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Private property is the part of nature which a person puts to practical use.

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What about the commons? How did people ever manage, for millenia, to put nature to practical use without claiming exclusive ownership? They must have done something right, for it is only in the last 150 years that humanity has pushed nature beyond its capacity to regenerate herself. Private property claims have done much to accelerate the process of exploitation to extinction. You might argue that the oceans are commons, which hasn't stopped the world from depleting the oceans. But I would counter that it is the Nature of Capitalism, not the absence of ownership, that is the primary cause. It is the overriding imperative for immediate exclusive profit that drives companies and nations to exhaust a resource as quickly as possible lest a competitor do likewise.

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Destroy nature, and you destroy the capacity to create private property.

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I didn't say that the only way that things can be put to use is via private ownership and a capitalist system. However, I maintain that the premise of private property is putting parts of nature to human use. Societies can exist without capitalism, but capitalism cannot exist without the raw materials found in nature that are required to produce goods.

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It is the overriding imperative for immediate exclusive profit that drives companies and nations to exhaust a resource as quickly as possible lest a competitor do likewise.

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Come on, Gir. There is no future in Capitalism. There is the next quarter. There is the 5 year plan. There is extracting the maximum profits as quickly as possible. Take a drive up secondary 734 to Grande Prairie, and note the checkerboard landscape of clearcuts of the boreal forest along the foothills. That is from the last 20 years. How long will the rest last? When they are exhausted, who is left with the mess? Certainly not the companies who exploit the forests, for they will be long gone.

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Where is the profit in killing the planet?

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Where is the profit in the Cod fishery? Where is the profit from the whaling fleets? Where is the profit from the old growth Douglas Fir, or Redwoods, or American Chestnut, or the Oaks that once grew along the Red River in Manitoba? I'll tell you where: straight into someone's pocket and into the ether.

The premise of private property isn't putting something to good use, it is putting something to profitable use, which is not the same thing. It is also putting something to use at the exclusion of others who may need that resource, and who may depend on that resource to survive.

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You might argue that the oceans are commons, which hasn't stopped the world from depleting the oceans. But I would counter that it is the Nature of Capitalism, not the absence of ownership, that is the primary cause. It is the overriding imperative for immediate exclusive profit that drives companies and nations to exhaust a resource as quickly as possible lest a competitor do likewise.

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But when people co-operate as in a happy family, everyone benefits. Co-operation is better.

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Originally posted by bittersweet:
Whereas the wolf and pine beetle don't have the capacity to choose whether or not to persist in their destructive ways, we do.

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Originally posted by Gir Draxon:
I see the relationship between capitalism and nature as quite simple. Capitalism is based upon private property. Private property is the part of nature which a person puts to practical use. Therefore, capitalism is derived from nature. Destroy nature, and you destroy the capacity to create private property. Without that capacity, the free market falls apart.

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Capitalism derived from nature ?. We could say that cannibalism is derived from nature, too, and the resultant outcomes somewhat similar.

People existed and thrived for millenia before the notion of private property existed. John Locke's case for exclusive property rights was plagiared from another Englishman before him. But Gerard Winstanley argued for land use for the common good. Private property, itself, was never the sole intention of the monied classes. Property had to come with cheap labour. The idea of private property was worthless to the idle rich without coercive labour laws to force peasants to work the land for them.

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People existed and thrived for millenia before the notion of private property existed.

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As a species, we live better now than we have ever lived. Unfortunately, this good fortune is not shared properly. And it comes in part as a free lunch - we don't pay for sunlight, and we haven't had to pay for clean water.

Private property is a good thing. Examples? I preciously guard my passport and happily keep my tax receipts.

More specifically, is it bad that people maintain their homes because they own them and can pass them on to their children?

[ 15 September 2004: Message edited by: August1991 ]

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Originally posted by August1991:

Private property is a good thing. Examples? I preciously guard my passport and happily keep my tax receipts.

More specifically, is it bad that people maintain their homes because they own them and can pass them on to their children?

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Ha! Read your passport again August, you dont' own it, the State does.... which brings up an interesting point as well to Canadian property law. According to a lawyer friend of mine, an individual might own title to the land in question, but in the end, the Queen (her Crown) owns it all. Even the US constituion always for unilateral land acquisition (with the constitutional promise of compensation of course).

Small business is a grey area, but it's partly a cultural thing. Currently, there's tons of courses on how to start and run a small business, lots of talk about it in newspapers, lots of worship of the individual entrepreneur. The assumption is that a small business is about one person, or maybe a married couple or something, having an idea, working things out, finding some money/a loan, renting the place, doing the interior, buying the stock, and hiring some people. That's just how it is, how it's done. It's hard to imagine there not being all these shops and other small businesses owned by one person and operated by that person + minimum-wage staff.

What if the baseline assumption, and what was talked about in papers, and what was in all the little community courses and so on, was that small businesses were things that a group of people started together. So that the way it's done is you have an idea, find some like-minded people and brainstorm together, ending up with a cooler, more developed idea, pool money and find a loan, rent the place, do the interior, buy the stock, and run the place together as equals. What if *that* was just how it was done? Mucho better.

Meanwhile, I still say the basic problem with capitalism (with respect to the environment especially) is that it's an externality-generating machine. And the farther the ownership is from where the externalized costs are happening, the less they have to pay attention. When local workers own their own businesses, there's still some pressure for externalities in a market economy, but it's reduced because they have to breathe the pollution they make, they know their personal kids will face the wood shortages caused by their clearcuts, etc.--they are, in short, not as successful at creating the externalities because while they may not have to bear the costs *as a business*, they still have to bear them *as people*. When ownership is distant capitalists, the capitalists don't have to bear the costs as people, they go to Club Med while their workers go to Club Dead.

Capital mobility makes it worse. While it's bad for capital to kill the *whole* planet, killing any given bit is no problem because when this bit dies you take the short-term profits and invest them somewhere else. By the time anyone notices they're running out of bits, it's a little late.

Even with ownership by workers, I'd still be interested in exploring different allocation systems as alternatives to markets, like Michael Albert's ParEcon.

[ 16 September 2004: Message edited by: Rufus Polson ]

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Originally posted by Rufus Polson:

So that the way it's done is you have an idea, find some like-minded people and brainstorm together, ending up with a cooler, more developed idea, pool money and find a loan, rent the place, do the interior, buy the stock, and run the place together as equals. What if *that* was just how it was done? Mucho better.

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The 'find a loan' part is the key one. Who would provide that loan, and why? It doesn't matter if a workers' co-op owns the equipment and is indebted to a third party, or if the third party owns the equipment directly and employs the workers.

[ 16 September 2004: Message edited by: Oliver Cromwell ]

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Originally posted by August1991:
Did they thrive? How many died young? How many suffered through sheer ignorance?

As a species, we live better now than we have ever lived. Unfortunately, this good fortune is not shared properly. And it comes in part as a free lunch - we don't pay for sunlight, and we haven't had to pay for clean water.

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Life expectancy for humans hasn't changed a great deal in the last 50 000 years. By and large, the most rapid and significant technological achievments have been made by us because of public education.

The idea for private property and exclusivity
came at great cost to peasants and farmers in England who suddenly found their freedoms restricted in the 16th through to 19th century England. Private property laws were quickly followed by coercive labour laws that punished peasants for refusing to work for wealthy landowners for non-living wages. It was crime to travel outside of your borough or shire and resist low wage hard labour offered by Lord's and land barons alike. You could be whipped half to death for refusing to be an economic serf and wanting to live in the forest on the "fat o' the lan'." You could be made a slave for what today would seem like minor infractions of the law.

The idle rich needed low wage labour to do the work for them, otherwise, the land was worthless unless for sheep grazing. And many Scotsman were burned out of their houses because the land they were living on was deemed more valuable as sheep pasture.

The advent of private and exclusive property rights in England was not a peaceful transition to early forms of market based economy for peasants in England. They resisted and protested.
The move toward private property was not a natural or smooth transition by any means.

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Private property is a good thing. Examples? I preciously guard my passport and happily keep my tax receipts.

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Passports are processed by federal workers on the public payroll, yes ?. I'm grateful to live in a civilized society. too ?.

And on a side note, the American conservatives are trumpeting the fact that home ownership in the States has risen since 2001. But bread also rises, and so has the percentage of American's defaulting on their mortgages risen by 45 per cent since 2001. Tens of thousands of Briton's lost their homes after Maggie described the advantages of home ownership to them. As conservative policies laid waste to the British economy in the 1980's, so did the assets of banks and private housing developers increase by foreclosing when mortgage payments stopped.

The well heeled in Venezuela have managed to re-gain their monopoly of land ownership after re-distribution by Chavez' people. Much will have more as always. The people demand socialism over oil oligarchy there.

[ 16 September 2004: Message edited by: Fidel ]

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Originally posted by Oliver Cromwell:
The 'find a loan' part is the key one. Who would provide that loan, and why? It doesn't matter if a workers' co-op owns the equipment and is indebted to a third party, or if the third party owns the equipment directly and employs the workers.

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Originally posted by Oliver Cromwell:
Hmm. I'm pretty sure you misunderstood him, since he's been quite emphatic elsewhere (I think it was Pop Internationalism) about the need to keep the national accounts identities in mind. The fractional reserve story is usually used to explain how a small change in the monetary base - the part controlled by the central bank - can have a much larger effect on the money supply. But money creation isn't the same as wealth creation.

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Yes, and now capitalists are finding it's much easier to live off compound interest, rent and the profits of high unemployment policies when governments buy back long bonds at better than term rates than it is to actually invest in the market.

Globalism based on supply side, trickle down is flawed and doomed to fail.

Edited to add that we're really DOOMed and things never looked blacker.

[ 16 September 2004: Message edited by: Fidel ]

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Originally posted by Oliver Cromwell:

The 'find a loan' part is the key one. Who would provide that loan, and why? It doesn't matter if a workers' co-op owns the equipment and is indebted to a third party, or if the third party owns the equipment directly and employs the workers.

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But when it comes to resource allocation - output and employment decisions - the decision makers will be faced with the same problem: to satisfy the demands of a third party. Stockholders will demand for profits and bondholders will demand interest payments.

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Originally posted by Oliver Cromwell:
The distinction is important from the point of view of who actually makes the decisions about what/where/when/how to produce. For many people - or most, but I don't think all - having that responsibility is worth something in itself. The house example is a good one; even if rent and mortgage payments are the same, people still prefer to own their own house.

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I think that this aspect of human nature to own the roof over our heads has been exploited by banks and housing developers. Recent reports from the American FBI says that the real estate industry there is uncovering fraud by real estate agents, housing appraisers and so on in what is now a housing bubble in that country. No reports from Canada where homelessness and housing shortages are beginning to resemble the American situation on a smaller scale.

The point is that our conservative and liberal governments across Canada have increasingly decided to allow the market to fulfill housing needs for Canadians and reducing the number of social housing units available for people on low income. And let's face it, low incomes are a very real part of our economy, and the market just isn't fullfilling what are real societal needs for Canadians. As child poverty and infant mortality remain stubborn in this country, so does a lack of affordable housing for many Canadians. As an example, Habitat for Humanity was recently searching for a family in my hometown who might qualify for the basic income assessment in order to handle the no-interest loan. Although the committee found that many families were in need, very few of them had a total annual family income of at least $19 500, the cutoff for Habitat in that area.

I think that home ownership is a great idea, and so would the availability of affordable rental units which are also in short supply across Canada. John Steinbeck would find no shortage of unfulfilled needs in todays market place to photograph or write about as the level of worker desperation is also being maximized at the same time.

[ 18 September 2004: Message edited by: Fidel ]

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Originally posted by Oliver Cromwell:

So it doesn't matter if the firm is run by a workers' co-op who has to pay off a loan, or if it's run by a manager hired by the shareholders, they still have to maximise profits. If there's only one optimal solution to the problem, then both sorts of firms will implement it.

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Nonsense. On a number of levels.
First of all, in the real world there is rarely one optimal solution to any given problem. The world is complicated; the solutions people work toward are inevitably influenced by their mindsets and their other interests. Hence things like Taylorite production, which are basically about the extension of management control, not about optimum productivity. And things like the constant assumption that incredibly high salaries for top management are the only way to get top talent, and that the "best" managers are the main ingredient necessary for running a firm well. Managers work with assumptions like that because they are managers, and such assumptions are good for them. And in fact, in the real world co-operatively owned businesses are frequently profitable while pursuing paths which are quite different from the paths their stockholder-owned competitors follow. Partly, the same money is distributed differently. In many cases, however, co-ops spend more effort increasing productivity where current North American stockholder-owned businesses frequently emphasize cutting costs.

Second, there's a massive distinction between taking out a loan and being owned by stockholders. Not that small businesses are generally owned by stockholders, so I'm not sure how it's relevant to the small business field I was discussing . . . but anyway. At the most basic level, the fact is that a loan has set and finite conditions of repayment. If you are paying off a loan, you have to make *enough profit to make your payments*, and you have to do so *until the loan is paid off*. The people who lent you the money have nothing else to say about your operations. You have no legal responsibility to them other than meeting the agreed payment conditions. Being owned by stockholders is an utterly different situation--the obligation to pay them is elastic and infinite, and they have the right to determine everything about how the business is run. Depending on their time horizons and assessments of the competitive situations of different industries, they may even choose to pull more short term cash out of the business than will allow it to be sustainable in the long term, so they can reinvest that money in what they consider a higher-growth area. The steel business in the United States went into decline largely for that reason--reliable but low profits weren't sexy enough for the investors, so they skimped on maintenance and physical plant for decades, pulling in short-term profits that allowed them to diversify into higher-return businesses. Made perfect financial sense for mobile capital. A lender cannot make such decisions. And a co-op would not make the same decision, because the workers are less mobile; their interests would be to keep the industry competitive for the longer term.

The rest is second-order stuff that depend on things like informational asymetries and risk. In certain markets - restaurants are a good example - workers may feel that they are willing to accept those risks: they know their market and have a good idea of what they have to do to keep in business. These people would accept to pay fixed interest payments and eat the risk. Profits they earn over and above those interest payments are simply the return on the risk that they've accepted.

In many others, that won't be the case. There are any number of examples where firms have tried to shift some of the risk to workers by introducing pay scales that are tied to profitability, and have been rebuffed. A worker at GM may feel that since s/he has essentially no control over whether GM makes any profit, profit-sharing becomes a random crapshoot. In such contexts, you'd expect workers to refuse risks they can't control.

But none of this would affect the typical capitalist. People who are lending money to risky firms would insist on high interest payments in order to comepensate them for the risk of default. People who are buying shares in risky firms would demand a lower price, so that the expected return is high enough to compensate for that risk.

I have nothing against worker-owned co-ops. But they don't affect the basic structure of capitalism: profits go to those who provide the savings.

[ 18 September 2004: Message edited by: Oliver Cromwell ]

Selling ownership to raise money OTOH, means that the new owners have complete ownership of the whole deal, and total control.

So in the first case the savers are to a fair degree the owners, or in the case of a co-op the worker-owners, only partly the creditors. In the second case, the stockholders are the source of it all. That would explain why, as I pointed out, stockholders have complete control while creditors' control is strictly limited.
Incidentally, small business owners, whether individual or co-operative, tend to create some extra value which probably gets overlooked a lot in the definition of savings--what people looking at residences rising in value call "sweat equity", or what Communist analysts would call labour power or some such.
I suppose it's theoretically possible for a firm to take out a loan that represents the full value of the firm, with the owners contributing nothing of their own, and for the payments to equal just the interest, and for the firm to never ever rise in value, and for there to be no inflation, so that the creditors really do remain the sole savers and theoretically have the same degree of control as stockholders. But even if it happened, regulations governing stockholding and conventional debt are so different that they really just don't behave the same way; people don't think of them the same way or react to them the same way, and there's no legal way of forcing them to treat lenders the same way as they treat stockholders, or vice versa. I think the very fact that default on debt can hand ownership to the creditor, while it does indicate a relationship between the concepts, shows pretty firmly that the creditor *didn't* have ownership until the default--that the concepts are distinct. People who own something get to decide how it's run. Creditors don't, unless the debtors aren't keeping up with the payments and the creditor gains access to the leverage of threatened foreclosure as a way of pushing the debtor into complying with their demands. Which again shows that from the real owner's point of view, having a creditor is very different from having an owner--the threat of the creditor transforming into an owner is generally sufficient to extract major changes in decision-making; hence there must be quite a difference between these states.

Whatever the theory, however, there's in fact a long track record that can be consulted for both stockholder-owned firms and co-operatively owned firms. Co-ops don't behave the same way. They are just as likely to be profitable as stockholder-owned firms, but generally have higher wages and better working conditions; on the other hand, they have sparser and less highly paid managerial structures. They tend to react to recessions by temporarily reducing wages rather than by cutting staff; they can do this with less labour conflict than a normal firm because, since the workers make the decisions, they know the firm won't try to keep the wages at that level once the recession is over. They've generally tended to be less expansionist than stockholder-owned firms, although there are exceptions, so I'm not sure that's an inevitable feature. In short, co-ops do behave differently. If your theories say they should behave the same, you may need to revisit your theory.

And your GM example underlines that in large firms there's a third, important element happening: Managerial control. Of course workers at GM feel they have no control over how much profit is made. They *HAVE* no control over how much profit is made--the managers do, and the managers could be Ken Lay for all they know. Heck, in the real world it's worse than that--the managers could do things like stock buybacks, providing the shareholders with money but resulting in artificially lowered profits, so as to avoid actually splitting profits with the workers. Workers are likely to be much happier with the idea of profit-sharing as a partial basis for salaries if they also gain meaningful levels of control.

[ 19 September 2004: Message edited by: Rufus Polson ]

This was considered beneficial at the time, since it was interpreted as an erosion of control by owners in favor of a build-up of control by workers, meaning longer-term horizons would be the norm, and an emphasis on investment for further production and keeping wages high and people employed would be the case instead of an emphasis on the wants and desires of the owners.

Since then, of course, we have seen the downside - the relatively weak connection between ownership and control, combined with deregulation of many previously regulated sectors, has resulted in a speculative, casino-like atmosphere in the stock markets as well as hijacking the CEO from being a worker in charge of the entire operation to being an owner/worker, with the necessary conflict of interest that implies, usually with the owner pathology winning out in the form of excessive CEO pay, stripping the company of useful assets for short-term gain, turfing workers at the drop of a hat to give a quickie boost to productivity by making the remaining workers afraid for their jobs, and so on. And don't forget the interlocking directorships and the golden parachutes.

Additionally, managerial control can mean that the owners may find that their objectives are not being reached, and this creation of two centers of power - one operational (the management) and one financial (the owners) can tear the company apart.

So there's downsides to this trend as well, and so I don't think "left" economists these days would be so uncritical of the shift from owner control to manager control as they were in times past. The critique goes on to attack the foundation on which capitalism is partly based - i.e. the notion that the owner is the person who gets sole official say in the company by virtue of the legal requirement of companies to maximize shareholder value - and to suggest replacements by diffusing ownership while retaining control; enter the worker co-operative.

Addendum, further on the shift-of-control effect noted above...

This was also remarked upon as putting the lie to the notion that entrepreneurialism requires ownership. Entrepreneurialism, in its true sense, requires only good creative thinking skills, and the ability and willpower to execute them. "Ability" is the factor usually interpreted to mean "having the money", but that is not necessarily true especially in large companies with their own R&D budgets.

[ 19 September 2004: Message edited by: DrConway ]