. They are also coming to understand that their leaders’ stimulus-phobia led to permanent socialism for the southern European oligarchs, the Franco-German bankers, and various zombified corporations.
Once upon a time, those of us who criticized the notion that every eurozone country should become like Germany objected that the German model worked only because no one else had adopted it. Today, with the end of cheap gas and America’s new cold war with China, the German model is kaput even for Germany. Yes, German exports will rebound, aided by the low value of the euro. Volkswagen will sell a lot more electric cars once supply chains are restored. BASF will bounce back, once energy supplies are secured. What will not return is the German model: A large chunk of Volkswagen’s revenues will go to China, whence the battery technologies come, and mountains of value will shift from the chemical industry to AI-related sectors.
Some German friends are pinning their hopes on the falling euro to restore the German model to health. It won’t. Low-savings countries with a structural trade deficit, like Greece or Ghana, do benefit from devaluation. High-savings countries with a structural trade surplus, do not – all that happens is that poorer domestic consumers subsidize richer exporters, which is precisely the opposite of what the German social economy needs.
My message to German friends is simple: Quit mourning. Cut through the denial, anger, bargaining, and depression, and start designing a new economic model. Unlike Greeks, you still have enough sovereignty to do so without the permission of creditors.
But first, you must resolve a critical political dilemma: Do you want Germany to retain political and fiscal sovereignty? If so, your new model will never work within this eurozone of ours. If you do not want to go back to the Deutsche Mark, you need a model embedded within a full-fledged, democratic European federation. Anything else will continue the Big Lie with which you are now painfully coming to terms.
I agree with much of what Noam Chomsky, Miguel Fuentes, and Guy McPherson say, but do not agree completely with any of them. My view of the planetary ecological emergency starts with the world scientific consensus, insofar as that can be ascertained, and draws on the long critique of capitalism developed most centrally by historical materialism. In terms of the scientific consensus on climate change, the reports of the United Nations Intergovernmental Panel on Climate Change (IPCC) are most important. The planetary emergency is not, however, confined to climate change, and also encompasses the entire set of planetary boundaries that are now being crossed, demarcating the earth as a safe home for humanity. Most of my comments here, though, will center on climate change.
In terms of the IPCC’s Sixth Assessment Report, published over the course of 2021-2022, it is no longer possible for the world entirely to avoid crossing the 1.5° C increase in global average temperature. Rather, in the most optimistic IPCC scenario (SSP1-1.9) the 1.5° C mark will not be reached until 2040, global average temperatures will go up a further tenth of a degree by mid-century, and the increase in global average temperature will fall again to 1.4°C by the end of the century. We therefore have a very small window in which to act. Basically, meeting this scenario means peaking global carbon emissions by 2030 and reaching net zero carbon emissions by 2050. All of this was outlined in the first part of AR6 on the Physical Science Basis published in August 2021. This was followed by the publication of the IPCC’s Impacts, Adaptation and Vulnerability report in February 2022, and its Mitigation report in April 2022.
Global surface temperature changes relative to 1850-1900 (IPCC, 2021)
Each IPCC assessment report (AR1-AR6) has three parts, each of which is published separately and is introduced by a “Summary for Policymakers,” followed by a series of chapters. In the IPCC process scientists, reflecting the scientific consensus, write the whole draft report. But the “Summary for Policymakers” for each published part—the only section of the overall report that is widely read, covered by the press, and constitutes the basis for governmental policies—is rewritten line by line by governments. Hence the published “Summary for Policymakers” is not the actual scientific consensus document, but rather the governmental consensus document that displaces the former. Especially with respect to issues of mitigation, related to social policy, governments can obliterate the entirety of what the scientists determined.
Capitalist world governments were particularly worried about, part 3 of AR6 on Mitigation, as drafted by scientists as of August 2021, since it was by far the most radical IPCC treatment of the mitigation issue, reflecting the fact that revolutionary-scaletransformations of production, consumption, and energy use (both in terms of physical and temporal scales) were now needed if the 1.5°C pathway was to be reached—or even in order to keep the increase in global average temperature well below 2°C. This is considered the guardrail for avoiding irreversible out-of-control climate change, which, if crossed, would likely lead to a global average temperature of 4.4°C (best estimate) by the end of the century, leading to the collapse of global industrial civilization. Chapter I of the AR6 Mitigation report went so far as to question whether capitalism was sustainable.
Anticipating that governments were prepared drastically to alter thescientific consensus “Summary for Policymakers”, scientists associated with Scientific Rebellion (linked to Extinction Rebellion) leaked the scientific consensus report for part 3 on Mitigation in August 2021, days before the release of part 1 of the report on The Physical Science Basis.This action allowed us to see the radical social conclusions of the scientists in Working Group 3, who well understood the enormous social transformations that needed to take place to stay within the 1.5°C pathway, and the inability of existing and prospective technologies to solve the problem, independently of transformative social change. The scientific consensus Summary for Policymakers for part 3 on Mitigation also pointed to the importance of vast movements from the bottom of society—involving youth, workers, women, the precarious, the racially oppressed, and those in the Global South, who had relatively little responsibility for the problem but were likely to suffer the most. All of this was eradicated, and in many cases inverted, in the published governmental consensus “Summary for Policymakers” in part 3 of AR6 on Mitigation, which was almost a complete inversion of what the scientists had determined. For example, the scientific consensus draft said that coal-fired plants had to be eliminated this decade, while the published governmental consensus report changed this to the possibility of increasing coal-fired plants with advancements in carbon capture and sequestration. The scientific consensus Summary for Policymakers attacked the “vested interests.” The published version removed any reference to the vested interests. More importantly, the scientific consensus report argued that the 1.5°C pathway could be reached while dramatically improving the conditions of all of humanity by pursuing low-energy solutions, requiring social transformations. This, however, was removed from the published governmental consensus Summary for Policymakers.
This, I think, is a good reflection of where the struggle lies in relation to the science and what we have to do. We have to recognize that there is a pathway forward for humanity, but that the capitalist world system, and today’s governments that are largely subservient to corporations and the wealthy, are blocking that pathway, simply because it requires revolutionary-scale socioecological change. The world scientific consensus itself in this planetary emergency is being sacrificed to what ecologist Rachel Carson called “the gods of production and profit.” The only answer, as in the past, is a social earthquake from below coupled with volcanic eruptions in every locale forming a revolt of the world’s population, emerging as a new, all-encompassing environmental proletariat. There are incredible obstacles before us, not least of all the attempts of existing states to mobilize the right-wing elements of the lower-middle class, what C. Wright Mills called “the rear guard of the capitalist system,” generating a neo-fascist politics. Nevertheless, we are facing a historically unprecedented situation. A Global Ecological Revolt is already in the making. Hundreds of millions, even billions, of people will enter actively into the environmental struggle in our time. Whether it will be enough to save the earth as a home for humanity is impossible to tell. But the struggle is already beginning. It is possible for humanity to win, and our choice as individuals is how we join the struggle.
It is clear from the world scientific consensus as embodied in the Mitigation report that a strategy of capitalist ecological modernization, financed by global carbontaxes and the financialization of nature, is something that is too little and too late—and relies on the juggernaut of capital that is already destroying the earth as a home for humanity—on the pretense that saving the climate can all be made compatible with the accumulation of capital.
What Robert Pollin and Noam Chomsky have advanced in terms of green taxes and a global Green New Deal that depends primarily on decoupling economic growth from greenhouse gas emissions through technological change—basically a strategy of capitalist ecological modernization with some just transition features, is not sufficient to deal with the crisis at this point—and would at best give us a little more time. Even this, though, is being resisted by the vested interests as a threat to the system. The capitalist class at the top is so intertwined with fossil capital as to be incapable of even a meaningful strategy of climate reform. It is prepared to drag its feet, while building fortresses to safeguard its own opulent conditions, stepping up its looting of the planet. This is not quite a suicidal strategy from the standpoint of the self-styled “masters of the universe”, because they have already largely separated themselves in their consciousness from humanity, the earth, and the future.
In contrast to Chomsky, the views of Fuentes and McPherson, though realistic on many points, seem, in different ways, to have given up. Yet, humanity as a whole has not yet nor will it ever give up. As Karl Marx said quite realistically, in confronting the destruction that British colonial rule unleashed on the Irish environment and population in his day, it is a question of “ruin or revolution.” We know now that even in the most optimistic scenario whole constellations of ecological catastrophes are now upon us in the next few decades. This means that human communities and populations need to organize in the present at the grassroots for survival at the local, regional, national, and global levels. Issues of survival are bearing down the most on marginalized, precarious, oppressed, and exploited populations, although ultimately threatening the entire chain of human generations. It is here we must take our stand. As the great Irish revolutionary James Connolly wrote in his song “Be Moderate,” “We only want THE EARTH.”
‘A landmark book… The Blue Commons is at once a brilliant synthesis, a searing analysis, and an inspiring call to action.’ – David Bollier
‘With remarkable erudition, passion and lyricism, Guy Standing commands the reader to wake up to the threat posed by rentier capitalism’s violent policies for extraction, exploitation and depletion of that which is both common to us all, but also vital to our survival: the sea and all within it.’ – Ann Pettifor
‘Shines a bright light on the economy of the oceans, directing us brilliantly towards where a sustainable future lies.’ – Danny Dorling
‘This is a powerful, visionary book – essential reading for all who yearn for a better world.’ – Jason Hickel
The sea provides more than half the oxygen we breathe, food for billions of people and livelihoods for hundreds of millions. But giant corporations are plundering the world’s oceans, aided by global finance and complicit states, following the neoliberal maxim of Blue Growth. The situation is dire: rampant exploitation and corruption now drive all aspects of the ocean economy, destroying communities, intensifying inequalities, and driving fish populations and other ocean life towards extinction.
The Blue Commons is an urgent call for change, from a campaigning economist responsible for some of the most innovative solutions to inequality of recent times. From large nations bullying smaller nations into giving up eco-friendly fishing policies to the profiteering by the Crown Estate in commandeering much of the British seabed, the scale of the global problem is synthesised here for the first time, as well as a toolkit for all of us to rise up and tackle it.
The oceans have been left out of calls for a Green New Deal but must be at the centre of the fight against climate change. How do we do it? By building a Blue Commons alternative: a transformative worldview and new set of proposals that prioritise the historic rights of local communities, the wellbeing of all people and, with it, the health of our oceans.
In this landmark book, Guy Standing not only documents how state-corporate collusion is destroying fragile ocean ecosystems, fisheries, and coastal communities. He explains how degrowth economics and fishery commons could restore the ‘Blue Commons-Wealth’ that belongs to all of us. The Blue Commons is at once a brilliant synthesis, a searing analysis, and an inspiring call to action
-David Bollier, author of The Commoner’s Catalog for Changemaking
Shines a bright light on the economy of the oceans, directing us brilliantly towards where a sustainable future lies.
-Danny Dorling
Guy Standing writes with remarkable erudition, but also with passion and lyricism about the Blue Commons.He commands the reader to wake up to the threat posed by rentier capitalism’s violent policies for extraction, exploitation and depletion of that which is both common to us all, but also vital to our survival: the sea and all within it. He offers radical and hopeful alternatives to the dominant economics for ‘making a killing’ from the commodification of nature – giving hope to the dedicated stewards of the seas – fishers and ‘blue commoners’ – but also to his readers.
-Ann Pettifor
As capital sets its sights on the seas, our planet’s final frontier, the struggle for the commons becomes all the more urgent. This is a powerful, visionary book – essential reading for all who yearn for a better world.
-Jason Hickel
A powerful indictment of all that has gone wrong with contemporary oceanic governance, and an inspiring account of how it can be put right. Guy Standing shows how local communities can turn the tide on neoliberal excess and put a vibrant and inclusive politics in its place.
-Chris Armstrong
Looking out of my window at the radiant blue of the Aegean Sea, I surrender to the dream of a near future where Guy Standing’s Blue Commons proposals have been implemented – an indispensable blue section of any genuine Green New Deal. It is a good dream, one that deserves a shot at infecting our sad reality.
On 16 June, University of Chicago Professor John J. Mearsheimer visited Villa Schifanoia in Florence to discuss the current Russian invasion on Ukraine whilst exploring the potential causes and consequences of the crisis.
The event, that was organised by the Robert Schuman Centre and the Department of History, gathered almost 200 attendees in person and online.
The political scientist, well known for his realist approach, argued that the United States was principally responsible for causing the Ukraine crisis, even if Putin was the one starting the war and the person responsible for Russia’s conduct on the battlefield: “My key point is that the United States pushed forward policies towards Ukraine that Putin and his colleagues see as existential threat to their country […] specifically I am talking about America’s obsession with bringing Ukraine into NATO and making it a Western bulwark on Russia’s border”.
Professor Mearsheimer insisted that Moscow was not interested in making Ukraine part of Russia, but in making sure it would not become a springboard from Western aggression; and that Russia could not feel safe, develop and exist while facing a permanent threat from the territory of today’s Ukraine. He insisted that despite the Western narrative about NATO, the determinant aspect to understand the root causes of this conflict is how Moscow sees the alliance’s actions.
The war in Ukraine is a multi-dimensional disaster, which is likely to get much worse in the foreseeable future. When a war is successful, little attention is paid to its causes, but when the outcome is disastrous, understanding how it happened becomes paramount. People want to know: how did we get into this terrible situation?
I have witnessed this phenomenon twice in my lifetime—first with the Vietnam war and second with the Iraq war. In both cases, Americans wanted to know how their country could have miscalculated so badly. Given that the United States and its NATO allies played a crucial role in the events that led to the Ukraine war—and are now playing a central role in the conduct of that war—it is appropriate to evaluate the West’s responsibility for this calamity.
I will make two main arguments today.
First, the United States is principally responsible for causing the Ukraine crisis. This is not to deny that Putin started the war and that he is responsible for Russia’s conduct of the war. Nor is it to deny that America’s allies bear some responsibility, but they largely follow Washington’s lead on Ukraine. My central claim is that the United States has pushed forward policies toward Ukraine that Putin and other Russian leaders see as an existential threat, a point they have made repeatedly for many years. Specifically, I am talking about America’s obsession with bringing Ukraine into NATO and making it a Western bulwark on Russia’s border. The Biden administration was unwilling to eliminate that threat through diplomacy and indeed in 2021 recommitted the United States to bringing Ukraine into NATO. Putin responded by invading Ukraine on Feb. 24 of this year.
Second, the Biden administration has reacted to the outbreak of war by doubling down against Russia. Washington and its Western allies are committed to decisively defeating Russia in Ukraine and employing comprehensive sanctions to greatly weaken Russian power. The United States is not seriously interested in finding a diplomatic solution to the war, which means the war is likely to drag on for months if not years. In the process, Ukraine, which has already suffered grievously, is going to experience even greater harm. In essence, the United States is helping lead Ukraine down the primrose path. Furthermore, there is a danger that the war will escalate, as NATO might get dragged into the fighting and nuclear weapons might be used. We are living in perilous times.
Let me now lay out my argument in greater detail, starting with a description of the conventional wisdom about the causes of the Ukraine conflict.
The Conventional Wisdom
It is widely and firmly believed in the West that Putin is solely responsible for causing the Ukraine crisis and certainly the ongoing war. He is said to have imperial ambitions, which is to say he is bent on conquering Ukraine and other countries as well—all for the purpose of creating a greater Russia that bears some resemblance to the former Soviet Union. In other words, Ukraine is Putin’s first target, but not his last. As one scholar put it, he is “acting on a sinister, long-held goal: to erase Ukraine from the map of the world.” Given Putin’s purported goals, it makes perfect sense for Finland and Sweden to join NATO and for the alliance to increase its force levels in eastern Europe. Imperial Russia, after all, must be contained.
While this narrative is repeated over and over in the mainstream media and by virtually every Western leader, there is no evidence to support it. To the extent that purveyors of the conventional wisdom provide evidence, it has little if any bearing on Putin’s motives for invading Ukraine. For example, some emphasize that he said that Ukraine is an “artificial state“ or not a “real state.” Such opaque comments, however, say nothing about his reason for going to war. The same is true of Putin’s statement that he views Russians and Ukrainians as “one people“ with a common history. Others point out that he called the collapse of the Soviet Union “the greatest geopolitical catastrophe of the century.” Of course, Putin also said, “Whoever does not miss the Soviet Union has no heart. Whoever wants it back has no brain.” Still, others point to a speech in which he declared that “Modern Ukraine was entirely created by Russia or, to be more precise, by Bolshevik, Communist Russia.” But as he went on to say in that very same speech, in reference to Ukraine’s independence today: “Of course, we cannot change past events, but we must at least admit them openly and honestly.”
To make the case that Putin was bent on conquering all of Ukraine and incorporating it into Russia, it is necessary to provide evidence that first, he thought it was a desirable goal, that second, he thought it was a feasible goal, and third, he intended to pursue that goal. There is no evidence in the public record that Putin was contemplating, much less intending to put an end to Ukraine as an independent state and make it part of greater Russia when he sent his troops into Ukraine on February 24th.
In fact, there is significant evidence that Putin recognized Ukraine as an independent country. In his July 12, 2021, article about Russian-Ukrainian relations, which proponents of the conventional wisdom often point to as evidence of his imperial ambitions, he tells the Ukrainian people, “You want to establish a state of your own: you are welcome!” Regarding how Russia should treat Ukraine, he writes, “There is only one answer: with respect.” He concludes that lengthy article with the following words: “And what Ukraine will be—it is up to its citizens to decide.” It is hard to reconcile these statements with the claim that he wants to incorporate Ukraine within a greater Russia.
In that same July 12, 2021, article and again in an important speech he gave on February 21st of this year, Putin emphasized that Russia accepts “the new geopolitical reality that took shape after the dissolution of the USSR.” He reiterated that same point for a third time on February 24th, when he announced that Russia would invade Ukraine. In particular, he declared that “It is not our plan to occupy Ukrainian territory” and made it clear that he respected Ukrainian sovereignty, but only up to a point: “Russia cannot feel safe, develop, and exist while facing a permanent threat from the territory of today’s Ukraine.” In essence, Putin was not interested in making Ukraine a part of Russia; he was interested in making sure it did not become a “springboard“ for Western aggression against Russia, a subject I will say more about shortly.
One might argue that Putin was lying about his motives, that he was attempting to disguise his imperial ambitions. As it turns out, I have written a book about lying in international politics—Why Leaders Lie: The Truth about Lying in International Politics—and it is clear to me that Putin was not lying. For starters, one of my principal findings is that leaders do not lie much to each other; they lie more often to their own publics. Regarding Putin, whatever one thinks of him, he does not have a history of lying to other leaders. Although some assert that he frequently lies and cannot be trusted, there is little evidence of him lying to foreign audiences. Moreover, he has publicly spelled out his thinking about Ukraine on numerous occasions over the past two years and he has consistently emphasized that his principal concern is Ukraine’s relations with the West, especially NATO. He has never once hinted that he wants to make Ukraine part of Russia. If this behavior is all part of a giant deception campaign, it would be without precedent in recorded history.
Perhaps the best indicator that Putin is not bent on conquering and absorbing Ukraine is the military strategy Moscow has employed from the start of the campaign. The Russian military did not attempt to conquer all of Ukraine. That would have required a classic blitzkrieg strategy that aimed at quickly overrunning all of Ukraine with armored forces supported by tactical airpower. That strategy was not feasible, however, because there were only 190,000 soldiers in Russia’s invading army, which is far too small a force to vanquish and occupy Ukraine, which is not only the largest country between the Atlantic Ocean and Russia, but also has a population over 40 million. Unsurprisingly, the Russians pursued a limited aims strategy, which focused on either capturing or threatening Kiev and conquering a large swath of territory in eastern and southern Ukraine. In short, Russia did not have the capability to subdue all of Ukraine, much less conquer other countries in eastern Europe.
As Ramzy Mardini observed, another telling indicator of Putin’s limited aims is that there is no evidence Russia was preparing a puppet government for Ukraine, cultivating pro-Russian leaders in Kyiv, or pursuing any political measures that would make it possible to occupy the entire country and eventually integrate it into Russia.
To take this argument a step further, Putin and other Russian leaders surely understand from the Cold War that occupying counties in the age of nationalism is invariably a prescription for never-ending trouble. The Soviet experience in Afghanistan is a glaring example of this phenomenon, but more relevant for the issue at hand is Moscow’s relations with its allies in eastern Europe. The Soviet Union maintained a huge military presence in that region and was involved in the politics of almost every country located there. Those allies, however, were a frequent thorn in Moscow’s side. The Soviet Union put down a major insurrection in East Germany in 1953, and then invaded Hungary in 1956 and Czechoslovakia in 1968 to keep them in line. There was serious trouble in Poland in 1956, 1970, and again in 1980-1981. Although Polish authorities dealt with these events, they served as a reminder that intervention might be necessary. Albania, Romania, and Yugoslavia routinely caused Moscow trouble, but Soviet leaders tended to tolerate their misbehavior, because their location made them less important for deterring NATO.
What about contemporary Ukraine? It is obvious from Putin’s July 12, 2021, essay that he understood at that time that Ukrainian nationalism is a powerful force and that the civil war in the Donbass, which had been going on since 2014, had done much to poison relations between Russia and Ukraine. He surely knew that Russia’s invasion force would not be welcomed with open arms by Ukrainians, and that it would be a Herculean task for Russia to subjugate Ukraine if it had the necessary forces to conquer the entire country, which it did not.
Finally, it is worth noting that hardly anyone made the argument that Putin had imperial ambitions from the time he took the reins of power in 2000 until the Ukraine crisis first broke out on February 22, 2014. In fact, the Russian leader was an invited guest to the April 2008 NATO summit in Bucharest where the alliance announced that Ukraine and Georgia would eventually become members. Putin’s opposition to that announcement had hardly any effect on Washington because Russia was judged to be too weak to stop further NATO enlargement, just as it had been too weak to stop the 1999 and 2004 waves of expansion.
Relatedly, it is important to note that NATO expansion before February 2014 was not aimed at containing Russia. Given the sad state of Russian military power, Moscow was in no position to pursue revanchist policies in eastern Europe. Tellingly, former U.S. ambassador to Moscow Michael McFaul notes that Putin’s seizure of the Crimea was not planned before the crisis broke out in 2014; it was an impulsive move in response to the coup that overthrew Ukraine’s pro-Russian leader. In short NATO enlargement was not intended to contain a Russian threat but was instead part of a broader policy to spread the liberal international order into eastern Europe and make the entire continent look like western Europe.
It was only when the Ukraine crisis broke out in February 2014 that the United States and its allies suddenly began describing Putin as a dangerous leader with imperial ambitions and Russia as a serious military threat that had to be contained. What caused this shift? This new rhetoric was designed to serve one essential purpose: to enable the West to blame Putin for the outbreak of trouble in Ukraine. And now that the crisis has turned into a full-scale war, it is imperative to make sure he alone is blamed for this disastrous turn of events. This blame game explains why Putin is now widely portrayed as an imperialist here in the West, even though there is hardly any evidence to support that perspective.
Let me now turn to the real cause of the Ukraine crisis.
The Real Cause of the Trouble
The taproot of the crisis is the American-led effort to make Ukraine a Western bulwark on Russia’s borders. That strategy has three prongs: integrating Ukraine into the EU, turning Ukraine into a pro-Western liberal democracy, and most importantly, incorporating Ukraine into NATO. The strategy was set in motion at NATO’s annual summit in Bucharest in April 2008, when the alliance announced that Ukraine and Georgia “will become members.” Russian leaders responded immediately with outrage, making it clear that they saw this decision as an existential threat, and they had no intention of letting either country join NATO. According to a respected Russian journalist, Putin “flew into a rage,” and warned that “if Ukraine joins NATO, it will do so without Crimea and the eastern regions. It will simply fall apart.”
William Burns, who is now the head of the CIA, but was the US ambassador to Moscow at the time of the Bucharest summit, wrote a memo to then-Secretary of State Condoleezza Rice that succinctly describes Russian thinking about this matter. In his words: “Ukrainian entry into NATO is the brightest of all red lines for the Russian elite (not just Putin). In more than two and a half years of conversations with key Russian players, from knuckle-draggers in the dark recesses of the Kremlin to Putin’s sharpest liberal critics, I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.” NATO, he said, “would be seen … as throwing down the strategic gauntlet. Today’s Russia will respond. Russian-Ukrainian relations will go into a deep freeze…It will create fertile soil for Russian meddling in Crimea and eastern Ukraine.”
Burns, of course, was not the only policymaker who understood that bringing Ukraine into NATO was fraught with danger. Indeed, at the Bucharest Summit, both German Chancellor Angela Merkel and French President Nicolas Sarkozy opposed moving forward on NATO membership for Ukraine because they understood it would alarm and anger Russia. Merkel recently explained her opposition: “I was very sure … that Putin is not going to just let that happen. From his perspective, that would be a declaration of war.”
The Bush administration, however, cared little about Moscow’s “brightest of red lines” and pressured the French and German leaders to agree to issuing a public pronouncement declaring that Ukraine and Georgia would eventually join the alliance.
Unsurprisingly, the American-led effort to integrate Georgia into NATO resulted in a war between Georgia and Russia in August 2008—four months after the Bucharest summit. Nevertheless, the United States and its allies continued moving forward with their plans to make Ukraine a Western bastion on Russia’s borders. These efforts eventually sparked a major crisis in February 2014, after a US-supported uprising caused Ukraine’s pro-Russian president Viktor Yanukovych to flee the country. He was replaced by pro-American Prime Minister Arseniy Yatsenyuk. In response, Russia seized Crimea from Ukraine and helped fuel a civil war between pro-Russian separatists and the Ukrainian government in the Donbass region of eastern Ukraine.
One often hears the argument that in the eight years between when the crisis broke out in February 2014 and when the war began in February 2022, the United States and its allies paid little attention to bringing Ukraine into NATO. In effect, the issue had been taken off the table, and thus NATO enlargement could not have been an important cause of the escalating crisis in 2021 and the subsequent outbreak of war earlier this year. This line of argument is false. In fact, the Western response to the events of 2014 was to double down on the existing strategy and draw Ukraine even closer to NATO. The alliance began training the Ukrainian military in 2014, averaging 10,000 trained troops annually over the next eight years. In December 2017, the Trump administration decided to provide Kyiv with “defensive weapons.” Other NATO countries soon got into the act, shipping even more weapons to Ukraine.
Ukraine’s military also began participating in joint military exercises with NATO forces. In July 2021, Kyiv and Washington co-hosted Operation Sea Breeze, a naval exercise in the Black Sea that included navies from 31 countries and was directly aimed at Russia. Two months later in September 2021, the Ukrainian army led Rapid Trident 21, which the U.S. Army described as an “annual exercise designed to enhance interoperability among allied and partner nations, to demonstrate units are poised and ready to respond to any crisis.” NATO’s effort to arm and train Ukraine’s military explains in good part why it has fared so well against Russian forces in the ongoing war. As a headline in TheWall Street Journalput it, “The Secret of Ukraine’s Military Success: Years of NATO Training.”
In addition to NATO’s ongoing efforts to make the Ukrainian military a more formidable fighting force, the politics surrounding Ukraine’s membership in NATO and its integration into the West changed in 2021. There was renewed enthusiasm for pursuing those goals in both Kyiv and Washington. President Zelensky, who had never shown much enthusiasm for bringing Ukraine into NATO and who was elected in March 2019 on a platform that called for working with Russia to settle the ongoing crisis, reversed course in early 2021 and not only embraced NATO expansion but also adopted a hardline approach toward Moscow. He made a series of moves—including shutting down pro-Russian TV stations and charging a close friend of Putin with treason—that were sure to anger Moscow.
President Biden, who moved into the White House in January 2021, had long been committed to bringing Ukraine into NATO and was also super-hawkish toward Russia. Unsurprisingly, on June 14, 2021, NATO issued the following communiqué at its annual summit in Brussels:
We reiterate the decision made at the 2008 Bucharest Summit that Ukraine will become a member of the Alliance with the Membership Action Plan (MAP) as an integral part of the process; we reaffirm all elements of that decision, as well as subsequent decisions, including that each partner will be judged on its own merits. We stand firm in our support for Ukraine’s right to decide its own future and foreign policy course free from outside interference.
On September 1, 2021, Zelensky visited the White House, where Biden made it clear that the United States was “firmly committed” to “Ukraine’s Euro-Atlantic aspirations.” Then on November 10, 2021, Secretary of State Antony Blinken, and his Ukrainian counterpart, Dmytro Kuleba, signed an important document—the “US-Ukraine Charter on Strategic Partnership.” The aim of both parties, the document stated, is to “underscore … a commitment to Ukraine’s implementation of the deep and comprehensive reforms necessary for full integration into European and Euro-Atlantic institutions.” That document explicitly builds not just on “the commitments made to strengthen the Ukraine-U.S. strategic partnership by Presidents Zelensky and Biden,” but also reaffirms the U.S. commitment to the “2008 Bucharest Summit Declaration.”
In short, there is little doubt that starting in early 2021 Ukraine began moving rapidly toward joining NATO. Even so, some supporters of this policy argue that Moscow should not have been concerned, because “NATO is a defensive alliance and poses no threat to Russia.” But that is not how Putin and other Russian leaders think about NATO and it is what they think that matters. There is no question that Ukraine joining NATO remained the “brightest of red lines” for Moscow.
To deal with this growing threat, Putin stationed ever-increasing numbers of Russian troops on Ukraine’s border between February 2021 and February 2022. His aim was to coerce Biden and Zelensky into altering course and halting their efforts to integrate Ukraine into the West. On December 17, 2021, Moscow sent separate letters to the Biden administration and NATO demanding a written guarantee that: 1) Ukraine would not join NATO, 2) no offensive weapons would be stationed near Russia’s borders, and 3) NATO troops and equipment moved into eastern Europe since 1997 would be moved back to western Europe.
Putin made numerous public statements during this period that left no doubt that he viewed NATO expansion into Ukraine as an existential threat. Speaking to the Defense Ministry Board on December 21, 2021, he stated: “what they are doing, or trying or planning to do in Ukraine, is not happening thousands of kilometers away from our national border. It is on the doorstep of our house. They must understand that we simply have nowhere further to retreat to. Do they really think we do not see these threats? Or do they think that we will just stand idly watching threats to Russia emerge?” Two months later at a press conference on February 22, 2022, just days before the war started, Putin said: “We are categorically opposed to Ukraine joining NATO because this poses a threat to us, and we have arguments to support this. I have repeatedly spoken about it in this hall.” He then made it clear that he recognized that Ukraine was becoming a de facto member of NATO. The United States and its allies, he said, “continue to pump the current Kiev authorities full of modern types of weapons.” He went on to say that if this was not stopped, Moscow “would be left with an ‘anti-Russia’ armed to the teeth. This is totally unacceptable.”
Putin’s logic should make perfect sense to Americans, who have long been committed to the Monroe Doctrine, which stipulates that no distant great power is allowed to place any of its military forces in the Western Hemisphere.
I might note that in all of Putin’s public statements during the months leading up to the war, there is not a scintilla of evidence that he was contemplating conquering Ukraine and making it part of Russia, much less attacking additional countries in eastern Europe. Other Russian leaders—including the defense minister, the foreign minister, the deputy foreign minister, and the Russian ambassador to Washington—also emphasized the centrality of NATO expansion for causing the Ukraine crisis. Foreign Minister Sergei Lavrov made the point succinctly at a press conference on January 14, 2022, when he said, “the key to everything is the guarantee that NATO will not expand eastward.”
Nevertheless, the efforts of Lavrov and Putin to get the United States and its allies to abandon their efforts to make Ukraine a Western bulwark on Russia’s border failed completely. Secretary of State Antony Blinken responded to Russia’s mid-December demands by simply saying, “There is no change. There will be no change.” Putin then launched an invasion of Ukraine to eliminate the threat he saw from NATO.
Where Are We Now & Where Are We Going?
The Ukraine war has been raging for almost four months I would like to now offer some observations about what has happened so far and where the war might be headed. I will address three specific issues: 1) the consequences of the war for Ukraine; 2) the prospects for escalation—to include nuclear escalation; and 3) the prospects for ending the war in the foreseeable future.
This war is an unmitigated disaster for Ukraine. As I noted earlier, Putin made it clear in 2008 that Russia would wreck Ukraine to prevent it from joining NATO. He is delivering on that promise. Russian forces have conquered 20 percent of Ukrainian territory and destroyed or badly damaged many Ukrainian cities and towns. More than 6.5 million Ukrainians have fled the country, while more than 8 million have been internally displaced. Many thousands of Ukrainians—including innocent civilians—are dead or badly wounded and the Ukrainian economy is in shambles. The World Bank estimates that Ukraine’s economy will shrink by almost 50 percent over the course of 2022. Estimates are that approximately 100 billion dollars’ worth of damage has been inflicted on Ukraine and that it will take close to a trillion dollars to rebuild the country. In the meantime, Kyiv requires about $5 billion of aid every month just to keep the government running.
Furthermore, there appears to be little hope that Ukraine will be able to regain use of its ports on the Azov and Black Seas anytime soon. Before the war, roughly 70 percent of all Ukrainian exports and imports—and 98 percent of its grain exports—moved through these ports. This is the basic situation after less than 4 months of fighting. It is downright scary to contemplate what Ukraine will look like if this war drags on for a few more years.
So, what are the prospects for negotiating a peace agreement and ending the war in the next few months? I am sorry to say that I see no way this war ends anytime soon, a view shared by prominent policymakers like General Mark Milley, the Chairman of the JCS, and NATO Secretary-General Jens Stoltenberg. The main reason for my pessimism is that both Russia and the United States are deeply committed to winning the war and it is impossible to fashion an agreement where both sides win. To be more specific, the key to a settlement from Russia’s perspective is making Ukraine a neutral state, ending the prospect of integrating Kyiv into the West. But that outcome is unacceptable to the Biden administration and a large portion of the American foreign policy establishment, because it would represent a victory for Russia.
Ukrainian leaders have agency of course, and one might hope that they will push for neutralization to spare their country further harm. Indeed, Zelensky briefly mentioned this possibility in the early days of the war, but he never seriously pursued it. There is little chance, however, that Kyiv will push for neutralization, because the ultra-nationalists in Ukraine, who wield significant political power, have zero interest in yielding to any of Russia’s demands, especially one that dictates Ukraine’s political alignment with the outside world. The Biden administration and the countries on NATO’s eastern flank—like Poland and the Baltic states—are likely to support Ukraine’s ultra-nationalists on this issue.
To complicate matters further, how does one deal with the large swaths of Ukrainian territory that Russia has conquered since the war started, as well as Crimea’s fate? It is hard to imagine Moscow voluntarily giving up any of the Ukrainian territory it now occupies, much less all of it, as Putin’s territorial goals today are probably not the same ones he had before the war. At the same time, it is equally hard to imagine any Ukrainian leader accepting a deal that allows Russia to keep any Ukrainian territory, except possibly Crimea. I hope I am wrong, but that is why I see no end in sight to this ruinous war.
Let me now turn to the matter of escalation. It is widely accepted among international relations scholars that there is a powerful tendency for protracted wars to escalate. Over time, other countries can get dragged into the fight and the level of violence is likely to increase. The potential for this happening in the Ukraine war is real. There is a danger that the United States and its NATO allies will get dragged into the fighting, which they have been able to avoid up to this point, even though they are already waging a proxy war against Russia. There is also the possibility that nuclear weapons might be used in Ukraine and that might even lead to a nuclear exchange between Russia and the United States. The underlying reason these outcomes might be realized is that the stakes are so high for both sides, and thus neither can afford to lose.
As I have emphasized, Putin and his lieutenants believe that Ukraine joining the West is an existential threat to Russia that must be eliminated. In practical terms, that means Russia must win its war in Ukraine. Defeat is unacceptable. The Biden administration, on the other hand, has stressed that its goal is not only to decisively defeat Russia in Ukraine, but also to use sanctions to inflict massive damage on the Russian economy. Secretary of Defense Lloyd Austin has emphasized that the West’s goal is to weaken Russia to the point where it could not invade Ukraine again. In effect, the Biden administration is committed to knocking Russia out of the ranks of the great powers. At the same time, President Biden himself has called Russia’s war in Ukraine a “genocide” and charged Putin with being a “war criminal” who should face a “war crimes trial” after the war. Such rhetoric hardly lends itself to negotiating an end to the war. After all, how do you negotiate with a genocidal state?
American policy has two significant consequences. For starters, it greatly amplifies the existential threat Moscow faces in this war and makes it more important than ever that it prevails in Ukraine. At the same time, it means the United States is deeply committed to making sure that Russia loses. The Biden administration has now invested so much in the Ukraine war—both materially and rhetorically—that a Russian victory would represent a devastating defeat for Washington.
Obviously, both sides cannot win. Moreover, there is a serious possibility that one side will begin to lose badly. If American policy succeeds and the Russians are losing to the Ukrainians on the battlefield, Putin might turn to nuclear weapons to rescue the situation. The U.S. Director of National Intelligence, Avril Haines, told the Senate Armed Services Committee in May that this was one of the two situations that might lead Putin to use nuclear weapons in Ukraine. For those of you who think this is unlikely, please remember that NATO planned to use nuclear weapons in similar circumstances during the Cold War. If Russia were to employ nuclear weapons in Ukraine, it is impossible to say how the Biden administration would react, but it surely would be under great pressure to retaliate, thereby raising the possibility of a great-power nuclear war. There is a perverse paradox at play here: the more successful the United States and its allies are at achieving their goals, the more likely it is that the war will turn nuclear.
Let’s turn the tables and ask what happens if the United States and its NATO allies appear to be heading toward defeat, which effectively means that the Russians are routing the Ukrainian military and the government in Kyiv moves to negotiate a peace deal intended to save as much of the country as possible. In that event, there would be great pressure on the United States and its allies to get even more deeply involved in the fighting. It is not likely, but certainly possible that American or maybe Polish troops would get pulled into the fighting, which means NATO would literally be at war with Russia. This is the other scenario, according to Avril Haines, where the Russians might turn to nuclear weapons. It is difficult to say precisely how events will play out if this scenario comes to pass, but there is no question there will be serious potential for escalation, to include nuclear escalation. The mere possibility of that outcome should send shivers down your spine.
There are likely to be other disastrous consequences from this war, which I cannot discuss in any detail because of time constraints. For example, there is reason to think the war will lead to a world food crisis in which many millions of people will die. The president of the World Bank, David Malpass, argues that if the Ukraine war continues, we will face a global food crisis that is a “human catastrophe.”
Furthermore, relations between Russia and the West have been so thoroughly poisoned that it will take many years to repair them. In the meantime, that profound hostility will fuel instability around the globe, but especially in Europe. Some will say there is a silver lining: relations among countries in the West have markedly improved because of the Ukraine war. That is true for the moment, but there are deep fissures below the surface, and they are bound to reassert themselves over time. For example, relations between the countries of eastern and western Europe are likely to deteriorate as the war drags on, because their interests and perspectives on the conflict are not the same.
Finally, the conflict is already damaging the global economy in major ways and this situation is likely to get worse with time. Jamie Diamond, the CEO of JPMorgan Chase says we should brace ourselves for an economic “hurricane.” If he is right, these economic shocks will affect the politics of every Western country, undermine liberal democracy, and strengthen its opponents on both the left and the right. The economic consequences of the Ukraine war will extend to countries all over the planet, not just the West. As The UN put it in a report released just last week: “The ripple effects of the conflict are extending human suffering far beyond its borders. The war, in all its dimensions, has exacerbated a global cost-of-living crisis unseen in at least a generation, compromising lives, livelihoods, and our aspirations for a better world by 2030.”
Conclusion
Simply put, the ongoing conflict in Ukraine is a colossal disaster, which as I noted at the start of my talk, will lead people all around the world to search for its causes. Those who believe in facts and logic will quickly discover that the United States and its allies are mainly responsible for this train wreck. The April 2008 decision to bring Ukraine and Georgia into NATO was destined to lead to conflict with Russia. The Bush administration was the principal architect of that fateful choice, but the Obama, Trump, and Biden administrations have doubled down on that policy at every turn and America’s allies have dutifully followed Washington’s lead. Even though Russian leaders made it perfectly clear that bringing Ukraine into NATO would be crossing “the brightest of red lines,” the United States refused to accommodate Russia’s deepest security concerns and instead moved relentlessly to make Ukraine a Western bulwark on Russia’s border.
The tragic truth is that if the West had not pursued NATO expansion into Ukraine, it is unlikely there would be a war in Ukraine today and Crimea would still be part of Ukraine. In essence, Washington played the central role in leading Ukraine down the path to destruction. History will judge the United States and its allies harshly for their remarkably foolish policy on Ukraine. Thank you.
John J. Mearsheimer is the R. Wendell Harrison Distinguished Service Professor of Political Science at the University of Chicago. His many books include The Great Delusion: Liberal Dreams and International Realities and The Tragedy of Great Power Politics.
There is ample reason to worry that major economies like the United States are heading for a recession, accompanied by cascading financial turmoil. Some of the worst elements of both the 1970s and the 2008 crash are now in play, with equity markets likely to move deeper into bear territory.
The global financial and economic outlook for the year ahead has soured rapidly in recent months, with policymakers, investors, and households now asking how much they should revise their expectations, and for how long. That depends on the answers to six questions.
First, will the rise in inflation in most advanced economies be temporary or more persistent? This debate has raged for the past year, but now it is largely settled: “Team Persistent” won, and “Team Transitory” – which previously included most central banks and fiscal authorities – must admit to having been mistaken.
The second question is whether the increase in inflation was driven more by excessive aggregate demand (loose monetary, credit, and fiscal policies) or by stagflationary negative aggregate supply shocks (including the initial COVID-19 lockdowns, supply-chain bottlenecks, a reduced US labor supply, the impact of Russia’s war in Ukraine on commodity prices, and China’s “zero-COVID” policy). While both demand and supply factors were in the mix, it is now widely recognized that supply factors have played an increasingly decisive role. This matters because supply-driven inflation is stagflationary and thus raises the risk of a hard landing (increased unemployment and potentially a recession) when monetary policy is tightened.
That leads directly to the third question: Will monetary-policy tightening by the US Federal Reserve and other major central banks bring a hard or soft landing? Until recently, most central banks and most of Wall Street occupied “Team Soft Landing.” But the consensus has rapidly shifted, with even Fed Chair Jerome Powell recognizing that a recession is possible, and that a soft landing will be “very challenging.”
Moreover, a model used by the Federal Reserve Bank of New York shows a high probability of a hard landing, and the Bank of England has expressed similar views. Several prominent Wall Street institutions have now decided that a recession is their baseline scenario (the most likely outcome if all other variables are held constant). In both the United States and Europe, forward-looking indicators of economic activity and business and consumer confidence are heading sharply south.
The fourth question is whether a hard landing would weaken central banks’ hawkish resolve on inflation. If they stop their policy tightening once a hard landing becomes likely, we can expect a persistent rise in inflation and either economic overheating (above-target inflation and above potential growth) or stagflation (above-target inflation and a recession), depending on whether demand shocks or supply shocks are dominant.
Most market analysts seem to think that central banks will remain hawkish, but I am not so sure. I have argued that they will eventually wimp out and accept higher inflation – followed by stagflation – once a hard landing becomes imminent, because they will be worried about the damage of a recession and a debt trap, owing to an excessive build-up of private and public liabilities after years of low interest rates.
Now that a hard landing is becoming a baseline for more analysts, a new (fifth) question is emerging: Will the coming recession be mild and short-lived, or will it be more severe and characterized by deep financial distress? Most of those who have come late and grudgingly to the hard-landing baseline still contend that any recession will be shallow and brief. They argue that today’s financial imbalances are not as severe as those in the run-up to the 2008 global financial crisis, and that the risk of a recession with a severe debt and financial crisis is therefore low. But this view is dangerously naive.
There is ample reason to believe that the next recession will be marked by a severe stagflationary debt crisis. As a share of global GDP, private and public debt levels are much higher today than in the past, having risen from 200% in 1999 to 350% today (with a particularly sharp increase since the start of the pandemic). Under these conditions, rapid normalization of monetary policy and rising interest rates will drive highly leveraged zombie households, companies, financial institutions, and governments into bankruptcy and default.
The next crisis will not be like its predecessors. In the 1970s, we had stagflation but no massive debt crises, because debt levels were low. After 2008, we had a debt crisis followed by low inflation or deflation, because the credit crunch had generated a negative demand shock. Today, we face supply shocks in a context of much higher debt levels, implying that we are heading for a combination of 1970s-style stagflation and 2008-style debt crises – that is, a stagflationary debt crisis.
When confronting stagflationary shocks, a central bank must tighten its policy stance even as the economy heads toward a recession. The situation today is thus fundamentally different from the global financial crisis or the early months of the pandemic, when central banks could ease monetary policy aggressively in response to falling aggregate demand and deflationary pressure. The space for fiscal expansion will also be more limited this time. Most of the fiscal ammunition has been used, and public debts are becoming unsustainable.
Moreover, because today’s higher inflation is a global phenomenon, most central banks are tightening at the same time, thereby increasing the probability of a synchronized global recession. This tightening is already having an effect: bubbles are deflating everywhere – including in public and private equity, real estate, housing, meme stocks, crypto, SPACs (special-purpose acquisition companies), bonds, and credit instruments. Real and financial wealth is falling, and debts and debt-servicing ratios are rising.
That brings us to the final question: Will equity markets rebound from the current bear market (a decline of at least 20% from the last peak), or will they plunge even lower? Most likely, they will plunge lower. After all, in typical plain-vanilla recessions, US and global equities tend to fall by about 35%. But, because the next recession will be both stagflationary and accompanied by a financial crisis, the crash in equity markets could be closer to 50%.
Regardless of whether the recession is mild or severe, history suggests that the equity market has much more room to fall before it bottoms out. In the current context, any rebound – like the one in the last two weeks – should be regarded as a dead-cat bounce, rather than the usual buy-the-dip opportunity. Though the current global situation confronts us with many questions, there is no real riddle to solve. Things will get much worse before they get better.
Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, is Chief Economist at Atlas Capital Team, CEO of Roubini Macro Associates, Co-Founder of TheBoomBust.com, and author of the forthcoming MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them (Little, Brown and Company, October 2022). He is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.
Editor’s note: Discussion includes using choice of production technique in central planning, opportunity cost, labour cost, calculating environmental costs (such as GHG emissions), agent-based modelling, consumer modelling, simulation results, computational complexity, research to be done.
[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Dr. Philipp Dapprich.
Philipp Dapprich is a political economist and philosopher working at the Free University Berlin. His PhD was entitled Rationality and Distribution in the Socialist Economy (2020), , and he is also co-author of a forthcoming (2022) book entitled Economic Planning in an Age of Environmental Crisis. Today we’ll be discussing his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993).
Philipp Dapprich, thank you very much for joining me.
[Philipp Dapprich] Thank you for having me again.
[ATO]Thefirst thing I’m going to say is I really recommend the viewers watch the previous interview, because they’re not standalone interviews. We covered a lot of important stuff last time about opportunity costs, the motivations for your work, and really if viewers want to understand what we’re talking about now they should watch that. So, I’m just going to say that once.
Today there are two main things that we want to talk about. The first is we want to get into the details of the simulations that you ran to investigate your new techniques of opportunity cost valuations in the Towards a New Socialism model.
The other thing is we want to talk about a fundamental question, a fundamental problem, in economic planning and central planning about choice of production technologies. Can you introduce the problem and how you approached it?
[PD] One approach to planning has long been to use so-called input-output tables. And input-output tables – they are commonly published even by western capitalist countries – show you which industries use inputs from which other industries, and which output, how much output, they produce with this.
And the problem with that is that these tables are generally very aggregated. So, you have entire industries, you might have something like Forestry and Agriculture, all bunched together into one column of the table. And it doesn’t differentiate between various different kinds of products within those industries. It won’t differentiate between different kinds of agricultural products, lumber, and so on. That’s the first problem: they’re way too aggregated. And what you’d have to do is to have a much more disaggregated table which differentiates between different kinds of products.
[ATO]When you’re talking about input-output tables – for viewers – you’re saying that these are very aggregated tables. And they’re saying, for example, the agricultural sector is outputting let’s say corn and milk. And then you’re also looking at the inputs required for that, for example, grain, iron, electricity.
[PD] Exactly. The input-output table will tell you not just how much the Forestry and Agriculture sector is producing, but also which inputs from which other industries it is using. Is it using a lot of input from the energy industry, or from the mining industry? How much labour is it using? That’s an important input as well.
But, as I said, it doesn’t differentiate between different kinds of products being produced in those industries. It’s all aggregated into one column. And if you want to plan specifically, not just what the size of a certain sector should be, but precisely which kinds of products should be produced – and that’s the level of detail of planning that we really need – those input-output tables are not going to be very useful.
So, the first thing you have to do is get a much more disaggregated table which differentiates within the same industry between different kinds of product. For example, you differentiate between wheat, potatoes, and tomatoes, and so on, rather than having them all bunched together as one sector. That’s the first problem, that they don’t differentiate between different kinds of products.
The second problem is they don’t differentiate between different ways of producing that product. The input-output table looks at the past year, or whatever year this table was made for, and looks at how much was used in this industry to produce whatever that industry produces. So even if we were to differentiate that, and we look at potato farming or we look at electricity generation (maybe that’s a better example here) it will not differentiate between electricity that’s produced by coal power plants versus nuclear power plants, versus solar and wind power plants. But if you want to plan precisely which methods should be used, you need to be able to differentiate this. Instead, an input-output table just tells you at the current mix of electricity production this is how many tons of coal were used to produce electricity, this is how many wind turbines were installed, and so on, this is how much labour was being used in in the electricity industry.
So, you don’t just want to differentiate between different kinds of products. Here we’re talking about the same product, electricity, but there are different methods of producing it. And one of the fundamental questions if you want to determine an efficient allocation of resources is which of these methods should we be using? We have to be able to tell them apart.
And the way that I do that is I kind of move away from these traditional input-output tables, and instead have tables which don’t have an entire sector or even single product as one column, but instead have a production technique. And producing electricity with coal power would be a different production technique hfrom producing it with wind power or nuclear power, and so on. And each column would then list with this particular kind of production technique how much labour is needed, how much coal would be needed, how many wind engines would be needed, to produce a certain output of electricity. And this can then serve as a basis for determining a production plan which precisely specifies which techniques should be used to what extent to produce the optimal overall output.
[ATO]Thank you for that overview. And let me ask: in a traditional input-output table, like you’re saying, it’s effectively a snapshot of the production techniques which are currently in use. However, if we wanted to devise plan for the economy that was the most efficient, we would of course not only want to find the best distribution of resources given fixed production techniques, but we’d also want to pick what the best production technique for each good and service would be.
So, you’re saying that part of how you approach this is that rather than using a traditional input-output table, you’re now introducing or including separate production techniques into some kind of table or matrix. Like you said, you could have multiple entries for electricity: Electricity 1, Electricity 2, Electricity 3, 4, 5, 6, 7, 8, 9, 10.
Could you talk more about how a planning algorithm can actually choose between these different techniques? Choose between one method of electricity generation over another.
[PD] What I call a plan, in the end, is basically a specification of which production techniques should be used at which intensity. Intensity here means if you use it at an intensity of one, then you’ll have exactly the input stated in the table and the outputs stated in the table. If you use it as an at an intensity of two, that means you’re using it twice as much. Which means you have twice as many inputs, twice as many outputs.
Input table and output table used in Dapprich (2021).
So, a plan in the end is supposed to specify which of these techniques should be used at what intensity. And the idea is that you calculate the plan which uses the mix of techniques which maximizes the overall production output, and that can be calculated using linear programming. So, you can determine the optimal plan, i.e. the mix of production techniques which maximizes overall production.
[ATO]In order for this to function then, presumably, let’s say in the real world, there would have to be some kind of register or list of available production techniques. How could we imagine that operating?
[PD] If you want to imagine some kind of central planning agency being in charge of this planning process in some sense, or administrating it, they would need to have this table which lists all the available production techniques, or at least the ones which plausibly could be used in an optimal plan. They need to have all the entries so they need to know which resources are being used, and which output is being produced by that plan.
The way that I imagine that this table would be created is you could have various production units communicating what production techniques they have available. Or you could also have research centres which continue to come up with new methods and which would then, perhaps in an experimental fashion, determine the resource usage of those production techniques, how much can be produced with those resources using that technique, and then communicate that to a central computer system where this would then be entered into the table.
[ATO]I’m thinking about computation here. And, of course, probably the great attraction of using these Leontief style input-output tables is that they make computation of a comprehensive plan so much easier. Now, if you introduce multiple production techniques, multiple production vectors for each product, that’s obviously going to make it more computationally complex. So, what are your thoughts about this? Is it still feasible and if so, how would you quantify that?
[PD] I think actually the biggest increase in computational complexity comes from differentiating between different kinds of products within the same industry. A typical input-output table will have maybe 100, at maximum maybe 500, different industries but there might be hundreds of millions of different kinds of products. That will massively increase the size of the table and that’s the computational complexity of the problem that has to be solved.
The different kinds of production techniques – if we maybe imagine that there might be two or three, on average, different ways of producing a product, that will of course increase it further. But that’s probably not the most relevant factor here. The differentiation between different kinds of products within the same industry will probably – at least that’s my guess – be the big effect.
The answer is yes absolutely that increases the computational complexity and increases the length of time that a computer will need to solve these kinds of problems
[ATO]Yes certainly, disaggregating the products has an enormous effect and that’s very relevant. I’m asking particularly about different production techniques because I think Cockshott and Cottrell have very convincingly argued that without multiple production techniques a comprehensive plan can be feasibly calculated for on the order of 100 million or a billion distinct products.
What you’re saying is that if we have, say, a handful of leading candidates for production techniques because it’s not necessary to list every single production technique available, including all of the ones which are really inefficient. There is probably a handful of ones which are more or less equally successful, maybe one is better in one aspect, another is better another aspect. You’re saying that, let’s say, if these additional production techniques are on the order of 10 or less, then you’re just looking at multiplying the calculations by a factor of 10.
[PD] Exactly. I think potentially imaginable production techniques can be already excluded from an engineering standpoint, because we already know that they used a lot of certain resources. We could in theory produce electricity by having hamsters on treadmills or something like that, but we know that’s not going to be an economically viable and feasible way of producing electricity compared to nuclear power or wind power or something like that. So, I think a lot a lot can be excluded already.
I actually think there’s a way also to formally calculate that without already having to do the optimization. Which is: if based on past plans, for example, you were able to calculate the opportunity costs of not just various products but also of inputs for these products – we talked about opportunity costs in the last part – if you were to calculate that opportunity cost, you could also use that as a cost indicator to give you a vague idea of the costs of different inputs. And then if you notice this production technique uses a lot of this really valuable scarce resource, that has a very high opportunity cost, that we really need somewhere, else then you can maybe already preclude that from the list to begin with. And that’s not going to be something that would be used in an optimal plan anyway.
[ATO]You’re saying that the opportunity cost valuations could be used to screen for efficient production techniques.
[PD] Exactly.
[ATO]Okay and actually on that point, firstly I’m just trying to picture the introduction ofthese multiple production techniques for each product. Is that essentially functioning like rather than, say, having electricity as an entry it’s almost like you have now multiple products. We know that they are electricity, but in mathematical terms it’s like there are different products.
[PD] Well, you need a way to specify to the algorithm, to the computer, that these are the same product. Because this will be relevant when calculating which techniques should be used, and how much do we need of a certain product, and so on. So, the algorithm needs to know which product is being produced.
The way I do this is by having actually two different kinds of tables. The first table specifies only the inputs of various production techniques. And then the second table specifies to you which product is being produced with this technique.
One advantage of this is also that you can actually have multiple products of the same production technique. In some production processes you might have maybe the main product but you also have some by-product that is being used. For example, something that has been in the news lately because of high energy prices, fertilizer manufacturers lowered their production but because a by-product of the fertilizer production process is CO2, that is then used for fizzy drinks and other kinds of things, that also reduced the availability of CO2. So, by having these two different tables – one specifies the inputs, the other the outputs – you can then also have in the output table non-zero entries for multiple products. You could have production techniques which produce more than one output.
[ATO]Yes, that’s a good point because that is certainly relevant information for actually quite a lot of products. And if we want to have a more circular economy that’s important information, we don’t want to just throw away products. We want to use by-products as efficiently as possible.
Staying on the topic of computational complexity just for a little bit longer: the opportunity cost valuations, what are the ramifications there on computation?
[PD] The way that I calculated them in my thesis was basically I did one optimization – we talked last time about this free bread method, for example, which might be used to produce one free unit of bread and then you see how that increases the overall output – so you do one calculation without any of these methods and then you do an extra calculation for each product. Basically, to see how much you increase the optimized production output when you have one unit of it for free.
And that, of course, means that you have to do a lot of extra calculations. But there is actually a computationally much easier way of doing this with linear programming. In linear programming, you actually get certain factors which are used in the optimization process which seem to be equivalent to my way of calculating it, and you get these basically computationally for free. So, there isn’t any significant increase in the computational complexity if you also want to calculate these opportunity costs.
[ATO]What you’re saying is that you can actually change from labour time calculations to opportunity cost calculations, which on the face of it would seem to require a lot more computation, but actually at the end of it these two methods – labour cost and opportunity cost – end up with roughly the same order of computational complexity.
[PD] Yes. At least that’s the case if you use linear programming.
The problem is that linear programming still seems to be a bit too complex for the number of different products and production techniques that that we have to consider. But there are better ways of doing that. Cockshott and Cottrell proposed the harmony algorithm – I think Cockshott was actually the one that that developed this – which is more computationally efficient than linear programming in these kinds of planning problems.
What I don’t know is whether there’s also a way of using the harmony algorithm to get these opportunity cost factors. I think that’s something that still needs to be looked into. Whether in the end you can also get these for free using an optimization method which is sufficiently computationally efficient to calculate a plan for millions, hundreds of millions, of different products and production techniques within a time frame that’s acceptable.
[ATO] You’re saying that the opportunity cost valuations actually do add in significantly more computation, so this is a topic for future research.
[PD] Well, they don’t add anything if you use linear programming. But the question is whether linear programming is actually fast enough to solve these kinds of problems. And Paul Cockshott suggests that actually with linear programming it would still require too much time, too much computer time, to solve these kinds of problems. And you actually need a more efficient algorithm and he proposes the harmony algorithm, which does solve it in time.
So, the question is whether what’s true for linear programming – that you can basically get these evaluations for free – is also true for the harmony algorithm. And that’s something that I simply don’t know.
[ATO]This is something to be to be worked out, it’s an open question.
[PD] Yes.
[ATO]All right. Would you be interested in talking about the opportunity cost of land in particular?
[PD] Yes, I mean it’s not that different from other factors really. But we could briefly talk about that.
[ATO]It’s basically the same process?
[PD] Yes, the idea would be that you consider if we had one unit of land extra how much does that increase production.
[ATO]Okay, let’s park that for now because that requires us to go back through all of the material from last interview again.
[PD] Yeah.
[ATO]Last time we discussed in depth the method that you’ve introduced to calculate the opportunity cost of different resources, different goods and services, in a democratic central plan. But also you did some simulations to investigate this, and we didn’t really talk about that much. Would you like to talk about that now?
[PD] Yes, sure, do you want me to just briefly outline it?
[ATO]Yes, please.
[PD] The basic idea of the simulation, or the motivation behind it, is I wanted to see how the composition of products that is being produced will differ in the traditional labour value model and my model using opportunity cost. And, specifically, I was interested in seeing how emission rights – if you constrain the allowable emissions for the economy overall, you put a cap on emissions – affect which kinds of products are being produced.
And I thought the best way of testing that would be a computer simulation. The computer simulation, on the one hand, uses precisely – or at least a simplified version of – the kinds of planning algorithms that you would apply in in the real world.
And then, on the other hand, you need to also consider the behaviour of consumers. Of course, in a computer simulation you don’t have real consumers, and in the real world you would, these would be real people going to the supermarket deciding what to use their vouchers, or tokens, or money, or whatever you want to call it, on. But for the purpose of the computer simulation, I devised a very simple agent-based model which simulates the behaviour of individual consumers. And then you can observe with consumers behaving in in this way how would the planning algorithm react to that? How would it change the composition of products that are being produced?
[ATO]Can we just take a brief detour here which I think people might find interesting. Some people will know what agent-based modelling is but others won’t. And I just think it would be interesting if you just explained briefly what that was. Because it’s a different kind of modelling than has traditionally been done for decades and decades, and it’s something that’s become a lot more popular now particularly in economics.
[PD] With agent-based modelling you’re basically modelling individual agents. You’re saying okay well we have maybe a thousand different agents and we’re going to model for each one of them how are they going to behave in a certain situation. How they’re going to act, interact with each other, with the environment, and so on. Which choices, which decisions, are they going to make?
And, of course, then you have some things about how people will react to various circumstances. And there might also be an element of chance. My model does include an element of chance as well, but with probabilities of various decisions depending on certain circumstances and also certain factors you can pre-specify as someone running this simulation.
(Source: Wikipedia) Netlogo is a popular and free agent-based modelling software. The image above shows an agent-based predator-prey model of an ecosystem with grass, sheep, and wolves. In agent-based modelling, rather than programming the macroscopic behaviour into the system (e.g. with an equation for the system), one programmes rules for each element of the system (e.g. for a patch of grass, a sheep,or a wolf) and then watches the agents interact based on their specified behaviour rules. Netlogo website: http://ccl.northwestern.edu/netlogo-ccl.shtml
[ATO]So people can picture this who aren’t familiar with it. You could imagine, for example, if you’re one of these evil ‘security’ corporations trying to prepare the oligarchy to deal with the various uprisings which are due to happen in the in the coming century. You can imagine a crowd control simulation where you have individual people. And you can imagine looking at them, and then there are simple rules which govern their behaviour. Like if they’re enclosed by a certain number of other agents, they might act like this, and so forth.
And so, you program in these very basic rules for what they’re going to do, and then you just watch what happens when you throw all of these marbles together basically, and they interact with each other. And sometimes very surprising things can happen.
Well, anyway that’s agent-based modelling, but you were talking about using that to model consumers in the simulation. So, please continue.
[PD] In my simulation, the basic idea or what I wanted from the consumers is I wanted their decisions to be price dependent.
Basically, what that means is that if the price of a good increases suddenly they should be less likely to buy this kind of product, and maybe choose some alternative instead. Because I wanted to keep it very simple, it is price dependent so you get exactly this result under very specific circumstances. But as long as these are met, then you get significant price reaction of consumers so that they’re less likely to buy a product if the price of that product increases.
But some still will buy it. Some people will still buy a product even if it’s ridiculously expensive. And the real world equivalent would be someone who values this product so much that they’re willing to pay even a very high price for it. And you get some people like that, and you get that in the simulation as well.
The way that I’ve done this is basically each consumer has an infinite shopping list, and the shopping list is ordered. It is procedurally generated; you generate as much as you need basically until the consumer stops shopping. You start off with the first item on the list and that’s the top priority for that consumer. And if the consumer can afford that item, then she or he will purchase that item, and then goes moves on to the second item. And this then continues until the consumer isn’t able to afford an item
I think three times in a row is what I picked here as the stop condition. So, if there are three items on the list in a row that the consumer can no longer afford, because she or he has already spent all of her credits on the items further up on the list, then she’ll conclude that she has run out of money. She can’t afford anything else. He’s going to go home now.
The reason that under certain circumstances this yields a price dependent behaviour -consumption behaviour – is that if the price of a product is more expensive, it is more likely that she will not have enough credits left to be able to purchase that, and she will have to skip the item and see if there’s something else further down on the list that she can still afford.
So, that’s how you get this price dependent reaction with people being less likely to purchase items as their price increases
[ATO]The aim there is you’re trying to create a model of consumer behaviour where consumers are responsive to prices. Because the essential point of this is to model consumer feedback so that they’re responsive to prices. And then you’re saying, also, that this is done in a statistical way. Essentially, there’s a statistical distribution of preferences – that’s what it amounts to. Even if something is very expensive, e.g. there’s a very expensive guitar, somebody will want to buy that. Most people won’t.
[PD] Exactly. Some people will still purchase this.
And also what you get with this agent-based model which you wouldn’t get with – or which would be more difficult to get with – standard neoclassical models, is that the choice of products doesn’t just depend on the price of an individual product. So, how many, say, potatoes we bought doesn’t just depend on the price of potatoes but it also depends on the price of other products. Because if potatoes have a fair price but something else is a real bargain, then people might choose to use their limited funds not to buy potatoes and buy something else instead. That is actually something else that I wanted to capture in this model, and which I’ve accomplished, that the amount of a product being bought doesn’t just depend on its own price but also on the price of everything else that could be bought instead.
So, these are the two important factors that I cared about and which are realized in the model.
But, of course, overall it’s not a particularly realistic model of how people behave. It’s not supposed to be. If you were to apply this model in the real world, you wouldn’t need this consumer model in the first place. You’d have real people doing this. So, realism is not necessarily what I was interested in. These two factors are what I care about: price dependent behaviour of consumers, and that the amount of the product being bought doesn’t just depend on its own price but also on the price of alternative products.
[ATO]You’ve got that consumer model, but of course your overarching goal isn’t to model consumer behaviour. That is in the service of a larger goal which is an optimal plan. So, let’s talk about the other aspects of the simulation.
[PD] The way these two parts then fit together – you have, on the one hand, this optimal planning algorithm, the consumer feedback mechanism which we talked about last time, and the consumer behaviour model. The consumer model tells you what the consumer feedback going to be.
So, at a given supply … The optimal plan tells you how much is being produced of various products, that tells you how much is available for consumers. That’s the supply that can then be compared to the demand at a certain price level. You market the consumer products at certain prices to consumers, and you see what is going to be the demand for various products based on the consumer model.
Then you have supply and demand, and you can compare these. And you might observe that actually at the current prices the demand for a product is really high higher than the supply. And then based on one of these two feedback mechanisms – which we talked about last time – you’d adjust the price to try to balance supply and demand.
So, in this case, you would increase the price, and because the consumer model is reactive to these prices that means demand will go down. If the opposite is the case, so actually at current prices the demand for product is much lower than what’s been made available through production, than the supply, then you actually lower the price to encourage more consumers to pick these kinds of products, so that they don’t go to waste.
That’s the first step, this comparison of supply and demand. And this is really where the consumer model interacts with the planning algorithm and the feedback methods that we talked about last time.
Dapprich (2021). Summary diagram of model. (1) The plan target is used to calculate an optimal plan, determing supply of each good. (2) Consumers respond to goods sold at prices, and adjust their demand. (3) Compare supply and demand and adjust prices. (4) Compare opportunity cost with price and adjust plan target. (5) Repeat.
This is then done 30 times. You can imagine that that this is one month consisting of 30 days, and every day we adjust the prices somewhat to try to create this match of supply and demand. What I found in the very simple simulations that I ran is that usually after around 20 days you’d have a pretty good match of supply and demand. It took 30 [days] because I also thought that fits well with one month, so we can maybe better imagine that. After this 30 day period, usually you’ll have the market clearing prices which match supply and demand.
Now you know what the market clearing prices for a product are. You can also calculate the opportunity cost, in the way that we discussed in the last interview.
And now you have to make them comparable. The way that you do it is you now have the market clearing prices after this 30-day period, and you can also calculate the opportunity costs in the way that we discussed the last time for various products. You now have to make these two comparable because they might be on completely different scales. You want to (what’s called) ‘normalize’ them, bring them on the same level.
And the way that I do that is I modify the opportunity costs such that the relative costs of various products remain the same. So, originally, one item costs twice as much as another item. Those relations will be maintained. But the overall cost of all the different products that have been produced will be the same now, after normalization, as the overall price at the market clearing prices of all the products that are available. You maintain the proportions of different costs while having them on the same scale as market clearing prices, so that market clearing prices and opportunity costs of products can now be compared.
[ATO]Just to make that concretefor viewers: so, you’ve calculated that the opportunity cost of bread is – I’m just going to pick random numbers – a thousand euro, or a thousand, let’s say. And for potatoes the opportunity cost is 500 euro. If you look in the shop, then price of bread is one euro and the price of potatoes is 50 euro. So, first of all you’re saying that the proportions are the same, the relative prices, are the same. But you can’t compare an opportunity cost of bread which is a thousand euro with the price of bread which is one euro. That’ll end up with nonsense.
[PD] Well, the proportions won’t necessarily be the same with opportunity costs and prices. The opportunity cost of producing one unit of bread might be twice as much as producing one unit of potatoes. But the price of it actually might be three times more. So, that can still be the case.
But what you want to avoid is that they are on completely different scales. You assumed opportunity cost is already measured in euro, or something like that. Now the opportunity cost is not being measured in the same unit as the credits, or the vouchers, or the or the money, that you’re using to purchase items at all. They’re not measured in the same unit.
So, you have to make them comparable in some sense. And, as I said, the way doing it is not to change the proportions of the cost. That would stay two to one, even if the price is three to one. You maintain these proportions. But the overall value of all the products has to perhaps be reduced. Let’s say, on average, the cost of producing an individual product is a thousand but the price of it on average is one. Then you have to reduce the cost by a factor of 1,000, reduce that for all products to make them comparable. That’s the basic idea.
[ATO]While prices would be recorded in some units – we could imagine it might be something like euro – the opportunity cost valuations, that measurement is in terms of fulfilment of the plan. It’s a fulfilment of the target vector, so it’s not it doesn’t have the same unit as a price.
[PD] Yes, the unit is whatever the unit of the objective function is, which could be tons of grain for example. Because you see a slight increase in the value of the optimized objective function, and that’s what you’re measuring here: the opportunity cost.
But you then want to make that comparable to prices. So, you might have to scale the opportunity costs down a bit, or scale them up, while maintaining their proportions. You might increase them by a factor of a thousand, or decrease them by a factor of a thousand, something like that, such that in the end the overall cost of all items available is the same as the overall price of all items available.
[ATO]So, what’s the next step?
[PD] The next step is now, after this 30 day period, you have the market clearing prices for items. You can also calculate the opportunity cost for the items. You scale the opportunity costs to be comparable to the prices, and then you compare them.
So, for each product you would look: well, the price for that item is maybe 10. But the cost of producing it is only 9. And then, because the price is higher than the cost, it means there’s a lot of demand even at a high price for this product, which means we should be producing more of this. People are willing to pay the cost of producing this item. And actually there are even people are willing to pay more than that. So, we’ll produce more of it in the future.
And so you adjust the plan target entry for that product. The plan target, to repeat from last time, specifies the proportions in which various products are being produced. If our example is bread, and you have a price for bread that’s higher than the opportunity cost, and then you increase the entry for bread such that in the next planned period, we’ll have a higher proportion of bread being produced in the output mix.
If the opposite is the case, let’s say for potatoes, the market clearing price is actually lower than the opportunity cost of producing potatoes, then you decrease the entry for potatoes in the plan target vector (which specifies the proportions at which things have been produced). And what you then get is basically in the next planned period – a few days, the next month – you’d be producing relatively more grain compared to potatoes. Because you’ve now increased the proportion for grain and decreased the proportion for potatoes. So, you have the higher emphasis on bread versus potatoes.
[ATO] You’re talking about using the comparison between the opportunity cost of a product – let’s say, bread – with the price that it’s selling for. Those are being compared, and then the plan target is being adjusted based on that comparison. If the price is higher than the opportunity cost, this is taken as a signal that it would make sense for more of this to be produced. Because people are willing to pay more than the calculated cost of producing it, which is the opportunity cost.
And similarly in the reverse case. If the opportunity cost is higher than the price, people aren’t actually willing to pay a price which is equal to the opportunity cost. Then that’s an indication that too much of it is being produced.
And so, the plan target, which is basically a recipe for the entire economy – we talked about that last time, the example was falafel. If you want to make falafel, then you have one tin of chickpeas, one portion of garlic and two of parsley. But this is for the whole economy.
[PD] Let me just correct you there. The plan target is not what you might call a recipe. It doesn’t tell you what you need to produce falafel. Rather, it tells you how much falafel should you produce relative to haloumi, and kebab, and other things. Because if you produce too much falafel, there actually might not be that many people who want to eat falafel. Maybe more people want to eat haloumi instead. So the plan target tells you the proportions in which various products should be produced.
A different table, the input table, would tell you what you need to produce it. that that would be the recipe, or the plan target tells you how much of various things to produce in proportion to other things.
[ATO] That’s completely true. And when I was saying that, I was thinking, well, this is actually a very confusing analogy, because the natural analogy of falafel will be an actual would be an actual product in the economy, whereas I’m talking about in the economy, What I was trying to get across when we went through this last time, was that if you’re producing one unit of potatoes, then there will also be produced two units of iron, five units of bicycles, three units of electricity. And, like you said, they’re fixed proportions. So that’s where I was going with the recipe – that it scales up in fixed proportions.
The point being that comparing the opportunity cost to the price – this feeds back then and changes that plan target. So, the proportions will change. If people don’t want bread, then the amount of bread in this plan target will decrease.
Okay, so now know what?
[PD] Yes, exactly. So, now you change the plan target. You change the proportions at which various consumer products are being produced. Basically the idea is to adjust them to what people actually want and need. And then you have a new plan target. And based on that, you can then calculate a new production plan for the next period.
So you had some initial plan target that you started off with. You’re now changing that plan target, somewhat adjusting that in response to the behaviour of consumers. And now you start in the next period and you do the same thing basically again. So, you’ll have a slightly different composition of products now. You’ll again market them to consumers, every day you adjust the price until you approach market clearing prices. And then at the end of the period, again the same for the third period, you would adjust the target and recalculate the plan.
So each plan period you get a slightly different composition, and it keeps being adjusted to match what consumers actually are willing to spend that vouchers or credits on.
[ATO] The way you’ve done this is that the consumer model runs for 30 iterations, which we could think of as 30 days, or a month, consumers going into shops and buying things and liking the prices, or not liking the prices, and changing their demand. But if we just think about the real world, would you envisage this model applying in real life in a similar way? That the plan target might be updated once a month? Or is this just the way the simulation functions?
[PD] This is just the way I did it in the simulation. How are you going to do it in the real world depends, for example, on how long it takes to calculate an optimal plan. So, if it only takes a couple of minutes, then maybe you can update it every day. If it takes a couple of days, then maybe once a week, or once a month is more realistic.
But I needed to choose some number here. And also the other factor was I wanted for the simulation at least sufficient time for prices to adjust to market clearing prices before I calculate a new plan. That’s why it shows this 30 day period.
In the real world, of course, you could adjust it depending on how fast prices approach market clearing prices, how long it takes to calculate a new production plan. So, you could do this a lot faster if that is feasible from computational standpoint.
[ATO] We’ve been mostly talking about the model. But what about the simulation and the results of the simulation? What happened there?
[PD] What I was particularly interested in is what happens when you introduce a constraint on emissions. I tested this in a very simplified setting, because this way, it’s basically easier – it was easier for me, and also for someone else looking at this – to understand what is actually going on here.
I took an economy, which only has two different consumer products. And the idea is that one of these products takes a lot of emissions – takes a lot of energy, which takes emissions – to produce. And the other product is the more green, environmentally-friendly product, it has a lower carbon footprint.
And I wanted to see if we now introduce a constraint on emissions, how does that affect the proportions at which these products will be produced? Will we produce more of the product that has actually high carbon emissions? Or will we produce less of that, but more of the environmentally friendly product? And I think this would be what makes sense and what should happen in an ideal model; that as you limit emissions, that increases the cost of producing a product that takes a lot of emissions, because these are now a scarce resource that we have to economise on. And that means we should probably be producing less of that. And maybe it’s better to produce something else instead, which doesn’t use up all of these emission rights.
So, I then tested this. I compared the labour value model of [Paul] Cockshott and [Allin] Cottrell with my opportunity cost model, and looked at how these two differ.
First, what I did was [look at] what happens if you don’t have an emission constraint at all. Basically, the economy is allowed to produce as many greenhouse gas emissions as is necessary to produce as much as possible. You don’t care about emissions at all. And I chose the basic parameters of the simulation such that under these circumstances, the proportions of A and B being produced are one-to-one.
So, what happens is you produce one of the environmentally destructive products, so maybe this is meat, which has higher greenhouse gas emissions. Then maybe the vegetarian option, which has lower carbon emissions. You produce one unit of meat for every unit of the veggie option. And that’s when you don’t have an emission constraint. That’s exactly the same in the labour value model and in my opportunity cost model. When you don’t take emissions into account, both models basically have the same result under the circumstances.
Dapprich (2021). Black arrow is both cost models with no emissions constraint. With emission constraint, red is labour cost model, green is opportunity cost model. Red is a scaled version of the black vector. Green is scaled and shifted in direction.
But if you now introduce an emission constraint and say we can’t overall emit more CO2, or more greenhouse gases, than a certain cap, then what happens in the labour value model – at least in some cases that I looked into – is that you simply produce less overall. So you don’t change the proportions. You don’t say we’re going to produce less meat because it’s environmentally destructive, but we’re going to keep producing as much of the veggie option or even more of the veggie option. No, instead, what you do is you keep the proportions one-to-one. You just produce less overall, because that’s all you can produce without violating the emissions constraint. But there’s no change in the proportions, because there’s no change in the in the calculated cost of producing these items.
Emissions aren’t factored into labour values. So meat doesn’t get a higher cost of production, just because you now want to limit the amount of emissions and it takes a lot of emissions to produce. So that’s not factored into the cost. And accordingly, it doesn’t factor into the mix of products being produced.
But what happens in my opportunity cost value model is that meat actually – when you introduce an emission constraint – gets a much higher opportunity cost. Because all those emission rights being used to produce meat could be used to produce a lot of other things. And that increases the cost of meat, and this then results in there being a lot less meat being produced. Because it has a higher cost and not as many people are willing to pay that high of a price, such that the cost and the prices are somehow balanced. So, you see actually not just a reduction in the overall production to meet the emission constraint. You see a drastic reduction in meat production, but a relative increase of the production of the veggie option, the environmentally friendly option.
[ATO] Yes, it’s very interesting. And I’m going to include pictures from the paper. Visually, this is represented as – you can think about this plan target as being a vector.
[PD] The plan target gives you gives you the direction of a vector. So, you have a product space. Because you just have two products, it’s two dimensional. That’s why I chose two products, it’s easier to them to understand. And the target tells you in which direction is that arrow going to be. Because it tells you the proportions at which products are being produced. And then the length of the vector tells you how much we are producing at these proportions.
And without emissions, basically, you get a one-to-one proportion. So the vector is at a 45 degree angle. And the length is as long as possible with available resources, not taking into account the emissions. You can produce as many emissions as you want, or as necessary to produce as much as is possible.
And so the in the labour value model, when you then introduce an emission constraint, what happens is the direction of the arrow remains the same, you simply decrease the length of the arrow. So, you will maintain the same proportions but produce less of all. While, in my model, you actually change the direction of the vector towards the environmentally friendly product. So you actually see a shift in the kinds of things being produced and not just the quantity of what has been produced.
[ATO] Yes, exactly. So what other results did you get?
[PD] This was the main thing that I was interested in. I also ran some tests to see what the computational complexity was. I used linear programming and my results were consistent with other tests of that Paul Cockshott did on the complexity of linear programming for these kinds of planning problems.
But the main thing that I was interested in was precisely this. How other factors than labour, in particular emission rates, affect the costs of producing items compared to labour values, and how that then affects the composition of products being produced. And the results were for the most part, consistent with my expectation; and I think demonstrate that opportunity costs are a more adequate measure of cost and that it really matters which one we choose, because it will lead to different a different mix of products being produced.
[ATO] Yes, the simulation is very interesting. Of course, it’s basically a proof of concept, because there’s a toy economy. But I think, yes, it does show that – like you were describing – there is a qualitative difference between the labour value model and the opportunity cost value model. In one you have the same plan target, the same product mix for the economy, and you’re just scaling that up and down. The opportunity cost model is more dynamic, in the sense that the mix can actually change.
Okay, so we’ve talked about the model, we’ve talked about the simulations. What work remains to be done, do you think?
[PD] There are a lot of simplifications in my simulation. And what could be done is to have a more refined version of it, which takes us to kind of other things which I haven’t taken into account.
For example, one major limitation of my simulation is that it doesn’t really consider economic growth and change in the capital stock. You don’t have a scenario where, for example, what you can produce in the second year depends on the machinery that you produced in the first year. So that’s currently not taking into account in my simulation.
There is literature on this. Paul Cockshott has written about multiyear plans where you get precisely this, what you produce in the second year depends on the machinery that’s available which can be also produced in the prior year, and built up, and so on. But there is, as far as I know, no model yet which tries to combine this these multiyear plans with consumer feedback. So you have the short term planning, where you don’t really see a change in the composition of capital goods, which is in response to consumer goods. That’s what I did. You have these multiyear plans where you do see a change in the composition of capital goods, and you can build up capital stock, and so on. But that wasn’t made responsive to consumer demand.
So, I think what should be done next is to have a model which does both, where you have constant changing capital stuff but the production specifically of consumer products, is also made responsive to consumer demand; and the proportions at which various products are being produced continually get adjusted, depending on consumer demand.
[ATO] And is that something that you think you’ll find yourself working on?
[PD] So at the moment, I’m not working on that yet. Maybe that’s something I’ll get the time to get to at some point.
At the moment, I’m working on some questions which are more related to philosophy. So I’m working on Marx’s concept of alienation and looking how that applies to a socialist society. Marx criticised capitalism because he thought that labour was alienated under capitalism. And then the question I asked myself is ‘well, isn’t labour still alienated under socialism? What’s different under socialism that suddenly people are not alienated, but are free in some sense?’. So that’s what I’m currently working on.
And the other thing I’m working on is I’m in active exchange with economists from the Austrian School of Economics, who have long criticised the feasibility of socialist planning. And we are discussing whether these cyber-socialist models – or sometimes they call them techno-socialist models – are an adequate response to this socialist calculation problem, which they think is a fundamental problem of socialism. So I’m engaged in active exchanges with them. There’s a special issue, it’s going to come out, I think, sometime later this year, or maybe next year, which will be an exchange along those lines.
And then I’m also working on a paper with political scientist Dan Greenwood where we really try to see where this debate is currently at. Which problems of socialism is the cybersocialist models, such as the ones we discussed, able to overcome and which problems maybe still remain?
[ATO] For the people watching, you’re saying that there’s work remaining to be done on integrating an opportunity cost model of central planning with consumer feedback with a multi-year investment planning model. And so if there’s somebody watching who thinks that they’re up to the task, that’s something to consider
We’ll leave it there. Thank you very much for joining me, again, Philip Dapprich, talking about introducing opportunity cost valuations and multiple production techniques into central planning. Because these are, these are two of the most fundamental issues, most fundamental criticisms, that can be made of central planning as a model. And so it’s very interesting to see the work that you’ve been doing. It’s very interesting and important on a general note.
In terms of this channel, I focus largely on post-capitalist futures. I think there are essentially three main categories, I think, of both capitalist features. The first is some variety of market socialism. The other is central planning. And then there’s economic planning, it’s in another way. So Participatory Economics is the best example. And what I’m interested in is in each of these models has been developed to its greatest extent. I think we all benefit from that. I’m not interested in just picking a horse, and following that. I certainly have opinions on what I think is good about each of these. I think that the work you’re doing is very important is what I’m trying to say.
[PD] Yes, thank you very much. And I agree that it’s important to consider different models. And obviously, I have I have a horse in this race. But I’m also always interested in engaging with alternative approaches. And I think there’s, for example, a serious debate to be had about what role of markets can or should play under socialism. Obviously, under certain circumstances, they can yield efficient outcomes. I think what I’m trying to show is that, I mean, we do use something like markets for consumer products, something vaguely resembling markets anyways. What I’m trying to show is that maybe you don’t need markets to determine an optimal plan. Maybe you can actually do it in another way as well. But even if that’s right, that doesn’t necessarily mean that it’s the best way. So, I think we need to look into other models as well and need to have these discussions. And yes, it’s good that people are working on other proposals.
[ATO] Okay. But it’s been great to talk about your proposal. And so thank you very much for joining me.
[PD] Yes, thank you so much. It was very pleasant discussion.
[ATO]Thank you for watching.
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There’s a lot more to come. We’ll keep exploring better futures for humanity until we get there.
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We are social creatures – we like to be heard. Yet, an enduring tragedy of modern society remains that there are things more often left unsaid, in the rare occasion there is actually something to say. A heavy silence or a hurried, awkward transition takes the place of words when we can’t bring ourselves to find and voice them. As a step towards finding the words and overcoming the heaviness which hangs about so many of us these days, I would like to invite you into a conversation about the toll of dissent, and about building a better world. We could begin by examining the unsaid…
The following was originally composed as a selection of conversations with a friend in Russia, since the start of Putin’s invasion of Ukraine. It was never published for fear that I would be unable to fully protect my friend’s anonymity. This friend is a fellow activist and dissident, who shares my notion that as advocates for change, it isn’t sufficient to just talk about what we don’t like about the world. We should also be able to seriously address the question: “So, you don’t like (insert least favorite ism here) capitalism, authoritarianism, imperialism, sexism, racism, classism, etc – then, what DO you want?”. Carving this path, my Russian friend and I occasionally correspond over a shared interest in developing theory, vision, & strategy for a Participatory Society.
As the war broke out in February, my friend began sending me reactions, in a stream of thought style. I tried to reply to the best of my ability, as an activist who, like most of us, wavers between feeling as if I can do nothing to alter the horrors of the world, to feeling as if I can, because we must. Activism aside, as a regular person receiving outbursts of pain and frustration from a friend, I do not waiver. I know what is needed is not necessarily all the solutions, or even answers, but active listening, a perspective from outside one’s own mind, solidarity, care, someone to stand as witness. Perhaps the difference we can all make as activists actually starts here, with the very personal. The act of listening transmutes an empty shout in the dark into something shared and named, dragging it out into the light, the first step in overcoming.
My idea for this essay was to present something different from academic conjecture, or even strategic analysis. I sought to put a highly personal, human face on experience and solidarity, via my friend’s shared reflections. They were to be presented as raw as possible, having been written informally for private communication, by a person for whom English is not a mother tongue. I had hoped this format would highlight the unfiltered, collective struggles and desires of regular people, as opposed to the desires and actions of imperial and for-profit warring powers, or even of the popular opinions of various thought factions. I had also hoped it would reflect friendship, that most powerful force of human-ness.
But, like I said, this piece was never published. Though I had first gotten permission from my friend to share their words (carefully and anonymously), once it was organized, edited, and ready for publication, I knew in my gut that it didn’t feel right. Without editing and redacting down to scraps, I could not share our conversations without leaving a trail to my friend. As the weeks passed and brutal crackdowns on Russians who dared to speak out, protest, share art, and in any way express dissent increased, I was glad of my choice. Though it is worthy to give visibility and voice to on-the-ground experiences – it would have put someone else in danger unnecessarily. It would have defeated the purpose of an essay conceived to show a path to solidarity and empathy between regular people, in the face of brutal conditions. The unsaid has many barriers.
While this war and other wars rage on, in the US, we have been reckoning with the violence of yet another school shooting, yet another racially motivated mass shooting, the attacks on women’s rights, prisoner’s rights, voting rights, and on our educational freedoms. Covid, climate, fascism, food shortages, and a litany of other wrongs makes up our day to day reality, landing on some directly, and on others as a kind of noxious, insidious white noise. Since my aforementioned international exchange, I’ve continued to encounter higher than normal levels of burnout and even existential stress lately among comrades, friends, and family, closer to home. I’ll admit that I was personally stung hard, and shocked at my own emotional vulnerability, by the news of Roe being summoned up to the executioner’s block. We are all vulnerable somehow, even when we think we have made ourselves strong.
This issue of the toll of dissent, of how to keep depression, fear, and hopelessness at bay, of how to take care of each other, how to pursue fulfillment and balance as activists and people of good intent, must not remain unsaid, it must be addressed. For my friend in Russia, for my friend’s sister in Detroit, for the man I saw rubbing his forehead at the grocery store checkout line, for the struggles of those who have come before, for my new baby cousin, for you, and for me, we must not pretend we are fine. And we must not be defeated.
This essay originally aimed to: provide a constructive activist outlook for people who share anti-war and internationalist sentiments, to open the conversation about the physical, mental and emotional toll that dissidence can take, and to offer community via the sharing of experiences. Pursuing strategy often means changing tactics to suit context, so I have shifted the form of this essay in the hope of preserving the message. I will first try to mitigate your loss at not being given a chance to read the words of my anonymous friend, by offering another Russian dissident perspective reacting to war and finding reason to rebel: an English translation of Alexandra Kollontai’s 1915, Who Needs the War. Her words are timeless and her sentiments, not unlike my friend’s. I would also encourage you to just listen to someone else’s reactions, and in doing so, contribute to giving voice to experience and support to a friend.
I had hoped the story created by sharing one personal conversation would resonate with many people of varied backgrounds, and perhaps become applicable to diverse crises beyond Russia and Ukraine. Instead, I’ll offer my own reflections, inspired by and distilled through many conversations, with many people from many places, over many years. This is my way to say something in a moment when there is something to say, to offer a fist in the air, and a hand across the divides.
What can I do when activism is making me depressed/anxious/hopeless?
Firstly, if something feels wrong, it just might be wrong. Stop and think, do not be afraid to question, to listen, to pause, and reflect. This general wisdom applies to activism too. If your activities feel harmful to your wellbeing, it is okay to stop, reflect, reconsider, and shift. A diversity of thought and practice is good for movements, and natural for people. Find your own path that you can sustain. You won’t always feel like a bucket of sunshine, of course, but don’t mistake adding your own suffering for alleviating others’ suffering. Take the long view.
I’ve hit pause, ready to reassess, now what?
Look to some kind of visionary thinking as a compliment to activism addressing immediate, urgent problems. Not just because I personally advocate for Participatory Society as a worthy and viable, post-capitalist alternative, and not even just because including vision is the best, most strategic way to practice activism and make continued gains, but also because vision is the yin to the yang of activism, in a personal sense.
There is outrage and there is vision. We can hold both at once to try to stay sane, and even balanced, once we have been politically awakened. Going back to ignorance is not really an option. Once you know, you know – you will not unsee just because it’s ugly. Though we may all fantasize about walking away when it gets too much, there will always be this consciousness somewhere lurking, and festering. Stopping is not really a viable longterm solution. Taking breaks, refreshing, balancing, yes – but just cutting out your awareness of the world and ignoring that you have a preference for how it could be better, no. In fact, it is often crucial for our mental health, in the darkest moments, to engage with our activism as a defiance against the paralysis of shock. The question becomes how to manage, how to be a balanced and fulfilled human, once we become activists.
Find balance? Sounds nice… heard it before… but how?
We need to express outrage and react to the problems of right now, especially when we feel personally shaken, as I felt about the current crisis around women’s rights in the US, as my friend felt about their country’s military aggression, etc. Experiencing and acknowledging a heartfelt and sane reaction to insane conditions is a healthy way to deal with it, rather than to pretend it’s not true.
It is vital to call out injustice, to never look the other way. For movements, it is important that outrage is heard, especially from first hand accounts. However, there is also no lack of outrage concerning many, if not most, of the problems in the world. Beyond self expression, it is not something that usually needs us to continue to sacrifice ourselves, get depressed over, and become burned out.
Practice non attachment to that which no longer serves you or your cause. Give yourself permission to let go, and then act on letting go of outrage. Not ignoring it, not denying it, but expressing it, acknowledging it, and then letting it go. Don’t let outrage drain and consume you. You are allowed to also have fun, be lighthearted, and look at the world around you for its beauty and potential, as well as for its troubles. You will not let your cause down by doing so, and you might even spark joy in others.
Very simply, it’s healthy to express outrage, but not to consume it, at least not serially. We often mistake consuming outrage and even suffering for activism – it isn’t. And if it is hurting your wellbeing, take a break.
Global climate change strike – No Planet B
With less outrage, what will fire my activism?
Explore and engage with worthy vision. There is a scene that struck me, even as a child, in the cartoon film version of Alice in Wonderland. Alice is lost and listlessly bumbling around Wonderland when she meets the Cheshire Cat at a fork in the road. She asks him politely, which way she ought to go from here? He informs Alice that the answer to her question depends greatly on where she is heading – to which she replies that she doesn’t much care where. The cat dissolves into a wicked swirling grin as he taunts, “Then it doesn’t matter which way you go!”.
Activists sorely need to conceive and share a worthy social vision to overcome cynicism, to share strategic orientation, to guide practice and experimentation, and to retain commitment against serious opposition. We need to engage in discussion about where we want to go, why we want to get there, and how we might carve a path. Vision is for running towards something, when it is insufficient to just run away.
Once we break the habit of consuming outrage as if it is our duty, we will create space for vision. We should consistently consume vision. Outrage might get attention, but vision begets hope and is constructive. Outrage will drain you, vision will sustain you. These are general things people might say all the time, but it’s not until you are in the midst of acute, immediate crisis, that they become more true than trite.
When you have that outraged, exhausted, or even empty feeling, try to translate a disgust for the present condition into a vision for a better possibility. Connect current suffering to systems, which are human-made and changeable, not inevitable. This is the important part. This is the empowering voice you should develop and continually use. This is the magic formula and the lifeline.
How, exactly, might I start?
This part is personal, though that doesn’t mean you must discover it alone.
Sharing and talking with others is a very good thing. Developing community around wellbeing is a way to help yourself while helping others, and it can even create venues and mechanisms that remain and develop beyond your own need. Talk it out, share, listen, come together. Having fun is not frivolous, it can be mutual aid.
Little, practical changes can be pivotal. Tune in to your own daily circumstances and habits, reflect on how they are making you feel, and perhaps try adjusting something.
Don’t over consume images that eat away at you – doom scrolling, scrolling in general. Reconsider letting your feeds define your information intake.
Have good words in your ears, good music too. This can be politically themed, or totally unrelated. The environmental and sensory experiences in which we are saturated affect us, greatly.
For the activist with a heavy heart, I sometimes recommend Rebecca Solnit’s Hope in the Dark, or A Paradise Built in Hell. She pursues truth with beauty, and the result was once uplifting, for me. Arundhati Roy is another writer who can use words in a way that I am able to find beauty, even joy and hope, within the most troubling realities. I had a few good laughs and was energized by reading some of the speeches in Lonnie Ray Atkinson’s recent satire, Don’t Think of a Republican. There are words out there for every taste – just have good words in your ears, consistently. They may even come from a friend.
Turn off the news for a bit. You don’t need to become an ostrich, just claim control of your intake, and occasionally step back to assess whether and how your news consumption is serving a purpose.
Music has even more diverse possibilities, so I hesitate to recommend any one tune at all – just that it is important. A song can affect your mood immediately, so curate your soundtrack to help give you what you need. Simple and powerful.
Laugh.
Don’t (completely) ignore your own needs: it could be a need for sleep, exercise, regular hours, ritual, daylight, good food, camaraderie, art, nature, whatever. We all over do it – but just as no one can learn for you or do push ups for you, no can sleep for you or smile for you.
Taking care of each other, and of our future, also means taking care of ourselves. I don’t necessarily mean naps and bubble baths, unless that is really important to you. I mean that it is a very human and healthy state of being to be conscious of the world around you, and to imagine how it might be better. This state of being is to be encouraged and celebrated. It is not a curse, and should not mean that we also must wallow in endless suffering, oppressing ourselves further even than the systems we fight to change. Remembering and embracing life’s authentic pleasures is not selling out, it is not a commodity for purchase, it is in fact a power that we can and must take back as we fight for a better world.
Does it even matter what I do, or how I feel?
Yes. It matters immensely. In fact, your question has been on my mind lately in the form of an unassuming image that, like a catchy tune, I can’t seem to shake. Let me explain…
I’m a sailor, a traveller. I recently visited a place I hadn’t been to in many years, so I climbed up to to the highest place to look around. Atop this view point rests an old church and community cistern. There, I saw a little printed out and hastily laminated sign stuck to the outside of the meeting hall. The scene is beautiful, but far from grand, set in a very small community of about 250 people who call the tiny Caribbean island of Mayreau their home. Mayreau is the smallest inhabited island in the Grenadines, and was once considered the poorest island in the Caribbean. Though these days it has become an increasingly popular tourist spot for people to visit by boat (the island has no airstrip), it is still very quiet, and very poor (if measured using traditional, first world economic metrics). The point being that the people of this community know what it means to confront hardship, scarcity, and to collectively manage resources: food, water, tools, care, education, etc. They have weathered hurricanes, drought, changing conditions of fisheries, influxes and disappearances of outside investment and development schemes, and now Covid. Mayreau is not some kind of utopian community, but, they are intimately aware that when things get tough, survival demands us to come together to keep going.
Back to the undecorated little sign that inspired this story – it said, simply: “I protect you, you protect me, we’re in this together”. I assume it was a reference to Covid and observing social distancing, masking, and other sanitary measures, because it was posted next to the meeting hall’s government issued plaque of a stick figure coughing with a big red X over it. If you live on a tiny island with no hospital, containing outbreaks of a virus like Covid19 takes on an even more urgent, and social consideration. That is the obvious lesson.
But why does this unassuming little sign continue to linger in my mind? What other unfinished business needs to be worked out? I protect you, you protect me, we’re in this together. I care for you, you care for me, we’re in this together. Perhaps there is a simple mantra here that we can adopt, beyond the obvious, beyond Covid, and beyond the searing heat, the increasingly dry ground, and the dwindling catches of a precarious island community. Perhaps, like a good mantra, it sums up in twelve words what I have used three thousand to try to convey: we are all sometimes in need, we are all sometimes able to give, and we are all in this together. The need could be physical, mental, or emotional, or maybe even just for someone to hear us, to witness and acknowledge our struggle. This mantra does not imply that we must all always agree or get along to become community. It allows for diversity and dissent. It is instead, a source of regenerative power – giving by receiving, and vice versa. The benefit is both in the doing, and the receiving.
To me, this mantra suggests that activism itself is not actually the cause of our fatigue, but a cure. It is my senses of perception, my eyes, ears, smell, taste, and touch who observe the world. It is my mind and my empathy who discover wrongs. It is a sense of hopelessness that is my enemy. It is a trajectory of isolation that convinces me that I am lost. It is your action, in the face of similar conditions, that inspires me. It is my action, guided by a vision for better, that rescues me. Through your activism, you bring back hope. Through my activism, I rescue myself. We participate in building community in which we rescue each other, plant the seeds of the future, and begin to live our vision, over and over again. Activism is at once personal and social, and in this way it is a regenerative process. I care for you, you care for me, we’re in this together.
Let’s keep talking.
The toll of dissent takes many forms. Longterm wellbeing is one crucially important aspect for activists, and for everyone really. I am grateful to all of you who have bravely shared your pain and frustration with me, it not only gives me a chance to be a friend, but it also gives me courage in reckoning with my own ups and downs. I hope anyone who reads this will share their own reactions, tips, and ideas, as this was always meant to be a conversation. Let’s not leave things unsaid.
I’ll leave off with a recognition that while this is an attempt to address a serious concern as a strategic activist and as a human being, I do not presume to offer a perfect solution, just to share. I get blue too, and sometimes also grumpy enough to clear a room. But I’m proud of your struggle, and everyone’s struggles, for a better world. In the midst of darkness, your struggle brings me joy and solace – and I hope you may accept the same pride, joy, and solace from mine.
A half-century long strategy, led by corporations, Wall Street, governments, and central banks, is coming undone. As a result, the West’s authorities now face an impossible choice: push conglomerates and states into cascading bankruptcies or allow inflation to go unchecked.
The blame game over surging prices is on. Was it too much central-bank money being pumped out for too long that caused inflation to take off? Was it China, where most physical production had moved before the pandemic locked down the country and disrupted global supply chains? Was it Russia, whose invasion of Ukraine took a large chunk out of the global supply of gas, oil, grains, and fertilizers? Was it some surreptitious shift from pre-pandemic austerity to unrestricted fiscal largesse?
The answer is one that test-takers never encounter: All of the above and none of the above.
Pivotal economic crises frequently evoke multiple explanations that are all correct while missing the point. When Wall Street collapsed in 2008, triggering the global Great Recession, various explanations were offered: regulatory capture by financiers who had replaced industrialists in the capitalist pecking order; a cultural proclivity toward risky finance; failure by politicians and economists to distinguish between a new paradigm and a massive bubble; and other theories, too. All were valid, but none went to the heart of the matter.
The same thing is true today. The “we told you so” monetarists, who have been predicting high inflation ever since central banks massively expanded their balance sheets in 2008, remind me of the joy felt that year by leftists (like me) who consistently “predict” capitalism’s near-death – akin to a stopped clock that is right twice a day. Sure enough, by creating huge overdrafts for the bankers in the false hope that the money would trickle down to the real economy, central banks caused epic asset-price inflation (booming equity and housing markets, the crypto craze, and more).
But the monetarist story cannot explain why the major central banks failed from 2009 to 2020 even to boost the quantity of money circulating in the real economy, let alone push consumer price inflation up to their 2% target. Something else must have triggered inflation.
The interruption of China-centered supply chains clearly played a significant role, as did Russia’s invasion of Ukraine. But neither factor explains Western capitalism’s abrupt “regime change” from prevailing deflation to its opposite: all prices taking off simultaneously. This would require wage inflation to overtake price inflation, thus causing a self-perpetuating spiral, with wage rises feeding back into further price hikes which, in turn, cause wages to rise again, ad infinitum. Only then would it be reasonable for central bankers to demand that workers “take one for the team” and refrain from seeking higher wage settlements.
But, today, demanding that workers forgo wage gains are absurd. All the evidence suggests that, unlike in the 1970s, wages are rising much more slowly than prices, and yet the increase in prices is not just continuing but accelerating.
So, what is really going on? My answer: A half-century long power play, led by corporations, Wall Street, governments, and central banks, has gone badly wrong. As a result, the West’s authorities now face an impossible choice: Push conglomerates and even states into cascading bankruptcies, or allow inflation to go unchecked.
For 50 years, the US economy has sustained the net exports of Europe, Japan, South Korea, then China and other emerging economies, while the lion’s share of those foreigners’ profits rushed to Wall Street in search of higher returns. On the back of this tsunami of capital heading for America, the financiers were building pyramids of private money (such as options and derivatives) to fund the corporations building up a global labyrinth of ports, ships, warehouses, storage yards, and road and rail transport. When the crash of 2008 burned down these pyramids, the whole financialized labyrinth of global just-in-time supply chains was imperiled.
To save not just the bankers but also the labyrinth itself, central bankers stepped in to replace the financiers’ pyramids with public money. Meanwhile, governments were cutting public expenditure, jobs, and services. It was nothing short of lavish socialism for capital and harsh austerity for labor. Wages shrunk, and prices and profits were stagnant, but the price of assets purchased by the rich (and thus their wealth) skyrocketed. Thus, investment (relative to available cash) dropped to an all-time low, capacity shrunk, market power boomed, and capitalists became both richer and more reliant on central-bank money than ever.
It was a new power game. The traditional struggle between capital and labor to increase their respective shares of total income through mark-ups and wage increases continued but was no longer the source of most new wealth. After 2008, universal austerity yielded low investment (money demand), which, combined with plentiful central-bank liquidity (money supply), kept the price of money (interest rates) close to zero. With productive capacity (even new housing) on the wane, good jobs scarce, and wages stagnant, wealth triumphed in equity and real-estate markets, which had decoupled from the real economy.
Then came the pandemic, which changed one big thing: Western governments were forced to channel some of the new rivers of central-bank money to the locked-down masses within economies that, over the decades, had depleted their capacity to produce stuff and were now facing busted supply chains to boot. As the locked-down multitudes spent some of their furlough money on scarce imports, prices began to rise. Corporations with great paper wealth responded by exploiting their immense market power (yielded by their shrunken productive capacity) to push prices through the roof.
After two decades of a central-bank-supported bonanza of soaring asset prices and rising corporate debt, a little price inflation was all it took to end the power game that shaped the post-2008 world in the image of a revived ruling class. So, what happens now?
Probably nothing good. To stabilize the economy, the authorities first need to end the exorbitant power bestowed upon the very few by a political process of paper wealth and cheap debt creation. But the few will not surrender power without a struggle, even if it means going down in flames with society in tow.
Editor’s Note: In this interview, Dr. Philipp Dapprich talks to After the Oligarchy about his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993). Discussion includes opportunity cost, labour cost, calculating opportunity cost in central planning, calculating environmental costs (such as GHG emissions), calculating opportunity cost of capital goods.
[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Dr. Philipp Dapprich.
Philipp Dapprich is a political economist and philosopher working at the Free University Berlin. His PhD was entitled Rationality and Distribution in the Socialist Economy (2020), and today we’ll be discussing his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993).
Philipp Dapprich, thank you very much for joining me.
[Philipp Dapprich] Thank you very much for this conversation.
[ATO]Before we begin with the questions, I was talking to Paul Cockshott yesterday and he mentioned that actually you, Paul Cockshott, and Allin Cottrell, have finished a book, a new book, on economic planning called Economic Planning in an Age of Environmental Crisis. And that’s just with the publishers now, and it’s going to come out sometime this year [2022]. So, do you want to say few words about that?
[PD]Yeah. So, what we’re trying to do in in this book is two things.
First of all, we want to demonstrate that you need some kind of economic planning in order to tackle the huge task of transforming the economy away from fossil fuels. Paul Cockshott actually did a calculation, for the book, of the investment that would be necessary in the UK, as an example country, to completely transform the energy system. And the amount of investment that is needed actually exceeds the annual total private investment in the UK. So, if that’s correct then there’s no way that private investment alone will be able to tackle this, and you need the state to step in and take a significant role in this.
The second thing that we’re doing is showing how economic planning techniques can be applied precisely to this problem of transforming an economy towards a completely different energy source. So, one of the things that we’ve looked at is how you can do long-term plans that gradually transform the economy or the basis of the economy. And the other thing, which is something that I worked on in my PhD thesis as well, is to look at how we can consider environmental constraints in planning and also in valuation of goods.
[ATO]Just one more thing on that. It’s a book primarily about long-term planning and about applying that to the environment, or will there be material about relating a long-term plan to, say, a yearly plan?
[PD]The techniques we describe are, of course, generally applicable for long-term planning and they could be applied to any kind of long-term objective that you might have. But what we’re arguing in the book is that this would be particularly relevant when you’re trying to drastically change the way that the economy is structured, and especially the way the production of electricity and energy is done.
[ATO]Well, it sounds like it’ll be very interesting, and I’ll make sure to get a copy when that is released.
But our conversation today is about something else. It’s about your work on introducing opportunity cost valuations into the Towards a New Socialism model. But before we get into what new techniques and methods you introduced, I’d like to situate that in the history of this problem, and also talk a bit about Towards A New Socialism. So, to give the background to viewers, can you frame the issue of economic calculation so viewers can understand why the issue of opportunity cost is important? And we can go on from there.
[PD]Generally speaking in a socialist economy, a similar problem applies as in any other economy, which is how to apportion resources, labour, the means of production, towards various uses. How much labour are we going to use to produce food versus energy, versus other things? And you want to do that in a way that is in some sense efficient.
And there are techniques to do that. There are optimal planning techniques that that can be used to do that, but what they can’t necessarily tell you is which kinds of products are needed. Do we need more food, do we need more laptops, do we need more smartphones? They can’t really tell you that.
So, in a sense, there’s still a choice that has to be made by individual consumers or planners on what kinds of things to produce. And obviously one thing that will factor into that is the usefulness of these products. If we decide how many laptops are we going to produce, we’ll have to take into account well how useful are more laptops going to be?
But of course you also need, on the other hand, to consider what is the cost of producing these laptops. And I think that costs should be understood as an opportunity cost. Basically, when you use resources to produce laptops, you can no longer use these resources to produce other things. Labour that is used in factories to assemble laptops is labour that can’t be used to produce smartphones instead, or food, or something else. So that is really what is meant by ‘opportunity cost’. It is the opportunities that are lost when we’re doing something. When we’re dedicating resources to the production of laptops, we can’t use these resources for something else, and that is the opportunity that’s being lost.
And the difficult thing is trying to capture that in a way that can be measured. Where you have a single scale that would tell you what is the opportunity cost of a laptop versus a smartphone, versus something else.
[ATO]To clarify, you’re saying that, in the context of socialism and socialist planning, there are techniques of optimizing a plan which given the products and the resources that exist today can distribute that in an efficient manner. But that is different from saying next year how that list of ingredients so and products should be distributed.
[PD]When you’re optimizing in mathematics that always means maximizing some function. And what we’re maximizing is the product output. But, of course, you have many different kinds of products; laptops, smartphones, food, and so on. And the way that that we deal with this is by fixing proportions of these products. We’re saying, well, we’re going to produce two smartphones for every laptop, and for so many units of food, and so on. So, you have set proportions, and then we maximize the output at these proportions.
But, of course, you don’t just want to choose any arbitrary proportions, because you want that to reflect the actual need for laptops, and smartphones, and food, and so on. So, you have to adjust these proportions to the actual needs. And this is where opportunity cost plays a role, because when you’re then deciding ‘well, should we maybe increase the production of laptops relative to smartphones?’, then one of the factors besides the usefulness of laptops and smartphones that you have to take into account is ‘well, how many more smartphones could we produce instead of one laptop?’. That’s the opportunity cost: what other things can we not produce if we produce one laptop?
[ATO]Let’s introduce Towards a New Socialism, because, so far, we’ve been talking about economic planning in general, central planning in general. But Towards a New Socialism is a particular model which does things in a particular way, and you decided to take that model and to refine aspects of that.
[PD]What I found the most significant contribution of Towards a New Socialism, and what made me want to work on this model and refine it is that it has this automatic feedback loop which continually adjusts the mix of products being produced in response to consumer demand.
So, if there’s a high consumer demand for laptops then we’ll increase the production of laptops. And the way that this works is that first of all you regulate the prices. So these are token prices in terms of labour vouchers rather than money prices, but we can put that difference aside for now.
You adjust the prices towards the market clearing rates of products, so these market clearing rates are basically the rates at which the supply and the demand for product match. We’re currently producing 1,000 laptops a month and there’s demand for 1,000 laptops a month at the current price. That’s when you have market clearing rates.
And then these prices give you a good idea of how much people are willing to pay for these laptops. And that could be used as a proxy for how useful they find these laptops and how important these laptops are to their lives. Then the idea is, well, if the price is very high then people are willing to pay a lot for it and then maybe that justifies producing more laptops in the future, because people really value them. While if the prices – the clearing prices – are really low, that means people aren’t actually willing to pay that much for that many laptops, and maybe we should be producing less in the future.
But the question now becomes: the price is high or low relative to what? You need some standard of comparison and that will be different for a laptop than for an apple, because a laptop takes significantly more resources, different kinds of resources, but generally more resources. It’s more expensive in some sense to produce.
[ATO]You’re talking about comparing the price at which it sells to the cost of producing it. And then it’s a question of how you define that cost.
[PD]Yes. And what the Towards a New Socialism model does is measure the cost of producing an item in terms of the labour time, the socially average labour time, that is necessary to produce it. This goes back to Marx’s labour theory of value, which is the theory of prices under capitalism but which now applies this to socialism and says this is also an adequate measure of cost, of the cost of producing items under socialism.
And a problem that many people have with this, and I think there’s certainly some truth to it, is that you’re only considering one factor that is necessary to produce an item: labour. And you’re ignoring other factors. You’re ignoring the machinery that is needed for it. Not entirely, because machines take labour to produce, so you could say labour factors into that as well. But you’re certainly ignoring things like fertile land, which is scarce and which can’t be produced by labour.
And what I was particularly interested in, in my thesis, is that you’re ignoring environmental cost. So, the way that I consider this in my thesis is I think we should introduce some kind of cap on the emission of greenhouse gases, and then when you cap the emission rights for greenhouse gases these emission rights become a scarce resource that needs to be economized on. And I think the amount of emissions that the production of your product takes then has to be factored into the cost of that product as well.
[ATO]Let’s address that last example. And I’m going to put myself in the position of somebody defending, who’s advocating for, the Towards a New Socialism model without these modifications. And a person might say: okay, but given that the plan – and, I think it is clear but just for viewers, the plan that we’re talking about is a comprehensive plan for producing all the goods and services for the economy, so everything that appears in in the shops, what resources and inputs go to what production units, ‘projects’ are what they’re called in Towards a New Socialism.
So, surely, say, in the case of carbon emissions, we could decide what our limit for carbon is going to be for this year, in the next 10 years, and then we could just use that, set that as a constraint, and we just make sure that the plan doesn’t exceed that constraint.
To make this completely concrete, let’s say there’s one billion tonne CO2-equivalent that is allowed this year. And so as long as all of the production that happens this year does not produce more than one billion tonne CO2-equivalent it’s fine. So, what do you think are the limitations of that approach?
[PD]I mean, this absolutely works. And even in the original Towards a New Socialism model you can introduce a constraint on emissions and that will make sure that the optimized plan that you calculate in the end doesn’t violate these constraints, towards whatever environmental limits that you think are necessary.
The problem I think is that it will lead to an inadequate measure of the cost of individual products, which will then lead to an inadequate mix of products being produced, with an over-emphasis on products which actually take a lot of these scarce emission rights. Which then means other things can’t be produced anymore.
For example, the cost of fuel. Diesel fuel for cars, or petrol for cars, would be quite low or would represent maybe the labour cost of producing that fuel, but wouldn’t take into account that actually by burning this fuel you’re emitting quite a lot of greenhouse gases. That means that there would be no incentive to say okay well this is actually what’s using up all our emission rights right now, let’s drastically reduce that and maybe even increase production of other things instead which don’t take up that many emission rights.
So that’s the problem. The problem is not that you’ll get a plan that then emits too much CO2, the problem is that we’ll be using all of our scarce emission rights to produce things which maybe we shouldn’t be producing. And we should use these emission rights to produce a lot more of other things which only take a tiny fraction of those emission rights.
[ATO]Let me recap that, and then I’m going to ask you another question as devil’s advocate.
If I’m correct, what you’re saying is that there are really two problems here. There’s an absolute and there’s a relative problem. The absolute problem is: how in absolute terms can we make sure that we do not exceed one billion tonne CO2-equivalent? But there’s a second problem as well. And that problem is: given that we don’t want to exceed that limit, how are we going to distribute these resources the most effectively, the most efficiently, with the greatest social benefit (however you want to phrase it)?
[PD]Exactly. Once we’ve decided to limit carbon emissions, they are a scarce resource and we have to decide how we want to use those resources. And maybe using all of it on car fuel isn’t the best way to use these scarce resources. Maybe other things, where each unit takes less of these scarce emission rights, would be a much much better way to go about it.
And because this isn’t reflected in the labour value costing of these products. If you simply use labour values, I don’t think that’s the result you’ll get. I actually showed this in a computer simulation for a couple of small sample economies, and I got some results that I wasn’t expecting. But generally, what you got was that in the labour value model, what happens is that to stay within the emission constraint you simply produce less overall. Or sometimes, in some really strange cases, you even produce more of the environmentally destructive goods.
Excerpt from Optimal Planning with Consumer Feedback: A Simulation of a Socialist Economy, Philipp Dapprich, 2021. The red arrow shows a mere decrease in how much produced. The green arrow shows a decrease in how much produced and a shift in what is produced.
But in my [opportunity cost] model, generally what you got is a reduction in production to stay within the emission constraint, but you saw a shift. You saw more relative production of environmentally friendly goods, while you saw a significant reduction in the kinds of goods that were actually contributing to carbon emissions. It’s because this was now reflected in their price, and they’d only be produced as long as people would be willing to pay that higher price.
[ATO]We’re going to get to your model, and we’re going to get to your simulations that are very interesting and important.
I’d like to focus on the problem for a bit a little bit longer. To illustrate this issue of staying within the absolute limit but maybe not solving the relative problem. I mean, we could think about that in other cases which would be even more intuitive. I’m going to give a very stupid example, although it’s not really because it’s kind of how the world actually works at the moment.
So, let’s say we have a finite water supply or a finite supply of grain. You might say okay there are 300 million tonnes of grain. We just don’t have more, we don’t have enough arable land, or whatever. An economy could produce that and distribute that in two different ways. One way is that they could make sure that everybody has a nutritious supply of grain, and the other way is that all of the grain could go to one person and everybody else could starve. And neither of these use up more grain than there is.
I just wanted to make it really clear. I said that was a stupid example but actually that is really pretty much how the world works today. Actually, it’s one of the great problems of capitalism. So, we can call a system socialism but if we don’t overcome that problem in socialism then that the problem still exists.
Okay, we’ve made the point clear but I want to drill into that a little bit more. One more question. If somebody were advocating Towards a New Socialism as it is, they might say: what you’re saying is true, but what if we set a long-term plan for a gradual decrease of these carbon emissions? This year it’s one billion tonnes CO2 equivalent, but let’s say in 10 or 15 years it’s going to be zero. So, people are going to have to figure out how to stop using it, effectively. How do you respond to that?
[PD]Once you get to zero emissions – let’s say zero emission really means no emissions, and not that you’re offsetting it. There of course also these ideas that we’re always going to emit some CO2 but we’ll have to capture the same amount of CO2 back from the air. Let’s assume that’s not possible and you really have to have zero emissions.
At that point, you probably don’t need my modification anymore, at least to take into account carbon emissions and costing. Because you could simply ban any products or any production methods which emit CO2 outright. Or you’d have to because you can’t have any of it anymore anyways. And so at that point it probably wouldn’t make a difference anymore.
But even if that’s what we were going to do, and we don’t continue to have small emissions. Because there are some areas where it’s really hard to get rid of these emissions because there aren’t really any feasible alternatives. But even if we were to get to that, at some point, that’s still a few years or decades down the road. So, in the meantime, we will continue to emit some CO2 but we have to drastically reduce that. And then you precisely get these kinds of situations that I’m looking at, where you have a constraint on emissions you still have some emissions, and then the use of emission rights should be reflected in the cost of an item.
[ATO]There’s a trajectory, there’s a journey still, and we can’t say ‘well, we’re going to get there eventually, so it doesn’t matter how inefficient we are in the meantime’.
And the other thing, and this leads naturally into some more issues that you’re trying to address, is that carbon is not the only environmental cost. It’s actually only one type of environmental cost. It’s only one type of natural resource cost. And it’s only one type of cost. Like you were saying, there are issues about the opportunity cost of using capital goods, for instance, as well. So, even if we got to zero emissions, that wouldn’t take care of that. Do you want to just say something about that as well?
[PD] First of all, maybe about environmental constraints. Of course, you can generalize this towards other environmental constraints as well. So, we could as a society decide not just that we want to limit CO2 emissions, but we could also decide maybe we want to reduce the amount of land that is used for agriculture so that we have more land that can be used for natural reserves or something like that. And then you could also say, well no we’re not going to use all available land that we could potentially use for agriculture, we’re actually going to reduce the number of hectares that that can be used in the plan for growing food. And then you have to use the available land more efficiently and so on.
So, you could do this with any kind of environmental concern, or at least a lot of other environmental concerns as well; formulate them as some kind of constraint, introduce them to the optimization problem that’s solved when you calculate an optimal plan, and then in a similar way, in my model, this would be reflected in the cost of producing these items as well.
And then, of course, this this is a general approach. It doesn’t just apply to these additional environmental constraints that you might introduce, but it also affects other constraints which happen to be there in the economy. For example, if there’s limited number of a certain kind of machine available at a time, and it would take perhaps a long time to build up the stock of that of that type of machinery, then that is an effective constraint on the economy as well. And that would also be reflected in the cost of items. Do they need a scarce machine they have limited capacity to produce at the moment? Then they’ll probably have a higher opportunity cost. And this will then be reflected in adjusting the portions of goods that are being produced.
[ATO] Hello, this is After The Oligarchy. A quick message. If you’re enjoying this, please press the Like button – it makes a difference. Don’t forget to visit aftertheoligarchy.com to see full transcripts of videos, plus other material. And on Twitter I’m @AfterOligarchy if you’re into that sort of thing. As we head back to the show now, let’s keep our heads cool and our critical thinking sharp. Now back …
[ATO]Let’s talk about this issue a bit more, so about the capital goods. This one is a bit different because there’s that embodied labour in capital goods and machinery. What we’re talking about with capital goods – people could think about machine in a production line, could think about a building – they are goods that are used to produce other things. They tend to be longer lasting.
In the case of carbon emissions, there’s no way really to interpret that in terms of labour. It’s just that there is a certain number of carbon emissions and we don’t want to go above that. How do we figure out how we use these?
But with capital there is a way to, at least partially, account for the cost to society of a capital good and that is how much labour went into (a) people actually labouring to assemble it and put it together, and (b) how much labour was put into the things of which the machine is made. So, if the machine, say, has three components – it’s got a belt, an engine, and an electronic interface – how much labour went into those things? And then you can go back, and back, and back, and back.
[PD]That’s precisely how you would calculate the labour value of these machines. And, as you say, there’s a case to be made that machines can be produced by labour. So, they are not as strictly limited as other things might be. We can produce more of them but they might still be limited in the short term. While in the long term you might be able to build up the stock of machinery, in the short term you might simply not have that many machines. And it might take some time to produce more.
And maybe this doesn’t just apply to individual machines but to capital stock in general. You can see – and, I mean, it’s often seen like this in the tradition of the labour theory of value – that capital is in a sense dead labour. This past labour that was put into machines, that was then accumulated and built up over time.
And there might be a limit to that as well, not just to individual machines but to capital stock in general. Because only the labour or the portion of the value produced by labour that is not immediately used up can even be accumulated as capital stock. So, there’s a limit to the capital stock that we have available at any time. And I think that should be reflected in costs as well because that puts a constraint on what we can produce.
[ATO]To develop on that a little bit more, on what this opportunity cost means. The way I think about it is, like you’re saying, firstly about time scales. We might say in 50 years, we might have twice as many, or three times as many, nuclear power stations than we have now. Or, like you’re saying, we might have expanded the total capital stock. It might be twice as big, but on the time scale of, say, this year, it’s essentially fixed. And so the question is, then, how do we distribute those capital goods such that they’re used the most effectively?
And opportunity cost is a way of basically saying how useful is each of these capital goods going to be so that we can make sure that they’re distributed in the right way. It’s quite a different way of thinking than the labour cost method, because that’s thinking about how do we optimize the amount of labour that went into these capital goods and that it’ll save in the future. Whereas this [opportunity cost method] is more about how capital goods are scarce, and given that they’re scarce and people want them for different things, how do we distribute them?
[PD]Exactly. An example that you might give, also to do with ecological transformation, is electricity generation. We have a certain amount of power plants running right now, that are available right now, and we now have to allocate the electricity that can be produced by the available power plants. We might be able to build more of them in the future, but it takes five years or even longer to build a nuclear power plant. So while this might be possible, it doesn’t really affect the available electricity that we have right now and that we need to allocate right now.
[ATO]Yes, exactly.
We’ve given the contours of the problem, we’ve talked about opportunity cost, and planning, and optimizing, and labour costs, so let’s look at what could be the solutions. You’ve talked a bit about that already. So how did you attempt to solve this problem?
[PD]The difficulty is finding a common denominator, a common unit in which to measure the opportunity cost. And there’s a way to do it which is known in the linear optimization literature, it’s called shadow pricing. And the basic idea of shadow pricing is that you make a slight change to one of the constraints of an optimization problem and then see how much does this change the value of the optimized objective function which you’re trying to maximize. That’s in very general terms.
The way that I applied this then to calculate the opportunity cost of consumer products – which is what I was mostly interested in – is I postulated, so to speak, that you get one unit of the product for free. So, let’s say we had one unit of bread for free. I do this by introducing a ‘free bread method’ which is a method of magically producing one unit of bread and without using any labour, any resources, any energy, and no emission rights, and so on. It just magically appears. This method can only be used once, so you can only produce one unit like this.
If I introduce this [production] method and we get this one unit for free, we can then use those resources which would otherwise have been needed to produce that unit of bread to produce other things. And that will lead to a slight increase in the overall production, and the value of the objective function. So, overall, you have a bit more because you get one unit of free.
But this is now measured in some other quantity. It could be could be a quantity of some other product, which I call the objective product. But generally you see this slight increase, and this increase is then used as the value of the product or the relative cost value of a product.
[ATO]Before we go into that I want to say that there’s this paper, ‘Optimal Planning with Consumer Feedback: a Simulation of a Socialist Economy’ [link] and that’s linked in the description. That goes through all of this in the full technical details. There will be people who will want to read through that, so that’s there for them.
If I can recap this, what you’re saying is that we are producing all of these different goods. And let’s say if we take one of them, if we take bread. What would happen if one unit of bread appeared without requiring any inputs?
[PD]Yes. I think one intuition that that some people might have – and I’ve had this question posed to me – at first is ‘well, isn’t what you have then simply one more unit of bread?’. The value of one unit of bread is one unit of bread, it doesn’t tell you a lot.
But you might say well we don’t actually need one more unit of bread. Maybe we want to use some of the resources, which we now don’t need to produce this unit of bread, to produce other things as well. So, you produce a bit more of everything basically with those resources. And this then increases the production of all things, at the proportions which are set by what we call the ‘plan target’. The plant target is what sets the proportions of various products.
[ATO]Can I come in on that just to clarify? What you’re really saying is you’re introducing one unit of bread for free, so that means there’s one unit of bread that you don’t have to make.
[PD] Yeah.
[ATO] And all the stuff that would have gone into producing that one unit of bread now can go to everything else. All of the flour, the electricity to heat up the ovens, the labour, and so forth. Now that we’ve gotten that free unit of bread, these resources can go elsewhere. And you’re seeing what is the effect of using those inputs elsewhere, is it better is it worse.
[PD] Yes. It will be better but better for sure, because you have additional resources available.
[ATO]Well, yes. [I meant relative to other products]
[PD]So you can produce more. The question is: how much more? And so, since we still assume that these proportions are fixed, you’ll produce a bit more of everything. And that means you’ll produce a bit more bread. You’ll have a bit more bread in the end, not a full unit, but some small fraction of it. But you’ll also have a bit more of everything else, and that increase can then be measured and used as the unit of value.
[ATO]You’re talking about optimizing, and you’re saying that whenever you’re optimizing, you’re always trying to maximize or minimize some objective function. To explain that, an objective function could be dollars, it could be labour hours, it could be megawatt-hours, it could be anything. In the case of your simulations and modelling, what is the objective function? How do you decide what the effect of this free unit of bread is?
[PD]I choose an arbitrary consumer product which I call the ‘objective product’. In some of the examples that I ran the simulation on this was grain. And I basically measure the output of grain that is being produced.
Then you could ask: well, why grain, why not any other unit? And the answer is it really doesn’t matter, because the proportions of these products are fixed. So, you’re producing, let’s say, seven unit of coal for every six units of grain. And then if you increase the production of grain, you also have to increase the production of coal, and so on. So, in the end it doesn’t matter which one you use.
You’re just trying to maximize the production of any one product. But because the proportions are fixed, that will also maximize the production of all the other products as well.
[ATO]It’s like there’s a recipe, and we know that in order to make one serving of falafel, you need to have one tin of chickpeas, one head of garlic, and two bundles of parsley. Then, if you’re going to increase the number of tins of chickpeas, well then the others will go up accordingly. It’s fixed.
[PD] Yes.
[ATO] And I suppose somebody might ask, why are these proportions fixed, surely they should vary? And I’m wondering is that just because this is a marginal unit? It’s just changing for one, so you can approximate it as fixed. Is that the answer?
[PD]Well, it is fixed only for the purpose of calculating one production plan. But then it gets continually adjusted. And that’s, I think, precisely the interesting thing here, that you have this automatic feedback loop. That then the proportions for the next planning period will get adjusted depending on the observed behaviour of consumers, and the observed demand of consumers. So, you fix it for one moment in time. But then you continually adjust it for future production periods.
[ATO]Let’s recap quickly, and then we’ll go to how this applies to environmental costs.
You’re saying we introduce our free unit of bread, we see how the inputs that would have gone into making that would be distributed to other products. And then we ask of our objective product – essentially any product, it could be grain, it could be iron – how much does that go up? And you’re saying, well why that? It’s because there’s a recipe. So, you can use any of these goods as a representative for how much production increases.
[PD]Yes, that’s exactly right.
[ATO]Okay. So, let’s look now at how you used this to incorporate environmental costs efficiently into the model.
[PD] You have a constraint on emissions. These emission rights are then scarce. And that means whenever you calculate the value of a product by pretending that you get one unit for free, that means you don’t have to use all the resources needed to produce it. And it also means you don’t need to use the emission rights needed to produce it. And these emission rights are then freed up to be used to produce other things as well.
The emission rights that get used up in the production of a product are now reflected in the cost as well. In the case of a product that uses up a lot of emission rights, when you get one unit of it for free you have loads of emission rights to work with. And you’ll be able to produce a lot more with that, and that’s why it will have a higher cost in the end. And this will then be reflected in how production gets adjusted and so on.
[ATO]You’re able to incorporate the environmental cost like you would how much flour it takes, or how much electricity it takes, to make the bread. We introduced the free unit of bread, and the question is really how efficient is it to use those carbon emissions – or to create those carbon emissions – in making a unit of bread? How much would production increase if they were used elsewhere? And so that’s the way we can actually figure out what is an efficient production plan with respect to distributing emissions.
[PD]In one sense, you already have an efficient production plan simply because you calculate an optimal plan. You can do that anyway, and even the labour value model does it.
I guess the sense of efficiency that you get in my model, that I think you don’t properly get in the labour value model, is an efficiency in terms of actually producing the things using limited emission rights which are actually needed the most or have the most benefit in some sense. That’s where you get the difference.
[ATO]Out of interest, if the constraint is set at one billion tonnes CO2 equivalent for that year, does that mean that the plan will always use up that much? Or could it actually use less using your method?
[PD]It could use less. There are constraints which are not effective constraints. This doesn’t only apply to emission rights. Let’s say we have a million hours of labour time available to produce things, but we only have a limited number of machines or raw materials. Then we won’t be able to actually use all of that labour, because we don’t have the tools, the machines, the raw materials, to do that. And in that case, labour wouldn’t be an effective constraint. You’d still introduce it as a constraint of the problem, but it wouldn’t really matter because you can’t use that much labour anyway, because you don’t have all the other ingredients needed.
And the same can be true for emission rights. It could be the case that maybe labour is the effective constraint on production. Or there could be multiple effective constraints on production, but maybe emission rights isn’t one of them and then you actually don’t use up all of these emission rights. And, in that case, you might as well not have introduced the constraint at all, because it’s not effective. It doesn’t do anything. I mean, you could still do it because you don’t necessarily know whether it’s going to be an effective constraint or not.
[ATO]In chemistry terms this is called the ‘limiting reagent’.
[PD]Yes.
[ATO]Coming back to our falafel recipe, you could have 300 million tonnes of chickpeas but if you’ve only got two bundles of parsley …
[PD]Exactly.
[ATO]…you’re only going to make one serving.
That’s for environmental costs, so let’s look at capital goods. How can the opportunity cost of capital goods be introduced to the Towards a New Socialism model along these lines?
[PD]This works in just the same way. If you have a product that uses a lot of scarce machinery or capital goods to produce, when you get one unit of it for free suddenly all that machine capacity that that would otherwise have been needed to produce that unit is free to produce other things. And that then means that you’d be able to produce a lot more with that than if you had another product for free which maybe takes the same amount of labour but doesn’t use as much machine capacity. That wouldn’t allow you to produce that much more, and that’s how you get the difference in cost in the final products then depending on how much capital goods are required to produce them.
[ATO]You’re looking at the capital goods that are used, say, to make bread, and that’s treated as another input. So, you might have flour, water, electricity, ovens. It might use three big industrial ovens, but it won’t use a synchronous generator. And so there’s a zero for that and there’s a three for the ovens. And so then it’s the same thing of ‘if the bread wasn’t made, how could those ovens be used?’.
In terms of the unique qualities, characteristics, of capital goods – and this applies to land as well – carbon emissions are a lot more transferable. Anybody can emit carbon emissions, anybody can use flour. However, a machine might be geographically fixed. So, how does that come into it?
[PD]Yes. That’s probably what people are going to think now. How do you use an oven that can be used to make bread to produce laptops instead? It doesn’t really work that way. This would be relevant when you consider a bit longer time period than this. We have a choice, we can’t produce all the capital goods we would ever want. But we can now choose whether to produce more ovens, or more ion plantation devices needed to make computer chips.
You have a choice at that point. It then becomes relevant whether a product requires a lot of these kinds of capital goods or not. It always depends on the time period you’re looking at. And in the very short term you might not be able to affect the mix of capital goods you have at all, and it might simply be irrelevant. You have to work with what you’ve got and ovens can only produce bread. But, in a bit longer time period, we might have a choice of which kinds of capital goods to produce and then it does matter.
[ATO]We’ll leave it there. There is still a lot more to talk about. We haven’t really dug into your simulations yet. And there’s also the issue of multiple techniques, multiple production techniques. We haven’t really dealt with that at all yet.
That was brilliant I really, I really enjoyed that. Thank you for taking the time.
[PD]Yeah it was good. I was surprised that you really take the time to dig deep into it and make sure people understand. That’s a lot more detail than … I’ve done similar interviews before and I don’t think we’ve gone into that deep into a particular point or anything like that. So that’s really good.
[ATO]That’s great, I appreciate that. That’s exactly what I try to do. I try to make a balance. But basically, with this YouTube channel and the blog that is exactly what I’m trying to do. Effectively, if we’re really going to do this, if we’re really going to change the world – and I know that this is how you feel and think because otherwise you wouldn’t be doing this – we have to have something that will work and that you can actually apply to the real world beyond some generalities. And that means that we need to go into these details.
Yeah, I mean you’re a bit of a strange philosopher. I know you were saying it was multi-disciplinary but I never expected somebody to mention a proportional controller in a philosophy thesis. Because that’s my background, electrical engineering. And I don’t know many philosophers you can use lp_solve.
[PD] I started off studying physics and philosophy in parallel, so that’s why I have the mathematical background. And originally my interest in philosophy was more in philosophy of science. I wrote my Master’s thesis in philosophy on the philosophy of quantum physics, so something completely unrelated.
But I was always a communist and politically interested. And I thought for my PhD I wanted to do something more relevant, but where I could also use my particular skills. I knew I wanted to go into philosophy and one of the reasons is that I just have such broad interests and philosophy is one discipline where you can you can do anything really. You can do the philosophy of economics, or political philosophy, you can also do philosophy of science.
And so I knew this would be, by the nature of it, an interdisciplinary project. And I got Paul [Cockshott] involved, he’s a computer scientist, of course. And he was the primary intellectual inspiration for the project as well. But then because I knew I wanted to do it in philosophy, we got a philosopher to be the primary supervisor. Paul was the co-supervisor. And then, I don’t know how much of the thesis you read, I mean a lot of it is standard political philosophy as well. I start off with very basic philosophical questions in terms of how to distribute things and the nature of rational choice, and these kinds of things. So, I try to ground it in in philosophy, but then I also get to these more technical things.
[ATO]No I like that. I think it’s a really nice combination. Because I probably have very similar interests to you. I’m very interested in the philosophy of science in particular. And you know there’s that saying of Richard Feynman that ‘the philosophy of science is as useful to scientists as ornithology is to birds.’ Well, I don’t agree with him on that. I don’t agree with him, particularly not now, where … anyway we can maybe talk about that again.
[PD]A lot a lot of physicists think like that. So, when I when I talk to other people in physics about philosophy of science they’re always like ‘we don’t need philosophers to tell us how to do science’. But, I mean, clearly there are ways of doing it wrong and there are ways of doing it right. Theorising about that is leaving the realm of science, in a sense, because you’re not doing science anymore, you’re talking on a meta level about science. And then you’re basically doing philosophy at that point.
[ATO]Yes, definitely. But I think there could be a lot more of that general discussion, which is necessary and important, and then going to ‘okay, but also we live in a real world, and we want to do things.’ I mean, in terms of philosophy I’m a pragmatist. As in John Dewey, and so on. So, ultimately, everything for me comes back to ‘what are we going to do?’. And so I thought that was great, you know, ‘yeah this is this is what Robert Nozick said, and so forth, and here are some critiques, but anyway so I was using lp_solve basically I figured out how to optimize the production plan.’ And I think there should be more of that.
All right, look, I’ll let you go. It’s great to talk to you, and we’ll talk again next week.
[PD]All right, I’ll see you next week then, bye.
[ATO] Thank you for watching.
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