GABlog

February 19, 2019

Can Networks Crowd Out Markets?

Filed under: GA — adam @ 7:24 am

When I go to the store to buy a loaf of bread, I have to pay the supermarket because I am not performing any equivalent service for them, or because, as is the case in David Graeber’s “communism,” we are not part of a community in which it is a matter of course that each takes what he needs and contributes what he can. So, how does the supermarket know how much to charge me? They buy the bread from a baker, and they have to charge enough beyond what they pay the baker to cover the costs of the building, the store technology, salaries and wages, etc., and still make a profit. The baker, meanwhile, needs ingredients, equipment, a building, employees, etc., so that determine how much he has to charge for the bread. And likewise for those who sell the baker the ingredients, etc. If we start at the other end, the supermarket charges what consumers will pay, which comes down to how much consumers prefer buying bread here as opposed to some other place, how much they prefer bread to possible substitutes (e.g., fajita wraps), how willing they are to forego bread compared to other types of food if they have less money to spend, etc. Still, at any point in time, there must be some minimum cost of making bread, and if it isn’t sold at that cost, bakers will simply cease to exist.

The standard argument for markets against planning is that no one can know how many people over, say the next month, will want how many loafs of bread, and, then, how much the operating costs of the supermarket, the ingredients and equipment of the baker, the machines that make the equipment for the baker, the machines that make those machines, etc., will cost over the next month. The only way to find out is to let supermarkets sell as much bread as they can, then have the bakers buy the ingredients they need to meet the demands of the supermarket, and so on, until we end up oscillating around an average amount of bread sold per month—sometimes the store will be out for a little while, sometimes it will have to throw away some extra, but that then gets worked into the cost. And, of course, with some products (probably not bread, though), the fluctuations can get really dramatic, to the point of forcing retailers and manufacturers out of business.

But, what if this all worked on something like a subscriber system? I, along with many others, sign up for a certain amount of bread (or a “basket” of goods, within a prescribed range of variation); the supermarket, along with other shops, subscribes with a “co-op” of bakers, who in turn subscribe with producers of wheat and ovens, and so on, who in turn subscribe with those they need to procure materials from? This could only work, or—not to get ahead of ourselves—be imagined to be possible, if everyone one joined various co-ops and virtually all economic activity took place through them. Those who make the machines to make the ovens sold to the bakers must ultimately, through a vast network of subscribers, subscribe those who employ the ones buying the bread. Obviously, I’m trying to imagine an advanced economy without prices and therefore without money, but also without central planning, and if that’s utopian, so be it, but I at least want to think it through in absolutist terms, and maybe someone else could incorporate these reflections into more sustainable ones. The question is whether the more advanced form of coordination that the elimination of liberalism, democracy, which is to say, “politics,” might make possible, would in turn make cooperation through a vast network of agreements between directors of enterprises possible.

It is already the case that much, if not most, economic activity is organized through networking: if you’re starting a new company, you look for customers and suppliers through established channels, including friendships and other informal associations; also, you will prefer to work with more stable companies with good reputations, in communities with reasonably favorable and predictable government, etc. You will prefer customers and suppliers you expect to be around for years over those who might leave or go under next month. None of this is directly priced. But all this means that the most basic value is an institution in which the high, the middle, and the low, cooperate rather than struggle against each other, in an area where other institutions are not trying to subvert the ones you want to work with. Companies that are well established and well run, and that value their reputations, will, of course, charge one another for goods and services, but they might also be more open to various forms of cooperation and exchange where payment can be waived or indefinitely deferred. With enough companies like this, you have your network of subscribers, and below a top-tier of networks, you could have lower tiers that would be more unstable and might need further supervision, or might even rely on money, but the damage done by their failures might also be contained.

Two big problems arise (at least that I can think of now). First, wouldn’t this be a very static system? How would innovation be possible—how could anyone break into the existing networks, and why should the top-tier companies feel any need to improve their products and services? Second, within this vast network of agreements that all depend on each other within an enormously complex system (the baker can promise x amount of loaves because the farmer has promised y amount of wheat, which he can do because the manufacturer has promised z amount of replacement tractor parts, within everyone bought in all the way across the social order), how can self-interested defections (cheating, strikes, adulterations of materials, side deals, black markets, etc.) be prevented? The eligibility of subscribers would have to be regularly assessed. We must assume the highest value of all is a unified and coherent command structure stemming from a central authority and reaching into all institutions. Individuals reporting directly to authorities would be in each company, and everyone in each company would be expected to consider himself a “delegate” of the government. There would be social pressures from other subscribers, who would stand to be disqualified if some of their members were found to be defectors. (If a particular subscriber can no longer fulfill its responsibilities, the central authority’s responsibility is to replace or reconstruct its governing structure.) We really have to assume the individualist, utilitarian ethics and morality of liberal society can be eliminated, and people can think of themselves as directly social. While it doesn’t quite prove anything, doesn’t the fact that so many millions of people can be recruited into an increasingly apocalyptic leftism that in many cases at least cuts against individual economic self-interests suggest that for many, if not most, utilitarian ethics are extremely unsatisfying? Doesn’t the fact that so many wish to resist the new order, without any guarantee that it will benefit them materially, indicate the same?

Innovation is really the bigger problem, since any innovation would have to, it seems, disrupt an extremely complexly integrated set of networks. How would R&D be conducted, and by whom? Here, I would follow up on some of my earlier “social market” posts and emphasize the centrality of the state to economic activity. This has always been the case, and is certainly so today—research is overwhelmingly shaped by state investment and subsidies, starting with the state’s monopoly on military equipment (which, of course, involves myriad spin-offs), but including quite a bit of investment in medicine, environmental technology, computing, communications, infrastructure, space exploration and so on. We can now add to that social network and surveillance technology. The state, then, perhaps in the form of its various agencies, would be a major subscriber within the networks. The state would be a major “consumer” of technological innovations and the co-ops who want to subscribe to certain forms of technological innovations could do so. (What does subscribing to the state entail? What does the state provide in return? Land, corporate and monopoly rights, airwaves, electronic networks, etc.) The co-op would then be able to provide a better product to its subscribers, and could solicit more subscribers as a result; as a subscriber to its suppliers, meanwhile, that co-op could be more demanding—its greater influence would enable it to get its employees into better co-ops or subscription lists.

I know it sounds crazy to speak of an advanced, civilized social order without money, in which everyone asks another for what they need, and in turn give others what they ask for. Maybe it is crazy, but I think it’s worth the speculation if we are to think beyond liberal fetishizations of the market. Almost everyone will concede that markets require some state support and regulation, but such concessions almost always assume that such support and regulation is the “lesser evil,” and so encourage us to constantly chafe against it, and assume it could always be reduced. Nationalist economics imagine a more positive role for the state, but that still involves intervening in already existing markets in very targeted ways—the basic liberal anthropology is not challenged. “Big government” left-liberal political economy, meanwhile, always presupposes an adversarial relationship between agents in the private economy—all the state does is take sides in that struggle, or sometimes act as a referee. But if we are genuinely to see the central authority as the source of social organization, as, essentially, the owner of the entire territory over which it rules, with subordinate agencies having delegated quasi-managerial powers over the “productive forces, then we should try to formulate that relationship prior to any mediation, like the various departments of a corporation. A corporation has external constraints, of course, but, then again, so does a government: it must show itself a respected and responsible actor on the international scene, whatever its place among an international hierarchy of states. But more important than all this is how to think about the creation, or re-creation, of an ethics, morality and aesthetics that transcends liberal ontology and anthropology.

I think the conventional view that sees pre-modern peoples as more “spiritual” and less “selfish” than moderns has it completely wrong. With all of the adherence to ritual and belief in supernatural agencies, pre-modern peoples are driven by the most material interests—fear and need. If one sacrifices regularly to the gods and is careful not to violate any ritual prescriptions, one will be provided for—one will have victory against enemies, a good hunt, rain for the crops. In a post-sacrificial order, there are no more exchanges with the gods, or even God: what God has given us is everything and incommensurable with any return; what each of us gives to God is also everything, all of us, even in the knowledge of its utter inadequacy. This desire is no less powerful in the atheist. The post-sacrificial epoch would better (and more positively) be called the epoch of the absolute imperative, a concept I take from Philip Rieff. The absolute imperative is absolute because no imperative can be issued in return by the commanded (no “God get me out of this and I’ll never…”). The absolute imperative is to stand in the place of whomever is violently centralized, i.e., scapegoated. The absolute imperative has its corollaries, enjoining us to construct and preserve justice systems that place accused individuals at the center in a way that defers, delays and ultimately transforms the scapegoating compulsion, or represent actions and uses of language that reveal the scapegoating compulsion in less than obvious places. Obviously, we (at least in the West) “hear” the absolute imperative because of the Judaic and Christian revelations, but it can certainly be made “audible” in other ways. But all the radicalisms and “holiness spirals” of the modern world, however “puppetized” and “proxified,” are set in motion by an attempt to obey the absolute imperative. Despite the best and worst intentions of economistic thinkers (who are really obeying the absolute imperative in their own way), human beings will not be satisfied with an affluent society, not even if we make a little bit more affluent. Or, at least, enough humans will not be so satisfied to allow affluenza to settle in, undisturbed, once and for all.

What, then, are the economic consequences of the absolute imperative? Eric Gans—while not speaking of an “absolute imperative”—sees the economic consequences of the Christian revelation to be, precisely, the free market, where exchanges are voluntary and non-violent and the natural world can be exploited in increasingly productive ways. This may be part of it: exchanges mediated through money are a huge moral advance over such economic practices as pillage and slavery. But if the most powerful players on the market simultaneously centralize and destabilize central authority, the ethical and moral advantages of both the market and central authority are compromised beyond repair. The two must be kept separate: money must be kept out of politics, but once the money is out, what is left of the politics? What, indeed, is left of the money? If money is first created by central authorities in order to enable individuals to purchase their own animals for sacrifice, then it from the beginning is a consequence of the derogation of authority over a shared sacrificial scene. The same is the case when money and markets are created by the imperial state to provide for soldiers in conquered territories—here, as well, money is a marker of the limits of authority, which means what money really measures more than anything else is the degree of pulverization of central authority. A secured central authority would, then, have to contain the market within its embedding, enabling, moral and ethical (disciplinary) boundaries. The use of money as an abstract sign of the goods, services, and capacities to be commanded by its possessor would necessarily dwindle: the uses of money would be qualified in many ways. How much could that use dwindle? If it dwindled to nothing, wouldn’t that mean that economic activity has been wholly re-embedded in a thoroughly articulated self-referential social order devoted to ensuring the institutionalization of the absolute imperative? That, at any rate, is the thinking behind the thought experiment attempted here.

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