Economic Update: Capital for Worker Coops


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On this week's episode of Economic Update, Prof. Wolff provides updates on US workers' productivity rising while wages flat since 2009, US corps evading taxes, Gallup Poll on poor US job picture, wealth of  billionaires enough, if redistributed, to change global economic conditions, rising corp debt problem. Major discussions of (1) ways and means of providing capital to worker coops, and (2) why technical "progress" excites capitalists and worries workers: the problem is capitalism.

Showing 5 comments

  • Miha Lešnik
    commented 2017-11-06 16:37:42 -0500
    Michael – robots cost a lot of money but capital is presumed a fixed cost. You buy a robot and its value is depreciated through a long period, and with a low variable costs of maintaining it you can significantly reduce the average production costs. This is the gist of automation.

    Regarding prof. Wolf’s point, I have some concerns. I agree that capitalist will tend to increase profits and that workers in general prefer more hours of leisure (or higher pay, it goes both ways). But imagine a relatively competitive market, where a robot is introduced. Lets say we have some coops and many corps in this industry. When there is a technological disruption that lowers the average costs of production if implemented, it will cost a lot of money. And we all know that coops have a big issue with raising capital. The second and more important issue is this: prof. Wollf’s assumption in his argument is that the price is fixed, but this is not the case in at least somewhat competitive markets. To compete for a market share, corps will decrease the price, not necessarily as much to meet the productivity gains, but they will do a combination of both – price down, profits up. This puts a competitive pressure on coops – they first have to afford the technology, and when they did, they will be forced to lower their prices, which means that not much of the progress will result in free time or increased wages. In a nutshell, the problem remains competitive markets.

    I have been thinking about the automation and co-ops lately, and haven’t found much on the topic. No matter how much I would like to, I can’t find a good argument why co-ops would be resilient to automation. Even in an ideal scenario of cooperative industry, fully automated robots will make markets fertile for the invasion of a capitalist firm – they will largely overpay an engineer or two and set up a fully automated factory that will be much more cost-efficient than a worker-governed. In the light of evolutionary dynamics; co-ops have lower fitness than capital-intensive capitalist firms.

    One could argue that capitalist firms will form a cartel and indeed keep the price fixed and pour all the productivity in their profits. Then and only then coops have a chance. But the issue of raising capital in coop remains. Coops could, of course, rent the capital, but who would lease the capital if he/she can make much larger returns with engaging the capital in a capitalist enterprise?

    It is possible that there are holes in my line of thought. I certainly hope so.
  • Dan Va
    commented 2016-12-11 20:45:59 -0500
    Catherine is right; thought provoking video there. We are automating ourselves out of work. But that leaves an accounting left to do. Without a stable society the inventors of those bots could not have assembled them; therefore there is an uncompensated benefit due to society by the makers of the bots.
  • Catherine Granicz
    commented 2016-10-13 13:56:43 -0400
    Here’s a thought-provoking 15-minute video on automation/robotics:

    “Humans Need Not Apply”
  • Will Cooper
    commented 2016-10-11 20:22:56 -0400
    Capitalists will almost always choose to increase profits through automation rather than confer benefits on workers. To think they would be unselfish and opt to improve the lives of workers, rather than boost the bottom line, is a pipe dream. The proliferation of robots, which is accelerating, is shrinking the proletariat. The number of unemployed and underemployed is growing. How will these people and their families survive? A guaranteed annual income provided by the government? Who will spearhead the socialist revolution if the proletariat declines significantly?
  • Michael Cerbone
    commented 2016-10-10 15:22:33 -0400
    First off, thanks to Mr. Wolff and all who make this possible. I have become addicted. You’ve given me the logical architecture and the language in which to build my complaints with capitalism. People have a harder time now telling me to shut up about it.

    In regards to the last bit about robotics, maybe I’m missing something but if the robots mean a 10% reduction in cost of production, and everyone works 10% less, but gets paid the same as before, then the point of the robots disappears.

    Robots cost a lot of money, I’m guessing. I don’t think the owners are going to outlay all that robot money so all could go home at lunchtime on Friday.

    I am though in favor of a midday quitting time on Friday or even Thursday if offered.

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