C. Sokolowski,
We exchanges as follows:
____________
Boddi:
> The Soviet Union was rife with hording,
> likewise capitalist industrial workplaces. The difference is that
> eventually hording *costs* a capitalist workplace real money. It cost a
Soviet workplace nothing. All you had to do was pad your requests a bit,
persuading yourself and your comrades that you were doing the best thing for
the workplace.
I do not think it is a fair statement. Hoarding had a tremendous costin the Soviet economy - but that cost was not borne by the enterprise management, but "socialized," which means that they were eventually passed on the enterprises, albeit in an "averaged" quantity. Hoarding persisted not because of the absence of cost, but because of distinctive short term benefits to the enterprise management. _____________
I think it is a fair statement because you I are saying the same thing. Soviet WORKPLACES hoarded because it cost them little or nothing relative to the general cost to the economy. Obviously my point was to suggest that hoarding would also be a problem for a parecon economy, as it was for the Soviet economy.
You continue: ________________
These were:
(1) Increased ability to deal with uncertainty - such as a supplier did not meeting his contractual obligation to deliver "intermediate consumption" products. That would prevent the enterprise from meeting its planned goals, for which the mgmt was personally liable. Hoarding solved that problem by giving the mgmt a "bargaining chip" to barter the "interim consumption" items from other suppliers.
(2) Access to shadow economy - the hoarded goods were generally poorly accounted for, so the mgmt could simply "liquidate" them in one form or another and pocket the proceeds.
Even more interesting is the fact that this behavior continued unchecked despite the presence of the watchdog, the Party cell attached to each enterprise. The role of the Party secretary in that cell was to watch the management that it does not abuse the "public trust" which in the part lingo was the code word for "central directives" (i.e. the Party interests). In reality, the secretary was almost always in cahoots with the top management for a very simple reason - if the mgmt went under, the firm would usually suffer (since the mgmt's political and personal connections were crucial to the firm's success), and that would diminish the status to the party secretary. _____________________________
Thank you for both recapitulating and expanding my critique. I alluded to point 1. I didn't even get into point 2. Obviously shadow economies and black markets plague all planned economies. Market logic doesn't go away and planned economies simply turn over control of the market to people who don't follow rules - hoarders, schemers, gangsters and the like.
I patiently accepted C Albert's assertion that parecon is a status-less state. I doubt it but, okay. Yet as you point out, the idea that regulators and workers do not develop an interest in preserving the status quo is silly. In fact, it is contrary to the logic of parecon in that workers are supposed to develop solidarity with the rest of their workplace. But C. Albert tells us that they will chuck it all in the bin without a squeak if "the public" tells them to. Not likely, I think.
You continue: ______________________________
That is, btw, not that much different from the US corporate economy operates. The execs rake in fabulous profits from moving other people's money, but it does not cost them a dime if the scheme flops - it is the other people who bear the risk and pay the price (cf. Silverado S&L, or Enron). That behavior is rampant despite the presence of various watch dogs, including the Board - which is usually a collection of the firm's management puppets. _______________________________
Yes O.P.M. (other people's money) is always a siren song. But you have picked two bad examples for your contention but illustrative examples for the importance of markets. Silverado and Enron were classic failures of marking to market.
The business elite were so ideologically blind that they failed to notice fundamental inadequacies in the private "exchange" Enron and the other merchant energy traders had created. Within that "exchange" the people who traded the inventory also controlled its physical disposition and availability to the market. There was no objective marking to market possible because Enron, Calpine and the like could hide inventory, making something like their "cornering" of the California energy market virtually inevitable. And, violating another fundamental rule of exchanges, the financial, *trading* liquidity of exchange members was not transparent. Anybody who knows the history of exchanges could have predicted what would happen next.
The S+L scandal was, at the most basic level, very similar. Essentially (and I am leaving out a lot) the S+L banks were quite suddenly allowed to enter a world of liquidity created by the newly-developing mortgage-backed securities market. The sudden boom in the number of market participants overwhelmed the old-fashioned marking-to-market system of the bank examiner. In the ongoing crisis in the mortgage world, you are seeing a much faster reaction by the market and sub-prime lenders are being forced to reign in their operations quickly. The banking system arguably still suffers from the problem of inadequate marking to market but it is in the derivatives area.
You're not going to get me to defend capitalist managements here but I quibble with the logic of your attack. First, I dismiss out of hand the fiction that corporate boards are supposed to be some kind of watchdog. Second, like all employees, the CEOs do not bear direct financial risk of loss from company losses. They get paid their salaries and their salaries went up with profits. Remember, Ken Lay and the S+L bosses made huge amounts of money for some people, they simply hid the underlying risks. They actually could have made nice little businesses that made nice little profits. Disaster was not inevitable if basic, reasonable, regulatory requirements had been in place.
Markets require scrupulous marking to market.
You continue: _________________________
What it demonstrates is that the so called "command" and "market" economies were not as much different in their organizational behavior as the propagandists on both sides claimed, the differences in institutional blueprints notwithstanding. It also demonstrates that institutional blueprints do not matter that much as the presence or absence of effective control mechanisms. Neither the Party cell nor the Board proved effective in this respect - so I have no reason to believe that worker's councils would be any different. _____________________________
The command economies cannot mark to market and the market economy failures you cited come from inadequate marking to market. I'm not completely sure what your conclusion is but my point is that parecon does not have effective control mechanisms. By vastly increasing the number of planners it tries to, but I think these planners lack a common objective language - money - in which to speak and cannot succeed.
peace,
boddi