The overarching goal of communism is for laborers to own the means of production instead of an owning/capitalist class. Employee owned businesses are the realization of communism within a capitalist society.
It seems to me that most communist organizations in capitalist societies focus on reform through government policies. I have not heard of organizations focusing on making this change by leveraging the capitalist framework. Working to create many employee owned businesses would be a tangible way to achieve this on a small but growing scale. If successful employee owned businesses are formed and accumulate capital they should be able to perpetuate employee ownership through direct acquisition or providing venture capital with employee ownership requirements.
So my main questions are:
- Are organizations focusing on this and I just don’t know about it?
- If not, what obstacles are there that would hinder this approach to increasing the share labor collective ownership?
Why does a worker-owned coop need to grow? Are you presuming they take outside investment / capital?
Capitalism compels firms to grow or die, in order to fight the tendency for the rate of profit to fall. We’d need to move beyond a profit-driven economy to move beyond this issue.
There is no tendency of the rate of profit to fall. The theory is inconclusive, as is empirical research. If TRPF were true, then growing a company would, in fact, accelerate the process.
It’s a tendency, not an ironclad law. Competition forces prices down, and rates of profit with it, but this process can be struggled against by expanding markets or finding new industries, which is why Capital always pours into “new fads” in the short term. Imperialism is actually quite a huge driver of this.
There are numerous studies showing broad rates of profit falling over time, as well. Moreover, Marx never lived to see Imperialism as it developed in the early 20th century, where the TRPF was countered most firmly.
This is not true in the general case. If prices for input materials are down, profits rise for the company using them. One company’s profit loss is another’s gain. That is even with the shaky assumption that competition can exist long term in a free market. Imperialism, as defined by Lenin, results in concentration of capital and the removal of competition.
There are counteracting forces for it, but expanding is not one of them. Expanding does not change the rate of profit (profit/capital invested); at most, it changes the total profit.
If it costs 5 dollars to make one widget on average, and company A creates a machine that improves production so as to lower the cost of widgets produced by them to 3 dollars, then they temporarily make more profit until other companies that make widgets find ways to lower their cost of production to around the same level. This new lower price has a higher ratio of value advanced from machinery as compared to labor, lowering the rate of profit. This is a general tendency, but can be fought against by many measures, including monopolization and using regulations to prevent companies from properly conpeting, ie by copyrighting machinery and production processes.
Imperialism didn’t just allow for expansion, it also came with violent means of suppressing wages and extracting super-profits. It wasn’t just an expansion that would raise total profitd while rate of profits fell, it also created new avenues for exploiting labor even more intensely, and selling goods domestically at marked up prices.
Really, I don’t know what your issue with the TRPF is, are you under the assumption that Marxists claim it’s an ironclad law over time and not a tendency, or are you against the Law of Value in general?
You didn’t address any of my concerns, nor was I talking about productivity. Let’s try again for the the first one with a simple example:
Company 1 makes a product (let’s say timber) at 50 surplus value. That 50 is a cost for company 2 that uses the product as an input material (it makes wooden chairs). We can calculate the total rate of profit of both companies. Now company 1 is forced to lower the price to 40 because of competition. We calculate the total rate of profit again and the total rate of profit has actually increased.
Thus, it does not follow that lowering prices/profits leads to a decrease in the overall rate of profit
What you have described is the pure moment of input costs lowering (and you’re confusing surplus value with price, 50 being surplus would also imply 10 in variable and 10 in constant, so 70 would be the input for company 2 if you simplify for the sake of example absolutely no tool usage in company 2). However, unless company 2 has a pure monopoly on chairs, this lowering of cost of production would also apply to other chair companies, and costs would lower. When wood prices are low, wooden chairs cost less than when wood prices are higher.
Further, the TRPF isn’t really about competition, or even surplus value. That’s one-sided. The TRPF is about rising organic composition of Capital, ie as c increases in ratio with v, or c/v. Competition pushes for this, as increasing automation can allow temporary advantage (as you’ve somewhat shown) before other companies follow suit. What you’ve shown is one company lowering the ratio of c/v, ie lowering the costs of their constant Capital over their variable, but that would imply that this company should never reduce wages nor increase automation as a rule.
In order to outcompete, constant Capital must rise in ratio, as it can lower prices of production below what others can offer, even though this raises c/v. Hence total profits rise, but rates of profit trend downwards.
Your argument would only hold true if this was the final part of the process and competition didn’t exist for company 2, allowing them to charge monopoly prices and never worry about increasing automation and productivity.
Now, the rate of profit falling is often wholly combatted by increasing exploitation, or e=s/v. This, however, gives rise to stagnating real wages while the Capitalists get ever wealthier, sharpening class contradictions.
Thanks for the detailed explanation, and sorry for the late response. Mine was just a simple counterexample to show that the tendency doesn’t always apply. You’re right that the c2 I used is wrong, and it should be s1+v1+c1, although that would still not change the result. My example was in the case where one producer wants to compete with another with a lower price, so chooses to trade a lower s for a bigger market share, so I wasn’t really getting into improved productivity, I was just addressing your initial statement of “competition forces prices down”.
In a real economy this chain would be much more complicated with way more steps and even backpropagation of some of the values. If we have a rate of decline of profit for company 1 called R1 and a rate R2, the overall R would only decline if R2 > R1, otherwise it would increase. So to prove a general declining rate of profit you would have to prove that the decline propagates fast enough through the entire chain.
Also, I fail to see how c/v (organic composition of capital) necessarily increases. If prices lower (due to competition, or productivity as you have said), then c will also decrease for the companies using those products (as I have shown in my example) as the cost of machines and input lowers (a computer in 2025 costs way less than the same one in 2000). To prove that c/v increases you would have to prove that dc > dv (derivatives), which is not at all clear since, while they both decrease, they can decrease at varying rates which are not predictable.
It sounds like it’s similar to saying climate change isn’t real because the weather was colder one day, when in actuality the theory of global warming is describing an ongoing process and tendency of the temperature to increase in the overall system overall long period of time, it’s not a day to day weather phenomenon you can describe with a singular slice of time.
Because they are subjected to market forces. I’m not referring to the decisions an individual worker in a coop might make—an individual may well decide to give away all their money and become homeless, that doesn’t mean it’s in people’s interests to. In a market, you must compete with other businesses, otherwise you will be out-competed and not survive. The “profits” obtained by a coop are still surplus-value; all the laws of capital outlined by Marx are still at play. Marx’s critique of political economy did not really hinge upon the specific boss/employee relationship; it’s about impersonal domination of the market over people who live in a capitalist mode of production. In Capital Marx spends quite a bit of time talking about how even capitalists are subjected to and dominated by capital; the domination is impersonal, and the domination of (hu)man by (hu)man is only secondary to that impersonal domination.
Have you ever considered that the model of free market under perfect competition in neoclassical economics doesn’t actually say that the market needs to be powered by the financial profit motive, just that the firms need to maximize their own utility? It’s just that in capitalism these get conflated because it’s almost always one and the same thing. But it doesn’t necessarily have to be the case. If you have an economy composed entirely of mission-oriented nonprofit organizations for example that compulsively reinvest all their excesses and internalize all of their external cost, you can still analyze it as a free market under perfect competition, and ironically, it works even better than it does for capitalism.
I am opposed to “maximising utility” because I am a communist. Production should serve needs, not production for the sake of production.
Ok, still exploitation.
I can see that those are your political beliefs. You are welcome to have those political beliefs. OP is asking about communists, and communists do not want this, so this is rather orthogonal to the question.
Is that not what “utility” means? Serving needs?
The verb “maximising” suggests a measurable “utility” which can be “maximised”, rather than needs which are either met or not.
I’m just curious what you think utility is and also who do you think is being exploited in economic institution that literally has to internalize all of the external cost? Also believe it or not I didn’t actually express any political beliefs here so I would appreciate it if you didn’t just assume that because I’m challenging you on your conception of things, it means that I disagree with your politics
“Utility” is not a concept I subscribe to per se, unless you just mean use-values in the same sense Marx uses them. I am responding to the concepts you are using. In a communist mode of production, production is, in the famous quote, “according to need”; in a capitalist mode of production, production is divorced from need, and we find production for the sake of production.
Marxists use the word “exploitation” differently to its colloquial use. “Exploitation”, in Marx’s critique of political economy, refers to the extraction of surplus-value. I’m not sure if you know what that means or not. I can explain it if you want but you can also look it up; it’s a pretty basic part of Marx’s critique.
I’m assuming you’re not a communist because you don’t seem to be familiar with communist views, and seem to be advocating for/in defence of a mode of production that is not communist. I don’t know how exactly you label yourself politically but it seems based on this short conversation that we can exclude communism from the list of possibilities, meaning we disagree.
Well, since you still haven’t told me what you think the word means in like a formal, well-defined, academic sense, I can’t really tell what your objection to it is. Like at the end of the day it’s just a word, and i have never actually run into a situation where if I thought about it for five minutes, I wasn’t able to actually reconcile the academic concept of utility with Marxism. And in practice, thinking about utility and realizing the highly arbitrary nature under which utility is realized under capitalism, is one of the main things that drew me to leftist economics in the first place.
I certainly am not using it in a colloquial sense and in fact, I have been using it in the Marxist one the entire time which is why I described a market economy where literally all of the firms are compulsively required to reinvest the very surplus revenue you describe back into the firm itself. So again I’m asking you: in that situation, where is the exploitation?
And then the next important thing is to simply realize that such an economy, whatever you wanna call it (because for some reason you seem like you don’t wanna call it a market and I don’t understand why, but fine) is completely consistent with what is called a “market” in neoclassical economics, and so even if for some reason you think it’s really valuable to say that an economy stop being a market when everybody in the economy isn’t trying to mindlessly get ahead anymore, you can still analyze it as a “market” and resisting this extremely useful framework is only making your own life harder