Reviewing political economy of equality

Marxism

Economic classes, not individuals are the actors Property rights cement class inequality Labor theory of value

Marxist Theory (cont.) Capital’s expropriation of surplus value + exploitation, commodification and alienation Diminishing of the surplus under market competition Wage suppression, outsourcing, technological advance, search for new markets, capture of the state But continued diminishing of the surplus..Falling rate of Profit Inevitable decline of Capitalism or Revolution?

New Political Economy of Communal Sharing

Possible Outcomes of Marxist analysis Unsustainability of capitalist system Falling rate of profit Worker’s revolution Crash and burn Socialism and Creation of the Welfare state Communism (system of communal sharing)

Saving Capitalism and Democracy: An alternative to Marx:

Democracies are likely to become welfare states. Why?

• • Majorities will favor social distribution to compensate for market weakness or market risks. Democracy is an institution that cannot resist majority demands.

• • • • Workers will protest economic inequality (caused by market liberalization) because it undermines political equality The market is going to relentlessly produce inequality of income because of the extraction of surplus value , and thus the market is eventually that is going to become incompatible with democracy. The norm of equal citizenship core of democracies. constitutes the Welfare states try to make democracy and markets compatible

Welfare states (try to) bridge the gap between economic inequality and political equality • How do they do that?

– Welfare states try to grant economic/social rights that have the equal status of property rights.

They do this by redistributing wealth – Workers require social resources, health, and education to participate effectively as equal citizens. • Rights granted on the basis of citizenship and not market performance. • Rights are granted on the basis of redistribution. Because it taxes and spends, the welfare state is by definition redistributive

Trade Unions: a powerful interest group in democracies

Under pressure from organized labor, Welfare states try to decommodify labor • making sure that the survival of workers is no longer contingent upon the sale of their labor power.

Welfare states attempt to undermine social and economic classes • One’s status as a citizen will compete with or even replace one’s class position.

• The balance of class power is fundamentally altered when workers enjoy social rights. The social wage lessens the workers dependence on the market and employers, and thus turns into a potential power resource.

But do welfare states really produce equality?

• • They were founded to coopt the working class and avert potential revolution – Bettering their working conditions – Eliminate poverty – Equalize opportunities If you just target the needy (the Robin Hood State) you stigmatize them and don’t create equality

Liberal Welfare States

• • • • Role of govt. is to nuture, not replace market transactions Minimal public intervention (assuming the market will provide adequate welfare) – Targeting only the neediest – Benefits to the poor are usually ungenerous Tax deductions are favored over intervention Poverty remains high

Social Democracy

• • • • Universal inclusion Comprehensive social entitlements to equalize living conditions across the citizenry The state takes over many of the tasks of the family Regulated labor markets

Conservative Welfare States

• • Built around social insurance With occupational distinctions – Meaning entitlements depend on life-long employment – Cementing male breadwinner logic of social protection

Conclusion: the Big questions

Political Economy of Community

Remember that In Liberal Theory, Freedom Trumps Equality

And in Distributive Justice Theory, Equality Trumps Community Community

Equaltiy

• • • But The political economies of Freedom and Equality undermine community

Freedom leaves out important social needs Equality

Private choices make community?

• • Conflict alienation Social darwinins insecurity

So what? Liberalism and distributive justice leave a psychological vacuum • • The focus on reason and class conflict leaves out emotion or a set of higher principles to guide human behavior.

Liberal Focus on rationality leaves out heroism • • the focus on freedom and equality leaves out the human need for security The focus on competitiveness, equality and the “cash nexus” leave out community solidarity – People crave for an identity bigger than themselves • The Liberal focus on competitiveness leaves out cooperation and heroism • This was actually Marx’s utopian vision—not realized under communism or even under the welfare state

Whole chunks of human experience that the welfare state leaves out • • • • Welfare state does not erase social class Social class is inherently conflictual. People want to live in harmony Work is still alienated Interpersonal relationships are still morally empty….welfare state does not connect people

Remedy: The Political Economy of Community

Corrects the weaknesses of liberalism and distributive justice

Goal: Community

• •

community provides protection and cooperation, fairness and mutual obligation. But intrudes on the market

Requirement for community: Equality • • • • • Equality: equality of all citizens is important for a strong community.

Why?

Economic inequality leads to political inequality via human psychology: Why?

affluent people are inherently more worthy than their underprivileged brethern……

Means: Communal sharing

• Communal Sharing (CS) everyone is equivalent and undifferentiated Marx: “to each according to his need, from each according to his ability Rousseau:

“Each of us puts his person and all his power in common under the supreme direction of the general will, and, in our corporate capacity, we receive each member as an indivisible part of the whole.”

But how will goods be produced? What are the incentives?

• • • Realistically, We still need the market but we need to push it back.

Could we restrict the sphere in which money matters? Could we circumscribe the power of wealth in society? Could we create a public sphere where money doesn't talk?

Gift Economies?

What about the individual?

• personal responsibiolity is most likely to flourish when there is genuine opportunity to participate in communal life.

What are the incentives to produce?

• • Money? Profit? No.

High compensation doesn’t attract the very best. It attracts the greediest.” • Truly great people strive for

more than

wealth.

New mode of production

• • Under communal sharing, property is owned by the community land and raw materials are communally owned and labour requirements are shared.

Is this all just another utopia?

Digital technology may be creating community • Radically different Mode of production

Web 2.0

• "We are enabling Internet users to author their own content. Think of it as empowering citizen media. We can help smash the elitism of the Hollywood studios and the big record labels. Our technology platform will radically democratize culture, build authentic community, create citizen media."

It creates both freedom

AND

community…..

Beastie Tux Duke Mozilla

The importance of technology: Digital goods are are ‘anti-rival” • • If I consume it, I don’t take it away from you But how does it get provided when there are free riders?

Incentives to contribute

• • • Open source benefits from free-riders and leechers Debugging incentive Incentive to speed up software development

What about rationality?

• • • What about exchange?

What about price?

What about profit?

Undermining “rationality”: the “gift economy” • • • social status depends more on what you give away than what you keep gifts bind people together, encourage diffuse reciprocity, and support a concept of property that resembles “stewardship” more than ownership per se A Gift Economy may be emerging in the sub culture of programmers

Is P2P a viable economic model along these lines?

What about property and property rights?

Political economy of community

People act in communities—do not calculate indi costs and benefits No need for Property Rights with anti-rival goods – and stewardship rather than property rights Gift economy

Communal sharing Little need for markets

Value is not determined by price

Collective action/cooperation possible without authority A New Political Economy?

Better life for all?