Wednesday, March 6, 2019

The People's Republic of Walmart?

A new book is out with the title, The People's Republic of Walmart: How the World's Biggest Corporations are Laying the Foundation for Socialism, written by Leigh Phillips and Michal Rozworski.

According to a review by Cory Doctorow:

Phillips and his co-author, Canadian labour organiser Michal Rozworski, have outdone themselves with this volume.
The two are addressing themselves to the socialist calculation debate, which raged through Austrian economic circles a century ago, with market-focused economists like Ludwig von Mises arguing that it was technically impossible to calculate an efficient allocation of goods in a large, industrial society, and that markets alone -- as a kind of distributed calculation engine -- could solve the problem of getting goods to the people who could make best use of them.
Von Mises won the argument in the 1920s...
But apparently, the argument Mises won, which he argued applied across all time and location where man exists, isn't a winner anymore according to Doctrow:
 [B]ut a funny thing happened on the way to the 2020s: we are now surrounded by companies and organisations that are as large or larger than the USSR at its apex, which undertake breathtakingly efficient allocations of goods and resources, and all without markets, running as command economies.
You've heard of these bigger-than-the-Soviet-Union command economies: Amazon. Walmart. The Pentagon. There are many more. Each one is an existence-proof of the idea that markets are not needed for mass-scale allocation.
First off, Amazon and Walmart are free market mass scale operations. They are not the antithesis to free market operations.

Second, the Pentagon is not an example of a market-driven organization. It is a command and control organization, the type which Mises argued would have to be less efficient. Indeed, in my book, Foundations of Private Property Society Theory: Anarchism for the Civilized Person, I discuss how free market defense would be more efficient.

Third, Mises never argued as to the size some businesses would grow. Indeed, as an extension of his calculation debate, it would not be difficult to argue that a central planner would not be able to determine the most efficient size of a corporation and that it could only be determined on the free market.

But Doctrow seems to think these free market firms are somehow communistic:
The upshot is that fully automated luxury communism isn't just science fiction: it's a going concern with real evidence on the ground.
Where he sees the communism in these free market organizations is difficult to understand. But it gets weirder. He next writes:
Market purists argue that we must tolerate all the evils of markets -- exploitation, inequality, the endangering of our biosphere -- because markets are the only conceivable force that can accomplish efficient allocation in our highly technical world.
If Doctorow thinks that exploitation is inherent in markets, then he doesn't understand the nature of the calculation debate that he references at the start of the this article (that according to Doctorow "Mises won.")

And he then introduces inequality as though it is a factor caused by markets. Does Doctorow believe that it is only market capitalism that makes him unequal to LeBron James on the basketball court?

Finally, endangerment of the biosphere is slipped in as settled since and apparently a corollary of free markets. But there are certainly more pollution threats in former communist countries that developed when they were communist nations. That is, the degree of biosphere threats is not a function of free markets but the societal structure. Granting the biosphere threat for a moment, free markets could operate just fine under regulations that barred even operations that were considered extreme notions of biosphere threats.

So Doctorow, along with the authors of The People's Republic of Walmart apparently believe that the large firms that have emerged on the free market now provide "fully automated luxury communism" that must allow free market operation on the "odd problem" but that there is a central hidden power which, as Mises showed, can't work but nevertheless is required to oversee operations:
Phillips and Rozworksi are proposing an alternative: bright green, high-tech societies where markets are useful tools for solving the odd problem, but where allocation is primarily accomplished by the preferred means of Jeff Bezos and Sam Walton, but to the benefit of the many, not the few.
Sounds to me like Doctorow and the authors are calling for economic fascism and don't realize it.

From Econolib:
As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax. In its day (the 1920s and 1930s), fascism was seen as the happy medium between boom-and-bust-prone liberal capitalism, with its alleged class conflict, wasteful competition, and profit-oriented egoism, and revolutionary Marxism, with its violent and socially divisive persecution of the bourgeoisie...
Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it...
Doctorow implies that Phillips and Rozworksi are proposing something new. They are rather proposing an economic system as hold, at least, as Hitler and Mussolini.

-RW






11 comments:

  1. The Pentagon also operates in a market economy and has prices for labor and capital.

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    1. Yeah, and pays $100.00 for a 14 cent I.C.

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    2. Plus the Pentagon doesn't depend on customers buying a product, but money forced out of people's hands whether they like it or not. They have no profit motive, and many times in government, you are rewarded for over-spending even if you dont need to so that you'll get the same or more next year. Whether you like them or not, they definitely dont operate in a market economy. And the fact that they do effect the market is true. The government can have effects on the market in many ways and this is just one of them.

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  2. Amazon and Walmart are only socialist is so far as it is part of their crony capitalism. For instance Walmart greatly benefits from the food stamps program. Walmart makes deals with governments to keep a cut of sales taxes paid in their stores. Amazon from taxpayer subsidized 2nd HQ and other arrangements. That is like many large corporations they use government to socialize their own costs on to other people while directing tax monies to themselves.

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  3. Walmart and Amazon got where they are by harnessing the price system to optimize distribution, so this moronic author thinks that it's proof that we should abolish the price system except "for solving the odd problem".

    Also, I don't remember voluntarily buying anything from the Pentagon before. Do they have tours? Is there a gift shop?

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  4. Doctorow has always been an activist first, journalist second.

    Some of the biggest fans of Soviet Communism in the twentieth century were the western multinational corporations that did business with them exclusively. From those corporations' perspectives, the arrangement was a lot more stable than one were they were always on guard against a competitor the free-market might conjure.

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  5. One of the things these guys miss about large companies is that there is competition within the companies.

    It is not uncommon in more well-run large companies to have services of an internal department competing with services of an outside company. In very large companies, it's not uncommon for two departments that do similar, or overlapping work to compete within the company to provide a particular service that might fall within the bounds of both sub-organizations. Most organizations devolve a significant amount of power down through the organization, and they check the sub-organizations power through the budgeting process, and they measure success through metrics to track progress. If the sub-organization generates direct revenue, that is, obviously, a critical metric.

    Even with that, organizations can, and often do become bloated. That may be solved through downsizing, or -- as in the late 1980s -- from entities buying out the company, breaking it apart, and selling the more efficient pieces at a profit.

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    1. They also seem to miss that Amazon and Walmart are still subject to the force of competition, unlike the Pentagon or any government. Corporate titans have fallen throughout history when their product or service goes out of favor, as consumers are not compelled to buy from them. If they can get really big and still persuade consumers to voluntarily buy from them, more power to them.

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  6. "Exploitation," particularly when lefties use it, is somehow a blanket term that unfailing describes a worker's relationship with his boss or company. It's used in only one way--to indict the guy with the capital taking advantage of lowly worker. Both assessments of the worker and the owner get hijacked by Lefty narratives. Thomas Sowell captured it well, "There are no dead-end jobs, only dead-end people." There are lots of benefits to worker and owner; the risks, on the other hand, seem to fall more on the owner's side of the partnership. Certainly, the worker learns skills, weighs opportunity, expands his social network, and earns money. This is exploitation?

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  7. To add the points Pandemic and NAPster made, the force of competition significantly changes the game of incentives. It was the threat of Amazon that made Walmart improve its online technology and improve its offering. It was Amazon's "Prime Day" that made a lot of retailers (including those in Canada), to have their own sales event during Prime Day. Walmart, likewise, most likely keeps a lot of other retails on their toes.

    What incentive does a socialist enterprise, which has revenues guaranteed (via stolen money / taxation), have for improving its processes? Especially if it outlaws all competition using threats of violence?

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  8. Maybe we should question their central thesis, too: "[Walmart, Amazon] is an existence-proof of the idea that markets are not needed for mass-scale allocation."

    I am sure Walmart and Amazon go wrong in their predictions a lot of the times. They might order a lot of goods that don't sell, only to have some kind of ridiculous "clearance sales" to get rid of them. Or on the other hand, they might buy too little of something, resulting in long waits for customers. Who hasn't seen the overripe Avocados and Bananas for sale in some Walmart location? How many Amazon users haven't witnessed out-of-stock items?

    If they could really allocate resources without markets (without being subject to supply/demand from the rest of us, which really makes his claim ridiculous come to think of it) why would a profit-seeking business ever have clearance events to get rid of excess supply or have something out-of-stock, leading to unsatisfied demand?

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