Some thoughts on economics

Greetings everyone, today I will be discussing my general thoughts on economics, this post also might raise some controversies since a lot of my economic stances are generally libertarian.

When it comes to organizing the economy I generally follow early Syndicalist systems of organization owing much to Proudhon's ideas of economic federalism, where freely associating Individuals operating within cooperative enterprises where every producer has autonomy and a voice, these cooperatives would form up occupational federations to organize their sector. 

I find this system to be superior to other, more mainstream 3rd Positionist systems which are mainly based around class collaboration and rugged trade unionism which even at it best keeps the division of labour (i.e surplus value extraction). 

Another thing is that I also believe in markets, true markets without state intervention which enforces capitalism. 

When the state intervenes in the free market, it rarely does to protect small producers or consumer, it establishes artificial scarcities such as rent and monopoly profits, land being a non reproducible good, is hoarded by large land owners and the state which collaborate to preserve their power, the most obvious example of this has to be infrastructure, instead of user fees funding infrastructure the state takes its position, discouraging infrastructure builders from going in accordance to consumer interests.

As for profits, costs rarely play a role in the price of most commodities, this is of course to monopolies existing, an example of this would be how Nike can sell a shoe for a more than a hundred dollars when it's production costs are a fraction of that, leading to huge profits for them and a huge burden on the consumer. Those are the most important problems of markets in capitalist society.

Under a truly free market prices would be tied to production costs and the labour put into them, when someone invents something and markets he would (at first) receive a huge profit for his innovation, when competitors adopt said innovation these profits would be driven down and down untill they reach zero, made possible by the decrease in the cost of production. Carson magnificently explained this in one of his blogposts.

Now let's go to another important subject in economics, taxation; 

Taxation in general is a burden on the economy, except in a few circumstances such as when it's used as a deflationary method in an economy with huge amounts of printing (such as that of the United States), in almost every other situation it just steals money from the producer and from the consumer, EXCEPT on the very special situation of land taxation, which encourages innovation, this is the general idea of Georgism/Geoism.

Land being a non reproducible good has many special effect on the economy depending on how it's treated.

Under say a progressive tax, when you tax a labourer who worked hard for his wage you will be incentivizing to work less hence be less productive, when you tax land you'll be incentivizing the land owner to make better use of said land, be it through a more creative use of it, for example think of a building with more rooms extending out of it, or of a building with more stories in it, or through using the land to create value in itself.

One  common objection aganist the land value tax is that landlords can push the costs on the tenants, but there are two main responses against it; 

1. The price effect of taxation is usually caused by a change of supply, since land is inelastic of supply (i.e there's always the same amount of land) there's no change in supply, hence no change in the price.

2. The land value tax in Georgism is supposed to replace all taxes, hence, its second name, the single tax, which implies tenants (and landowners) will have more money at hand than what they had before the tax, thus more ability to pay.

You can make an objection towards the second point that pushing the costs on the tenants is still possible, but does it really happen though? I'll use the example of a trolley and an elevator, you pay money to use the trolley, but not the elevator, you may think well oh it's because the trolley is big and expensive while the elevator isn't as expensive, but the elevator still costs a lot, and also requires maintenance, electricity, etc. The main reason one costs money to use while the other doesn't is because the second one leads to a value, the elevator leads to a room where you might pay for something and hence make up for the costs of the elevator while the trolley doesn't lead to a destination (in most cases) which is profitable to the trolley owner.

Now towards trade.

In the 3rd Positionist community, free trade is not really looked at with any amount of affinity, this is the result of economic 'nationalism' being a very common position in the community, I will challenge these ideas in the following paragraphs.

Nationalism, does not simply mean a rejection of all other peoples and an upheaval of yours, neither is internationalism simply the upheaval of the metaphysical conception of 'humanity', Fascists have pointed towards this before such as the Patriotic Socialist wordpress, although unfortunately their post on Nationalism was deleted.

Nationalism is the principle that all people are sovereign, all people are different, hence have different needs, wants, functions (with emphasis on the functions), etc, this in no way goes aganist the principle of internationalism, in fact nationalism is the precursor of internationalism, you can't have the "inter-" without the "national", hence why Fascists should not reject free trade on the abstract basis of 'economic nationalism'.

Free trade is almost objectively good both theoretically and empirically, Ricardo showed us, centuries ago through his theory of comparative advantage and his law of association the utility of free trade and the social division of labour (not dividing labour between what goes to the producer and the overlord as mentioned before, but dividing commodity production into different stages) 

"What happens when A produces both things better than B? David Ricardo answered this question when he expounded his law of association over 150 years ago. This law is best illustrated by a concrete example. Let us say that Jones can produce one pair of shoes in 3 hours compared to Smith’s 5 hours. Also let us say that Jones can produce one bushel of wheat in 2 hours compared to Smith’s 4 hours (cf. Table I). If each man is to work 120 hours, what is the most advantageous way of dividing up the work? Table II shows three cases: the two extremes where one man does only one job while the other man does the other, and the middle road where each man divides his time equally between jobs. It is clear from Table III that it is to the advantage of both men that the most productive man should devote ALL of his energies to the job which he does best (relative to the other) while the least productive man concentrates his energies on the other job (case 3). It is interesting to note that in the reverse situation (case 1) – which is also the least productive case – the drop in productivity is only 6% for Jones (the best worker), while for Smith it’s a whopping 11%. So the division of labour, while helping both men, tends to help the least productive worker more than his more efficient workmate – a fact which opponents of this idea should note well."

"These figures show something which is pretty obvious intuitively. A skilled surgeon, after many years invested in schooling, internship, practice, etc., may find his time more productively spent in actually performing operations than in washing his surgical instruments in preparation for these operations. It would seem natural, then, for him to hire a medical student (say for 1 pound per hour) to do the washing up job while he does the operating (for say 3 pounds per hour). Even if the surgeon could wash his own instruments twice as fast as the student, this division of labour would be profitable for all concerned."

As for comparative advantage, it goes under the same basic essential idea, it states that 2 countries producing 2 different commodities but one of them produces both commodities better than the other, should focus on producing what they're the best at, although Ricardo's theories have been challenged by increasing the variables, but this has been counterattacked by neo-Ricardian theorists, 

"if free trade harmed producers more than it benefits consumers, the former could outcompete their foreign competitors by bribing domestic consumers with better prices and still gain compared to ceding the market to foreign producers - and protectionism would not be necessary. When domestic producers are unable to compensate consumers for not patronizing foreign suppliers, it means that free trade benefits consumers more than it harms producers."²

Another attack aganist free trade is that it destroys jobs, but this argument has many holes in it, first, the availability of jobs is a symptom, not a cause of prosperity, if the latter was true then banning agricultural technology would generate much wealth (RETVRN TO FEVDALISM!!!!)

Indeed technology is a larger cause of job destruction, at least in the United States, the number of jobs in American manufacturing dropped from its peak of 19 million in 1979 to 12 million toda (there was also an increase in output by 40% in the last 20 years)³ y, it has been estimated that free trade accounts for only 13% of that and at that same time, employment in general increased from 99 to 151 million today, a net creation of 52 million jobs, and GDP per capita (although not directly a measurement of wellbeing of income but a decent substitute for it) increased by 79%.⁴

Another objection is that employment is mainly driven by population growth, his own spending creates jobs elsewhere in the economy, another reason to support free trade is that it's a good tool when prices are high domestically while goods are produced in larger and better quantities in other countries. 

That's all comrades, I hope you enjoyed this essay on economics, take care. 

Ave.

FURTHER READING/BIBLOGRAPHY

Proudhon and Economic Federalism by WH George,. Retrieved on 4/5/2022 from jstor.org

Brown, Tom. Trade Unionism or Syndicalism? Retrieved on 4/5/2022 from theanarchistlibrary.org

Who Owns the Benefit? The Free Market as Full Communism by Kevin Carson, Retrieved on 4/5/2022 from theanarchistlibrary.org

The Distorting Effects of Transportation Subsidies by Kevin Carson, Retrieved on 4/5/2022 from fee.org

The Economics Behind Sneakers By Lisa Goetz, Retrieved on 4/5/2022 from investopedia.com

Modern Money Theory: Using Authoritarians’ Tools Against Them by H.B. Dillon Williams, Retrieved on 4/5/2022 from c4ss.org

How Georgism can fix the broken tax system by Nikolaj and Simon Talks, on youtube

The simple reason why land values taxes DO NOT cause higher rental prices by Nikolaj and Simon Talks, on youtube

On having a correct understanding of nationalism by Kim Jong Il, Retrieved on 4/5/2022 from archive.org

The Neo-Ricardian Trade Theory and the New Theory of International Values by Akira Takamasu, Retrieved on 4/5/2022 from jsie.jp

A Critique of Communism and The Individualist Alternative by Ken Knudson, Retrieved on 4/5/2022 from theanarchistlibrary.org

Free Trade Isn't Killing Jobs by Pierre Lemieux, Retrieved on 4/5/2022 from fee.org

Free Trade Is the Key to Economic Growth by Baruti Libre Kafele, Retrieved on 4/5/2022 from fee.org

CITATIONS

1. p 36-39, A Critique of Communism and The Individualist Alternative

2. Free Trade Isn't Killing Jobs by Pierre Lemieux 

3. Free Trade Is the Key to Economic Growth by Baruti Libre Kafele

4. Free Trade Isn't Killing Jobs