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r/CapitalismVSocialism•
namesrue

[Market Socialists] How do you respond to the capitalist "time preference" argument?

It usually goes something like this:

Market socialist: "Workers should own their enterprise by right of their labor. Wage labor is effectively disenfranchisement!"

Capitalist: "Often, entrepreneurs don't actually make money until long after the enterprise has been running. Why would most workers - who need to get paid or starve - want this for themselves? The capitalist has a low time preference for when the returns on his investment come to him, but the worker cares very much when he will be paid - he has a high time preference. I mean, do you expect workers to pay out of their own pockets when the business loses money?"

My own answer to this is that the money to pay workers is there, regardless. It is a business expense whose payment is legally mandated in the status quo. The workers wouldn't pay out of their own pockets to settle losses immediately, as the above reasoning suggests. They would simply go into debt to continue paying themselves in the short term, as capitalists do all the time. I don't see why workers wouldn't function the same in that respect.

Also, if it doesn't suit them, workers not interested in ownership of the enterprise (and thus, it's associated debt) could always easily opt-in to wage labor when absentee-ownership of property is not mandatory and ubiquitous.

But that seems like a wishy-washy, economically illiterate answer. I'm curious what market socialists here (and their capitalist ideological adversaries, of course) have to say about it.

tl;dr Title.

Posted Mar 21, 2018, 1:13 AM UTC

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JabroniBalogna88•

The first premise is false. The money is not always there regardless. That just isn’t true.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

Sorry, what I should have said was "The money to pay the workers is no more there than it otherwise would have been." It seems to me that, to whatever extent the workers cannot pay themselves, the capitalist would also not have been able to pay them.

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naranja115•

So how does anyone become a billionaire? From whence comes the money? Or is it all just borrowing and investing tricks, in which case why allow billionaires at all?

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

So how does anyone become a billionaire?

Through their labor.

From whence comes the money?

Community banks and other credit unions, a la mutualism.

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naranja115•

Nobody does a billion dollars worth of work alone.

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HummingBread•

Businesses still pay workers even while operating at a loss.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

By means of debt or savings, which cooperatives are both capable of.

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JabroniBalogna88•

*some businesses

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specterofsandersismPosadist•

And workers produce value for the capitalist for a third or more of all the hours they're allotted on this Earth, even while the capitalist produces no value. What of it? Your comment precisely reverses the actual order of things: workers always produce value. The capitalist rarely does.

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HeFlipYajust text•

even while the capitalist produces no value.

If you define value as socially necessary labor time then it's true by definition only.

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[deleted]•

[deleted]

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PerfectSocietyPost-Left Anarchist•

Businesses lay off workers when they go into the red to reduce costs. It's the remaining workers that still get paid.

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specterofsandersismPosadist•

Not a market socialist, but time preference is post hoc moralism intended to castigate the poor for not spending their money better.

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Argovan•

Exactly. It could be better be termed time need, or payment urgency. The brinksmanship that the poor workers of many countries are forced to practice, always teetering right on the edge of poverty, is also a great motivator to stay in line and not protest the status quo.

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specterofsandersismPosadist•

Time preference is the breathtakingly obvious assertion that people die in as little as 3 hours without shelter, 3 days without water, and 3 weeks without food. That's it. That's all the liberal geniuses have managed to produce: basic biological facts.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

Neither am I, for the record. Just think it's an interesting question.

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mentatmookie•

Agreed. It's an instance of abstinence theory. It's a justification for the profits harvested by the capitalist. It is not, as apologists so often claim, the source of the profits.

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HeFlipYajust text•

That certainly is one application. Another is an empirical fact which helps us understand why some economic decisions are made. For example, it allows us to explain why one economic agent would take a lower total reward over a higher total reward if the bulk of that reward can be consumed today instead of later. That can be explained has ranking the present over the future in ordinal utility. This is actually a form of risk management as well, because there are risks to future payouts.

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specterofsandersismPosadist•

Another is an empirical fact which helps us understand why some economic decisions are made.

Breathtakingly obvious assertions will of course help you understand the world better. For example, it's difficult to understand the world without understanding the fundamentals of human biology, i.e that we die really fucking quickly without sustenance.

The reason for using complex terminology to describe such basic facts, however, is entirely for the purpose of mystification.

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HeFlipYajust text•

Time preference helps us understand why people address basic sustenance before luxuries, indeed! What is more interesting is it also helps us explain why someone chooses to wear copious quantities of gold jewelry around their neck to maximize their social status today, and the benefits that derive from that (say, greater access to ho's and/or bitches) at the expense of economic security in the future. If the benefits today plus the lack of benefits in the future is less than the lack of benefits today plus the benefits in the future, we would say the person has a strong preference for the present and/or the near future over the distant future. This helps us rationalize what appears to be irrational behavior.

Ya dig?

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metalliskaMutualist-Orange•

is it also helps us explain why someone chooses to wear copious quantities of gold jewelry around their neck to maximize their social status today,

source paper.

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specterofsandersismPosadist•

Time preference helps us understand why people address basic sustenance before luxuries, indeed!

You're calling common sense/basic biological facts "time preference."

What is more interesting is it also helps us explain why someone chooses to wear copious quantities of gold jewelry around their neck to maximize their social status today, and the benefits that derive from that (say, greater access to ho's and/or bitches) at the expense of economic security in the future. If the benefits today plus the lack of benefits in the future is less than the lack of benefits today plus the benefits in the future, we would say the person has a strong preference for the present and/or the near future over the distant future.

Do you not see how circular this is?

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metalliskaMutualist-Orange•

empirical fact

Which one? Someone somewhere invested in a bank?

economic agent

reward consumed

ordinal utility

payouts

All of these are textbook scenarios, not IRL ones.

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HeFlipYajust text•

If you are going to reject my axioms, maybe you could put a little more effort into it. For example, economic agent is a definition of something that actually exists (a discrete decision maker). If you are going to suggest that doesn't exist, I expect more.

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metalliskaMutualist-Orange•

something that actually exists

matter (mătˈər)►

n.
Something that occupies space and can be perceived by one or more senses; a physical body, a physical substance, or the universe as a whole.

So how much space is being taken up?

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RandomCapitalist•

u/heflipya u/soskrood u/adam_marks

Just wanted to make sure you saw this gem, comrades.

I'm actually curious what less pants-on-head totally insane commies like u/deitzien have to say about this.

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specterofsandersismPosadist•

u/diezeiten would almost certainly agree with me

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diezeitenCommunist•

u/RandomCapitalist

I mean, he's right in the sense that these kinds of buzzwords are often used to justify the dynamic between capital, the bourgeoi, and the proletarian. I don't know if I would say that's its primary or conscious purpose though.

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RandomCapitalist•

That wasn't the claim though. That I acknowledge.

The buzzwords "genetic" and "IQ" are used by trailor park incest children to promote bad science and a dumb ideology but that doesn't make the actual concepts of genetics and intelligence an Alt Right confabulation meant to belittle blacks.

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RandomCapitalist•

You're reaching levels of stupidity that shouldn't be possible.

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TheThingsUnsaidLibertarian•

The problem lies in the risk. If you have an enterprise owned by solely by workers, then you have to ask yourself, how will the risk be divided amongst them? (I think it's fair to say the higher each worker has to go into debt the higher the risk that worker assumes.)

Let's say you divide the enterprise how you suggest it would be divided.

workers not interested in ownership of the enterprise (and thus, it's associated debt) could always easily opt-in to wage labor when absentee-ownership of property is not mandatory and ubiquitous.

If some workers don't own a stake in the business, at what point does it come closer to capitalism than socialism? Isn't this similar in a way to buying stock in a company, except in this case the workers are buying stock in their company to keep it afloat? But I'm getting ahead of myself assuming that the most efficient way to divide up the enterprise would be to give portions of it to those invest the most money in it. (Which is actually just capitalism with extra steps)

What if we assumed that a certain number of workers chose not to be a part of the enterprise and don't take on debt, as we did in the last scenario. But this time the remaining owners of the enterprise must spend equal amounts of money to keep the company afloat. Well, some people may be less able to take on that debt, even if they still want to be a part of the enterprise. In other words, they take on more financial risk to them and their possible families, without receiving any extra return. And so we arrive at a similar problem phrased in a different way. A large portion of the workers are not going to want to go into debt for the company because they assume a large amount of risk and the same amount of return as anyone else. In other words, the ones who will own the majority of the company are the ones that are already well off. The rich get richer.

One more scenario. What if each worker went into debt based on their individual financial conditions? So, if you work at the company, the more money you have the more money you put into the company. Now we need to look at what would happen to the labor markets if this occurred. Simply put, small businesses would die, or at least be unable to grow. And they, and those who owned them, would be at constant risk of financial ruin. Think about it. Let's say you're a well off guy in the socialist economy posited in this scenario. Where do you choose to go work, the small company where you will need to spend a large chunk of money to keep afloat, or a large company made up of many workers where you only have to contribute a little bit?

Why would anyone with large money needed to keep small business afloat ever want to work at a small business? And since there is no such thing as investors, there is no way for small businesses to get the cash they desperately need. The only people that work at the small business are impoverished citizens, if they choose to work at all and face the obligation of going into debt to keep a company afloat that will never be able to compete against the larger company. Oh yeah, and I didn't even mention economies of scale. The small business, in most scenarios, would have to be running at a serious loss to ever compete with the large company.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

Thanks for the thoughtful response.

If some workers don't own a stake in the business, at what point does it come closer to capitalism than socialism? Isn't this similar in a way to buying stock in a company, except in this case the workers are buying stock in their company to keep it afloat? But I'm getting ahead of myself assuming that the most efficient way to divide up the enterprise would be to give portions of it to those invest the most money in it. (Which is actually just capitalism with extra steps)

It would not be like capitalism (in the non-Marxist sense), because workers would own the enterprise by right of their labor and use of it. If they wanted to abdicate that, it would truly be of their own volition (as opposed to now, where there is no way to acquire this kind of property now besides purchasing it). Also, wage labor while working with your fellow laborers as owners would be very different than wage labor with owners in absentia.

But this time the remaining owners of the enterprise must spend equal amounts of money to keep the company afloat. Well, some people may be less able to take on that debt, even if they still want to be a part of the enterprise. In other words, they take on more financial risk to them and their possible families, without receiving any extra return.

There is no reason to think that they wouldn't receive any extra return. They would own more of the business and therefore reap more of its profits, as you acknowledge in the next part of the paragraph.

A large portion of the workers are not going to want to go into debt for the company because they assume a large amount of risk and the same amount of return as anyone else. In other words, the ones who will own the majority of the company are the ones that are already well off. The rich get richer.

The rich already get richer. The difference is that now the rich must labor to maintain their wealth, and their coworkers can opt-in to ownership of the enterprise when they can afford to, without having to compete with absent private investors, whenever they want. However your point is a fair one. I would prefer to abolish capital entirely, because it will always lend itself to unegalitarian inequities like this.

What if each worker went into debt based on their individual financial conditions?

Where do you choose to go work, the small company where you will need to spend a large chunk of money to keep afloat, or a large company made up of many workers where you only have to contribute a little bit?

Well they might do it if they are wealthy enough to not worry about it and prefer the work/return/lifestyle of being self-employed over working in a large cooperative. Also seems like it would a high-risk, high-reward scenario, which typically favors the wealthy anyway. What you are talking about is economies of scale, and it applies to the status quo already. Giant corporations already make up most of the economy by GDP; small businesses have been closing their doors against the might of companies like Wal-Mart and Amazon for a long time now.

Since there is no such thing as investors...

Sure there are, in the form of community credit unions. Would there be less money than in for-profit private investment? Probably, particularly with the ridiculous wealth inequality we have at the moment. Would there be "no way for small businesses to get the cash they desperately need"? I'm not so sure, but I admit it is possible. Since I'm not forcibly seizing and redistributing property, I'm not worried about completely crashing the economy. Simply have the state stop enforcing absentee-ownership property norms and people will be free to rectify the situation however they would like.

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metalliskaMutualist-Orange•

They would simply go into debt

Which is the "criminal mastermind" behind this whole "time preference" propaganda to begin with. You're now using Credit Score to make a decision. How did we get here? How did a non-democratic social label weasel its way into who should start or fund a business?

Also, if it doesn't suit them, workers not interested in ownership of the enterprise (and thus, it's associated debt) could always easily opt-in to wage labor when absentee-ownership of property is not mandatory and ubiquitous.

That's not necessarily an option for all cooperatives.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

The difference is that they would go into debt with a community bank of some sort rather than private investors. If they defaulted, the property would be publicly owned. Do you have an alternative?

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metalliskaMutualist-Orange•

community bank of some sort rather than private investors

...which will be bought out by those private investors on wall street...

If they defaulted, the property would be publicly owned.

I don't know what you're describing here, but it is intriguing. Are we talking about a foundational agreement on a cooperative? AFAIK, any incorporating documents have to list capital on its way in. Thus, any default can turn to that capital for auction or repossession, not necessarily donation to public.

I'm unaware of how to structure a document such that default ends up in public hands instead of a bank's.

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

Sorry, I don't think I made myself clear. In this hypothetical, there is no absentee-ownership of property backed by the state. There would be no reason for private investors to buy it because they would have no legally binding claim to ownership of the property unless they were working it.

In such a case, the only investment happening would be from mutualist style credit unions, where the collective that owns the credit union would also own the defaulted property. It could be bought by someone else, but, again, they would only have a legal entitlement to it If they were working it.

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metalliskaMutualist-Orange•

ok this makes more sense; I was hoping you had run into this situation in the wild

1
Fuck1917and1776Class-exclusive socialization for the powerful•

Is Low time Preference is genetic (low iq) or based on behaivor?

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namesrueOPLeft Libertarian | Anarcho-Bokononism•

The implication is usually that the capitalist has enough money to where he doesn't need to worry about being paid immediately.

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slayermentExitarian (crowdfreedom.com)•

This is a very good question. As with most things it's probably a mixture of genetics, environment and simply preference. High time preference isn't always wrong. But if you look at most successful business entrepreneurs you will find they have low time preferences.

If you look at IQ tests higher IQ people have a greater deferral of gratification which coincides with low time preference. I think all of this is related. Check out marshmallow experiment videos on Youtube if you haven't already.

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soskroodWarned you we tried Listen you did not Now skrood we all will be•

Is Low time Preference is genetic (low iq)

I think you switched 'low time preference' and 'high time preference' around in your head.

Low TP = 'willing to wait' (normally associated with higher IQ).

High TP = 'want it now' (normally associated with lower IQ).

or based on behaivor?

Tim preference is not 100% based on behavior - it is based on preference and usually evidenced in behavior. Let me see if I can explain it better.

John Doe is poor and lives paycheck to paycheck. He doesn't go to movies, drives a shitty car, but enjoys his low-paying job. Every week he takes a small portion of his paycheck (20$) and saves it. John Doe is a low time preference person constrained by his economic situation into mostly high time preference decisions.

Jane Doe is also poor and lives paycheck to paycheck. She does go to movies, she pimped out her car with a thumping sound system and rims, and saves nothing. Jane Doe is a high time preference person making high time preference decisions with her resources.

In practice what this means is if John comes into extra money, he will likely do well with it / invest it / and improve his overall situation significantly.

If Jane comes into extra money, she will spend it on stupid shit and end up back in the same situation (paycheck to paycheck) in short order.

This behavior is very common in lottery winners. The lottery is a perfect example as a test of time preference. The odds are terrible, the fun fleeting (seriously - scratching a ticket?), yet people throw money at it. The vast majority of lottery 'winners' end up bankrupt within 5 years. Yes, they have money but their time preference is still the same so they can't help but waste it all on more equally stupid shit. If you regularly play the lottery, you have high time preference (especially if you are poor and it is an impulse buy).

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MissBrainProblemsDirty Dumb Syndie Scum•

In my ideal market socialist (or I suppose market syndicalist) system, worker-owned enterprises would receive funding directly from the union that their industry is apart of, and there would be a bare minimum amount of funding for each enterprise. Each enterprise would, of course, democratically decide how much currency from this funding each worker receives for their labor - along with how to spend the rest of it, but that's neither here nor there. If an enterprise fails to perform its task at a bare minimum level of efficiency, then the enterprise will be closed down by the union, and its workers relocated to another enterprise of their choice. If an enterprising laborer decides that they want to have their hand at starting a new enterprise, then the building, supplies, and - dare I say it? - capital from the old enterprise will be handed over back from the union to the new enterprise, instead.

EDIT: The "funding" or "currency" used in this ideal society would be a static amount distributed by the central directorate to the unions. For clarity.

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BothWaysItGoesStateless, classless, moneyless fascism•

Who will loan them money?

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Illin_Spree•

I would focus on the implications of social ownership of finance capital in market socialism. The reasons to desire social ownership of capital are many and complex, but in short they come down to the manifold negative consequences related to the concentration of wealth that occurs in a capitalist legal/financial schema.

In capitalism as we know it, capitalists monopolize ownership of means of production (and other capital) via their monopoly or near-monopoly over startup capital. If start-up capital is socially owned (yet distributed as locally as possible to democratic credit unions on a per capita basis), then the basis of a capitalist class is undermined. Via their control over 'capital', the people democratically control their own destiny, or at least have more control than they did previously.

The aspect of this I take seriously is that the actual entrepreneurs (who in market socialism would be people working in the enterprise, not investors) might be obliged to take risks (and less rewards/profits than otherwise) to develop a new product or service. And in market socialism, once a new product/service is developed, it would be impossible (or at least not desirable) to prevent other firms/workplaces from copying their techniques. So the challenge is to provide incentives for innovation that are not dependent on perpetual property rights and government enforcement of those rights. But I think there are ways to meet that challenge within the market socialist framework. Guild and craft associations, recognizing merit and dishing out rewards for exceptional work, could be part of that.

See also the discussion in Anarchist Faq.

1