Off topic but I'm always amazed whenever I come across a photo of my home city online.

While I think I understand the sentiment here, I disagree with the idea that information processing is unproductive. I think that banking, insurance, sales and marketing contribute to the economy even if they are literally bureaucracies. Even in a perfect planned economy I imagine that these functions or at least similar information processing functions would have significant value.

By  Arkem, at Thursday, May 27, 2010 8:56:00 pm  

Hmmm ... it takes a lot more 'industry' to build a skyscraper than it does to build a shed.

By  Anonymous, at Thursday, May 27, 2010 9:28:00 pm  

Interesting choice of picture, especially given your subject. My old home town, Perth. The great pointy thing in the middle was thrust into being, the tallest building in Australia for a while their, by a captain of industry who turned out to be a master of the long con. And no, he never produced much of anything. Such were his talents he will go down in history as the only man ever to go bankrupt selling beer to Australians.

By  Anonymous, at Thursday, May 27, 2010 9:28:00 pm  

"comparable stage of development" seems like the key phrase here. What truly socialist polity reached a comparable state of development to a modern capitalist polity?

By  BillSaysThis, at Thursday, May 27, 2010 9:33:00 pm  

Bureaucracies are a form of welfare. Much like the military are. Having lots of welfare-dependent castes (including starving and violent under-classses) is a form of conspicuous consumption.

Reformists might claim they are parasitic and symptomatic of ailing decadent societies, but their real purpose to scare off would-be raiders.

"Loook! we're so successful we can waste human potenital in these useless entreprises. Stay away!"


Just like the big horns on cows on the open range. In the forest only bull have horns, because they get in the way so much.

By  meika, at Thursday, May 27, 2010 10:37:00 pm  

Capitalist economies have more bureaucrats because they have to expend more effort on planning - since each company must plan to outcompete its peers.


The increased planning effort is why capitalist economies outcompete so-called "planned" economies, where fewer bureaucrats make decisions with far greater impact.

By  Ben H, at Thursday, May 27, 2010 11:17:00 pm  

I think it's misleading to refer to the people in those buildings as a bureaucracy. Not all information work is bureaucracy; some of it is entrepreneurship. Von Mises discusses the difference in his book Bureaucracy, if I recall correctly.

That's not to deny that there's a bureaucratic aspect to corporate management. But some of the people in those offices are doing other things. To be specific, they're looking for resources that could be moved to more productive uses, capital that could be invested at a higher rate of return, and other opportunities to restructure the economy. A command economy is like a machine designed by a team of engineers who are not part of the machine; a market economy is more like a living organism that constantly reconstitutes its own tissues, one cell at a time.

By  William H Stoddard, at Friday, May 28, 2010 12:29:00 am  

I don't know about all the theory, above. I do know that the MBAs and department heads I had to report to ran their offices like bureaus - that is, as fiefs. They came out of the same credentialing system as their government counterparts, and they were for the most part fiercely territorial about their places in the alleged meritocracy.

Waiting for paperwork inside the Building or Parks&Rec offices is not dissimilar to waiting for feedback from HumanRec or Accounts in an American corporation. You face a front line of buffer personnel, whose job it is to separate the chief, or committee of poobahs, from the petitioner, reinforcing the awareness of power. You queue up and/or get serious service depending upon your rank within any number of hierarchies. And you always defer to power, even if that deference is expressed as faux independence of the sort preferred by a species of hipster sometimes in vogue.

I've site and personnel managed everything from liquor to petroleum to entertainment retailing, as well as worked in windows manufacture, industrial laundry, food service and assembly - and it sure seems to me that corporate structures depend upon a whole lot of offices-within-offices, committees to study committees models which can be seen in government.

I've also been involved in other sorts of less licit sales, prior to having kids and "going straight." In the black and grey markets, there's a lot less of that top heaviness, because the social-economic environment favors maneuverability and mobility.

At least in my experience. I imagine once a person manages to climb high enough up in a cartel, it starts to resemble any other hierarchy dominated resource and extraction regime.

By  Jack Crow, at Friday, May 28, 2010 4:39:00 am  

Jack: R. H. Coase's "A Theory of the Firm" effectively defines a firm as a domain within which central planning takes place in a market economy. Coase thinks that a key question is what things will be planned within the firm, and what things will be determined by market transactions. Where the boundary lies is one of the big questions affected by market pressures on a firm. In effect, a classic socialist centrally planned economy runs the entire economy as one big firm, with everything decided inside the organization.

At least in the United States, something like 10% of the labor force is self-employed, meaning that either they aren't in a hierarchical organization or they're at the top of the hierarchy. That's not a dominant share, but it's an important escape route for people who don't do well in hierarchies. Writers, for example. . . .

By  William H Stoddard, at Friday, May 28, 2010 5:37:00 am  

Ken, thanks for that great quote, and for the text you link to. I spent the Summer of 71 living in a London bedsitter, reading and writing. Perhaps the first thing I read was that Lawrence & Wishart edition of Marx- selections. I went straight to 'Wage Labour and Capital' and was amazed. Here was a technically respectable account of exploitation (and profit), a notion which my friends had been blabbing about for several years in mushy Anglogerman. The essay convinced me and still does. I too thought up the notion of tokens, while having no time to read up on economics.

After I moved to the Civilised World I was told that the value notion was 'metaphysical' and hence useless. I also learned about the Transformation Problem, the maths of which I could not judge owing to lack of time. But I firmly believed that some notion of value, one closely connected to labour time, could be saved. I took no stance on the Transformation Problem but hoped for the best (Sraffa was too terse for me to follow). Last year I heard that the Problem can be solved in Marx's spirit: value is claimed to be proportional to labour time. Again I don't have the time to study the material, but I'm immensely delighted to read, here and elsewhere, that value is once again a respectable notion.

As for the photo, I must admit that it totally disgusts me. I was born in that great city in 42 and left for the Sticks in 68. Between 58 and 68 Manhattan Island was reasonably cosy, livable, and especially intellectually exciting. Now I could not afford an apartment there for one week, the cute bookshops have been competed away by bureaucrats, and their kind populate those horrid, gun-metal looking, structures. As a friend who lives there told me in 2002, They took the soul out of it. I assume he meant the bureaucrats, their Masters, and their followers, mostly gung-ho immiserators. These creeps infested NYC in my time too, but there were many compensations.Those that I enjoyed and am indebted to are gone.

By  George Berger, at Friday, May 28, 2010 8:30:00 am  

George - the photo is of Perth, Australia, not Manhattan. It's in ZZ that I learned from my brother that useful abbreviation 'CBD' - 'Central Business District'.

By  Ken, at Friday, May 28, 2010 9:23:00 am  

In NZ, I mean, not ZZ.

By  Ken, at Friday, May 28, 2010 9:23:00 am  

Ha! I thought of course that ZZ was the name of some Anarchist periodical! Well, it's being one of Perth just makes me angrier. Are all cities with harbours getting to look very much alike? The harbour district in Rotterdam is called Manhattan on the Maas.
I must correct one error. I hear that the difficulties seemingly lurking in the Transformation Problem are mostly non-starters. I also heard and read that when rightly formulated prices become proportional to value. I wrote about the relation between value and labour time. That's something I know nothing about. My remarks about Manhattan's glory days need no changes.

By  George Berger, at Friday, May 28, 2010 10:17:00 am  

Heinlein pointed out that the Marxian definition of value, ie, the amount of labour put into creating something, is false; one must take into account the skill of the labourer. As Heinlein put it, a great chef can prepare a delicacy in the same time that an incompetant cook can take to ruin the same ingredients.
Grif

By  Anonymous, at Friday, May 28, 2010 1:52:00 pm  

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By  Keith Ferrell, at Friday, May 28, 2010 1:56:00 pm  

Lewis Mumford, who knew a thing or two about these matters, and would have appreciated, I believe, both the passage quoted and, had he been able to read it, The Sky Road,
its attitudes and its prose.

By  Keith Ferrell, at Friday, May 28, 2010 2:02:00 pm  

"To be specific, they're looking for resources that could be moved to more productive uses, capital that could be invested at a higher rate of return, and other opportunities to restructure the economy."

Yeah, it's not like trillions of dollars were going to flush themselves down the toilet in 2008-2009. Thanks for sticking up for all those "more productive uses." I'm sure Greece, Spain, etc., are also grateful for the chance to have such productive foreign bankers restructure their economies at gunpoint.

"That's not a dominant share, but it's an important escape route for people who don't do well in hierarchies."

Indeed, if poorer workers don't like being pissed on by their betters, they can just become entrepreneurs. The big banks, stuffed with money provided by central governments from the public purse to cover their bad bets, are desperate to put all that money to more productive use by funding new small businesses. Or by creating more over-leveraged derivative financial instruments, which is at least as beneficial.

...Seriously, does William H. Stoddard actually write ad copy for The Morning Star? Because this defense of people who get paid to shuffle ever-larger sums amongst themselves in a combination of musical chairs and Russian roulette verges on parody.

By  mds, at Friday, May 28, 2010 2:06:00 pm  

William,

My friend is "self-employed." The cost of his oil based painting products has almost risen to the point where he either prices himself to do work that only the very wealthy can afford, or he gets a job.

This is an experience mirrored throughout the building trades, where independent smallholders cannot compete with the large concerns, unless they are operating in environments not yet targeted by those larger combines.

By  Jack Crow, at Friday, May 28, 2010 2:43:00 pm  

Anonymous: I am not myself a Marxist, as I think is obvious; but Heinlein's discussion of the labor theory of value is so wrong as to be virtually a parody. To start with, he links it to Marx exclusively; the actual labor theory was the work of the early classical economists, and above all of David Ricardo, who was as capitalist as they come. But more basically than that, what "value" means in that phrase is not value in the ethical or metaphysical sense, but exchange value, or market value, or in modern language, price; the labor theory of value was a proposed explanation for why commodities on the market have the prices they have. Marx recognized the more general sort of value, value-for-sustaining-human-life, but he called that use value as distinguished from exchange value . . . and the LTV was the labor theory of [exchange] value.

Now, I think that Marx was wrong, and that the LTV has hidden logical circularities which reveal it to be tautological if made explicit; the subjectivist or marginal utility theory of value replaced it for a good reason. But Marx didn't make the silly mistakes that Heinlein attributes to him.

By  William H Stoddard, at Friday, May 28, 2010 3:49:00 pm  

Religion is similar ( I view capitalism as a form of religion). During the middle ages there was a religious structure that produced very little and absorbed a lot of wealth. At first the monastic orders were self sufficient, but eventually depended heavily on the work of others in order to survive. They justified their lack of production, and their entitlement to wealth, by claiming to serve a useful purpose, that is to render services of arcane rituals in death languages, Latin, for the spiritual well being of society. They performed rituals only the clergy could understand, in a language only they could speak. Obviously if you believe in Catholicism you would think this bureaucratic structure is essential for the maintenance of society. It is not different today. The upper clergy of our capitalist religion speak a language only they can understand (think of derivatives or complex financial instruments) therefore justifying their parasitic wealth as essential for society. Wall Street is the new Vatican.

By  Walter, at Friday, May 28, 2010 5:23:00 pm  

"The upper clergy of our capitalist religion speak a language only they can understand"

To me, the recent capitalist-inflicted calamities would suggest that a slightly better formulation is: "The upper clergy of our capitalist religion speak a language not even they can understand."

By  mds, at Friday, May 28, 2010 5:44:00 pm  

To me, the recent capitalist-inflicted calamities would suggest that a slightly better formulation is: "The upper clergy of our capitalist religion speak a language not even they can understand."

Well yes, you are correct. Its funny but many a medieval monk did not speak Latin, only spoke gibberish that sounded Latin and impressed the gullible. I think your earlier remark hits it right on the spot. The new arcane financial rituals (derivatives) are not about being productive, but about finding self referential logic to justify their parasitism. Of course this requires an outside view of the whole affair. Here in the U.S. (especially universities) we are so entrenched in this “entrepreneurial” myth that too speak against it warrants burning at the metaphorical steak (being label a socialist).

By  Walter, at Friday, May 28, 2010 6:16:00 pm  

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By  basur hapi, at Saturday, May 29, 2010 8:59:00 am  

I just found this on the excellent American website, truthout.org. It seems relevant here:http://www.truthout.org/back-marx-how-can-his-work-help-us-understand-modern-times59774.

This site collects news items from many reliable sources. Most concern American matters, hence stuff pertaining to the whole world. They are mostly critical expositions, no rants. Recently the site has published some excellent op-ed pieces. PS Someday I'll learn how to put clickable URLs online here and elsewhere.

By  George Berger, at Saturday, May 29, 2010 9:59:00 am  

Well, the medieval monasteries also conserved books from the ancient world (those that escaped the attentions of the Christians at Alexandria!) They also fulfilled a charitable function, and at least tried to be a sort of health service, with their herb gardens (yes, I know, the only doctors worth a darn were Jewish - when the Spanish Inquisition needed a doctor for their victims, they found the only competent ones were Jews, so they compromised by hiring a Jew, as long as he didn't call himself a doctor!). But at least they tried - trouble is, the "wisdom of the ancients" got revered a bit too much, making scientific progress impossible until Copernicus, Galileo, etc. Oh, and the monks also provided a clerical service for the aristocracy, and copied out books.
Grif

By  Anonymous, at Saturday, May 29, 2010 2:14:00 pm  

I'm not a proponent of the labour theory of value, but the criticisms that are raised against it tend to misrepresent it quite fantastically. Here's an intelligent defense of the LTV, an intelligent critique that doesn't make the usual mistakes, and a reply to the critique.

By  Roderick T. Long, at Saturday, May 29, 2010 7:28:00 pm  

Isn't the diference that in free-market economies the productivity of labour tends to be monumentally higher, and hence they can afford to pay for lots of extra managers, advertising people and lots of others doing what on the face of it are socially unnecessary tasks?

By  ejh, at Sunday, May 30, 2010 2:52:00 pm  

I think "somewhat less unfree market economies" would be more accurate than "free-market economies" to describe western capitalist countries, as they're characterised by massive government intervention to enable the corporate elite to dominate the market and so aren't remotely free (though they do allow more competition than state communism and so are less unfree).

By  Roderick T. Long, at Sunday, May 30, 2010 6:25:00 pm  

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By  Anonymous, at Monday, May 31, 2010 8:03:00 am  

Still the best (possibly):

http://www.marxists.org/archive/rubin/value/index.htm

We in the CPGB/Weekly Worker spent a long time studying this. MAke sure you do too!

By  Unknown, at Tuesday, June 01, 2010 8:07:00 am  

"the amount of labour put into creating something" - Might be Heinlein's definition, but no way is it Marx's.
Just for one example, Part V of vol I of Capital. Where surplus value, the value that matters for profit, has three variables, length of working day, intensity of labor, productivity of labor.
And the presentation becomes more complex as the analysis proceeds.

Chuckie K

By  Anonymous, at Tuesday, June 01, 2010 1:49:00 pm  

The observable fact about the socialist economies is that they employed far fewer people in bureaus or offices than capitalist economies at a comparable stage of development.

I am rather sceptical about this statement and would like to see some numbers backing it up, or at least a bit more rigorous reasoning than just comparing skylines. Apart from anything else, a more technically-advanced society would probably have a higher number of bureaucrats simply because the productivity of manual labourers and skilled industrial workers would have been augmented by machines, and office-workers and managers wouldn't have been, or at least not to the same extent. I'm sure, for example, that the workforce of a modern shipyard has a much higher percentage of office workers than a shipyard in 1900. Is this because it's been taken over by bureaucrats? No, it's because you don't need so many people bashing metal to build a ship now as you did in 1900, but you still need almost as many people at drafting tables and accounting offices.

By  ajay, at Tuesday, June 01, 2010 3:29:00 pm  

ajay - well, the real assertion being made here is that a planned economy - even a 'bureaucratically planned economy', as the Trotskyist phrase goes - has less of an information-processing overhead than an actually existing capitalist economy at a roughly similar level of development, when you take into account the whole process of accounting, sales, finance, insurance, etc, in other words the administrative overheads (which by the way do not include 'people at drafting tables').

An experience that may be relevant: I left a job at the London Electricity Board just before it was privatised, and all the talk was about opening new offices and taking on new staff to handle the new financial requirements.

Another experience, not personal, is that in the 1970s and 1980s one unexpected downside for emigres from the USSR to the USA (and Israel) was how many more forms they had to fill in and how much more officialdom they had to deal with in everyday life.

Numbers: I have in my head a couple of figures, which may be wrong and for which I can't put a finger on the source.

One is that Gosplan had 1200 employees.

Another is a comparison of the number of 'civil servants' in the Russian Federation in the 1990s versus the number of 'bureaucrats' in the Russian Soviet Federated Socialist Republic in the 1980s, and the former is larger.

Of course it could be argued that the formerly existing socialist economies had objectively a vastly larger information-processing requirement than rougly equivalent capitalist economies, a requirement that they didn't meet.

By  Ken, at Tuesday, June 01, 2010 8:08:00 pm  

One is that Gosplan had 1200 employees.

Another is a comparison of the number of 'civil servants' in the Russian Federation in the 1990s versus the number of 'bureaucrats' in the Russian Soviet Federated Socialist Republic in the 1980s, and the former is larger.

GOSPLAN itself was a small and elite part of the planning system, which encompassed the ministries, their regional branches, the branch GOSPLANS at the republic level, the kombinat management structures, etc. This is like asserting that there aren't many civil servants in Britain by only counting the First Division policy grades.

And, of course, the Russian Federation took over most of the functions of the Soviet government. The RSFSR didn't, for example, control the armed forces, nor did it control what are now Gazprom, Rosatom (i.e. the old Ministry of Medium Machine Building), Rosaviakosmos, Rosoboronexport, or the all-union railways ministry, or the all-union pipeline system or the electricity grid. Those were all-union ministries.

Similarly, the Central Committee Secretariat was transferred into the Russian Federation wholesale, where it became the Presidential Administration - same role, same building, same staff mostly.

So yes, if you have to take over the key government functions of a superpower, civil service headcount goes up. Who knew?

Also, this "skyline" argument is very silly, isn't it? You simply can't build sideways on Manhattan Island - you'd fall into the harbour. Where you have lots of space, as in...Russia...or California...you can.

Further, this is not an image of a low-rise city. (I am sure you are not unaware of these)

By  Anonymous, at Wednesday, June 02, 2010 7:45:00 am  

There is an exploitation problem in economics, and if markets are open there are correcting factors available. The problems is markets are very rarely open.

To my mind there is a much worse problem buried in the nature of the valuation system behind money.

The biggest problem with money lies in the fact that it is not a measure of real value, but of scarcity value.
One can easily establish this by contemplating two of the most valuable things to any human being, oxygen and water. For most of us both are plentiful and cost little or nothing - oxygen certainly costs most of us nothing most of the time - one exception being under water, when SCUBA is required.

This non-equality between real value and scarcity value introduces a fundamental problem into monetary systems.

There are two basic classes of mechanisms by which one can increase money.

One is socially useful, and involves increasing the supply of something that is valued.

The other is socially devastating, and involves increasing scarcity to increase value.


This incentive to increase scarcity is clearly present in many aspects of society.

Monopolies are one simple expression. Laws which create barriers to entry, such as most "health and safety legislation" are another that is not so clear (because a lot of advertising and political speak has gone into convincing us that such laws are for the public benefit, rather than the reality, which is that they are for the monetary benefit of a select few). When one starts to look clearly, in depth, it is profound how far this "double speak" goes in all aspect of society - health industries which are in fact sickness industries. There are many others - deep in all levels of governance.


On a separate but related issue, I have a method to give more equal power to the employee in the very unequal employer/employee relationship - http://www.solnx.org is my best effort at solving a lot of problems. If the oncologist is correct, then I have only a few more months to gain some traction with this idea.

By  Ted Howard NZ, at Wednesday, June 02, 2010 7:52:00 am  

Yorksranter - thanks. Your points about the numbers are well taken, so I'll happily withdraw that argument. (Of course I was aware that Gosplan was only the tip of the planning iceberg.)

The skyscrapers - I'm not so sure. In fact I think they bear out Cockshott's point. Only two of these Seven Sisters are office blocks. The rest are apartment blocks, a hotel, the university etc. And the main reason any of them were built so high seems to have been Stalinist grandiosity rather than necessity. The Wikipedia article cites Khrushchev recalling Stalin's grumble that Moscow had 'no skyscrapers', and also makes the point that such heights were rare elsewhere in the bloc.

As for the skylines not being present where there's lots of space ... well, the one in my pic is of Perth, Australia, where there's (to all appearances anyway) plenty of room for sprawl.

By  Ken, at Wednesday, June 02, 2010 9:00:00 am  

The centre of Perth is tucked into a bend in the Swan River, which likely explains it.

By  Anonymous, at Wednesday, June 02, 2010 10:08:00 am  

This comment has been removed by a blog administrator.

By  Anonymous, at Wednesday, June 02, 2010 10:53:00 am  

Under the tyrannical sway of any Committee of Public Safety that I ever get to onto, spammers will be beaten to death with baseball bats.

By  Ken, at Wednesday, June 02, 2010 12:23:00 pm  

"Under the tyrannical sway of any Committee of Public Safety that I ever get to onto, spammers will be beaten to death with baseball bats."

You could have suggested that one to Labour before the election, you know.

By  mds, at Wednesday, June 02, 2010 1:31:00 pm  

Perth's a lovely city. I live near, in Queens Park. We've got enough sprawl here, thank-you very much.

As for bureaucracy, I always think of the concept and practice as the opposite of democracy. A bureaucracy is where bureaucrats make top down political decisions. Surely in a society where common ownership of the collective product of labour is the rule, the people would need no bureaucracies; they would need co:ordinating bodies; but these would be to democratically controlled.

By  Mike Ballard, at Thursday, June 03, 2010 1:04:00 am  

well, the real assertion being made here is that a planned economy - even a 'bureaucratically planned economy', as the Trotskyist phrase goes - has less of an information-processing overhead than an actually existing capitalist economy at a roughly similar level of development

I think that's going to be a tricky one to analyse. First, define "similar level of development". You can't do it just by comparing the US and the USSR in 1980, for example, because (this was the point of my shipyard example) the US was a more technologically advanced manufacturing economy - more sophisticated machine tools etc - which would tend to produce a higher bureaucratic load percentage, all else being equal.

There's also not much reason for expecting a significant advantage, a priori. A shipyard in a command economy will still need accountants - even without money, it'll still need to track resources and equipment. It'll still need sales and purchasing staff - or, at least, people to handle the process of getting resources from suppliers, and transferring ships to users. It'll still need HR people. True, it won't need advertising. But, conversely, it will need the civil servants of the Ministry of Deciding How Many Ships To Build.

Of course it could be argued that the formerly existing socialist economies had objectively a vastly larger information-processing requirement than rougly equivalent capitalist economies, a requirement that they didn't meet.

This is also a good point.

By  ajay, at Thursday, June 03, 2010 10:25:00 am  

It isn't plausible to regard "banking, insurance, sales and marketing" as "unproductive work." On the other hand, offices and bureaus devoted to inventing ever more complicated ways of telling people not to do things, or they will be punished, or of telling people what they must do, or they will be punished, must surely be exactly what is meant by unproductive. The whole point of those activities is not to produce but to modify the behavior of those who do, even to the point of having them stop.

And, Ken, in case you're wondering, yes, I'm the old friend (one of them, that is) who you were kind enough to mention on the Acknowledgments page of The Star Faction. I've been pleased to see your career blossom as it has done. Warm regards.

By  Leighton, at Tuesday, June 08, 2010 12:00:00 am  

Leighton, I'm delighted to hear from you. Warm regards to you too.

(For the benefit of anyone who wonders what this is about - Leighton gave me a lot of education about libertarianism, back in the day, the day being the mid-90s on Usenet - those happy years when it was always September, somewhere on the Net.)

By  Ken, at Tuesday, June 08, 2010 11:50:00 am  

Also known as "the good old days." :-)

Now that I've found your blog, I will try to say hello, now and again, with a libertarian, sci-fi fan viewpoint.

By  Leighton, at Tuesday, June 08, 2010 3:09:00 pm