Exploiting the untangle angle
By Daniel M. Ryan
web posted May 19, 2008
There's a reason why people who are quick with the books tend to be looked down upon as ‘impractical'. Everyday life hands out quite a few tests that the scholar type doesn't exactly pass with flying colours. Usually, these life challenges are outside of the intellectual realm, but occasionally one pops up that's central to the life of the mind.
Take the capitalism's-decay model of Karl Marx, for instance. An intellectual like me takes years to figure out what someone with feet closer to ground could spot on first reading: "What about all those people who pick themselves up after going broke? The Communist Manifesto implies they never do, but I've read about lots of people who've done so. If the fallers and re-risers cancel themselves out over time, then there's no reason why the capitalist system can't go on forever."
Anyone who said this in a classroom of smart, high-achieving students, whose "fear of falling" is tied to admission to elite universities, would be the centre of some very bug-eyed attention. One of the downsides of youth, after all, is that the ability to jump out of your own personal paradigm isn't that developed. In order to have nailed this one in a classroom, such a youth would have to be somewhat out of the high-achieving norm.
The same thing goes for the Marxian proposition that "capital" exploits "labour" in a free economy. It takes an unusually quick-witted youth to see that this proposition is roughly equivalent to, "in a free economy, producers will be exploited by consumers through the power of demand." Labourers, after all, supply labour in exchange for wages or salaries; employers are demanders of labour services.
As many of you know, there's an answer to any question that points out the Marxian labour-market scissors seem to be short a blade. Workers, it is claimed, have no reserves to fall back on. Thus, they can be starved out. Employers, on the other hand, have lotsa cash in the till so they can wait a confrontation out. (The lad or lass who can see though the latter part of this one is likely to have some kind of corporate or corporate-analysis experience, which makes it easy for him to be shown the door in spirit. The person who sees through the former part is likely to be scoffed at, or euchred out through misdirection.) The backup explanation ends with, "Once the workers are hungry, they'll work for anything."
Then, the horror stories emerge. In a free economy, wages would go down to paper-route wages. Piece-work rates would plummet to the point where, as of today, only a social-assistance recipient with nothing else to do would take them. Only there wouldn't be any social assistance, so the starving workers would have to take them or leave it. Since private charity is always assumed away by the Marxian system, except as a spontaneous groping towards the socialist ideal, it is asserted that the masses would eventually be drummed down to subsistence level and even below in many cases.
This line of reasoning is one that blindsides one particular kind of person: the go-getter. Someone whose resourcefulness bubbles up in a crisis, and who meets penury with action. Someone who find it obvious that a starving man will do anything to lessen his hunger.
Someone who would be blown away by the more common-sensical retort: "Well, why doesn't the worker just say, "I'm starving anyway, so why should I prolong the agony? I need that tradesman's wages like I need a hole in the head." Life's bad enough without making it worse.' And why wouldn't the guys whose wages haven't been hammered down help him out a little if he's really starving? It can be done through food banks."
Questions like these, which pick away at the Marxian system, tend to only reinforce it in the eyes of its believers. That's because Marxism is an unusual combination of theoretical neatness, common sense, and monomania. The first two, when put together, offer a potent seduction to the sheltered bookworm: the promise of learning about the "real world" without being knocked about by it. (Marx is far from being a monopolist in the area: others find a similar combination in, say, the fiction of Robert A. Heinlein.) This part of the package is what Marxists are grateful to Marx for. In this sense, they're a lot like Marx's fan club. The last part – the monomania – keeps them Marxists.
When it's stripped aside, by dropping the assumption that all self-protective and self-improving means that workers come up with in a free economy are inevitably steps to socialism (as defined in the Marxian sense), the common-sense element becomes manifest. It's close to obvious that workers would have a common interest in supply management, so as to get the most they can for their labour; that's merely acting like any other economic agent in a free economy. Similarly, their habit of being suspicious of the "capitalist" or the "boss" is not incompatible with a shrewd negotiating stance. In this sense, a worker who finds nothing but evil in "bosses," while yearning to open up a shop of his own, is far from hypocritical. Anyone with negotiating experience knows that strong words are flung around cavalierly in the negotiating room, and mean little when negotiations end. To look at the other side, who's to say that japes at the ‘lazy workers' are more than just spilled-over negotiating-room talk, aimed at lowering the disutility of labour and thus wages?
The same thing goes with mutual-assistance societies, which include (but are not confined to) labour unions. After all, one of the essential customs of laissez-faire capitalism is, "if you don't like what's offered, set up an alternative on your own." A lot of the mutual-assistance mechanisms set up by the "workers" were precisely that. There's no rule that says these institutions have to be profit-seeking. Nonprofit, loss-avoiding corporations exist too.
Of course, theory often gets tangled up with history. The history of labour relations is entangled with deviations from laissez-faire's non-aggression principle on both sides, largely due to the working classes being lumped in with the "unruly mob" by older traditions. As a result, theoretical analysts of the labour markets bump into heated words and emotionally-charged anecdotes along the way. What else would you expect from the apparently contradictory nature of a system built upon resolution of conflicts of interests through bargaining? Where a lot of heat gets put into negotiating ploys?
Some of those slogans might take the skill of an anthropologist to untangle. Take, for example, "freedom to starve." To my eyes, that looks like a warning cry sent from European peasant to European peasant when the good ol' U.S. of A. (and Canada) offered "Free Land in a Free Nation!" to foreign homesteaders. "Freedom to starve" sounds to me like a disguised warning that the "free land" was also unimproved land, and wouldn't produce a peck of corn until a lot of labour had been sunk into it. This interpretation, of course, is only my opinion on the matter.
Solider ground exists, though, to conclude that those horror stories about below-subsistence wages come from a certain part of town: places inhabited by those subsisting on private charity or government-provided social assistance. Intermixed pride aside, the main reason why a man would scoff at a paper-boy wage is because he can't pay his bills on it. The same thing goes for women and babysitters' wages. Since neither can, there's no reason at all why they would take up any such offer…
…unless their food and rent is guaranteed through the help of a third party, such as the community chest. Then, they can take the dollar-an-hour job, if only for the sake of saying that they work too.
In fact, when examined closely, the most likely place where said "exploitation" can be found is in the welfare circuit. Guaranteed subsistence, and shame in being a recipient of charity, lowers the disutility of labour considerably. The supposed exploitation that would be rife in the free market looks a lot like the welfare trap, where ambition is destroyed through a lethal combination of charity-recipient guilt and contentment with a subsistence-level lot. It could be called the "workhouse trap," or the "doing something for the sake of doing something" trap.
The tragedy of this circumstance is that one man's exploitation is another man's work-therapy. And vice-versa. 
Daniel M. Ryan is a regular columnist for LewRockwell.com, and has an undamaged mail address here.