In the previous posting on this subject we looked at the “problem” of advancing technology and the various responses that have been developed, which boil down to rejecting technology, or redistributing what belongs to others, whether the technology itself, or what it produces. We closed by suggesting that envy and greed are not exactly optimal for anybody, and that perhaps we should be looking at justice — which is the response we will look at today.
To recap our discussion up to this point, there are five situations that need to be addressed if we are to carry out a restructuring the social order. Again, there may be more, but these are the ones we think are key to carry out a just, effective, and sustainable restructuring of the social order:
· The Misunderstanding of social justice,
· The “slavery of past savings,”
· “Currency Principle” versus “Banking Principle,”
· The effect of advancing technology, and
· Belief that solutions can’t work as a system.
Looking at the presumed problem of technology from the standpoint of justice, we realize that the usual solutions — rejection and redistribution — are contrary to human nature, and thus to justice, the highest natural virtue, that is, the virtues for which every human being has the natural capacity to acquire and develop.
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| Tool-making and using is natural to human beings. |
Making and using tools is natural to human beings, and thus related to justice in that denying people the right to use technology is unjust. To prefer simple technology to complex technology — other than as a genuine preference that is not forced on one’s self or others — is a difference in degree, not in kind.
Similarly, redistribution of either ownership of technology or the fruits of technology is contrary to justice, unless (again) it is voluntary or the need is so extreme as to endanger lives or the common good. Ownership — private property — conveys rights and powers, among which is the right to exclude others from using what is owned, and the right to retain for one’s self what the technology produces.
This, by the way, brings to light a few of the contradictions inherent in many forms of socialism. If, as many economists claim, all production results from labor, people own what their labor produces (as even Marx admitted, even insisted on), and technology only enhances labor, then how can society at large claim a part of what others produce if they neither own the technology nor contributed their labor to the process?
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| Karl Marx |
More immediately, when a worker is hired to operate machinery belonging to somebody else, who owns what it produces? The worker can’t claim everything, because the owner’s labor went into obtaining or creating the machine, at least within the past savings paradigm. Nor does the owner own everything, for the technology is enhancing the worker’s labor.
Marx at least treated this question somewhat logically, if not entirely consistently. According to him, technology is the “congealed labor” of the owner, and the owner is due back only what he put into it, essentially depreciation. The problem, of course, is that the workers would also be due back only what they contributed, up to the value of their labor. If technology only enhances labor, and you can only own what your labor produces . . . and yet technology is simply the owner’s labor in another form, who really owns what technology produces over and above the value of the labor that technology enhances?
This paradox resolves itself when we realize that technology is independently productive, sometimes even autonomously productive. That being the case, the owner of the technology is due what the technology produces, that is, the profit over and above the costs of production.
The problem there is that this relegates workers to mere suppliers of the labor input. Labor must therefore be purchased at as low a price as possible in order to make it worth the owners’ while to engage in production instead of simply living off accumulated wealth.
There is, of course, only one just and viable solution to the problem of non-producing consumers, and non-consuming producers: every consumer must be a producer, and every producer must be a consumer. And the only way to do that is to recognize that technology is independently productive as is labor, and that therefore everyone who consumes must also produce, either with labor, technology, or both. It’s simple justice.
There is also a practical side to workers and other consumers becoming owners. It enables producers to make profits without having to raise fixed costs. This was probably best explained by labor statesman Walter Reuther in his testimony before Congress in 1967:
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| Walter Reuther |
The breakdown in collective bargaining in recent years is due to the difficulty of labor and management trying to equate the relative equity of the worker and the stockholder and the consumer in advance of the facts…. If the workers get too much, then the argument is that that triggers inflationary pressures, and the counter argument is that if they don’t get their equity, then we have a recession because of inadequate purchasing power. We believe this approach (progress sharing) is a rational approach because you cooperate in creating the abundance that makes the progress possible, and then you share that progress after the fact, and not before the fact. Profit sharing would resolve the conflict between management apprehensions and worker expectations on the basis of solid economic facts as they materialize rather than on the basis of speculation as to what the future might hold…. If the workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing as such cannot be said to have any inflationary impact upon costs and prices…. Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth. (Testimony before the Joint Economic Committee of Congress, February 20, 1967.)
The question then becomes, How do people who have no savings purchase the technology . . . that is probably responsible for their not having savings in the first place?
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| Louis Kelso |
The answer — as we have covered in a number of previous blog postings — is to shift the financing of technology from “past savings” (past reductions in consumption), to “future savings” (future increases in production). Only people with savings or who can persuade those with savings can purchase technology when financing is restricted to past savings.
When financing is based on future increases in production instead of past reductions in consumption, however, anybody who is “creditworthy” can purchase technology now and pay for it out of the future production of the technology itself. This was Louis Kelso’s proposal, and what CESJ has embodied in the Economic Democracy Act. It is, ultimately, the only viable solution.
In the next posting on this subject, we will look at putting things together as a system.
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