Re: [OPE] Invention, Inventors, and the Productivity of Labor

From: Ian Wright <>
Date: Fri Nov 07 2008 - 21:05:50 EST

Alejandro Agafonow wrote:
> Are there different rewarding rules in Mixed economies? Well, in my
> scheme too.

Sure, but that's not an argument for preserving different "rewarding

That some members of a firm get paid wages, while other members have
claim over the profits, solely in virtue of property rights, is part of
the very "DNA" of capitalist economies. The different rewarding schemes
are the root cause of antagonistic economic classes, enormous income
inequality, the corruption of democratic life, and many other social ills.

So this is why I am wary of post-capitalist schemes that reproduce
different rewarding schemes. How the surplus gets created and
distributed defines the economic basis of society. Different rewarding
schemes will, I think, produce new kinds of class divisions.

> Since we’ll have a social division of labour during so long, until we’ll
> be able to synthesize goods at zero cost, it doesn’t have sense to
> establish the same rewarding rule for people that bear so different
> responsibility for the outcome of certain productive unit.

Yes there is division of labor, and different members of a firm
contribute different kinds of concrete labor during the production of a
firm's output. But all members of a firm are "responsible" for the
output. The question is, "by how much" are they responsible?

For example, the CEOs of almost all capitalist firms get renumeration
far in excess of their objective contribution to the financial success
of a company. How can we know that? If we got the funding we could
perform a large-scale social experiment: (i) convert a sector of the
economy into worker-owned, democratic firms, (ii) allow the members of
those firms to distribute the residual income in a democratic fashion,
and (iii) record how much the CEOs gets renumerated. Will it be the same
as before? (The answer is of course "no".)

There's nothing *qualitatively* special about managerial or
entrepreneurial work that justifies *qualitatively* different "reward
schemes". However, some very talented leaders do contribute more to a
firm's success than other workers. If so, this *quantitative* difference
will be recognized by the other members of the firm and the talented
workers will be more highly rewarded to reflect that. In a competitive
environment, it is in the interest of all members of a firm to
differentially reward talented workers otherwise they will leave and
join another firm. They will lose that value-added.

> Even more, managers should be encouraged to experiment with different
> rewarding rules within their firms for the sake of competition and
> efficiency increment.

That depends on the legal framework in which they are allowed to

For example, capitalist property relations, in which labor is hired and
the supplier of capital is the residual claimant on firm income, should
be illegal. In just the same way that voluntary slavery is illegal now
(e.g. I am not allowed to capitalize my future income stream and receive
a lump-sum now in return for working for life for a single firm).

> The important thing is the degree of income inequality emerging from
> these rules (that should be low), not the rules themselves.

I think income inequality will be low if the constitution of firms
genuinely reflects the equality of all people, and is founded upon
constitutional principles that enforce decision-making mechanisms that
maximize the probability that quantitative differences in renumeration
objectively reflect quantitative differences in contribution. I think
some kind of voting-scheme to split up the pie could satisfy these

In contrast, if you have different rewarding schemes you must make a
qualitative distinction between different kinds of concrete labor (e.g.,
entrepreneurial vs. managerial vs. production vs. research etc.) You'll
therefore need to define and enforce those differences. You'll need
criteria to decide which category a particular worker belongs to (this
will be contested). You'll need cumbersome accounting schemes to measure
when a particular individual outputs different kinds of concrete labor
(e.g., half a day being an entrepreneur and half a day producing), and
so forth. This is messy, but I also think it's unnecessary, and not well

I wonder if this is an echo of Schumpeter's heroic entrepreneur in your
thought? The Austrian school overplays the contribution of
entrepreneurial labor in order to justify capitalist property laws.

Be interested in what you think,
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Received on Fri Nov 7 21:08:47 2008

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