Tag: Workers

Decentralizing Business: How Less Government, Not More, Will Help the Workers

By Mason Mohon | @mohonofficial

Business is bad – or at least that’s the contemporary cultural outlook. To the disdain of the Randian acolytes, society really hates businessmen. They are seen as gross, mean, and evil cheaters that act for nothing but profit. They would see the world burn for the fattening of their checkbooks. This seems to primarily be the product of the modern film and television industry. The mantra “it’s just business” has infected our entertainment and shows no signs of going away.

But the outlook we have toward businesspeople is not completely accurate. Absent government involvement, those running businesses have to serve the needs of consumers. The good entrepreneur is always looking out for demand that they can provide supply for. If they do not, they will gain no customers and thus no profits. It is the nature of private industry.

So, at a basic level of analysis, the cultural view of traditional business is inaccurate. But they may be onto something. Maybe the nature of “being business” isn’t bad, but the traditional structure could be. To explore the workings of human interaction and development, we can look towards the economist and philosopher F.A. Hayek. In Hayek’s Individualism and Economic Order, he explains:

[W]e discover many of the achievments on which human institutions rest have arisen and are functioning without a designing and directing mind… the sponatneous collaboration of free men often creates things greater than their individual minds can ever comprehend. (Page 7)

Often, this analysis is purely extended to governments. After all, this is part of the Hayekian critique of command economics and collectivist governments. Yet, I believe that Hayek’s analysis could extend further than the government. Somewhat ironically, this analysis could be extended so far as to protect the communist goal of protecting the sovereignty of workers.

When applied to governance, Hayek’s critique makes clear that one man at the top cannot do any project justice. Especially when it comes to large economies, no one human can hold all of the information in their mind so as to properly organize. This is the fatal flaw of any command economy. Technocrats and central planners don’t know what they’re doing – but are they really to blame? They’re only human.

Because of the human inability to hold so much information at any point, command economies are ultimately doomed to failure. This is seen most recently in Venezuela, an economy that seems to merely echo the broader downfall of command economies in the 20th century. One in charge cannot make a proper decision about what to produce, in what quantities, and with what material.

This is where business as an edge of state-based industry. Because of the profit and loss mechanism of private firms, they can accurately determine what to produce. If consumers do not want what a firm produces, the firm will go under. If the business produces too much, the surplus of goods will result in damage to the business’s profits, thus causing them to reduce production. If they are using bad material that damages the quality of the product, consumers will move to a competitor. If they are using material that is too good, it will hike up prices past the equilibrium price level, once again resulting in consumers going to a competitor for a less luxurious yet more affordable product.

But this does not mean that all is perfect in the traditional business structure. Samuel Edward Konkin II explained that the contemporary business model, “especially the corporate hierarchy, [is] an imitation of the state and not the market.” Large corporations have presidents with subordinates, along with a board of directors, making up a congress of sorts. Business has begun to echo the state because the state has entrenched itself into the minds of society. Instead of being the spontaneously organized collection of minds that Hayek described, business has become a rigid corporate structure mirroring the process of traditional government.

And this has its tolls. Top-down business approaches will be slower, simply because of the problem of knowledge. Hayek’s argument about knowledge being the limitation of human leadership applies to business too. As firms get larger, it gets increasingly difficult to make decisions that will benefit the company as well as the consumers.

In addition, as a business grows, it gets clunkier. Bureaucracy begins to develop, resulting in sluggishness when it comes to consumer service. In addition, once a business is large enough, it can become detached from the wants and needs of consumers, sometimes even ignoring them altogether. This has become especially apparent in tech giants such as Facebook and YouTube. The platform users were originally consumers that the platforms aimed to serve. This took a turn, though, when users turned into products in the form of psychological profiles to sell to advertisers. These massive corporate structures have become detached from those they originally aimed to serve. They have become more intent on developing tools to get users psychologically addicted rather than develop products that the conscious mind of the user actually desires.

So what would an alternative look like? We need something that avoids the problem of having a commander with limited knowledge and potentially other advantages. The proper alternative is decentralizing authority. This could take various forms when it comes to larger corporations. In some instances, it may look like a pure workplace democracy. In others, it may look like a technologically integrated workspace, utilizing blockchain to maintain order but reduce the need for corporate hierarchy.

Workplace democracy is already somewhat commonplace and seems to have some benefits. Nigel Nicholson, a professor of organizational behavior at London Business School, wrote in the Harvard Business Review that a democratized workplace that includes the workers in business decisions is the only type of workplace model that takes human nature and behavior into consideration. Once again looking back to Hayek, we can see that this makes sense. The combined knowledge of those that are hands-on with the day to day business will usually be more effective than a detached administrator and his one-man knowledge.

Furthermore, workplace democracy seems to have psychological benefits. Depression researcher Johann Hari explained that individuals like to feel like they’re in control of their own lives, and if they work a job where someone makes all decisions for them, it can lead to a feeling of helplessness. As a result, some workers may develop depression. When the workers are put in control, the depression dissipates. In addition, morale is boosted and so is productivity in turn.

Moreover, blockchain technology could prove to be phenomenally beneficial when it comes to larger businesses. The nature of blockchain means that it is decentralized, removing the need for a central authority. Code is law, so if done right, the system cannot be cheated. Blockchain has various other benefits in the business sphere, including supply-chain management and in-company voting.

Decentralizing business through various means has many benefits. Destruction of the traditional hierarchy in business would prove beneficial for the workers and, in turn, the well being of the business. Hayek’s problem of knowledge has more to offer than a traditional critique of the workings of government.

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Marx is Wrong About the Workers

By Mason Mohon | @mohonofficial

In my recent reading of Marx and Engels’s The Communist Manifesto, I was kind of surprised by the characterization made of the relationship between the employers and the workers. Marx calls the relationship exploitative multiple times throughout the work. The workers produce, and then the employer steals away the product of his or her labor. With this characterization, it is no wonder people are so against modern-day capitalist relationships. But this characterization is not the reality of the situation. It is based on loaded language and misrepresentations of the market process.

A particular passage caught my attention:

“In proportion to the bourgeoisie, i.e., capital, is developed, in the same proportion is the proletariat, the modern working class, developed–a class of laborers, who live so long as they find work, and who find work so long as their labor increases capital. The laborers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations in the market. ” (Marx par.34)

This paragraph has two core planks: the workers’ lives are dependent on capital, and the workers are owned. Marx says that the worker only lives if they can find work. One may take this as Marx saying that work is bad, but that is not what he is saying. He is saying that work is bad as long as its existence depends upon capital production. Work dependent on capital production is not a bad thing, though. An employer only will hire a worker if the hiring will bring the employer more wealth. This may seem terrible and selfish, but capital accumulation in private hands is a good thing.

Businesses will garner capital as long as they are serving consumers. The worker is part of this process. Capital accumulation for the employer means that they can go and enter into another entrepreneurial endeavor, thus serving more consumers. Thus, the relationship between the worker and the employer being one that produces capital is good for society. Entrepreneurs and capitalists make the world a better place by serving the wants of consumers when they accumulate capital. This is not a bad thing.

But then we move on to the second plank of this passage. Marx claims that the workers “are a commodity.” On the very next page, he goes on to call the workers “slaves of the bourgeoisie class.” This is nothing more than a rhetorical trick. Any reader will want to end slavery, so when Marx calls this situation slavery it forces the reader to believe certain things without proper logical backing. The situation for the working class is not as dire as Marx makes it seem.

The relationship between the worker and the business owner is voluntary in private enterprise. The worker chooses to work for the employer for a wage they agree upon (minimum wage laws set aside). This consensually agreed upon relationship is only slavery in the furthest reaches of intellectual fantization. Any other situation would be slavery. This is the only relationship that can be outside the definition of slavery. So if this is slavery, what is freedom?

Marx believes it is slavery because the employer steals from the laborer. The employer exploits the worker and takes away the value he produces. This is also an inaccurate depiction of the relationship. The worker does not create the products he or she is employed to create from scratch. The worker creates a product using the capital goods the employer has provided them with. Thus, the employer is not stealing anything. Rather, they are paying the worker to do something with the resources they already own.

There is an institution that does steal things it had no hand at all in producing, though. It is called the state. If I were to take nature-given resources and produce a product, and then sell said product, the state would take some of my profit. This is an exploitative relationship. This is the exploitation Marx should have set his sights on.

At the same time, the employer does not buy the worker. The employer rents the labor of the worker. Buying the worker would mean they never went home to their family and they would get a one-time payment to their previous owner, not a wage paid out directly to them. Clearly, this is not the case. Workers rent out their labor voluntarily, and they are still in control of themselves.

If the employer truly did own the worker, the worker could not leave. The worker would be permanently stuck in the present job. But workers can leave if they are unhappy with the working conditions or wages. Marx talks about competition as if it a terrible fire that workers must burn in, but workers are the ones that force businesses to compete.

Competition is what brings up working conditions, pushes down prices, and keeps quality high. It is a staple of the free market and may be one of the most beneficial parts. Marx’s criticism of the relationship of the workers to the employers is misguided, and the conclusions he draws are flat out wrong. Thus, they should be entirely rejected.

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Prop A: Missourians Vote Against Proposition A

By Mason Mohon | @mohonofficial

On Tuesday Missourians voted on whether or not they would uphold or repeal the contested Senate Bill 19 legislation that established a right-to-work law in the state.

Missourians have voted against Proposition A.

Approximately 30% of Missouri voters voted in favor of the proposition, while 70% voted against it.

This is in accordance with the July 10th poll done by the Remington Research Group which showed that 38% of voters would vote yes, while 56% would vote no.

What is Proposition A?

Proposition A is a Right to Work Referendum in the state of Missouri. It determines whether or not Senate Bill 19 will be upheld. Senate Bill 19 established a right-to-work law in the state of Missouri.

This law would mandate that no person can be required to pay dues to labor unions or join a labor union as a condition of employment. Left-leaning people see this as a stomp on the autonomy of unions and a dangerous stab at worker protections. People on the right see it as a blow to the contractual relationships between workers and their employers.

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Minimum Wages Only Hurt the Economy

By Jack Parkos | United States

Recently, a couple states have been not only playing with the idea of a minimum wage, but trying to pass bills on it. However, this is a bad idea. Not only is raising the minimum wage going to hurt the economy, but any minimum wage is detrimental. It hurts workers, business owners, and consumers.

The concept of a minimum wage implies that the government owns a business and its money. To believers in minimum wage laws, I have a simple question to ask. What gives the government the right to decide wages? The answer is, simply, there is none. A business is the property of the owner, not the government. The economy, not the government, is ultimately responsible for deciding wages.

This brings me to my next point. Many economists agree, a minimum wage is bad, let alone a higher one. Let’s assume we go with Delaware’s proposal to raise minimum wage to $10.25 by 2021. This is a $2 increase to the current price floor for labor. This may not seem like a lot, but for a business owner it could be disastrous. Raising the minimum wage to $10.25 an hour, or $15 an hour like many advocate, would be a disaster for the restaurant industry. On average, restaurants make only 5 dollars in profit for every 100 dollars in sales. It is already hard enough on restaurants to pay employees (which is why waiters get tips in exchange for lower wages). However, this is not always the case, and in many cases, employers would be forced to cover the full increase in the minimum wage.

This will lead to two major detriments. First of all, employers may need to cut back on their staff. A small business with a low profit margin may not be able to pay its employees a higher wage. As a result, the employer will likely lay off some workers to afford the wages of others. Also, a minimum wage increase may lead to an increase in prices. To afford to pay higher wages, employers are likely to have to raise their prices. However, any government policy that leads to price hikes is bad for the economy. Prices and wages should go up and down based on market forces of supply and demand.

Conversely, proponents of the minimum wage argue workers will be taken advantage of. Many claim workers will not be paid their fair share. Yet, this is simply not the case, and economic competition disproves the notion. Prices on labor follow the same economic forces as prices on goods. Just as nobody will pay 20 dollars for a cheeseburger, no one will work a job that pays 10 cents an hour. Thus, a business owner will look at profits and determine a wage that people would be willing to work for. That’s how it works for all jobs, and laws cannot substitute this process efficiently.

My final point is that minimum wage jobs are simply not meant to be a career. They ares stepping stones to that point. Many people’s first jobs are minimum wage jobs. The jobs are often marketed to high-school or college students trying to gain experience. Also, many of these workers, given good performance, receive a raise in their first year. Clearly, wages would be determined by the economy, not by government.

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How the Government Held Back the Second Industrial Revolution

By Mason Mohon | USA

Between the end of the Civil War and the beginning of the 20th century, the American economy experienced growth like no country had ever seen before in the entire history of the world. The discovery of lots of oil, along with the progression of electricity, expanded logging industries, and advancements in mining gold and silver created profound economic growth. New investments from overseas stimulated the American economy and migrant workers provided cheap menial labor. The development of steel lead the railroad system to a great multitude of new locations.

This age in American development was also seemingly plagued by the ills of the free market and was only held through because of government intervention. That is what historians see, and that is what the textbooks teach. Labor conditions were horrible, income inequality increased, and robber barons took over the oil industry. The issue with this, though, is that people look at it with no depth. They take everything at an economically uneducated mainstream face value. A deeper look into the issues afflicting America must be taken if we want to truly see what harmed and benefited the United States during this time.

In the first place, we must look a bit at what did not happen, and where funds did not go. This is important because of what Bastiat described as the seen versus the unseen. In one of his most famous essays, he wrote the following “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” What this means is that we saw the consequences of what happened in history, but to find out if what we did was as beneficial as it could have been, we need to look at the consequences of the potential action that was not taken. This is especially important for the second industrial revolution., because the government did intervene, and growth did happen, but correlation doesn’t equal causation. We must look to what we know to be economic law, and what is true in all instances, and look at what did and didn’t happen.

Many argue that the government’s subsidies and land grants to the railroad industry allowed the economy to boost, and even more, that they were instrumental and critical to the economic growth that happened. This is not true at all. The subsidies that went to the railroad industry went there because the money was taxed from people around the United States. This was money that could have gone places consumers wished for them to go. There is no way to gauge demand for a government agency, so instead, they must bring in scientists who make a guess as to where the best place to promote industry would be. An astounding amount of money went from the government, after it had been stolen to the taxpayers, and went to what there wasn’t necessarily demand for. The railroad industry would have flourished, and maybe even in more economically strategic places without the government’s “help.”

Furthermore, this was seen as the age of the “robber barons,” with men like Rockefeller, Morgan, and Carnegie dominating economic industries, both by cutting prices to beat out competition and by buying out the entire process of producing the good that dominates their industries. Many do not like what these men did and see it as sensible as to why antitrust laws were passed soon after. The issue, though, is that many men of great industry in these times colluded with government to benefit their industry. When it comes to monopolies, you can achieve one in two ways: the natural way, which means serving consumer demand better than everyone else, or the unnatural way of working through government subsidy and regulations to get a foot up on the industry. The second method was the one used primarily in these days because of the lack of lobbying laws. It was not a flaw in the market that these men climbed to the top, but rather it was collusion with the state, the ultimate organization of violence.

Lastly, the poor working conditions and the profound income inequality is seen by many to be a flaw in the upgrading capitalist system. The issue with this is that the workers may have had a tough working environment, but it was better than the alternative of starving by not working or the economy staying behind and everyone continuing to live in a sort of agrarian post civil war economy. The real wages of the workers increased in these times because the development of chain companies, steel for transport, and electricity, which all worked to drive down the price of goods. The conditions of each worker was actually improving from what it had been. At the same time, inequality in income is not an inherently bad thing. The way capitalist economies have tended to work is the rich get richer, and the poor get richer at a slightly lower rate, contrary to the Marxist joke.

In the end, we must realize that we cannot take what happened during the second industrial revolution at face value without looking at economic law and applying it. The point of studying history is to learn from the mistakes of those in the past, so what we must mainly learn is that government subsidies put money into places where there is not necessarily demand and that corporate lobbying is the primary cause of unnatural and harmful monopolies.