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Prof Wolff. How can market based worker coops avoid predatory competition?

I've been thinking about how to build an economic system to replace capitalism and I've turned to the Proudhonian libertarian socialist inspired alternative commonly known as anarchosyndicalism or worker coops. A self-sufficient ecosystem of federated coops (of all kinds), could, if made incompatible and inimical to the capitalist system, replace it. However, even with socialized property, and socialized intellectual property, it is expected that some coops will produce more than others, and without a centralized or coercively regulated system, with a free system, some coops would outproduce others, have better marketing, location, or otherwise achieve competitive advantages that would then create inequalities. The best case scenario, means those inequalities are negligible, but those would likely be compounded by the effect it would have on the commodity prices, making coops that produce more, have cheaper products, which would then be favored by demand, and then this supply and demand dynamic could make a successful coop undermine and vanquish the competiton (which isn't necessarily a bad thing). This could, however, snowball into the concentration of wealth into an area that would then out-compete coops in other areas, creating regional inequalities, etc. Also, when commonly funded services (education, healthcare, security, justice, art, culture, banking, roads, etc) are accounted for, even if they are sustained by contributions proportional to production, some coops could potentially opt to lessen their contributions to counterbalance, achieve or pursue competitive advantages, thereby preventing such services from improving or even causing them to contract. Essentially, my fear is that market dynamics would eventually erode the basis of this anti-capitalist society. Is there a mechanism to avoid such a fate that doesn't fall into the trap of a bureaucratic distribution system?

posted an official response

A worker-coop based economic system has a set of systemic advantages over a capitalist enterprise-based system. However, a worker-coop based system is not a general solution to all economic problems, risks, unwanted outcomes. A worker-coop based system would have to solve the problem of distributing both resource inputs (among enterprises) and commodity outputs (among enterprises and individuals): likely using a mixture of markets and centralized or decentralized govt controls. Such mixtures have been the norm for centuries although varying the components of such mixes. Minimum and maximum incomes, periodic redistributions of resources and other forms of wealth, socially determined balances of individual and social wealth are among the many, many mechanisms societies have developed over the centuries to deal with inequalities if and when they emerge systematically from any economic system.

If what you seek is a production system that somehow guarantees to forestall all economical outcomes you find distasteful, I fear your search is foreclosed, non-viable. You will indeed have to accompany your worker-coop based production system with various modes of social interaction, monitoring, and control to achieve the good society you seek.

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Why can't drivers create their own app?

Hello. First off, I want to say thank you for what you do, professor. I'm wondering why TLC/FHV drivers can't simply put their own app out that (ideally) wouldn't take ANY commission. It's my understanding that there is no exclusivity with drivers and platforms (Uber, Lyft, Juno, car service base and etc); meaning an Uber driver is a Lyft driver and a Juno driver all at once. Juno is an interesting story because it got sold for $200,000,000 to Gett and only lived in the market for one year. They just gave out $50 phones to drivers that were already driving with Uber and Lyft and only charged them 10% commission (compared to Uber and Lyft's 20%.) This movement of "for the drivers" was its own selling point to the both drivers and passengers. You hardly seen any ads for Juno but they sold for a lot of money in a short period of time because of their share of the marketplace that they carved through that mantra. So my question: why can't the workforce recognize that they physically own the market and create their own app that can offer the driver the whole 100%? In a competition sense, $1,000,000 to build a GPS app that processes credit cards (ie Uber Lyft etc) doesn't seem like much to bring the antedote to the scam that these "ride-sharing" hustle bring along. Sounds like it can be even crowd-sourced. No other company would be able to compete. True P2P.

posted an official response

I believe that there are worker coops already functioning in the space and that they have figured out what you have, namely that by removing the profiteer, they can offer the same driving service to customers at a lower price while still earning a living for themselves as drivers "associated in a worker coop." If they can solve scaling problems to compete with economies of scale of Uber etc - or if scaling is minimally necessary - this is a recipe for success that will inspire others.

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What is the REAL justification for Trump's "new strategy" for Afghanistan.

The Disconnect between Trumps earlier position on Afghanistan and what he is doing now can not go unnoticed by anyone. IS this all simply "War as for-profit Business" OR is their ANY real strategic end-game for anyone? Surely to God people see that more Billions and more bloodshed here will have the same effect it has had since Bush 43? OR, is there more to this?

posted an official response

There are always multiple causes shaping an event (just as there are clashing causes blocking or delaying that same event). So yes, war profiteering is a clear cause for escalating a military operation as Trump has just done in Afghanistan. But avoiding the geo-political effects of a withdrawal that would be seen as a defeat is also a cause. So too is Trump's need to do something Democrats will find difficult to attack after the fiasco of his behavior around the Charlottesville killing. Such causes (and there are more) overwhelmed the counter causes such as his campaign statements against the Afghan war, his desire to cut taxes without ballooning further deficits, and other such counter causes. Whether and how concerns about bloodshed and lost wealth and long-term political effects figured in the Trump regime's calculations of the multiple causes is anybody's guess.

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How do health insurance cooperatives compete with larger companies?

I am entering the medical field and want to work as a physician with purpose. I was wondering about the logistics of health insurance cooperatives and how effective they are at providing cheap care for low-income communities. How does one go about making one of these coops happen?

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Unemployment and Maximizing Income

According to economist Benjamin Ward if you assume a homo oeconomicus, who wants to maximize his income, and that workers get not only a standard salary, but a bit more/less if the company makes a profit/loss, you have the problem that if there's high demand and the company makes a profit, if it takes on additional workers the profit has to be shared by more people. The other way around, if the demand is low and the company is operating at a loss, it would be logical to take on more workers to share the loss among more people. So this incentive is very counter-productive. Coincidentally the Yugoslavian economy consistently had problems with high unemployment. Is there a causal relationship? How large is the practical impact of the problem described above?

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Economic Nationalism

Steve Banon claims to be an "Economic Nationalist" rather than a White Nationalist. What is Economic Nationalism?

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i was very gratified to hear your recent guest talk about the move toward a Neo-feudalism

this has seemed so obvious to me for some time. as well, the fact that we in the US have now been "colonized" using the same model imperialists have inflicted on other countries. Please expand this discussion with concrete examples that relate to people's lived experiences today.

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great things happened in USA in 1944, in USSR in 1917 and later in china..etc..compare!

Is it possible to comapre the economic situations of the people as to at which point the status quo became unbearable in tems of income and wealth inequalities, peoples' pain, national debt etc.....this will tell us where we are now!

posted an official response

We can, I believe, draw very useful parallels and thus lessons from those moments when huge changes were produced. But we need also to be attentive to the uniqueness of each moment. A great political leader once said: "For decades nothing seems to happen, and then, suddenly, in a few weeks, decades happen." That is one lesson to keep in mind. Grievances accumulate slowly into a state of intolerability. Likewise those aggrieved have to be able to see, top identify some social force that at least has a chance to really change the situation. If the see such a force but it fails them, they will likely be all the more reticent about trying again. Thats why it all takes those long decades when "nothing seems to happen." But if there are alert folks who participate all along and evaluate the situation continuously, then you may have that magic combination of (1) an intolerable situation, (2) loss of confidence in existing leaders and institutions, and (3) reasonable hope in alternative leaders and alternative institutions - that enables those great historic turning points.

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Hi Professor,

Hi Professor, I'd like to have your take on something lots of people say, that only finance capitalism is bad and productive industrial capitalism created lots of good things; that if we could go back to regulated capitalism, the kind that existed from 1945 to 1975 ( coined as the Glorious thirty in France), we wouldn't have the problems of inequality we experience today.

Thank you.

posted an official response

This is indeed and old argument. I recognize that it is tempting to distinguish among capitalisms so that opposition can be focused on only one type rather than on the system across its types. Finance versus industrial capitalism is one such differentiation among types. Here are some others: high-wage versus low-wage capitalism, foreign versus domestic capitalism, small versus large capitalism. For me, such differentiations can be useful to understand periods within capitalism's historical duration, but they are not useful in terms of countering the criticisms of capitalism as a system. There it is a little like distinguishing between slaveries that treat slaves better versus those that treat them worse, serfdoms that crush serfs versus those that leave them alone, and so on. While the differences may be important for understanding how they work, who suffers more or less in them, etc., none of them go to the heart of the problem with the system per se.

Capitalism as a system always tends toward greater inequality (unless stopped by mass worker counteraction), suffers from debilitating instability (business cycles) that affect the working class and poor more than others, and is manifestly undemocratic (it gives a tiny minority - major share-holders and the boards of directors they select) - all the economic power and most of the wealth while excluding the majority (workers) from participation in enterprise decision-making and much else. Industrial capitalism was as prone to all these negative qualities as finance capitalism. So I am not sympathetic to making a big deal of the differences among capitalisms; the task now is to move beyond all types of capitalism to a better system.

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Finance under Socialism?

I conclude that we would not have a stock market in a socialist (co-op) economy as "shares" in the enterprise would presumably not be bought & sold as they are under capitalism. But various kinds of financing would still be necessary, i.e. loans of various sorts & arguably bonds. For small scale I can see credit unions functioning well. But what about major investments such as pubic infrastructure? Local governments may not be able to raise the tax revenue. Is pubic banking the answer? We would still need a finance sector of some sort, but what might it look like? Thank you.

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Method in their madness!

Obviously, the rich and corporate tycoons are attacking the middle class....why? because these were the people who formed unions, and built parties like socialists and communists that made them pay their fair share ,,,but they think since they already destroyed the troublesome ones, if they are squeezed further they will still be unable to do anything about it......until only poor and rich are left and the only possible stepping stone between them will be non existant. Then they get back to their business of LEADING the rest of the world to the same conditions. This way there will never be a challenge to white man's superiority.....This calls for immediate action...Thus urgency need to come out more forcefully in Mr. Wolff's talks, videos etc. ...will you please do it or depend on american's desire to fight back or close their eyes?

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New Economy Roundup Co--Op Artcles

Go to neweconomy.net/blog. Listing on 8/17/2017.

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What if we intentionally shrank the labor pool?

My idea is to spread a theory that a population reducing its need for income would create a need for workers in the society. It would in essence try to recreate a labor shortage. The money and bills targeted would be the most wasteful costs (and traditions) that produce the fewest jobs, and it would support the creation of efficient social systems to meet people's needs. The people, working half as many hours, would be scarce and worth more. Is this even a valid argument to make in a modern capitalist labor market (in the U.S.)? By that I mean, have we come too far from being scarce to have an effect? Also, does this theory have a name?

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Another example of state incentivized tax-payer funded, low paying jobs

Prof. Wolff, you mentioned a couple examples of this in a recent Economic Update so I thought I'd give you another example. Iowa is one of a few states that is trying to woo Toyota into building a factory in their state by offering various tax-payer funded incentives. http://www.desmoinesregister.com/story/money/business/2017/08/15/toyota-plant-could-cost-iowa-hundreds-millions-incentives/556224001/

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From Reddit, regarding Blackwater's desire to privatize Afg. War using E. Ind. Co. as a model.

Taken from the 'World News' subreddit: **This guy is one of the smart people on this thr... https://www.reddit.com/r/worldnews/comments/6tvmif/blackwater_founder_erik_prince_cites_east_india/dlo586k

posted an official response

Thanks for alerting me to that reddit discussion. It contains a valuable and spot-on reminder that however much we may demonize the perpetrators of profit-increasing decisions by corporate leaders, they are responding to the existing capitalist system's structure of rewards and punishments. To end the social costs of their behavior requires changing the system so they or those who replace them, facing different rewards and punishments, will behave differently. Indeed, our fascination with mobsters, crime stories, etc is a deeply psychological recognition that they are explicitly what most business leaders are implicitly, mobsters get caught (at least in the fiction) while "banksters" dont or at least dont get punished. And if we did try and imprison bank leaders, because those who replace them face the same basic rewards and punishments will behave similarly. We have lived through this countless times. No matter how much people hope that the easier tasks of calling out the bad guys for moral turpitude, passing a reform law, or changing political leaders from establishment parties will suffice, they dont. The harder task of system change awaits and is probably better to get to that sooner rather than later.

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