Friday, February 10, 2012

The Coercive Law of Competition

One of the obvious, and obnoxious, arguments about the so-called "Golden Age of Liberty" that I discussed last week is this notion that those who were most exploited by such a society could instead choose to not to be exploited.

There exists this fallacy among Libertarians that government action is coercive because the threat of force is used to guarantee compliance. They assert that by removing government coercion that we are then liberated from any and all threats of force, so we can live a more free and liberated existence.  This myopic view of coercion is not only false, but does nothing other than strengthen other processes and agencies that can be far more restrictive on one's liberty.

Let's turn briefly to a Libertarian response to my post.  A Libertarian would say that a person has the freedom to not be employed by a factory that forces them to live in a factory, get paid in factory scrip, and risk life and limb on the job.  They would also say that such a person can choose to opt out, and instead find employment elsewhere or even start their own factory and join the capitalist class.

This sounds very simple and agreeable, but it stems from a fundamental misunderstanding of the economic reality. Karl Marx has been thought of as a great Socialist or Communist thinker when he has actually given us the most incisive understanding of Capitalism.

One aspect of Marx's critique of Capitalism that often gets overlooked is the Coercive Law of Competition.  Imagine two factories each making some sort of widget. They exist in competition with one another and are constantly trying to expand their businesses. This expansion is not just into new markets, but to also take over market share from their competitor.
Even in the future, Spacely and Cogswell are compelled by the Coercive Law of Competition.
Imagine that both of these factories are, more or less, equal in their ability to manufacture these widgets, and in doing so are able to reach a comparable level of surplus value, profit, from the sale of their widgets. One method by which one of these factories could expand its market share is to lower the price they sell their widgets for, in hopes that expanding market share will make up their loss in profit per widget. When one factory does this, and they will, the other factory must follow suit to stay competitive or else they will lose market share and fail.

Additionally, one of these factories could innovate production in some way, so as to more efficiently produce widgets.  Let's say that it took 8 hours of labor for a worker to make 100 widgets. Let us imagine that it took the sale of 40 widgets to pay for the worker, the raw materials, and for the factory itself and that the 60 remaining widgets are the surplus value of the worker's day and become profit to the factory owner.

One way the factory could maximize its profit is to keep prices the same but to find more efficient ways to make the widgets.  Let's say that the first factory is able to make the same 100 widgets and that it only required the sale of 30 widgets to pay for the whole lot.  They would then be able to take that same surplus value by selling their widgets at a lower price.  This, in turn, would force the second factory to emulate this new breakthrough in efficiency so that they could compete as well.
Now, imagine that this breakthrough was the demand that the factory workers work additional hours each day for the same pay.  All of a sudden, you start seeing these factories competing and trying to find new ways to exploit the workforce so as to maximize profits.  These two factories have fallen into a spiral of competition that requires each to not only keep up with the other but to also find new ways to innovate their product and the processes that are used to manufacture them.

This spiral of competition also has a side effect of diminishing the amount of profit each widget brings to their respective factories.  I'll talk about the tendency for profit to diminish some other time, as it is an incredibly interesting subject.

This system of competition is widely accepted, even if it is not attributed to Marx or spoke of in Marxist language.  We can see this competition now as American factories continue to export manufacturing to areas where labor is cheaper and there are fewer regulations. We can even see this Coercive Law of Competition in the flaccid economic recovery in recent years.

Many firms have figured out that their remaining work force is terrified of losing their job and will gladly work longer hours and at greater intensities for the same or lower pay. Businesses have scared their workers into producing more for the same, or less, pay and that is why the economy is producing as much as it did before the economic crash but with fewer workers and with greater profits.
We tend to think of businesses and industries existing in competition with one another, and instead choose to ignore that each of us are also in competition with each other. You and I are like the two factories making widgets in that we are competing for a job in the marketplace. We are coerced into working those longer hours and at greater intensities because we understand that labor is just another commodity in the marketplace. We are coerced into accepting ever worsening working conditions so as to stay competitive in this environment, because if we do not, another person will. The Coercive Law of Competition affects all commodities and does so without prejudice.  This creates a race to the bottom and can ultimately result in a society described before.

The only other option an individual has is to stop selling their labor power in the marketplace and become a capitalist who exploits the labor of others.

A Libertarian believes that the only sort of coercion that can exist is that from a government. The marketplace exerts a great amount of coercive force onto the world, and it is only through democratic governance that we have managed to fight against the Coercive Law of Competition and its excesses.

The capitalist economy is a force of nature that does not care about people or the environment. All it knows how to do is create surplus value from capital and nothing else. There are also some inherent contradictions within it that make it increasingly difficult for capital to accumulate profit.

To ignore this reality and asset that without governmental, or democratic, coercion that we will somehow have more liberty is to fundamentally misunderstand history and the reality of capitalism.  Just as democratic governance has tried to protect people from the elements, it has also tried to temper the excesses of capital accumulation.

Next week, I am going to try to go into the recent debates surrounding SOPA and Net Neutrality. These two issues, and the reactions to both, provide a great framework to express how capital can actively seek to limit the liberty of people at the goal of expanding profit.

My goal for next week is to do a review of the first 3 episodes of Ring Ka King for Monday, more pictures and analysis of my Ogre army on Wednesday, and the above mentioned post on SOPA and Net Neutrality on Friday.  If I have time I should also have Smackdown and Raw reviews up as well.

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