Mises' Jeff Riggenbach shreds the Zeitgeist movement (sort of)

[LTKoblinsky]

WOW, the firm example went right over your head. Your suggesions as alternatives are very unrealistic. There is a reason that worker co-ops are less efficient and less prevalent than private firms. There are reasons to seek out third parties for oversight; it a means of division of labor, allowing for greater productivity from the whole group.

Division of labor is not efficient if you are introducing unnecessary labor that is divided from the rest by introducing a manager. I completely ignored the fact that the way you said people sought out a manager is never how it happens in the real world. The owner of capital or his delegated manager seeks employees to do work that must be done, not the other way around.

Would you please cite a source for your belief that worker co-ops are less efficient? The lack of prevalence can be explained by other aspects of our state-capitalist situation pretty easily, I shouldn't even need to attempt it.

Your complaints about "self-interest" are discussions of fraud. A better conversation to have is what are the market's means of dealing with fraud. Reputation, contract, and common law are all very effective and complimentary means of minimizing fraud in the market.

Of course it's fraud. That's precisely my complaint. But in any privately owned business I've ever been an employee of, they'd become very suspicious if I started asking to see their books, and probably just fire me if I continued to press the issue. Of course, if managers were introduced according to your "workers seeking managers" story, the contract would probably keep that from happening, but that isn't how it ever happens. This reminds me of the social contract, being completely unrealistic so you can have one useful tool to explain something.

Finally, your "full price" theory in no way refuted what I said about services. You make it seem as if labor is the only legitimate means of ownership (and this is where you say, "nu-uh! that's not what I'm saying!") and that there's some inefficiency or immorality that goes on whenever any person provides any value added service for another.

I do believe that labor is the only legitimate means of ownership. You'll have to clarify on the second point. If the next paragraph was intended as such a clarification, see below.

If I paint a friend's house for $300 and he gets $3000 more when he sells it because of the favorable color, excellent craftsmanship, and durable paint, am I being robbed of the "full price" of my work on that good?

No, because the production happened on your end, you gave it to him, and what he does with it after that is his business. Nothing I said meant that you had to consider the entire lifespan of a good from digging raw materials out of the ground to the final highest price it ever can be said to sell for. It can be isolated to steps in production. When I said LTV is more focused on the process of production and STV on the point of transaction, this is the kind of thing I was talking about.

It's late, so I'm only going to address one point; You continue to misunderstand the example of the firm. The example was simply to point out the logic behind the firm. It was a hypothetical to show that participants recognize that their labor within the firm is more efficient and productive than if they had to produce the good themselves. So I can get some sleep, read the quote I posted in the Friedman post and read that chapter on firms, please.

[Zhwazi]

I read the first three paragraphs until I found the relevant portion to be in the section at the end titled "The Puzzle of the Firm". Insufficient evidence. I can raise several objections immediately.

His answer to why we don't have large numbers of individual-person "firms", is that:
"The simplest answer is that contracting can be costly." Note he says "can be" and not "is". Also note that he does not provide a more complicated or alternative answer to why large numbers of individual-person firms are not prevalent, he only elaborates on this one. He also doesn't mention explicitly that the expensive part of contracting is negotiation, though his example is precisely the question of negotiation. He does not claim that firms are more efficient for any other reason beside this one (at least so far as I was able to find in my quick reading of what appeared to be the relevant portions. If I am wrong please correct me and point out where this was.)

The first objection that comes to mind is that yes, it can be, however this says nothing about the actual incidence of it being costly. I believe it is far less often than is implied. Second objection of mine is that negotiation has benefits for those involved (as even in the provided example of negotiating a wage, he says that it hypothetically should happen even though it is expensive), so it should not simply be written off as a cost. Third is that where such negotiation would be common, it would be streamlined. Negotiation is expensive in contexts where negotiation only rarely happens. Where negotiation is commonplace (think bazaars) it happens quickly. Negotiation between two individuals that regularly negotiate would quickly find a regular equilibrium and stay there unless outside forces changed things, and that's perfectly explainable to the other side of the transaction.  Thus the costs of negotiation are overstated.

His solution to expensive negotiation is to have long term contracts. He says:

"The firm is a particular sort of long-term contract, in which the workers agree to do what they are told (within certain limits) for a stated number of hours a day in exchange for a fixed payment."

He then brings up precisely the problem that I mentioned, though he phrases it "who watches the watchers". From the laborer's perspective, nobody. Luckily he doesn't provide some fiction of the workers seeking managers, because that would be silly, so the question of watching the watchers from the bottom doesn't need to be answered for him.

I also want to bring up that the fact that by default these negotiations only rarely happen increases the cost of what negotiation does occur, because if one knows they will not have another opportunity to negotiate for some long period of time, they will negotiate as hard as they can, even if it makes things difficult and expensive, until the costs of continuing negotiations amortized over the duration of the contract outweigh the benefits of a more beneficial agreement.


Regarding your selection, that's his property theory. I have my own property theory. The need for property theory is not something that we disagree about. I'm a propertarian, plain and simple. His property theory seems to disregard how property actually comes to be and asserts that property is logical because lack of property is problematic. I don't disagree with that, but it doesn't answer the important question about why property is the way it is, and that seems to be the major point of disagreement. Mine provides answers to questions like that.

[LTKoblinsky]

On my way out the door to work, but wanted to point out a coupla things I thought of as I was falling asleep.
1) production is a transaction when you trade your service (say flipping burgers) for a fee (a wage).
2) You play semantics games. "can be" and "is" are matters of making a hypothesis and observing the data. The portion you read is the part where he describes the theory.
3) Contracting is expensive. I did the contractor route a few years ago. Bigger paychecks, but more expenses. I was worse off in the long run.

[Zhwazi]

I'm most interested in 3. What were the additional expenses you had that were a result of contracting?

[Cognitive Dissident]

Okay, I finally have enough time to give specific responses. I really much prefer one-on-one real-time dialogue because this post is unweildily big and I imagine nobody is going to read all of it. Forum posts suffer a sharp diseconomy of scale. It is difficult to argue when the same mistakes are being made over and over and I cannot point them out until you are 20 mistakes down the train of logic.

...

This is exactly the hot air vortex I expected, and why I don't expect to be "playing" any longer.  Just a few choice comments, though.

Just because you cannot see the order from 20,000 feet, doesn't mean the order does not exist.  When you come down to the level of the actual endeavors and the interaction, the order is, in fact, there--not only in some places, but in the places where people practice rational self interest, rather than politics of the state and pure hedonism.

To the extent that I correlate chaos with tyranny, it's because tyranny causes chaos, and to the extent that I correlate order with voluntary action, it's that voluntary action is in harmony with order.

At one point, you belittle me for an editing error, in which the words "that is" remain in what should have been "As for Riggenbach, his point is salient."  I thought that was obvious.  As for your reply, and your feigned confusion--there was an entire paragraph in explanation of exactly what I meant.  You won no "superiority points" you may have imagined.

Speaking of "superiority points" your straw market "libertopia," misses the mark.  Not only haven't I suggested any "libertopias," (that's the stuff of collectivism), the extent to which markets have been free, voluntary and open has corresponded to the extent to which they have been the most successful endeavors in the history of mankind.  To deny that is to be incredibly obtuse and/or disingenuous.

You pretended not to understand my point about the use of hierarchies under property ownership, as though it had somehow been poorly written.  Maybe I can put it into first grade english for you: hierarchies are in use when there is a single property owner, and work better than collectivism.  However, hierarchies don't work optimally even in that case, without allowance for individual decision making at the lower levels.  Under collectivism this nuance is not even possible.

The "red part" you highlighted is a part of a sentence and another sentence following it.  Those were parts of a paragraph.  The previous paragraphs you pretended were poorly written, and the enclosing paragraph, explained very well what "evidence" I had: the corporation, in the sense of the for-profit endeavor and in the sense of the government, municipal and state corporation.  Those are my evidence.  They don't work, but to the extent that they do, those that do are for-profit and the owners allow greater autonomy at the lowest levels.

You pretended not to see the importance of the attention to detail a property owner can give to a small plot.  The point there was that in avoiding the vain attempt to tightly control a giant fiefdom from above, one can better manage it--either by granting ownership of small plots to others through sale, or by employing managers who are responsible for optimizing production.  I thought the reason why was obvious--because the control is more local, and there is a stakeholder for each plot.

Your insistence that "order and chaos can both be used for control" is absurd, and at one point, you make a claim that one is not the opposite of the other.  I give to you the definition of "chaos: complete disorder and confusion."  Neither order nor control is implied here.  Both are, rather, contradicted.  Something which is in a state of confusion is both out of order and out of control.  You go on to claim that I went on an "irrelevant diatribe" and again took a snipe at grammar and diction when there was no issue.  

You seem to be the one with the grammar or diction issues, as evidenced immediately above.  This is compounded by the failure to construct a claim which makes sense, itself: "If you think he was right, then explain why you think he was right, instead of going off on an irrelevant diatribe about communism immediately after saying what I can only assume in spite of grammar and a word that has no meaning in the context in which it is used means that you believe he is right, and would be easily misled into believing you were trying to support the first sentence of a paragraph with following sentences instead of creating a new paragraph when you are starting a new idea."  This jumbled sentence-paragraph seems to erroneously and simultaneously pick on my grammar and diction while additionally claiming I would be mislead by my own words!  What?  English is happen to comprehend here?  (Yes, that's a joke.)

At this point, I'll simply stop, because it was clear to me in previous bouts with your asininity that you are very proud of your senseless blather while very critical of the expression of others, and for no apparent reason.  You use straw man arguments and other side-tracking techniques to derail the discussion in an attempt to appear superior to others.  You nit-pick on typos while yourself constructing massive and incoherent paragraph-sentences.  I doubt you even mean to constructively support your "ideas" but rather to troll a BBS full of individuals who have actually tried to apply logic to their ideals.

This is why I do not intend to continue humoring your apparent attempts at trolling.  Thanks for fucking up the thread.

I initially locked the thread after posting this, because I don't want to continually see this thread, which I started and has been trolled into the ground, as "new replies to your posts," but I decided that would be unfair to a couple other individuals who were discussing in good faith, so it is again unlocked.  My intent is never again to waste time attempting to discuss anything with you (that doesn't mean I won't discuss with others.)

[Zhwazi]

Fine, I don't plan to force you to. As I said though, I much prefer one-on-one realtime discussion. The forum format breeds antagony.

[LTKoblinsky]

I just got the chance to read your entire critique (sorry to interrupt, WTFK).
1) Property: that excerpt I pasted into the forum was from the introduction of his book. If you want to critique his theory for not being more detailed and addressing every problem, read the rest of the book first.
2) Negotiation: The whole damn point summarized is that less negotiation and more work is the most productive and beneficial system for all involved in the transaction.(yes, labor is a transaction)

3)and this:

it was clear to me in previous bouts with your asininity that you are very proud of your senseless blather while very critical of the expression of others, and for no apparent reason.  You use straw man arguments and other side-tracking techniques to derail the discussion in an attempt to appear superior to others.  You nit-pick on typos while yourself constructing massive and incoherent paragraph-sentences.  I doubt you even mean to constructively support your "ideas" but rather to troll a BBS full of individuals who have actually tried to apply logic to their ideals.

[Cognitive Dissident]

I just got the chance to read your entire critique (sorry to interrupt, WTFK).

Naw, no problem; trying to make it clear I wasn't pissed at anyone else, etc.

[Zhwazi]

1) Property: that excerpt I pasted into the forum was from the introduction of his book. If you want to critique his theory for not being more detailed and addressing every problem, read the rest of the book first.

I have a lot of books on my list to read, this one is not a priority. Can you find the place where he actually explains his property theory so I can look at that?

2) Negotiation: The whole damn point summarized is that less negotiation and more work is the most productive and beneficial system for all involved in the transaction.(yes, labor is a transaction)

I know that that is the claim. I was asking you personally. How much bigger do you suspect your paychecks were (proportionally, in percent for instance) and how much time do you believe you were spending negotiating (also in percent if possible)?

[LTKoblinsky]

1) Property: that excerpt I pasted into the forum was from the introduction of his book. If you want to critique his theory for not being more detailed and addressing every problem, read the rest of the book first.

I have a lot of books on my list to read, this one is not a priority. Can you find the place where he actually explains his property theory so I can look at that?

2) Negotiation: The whole damn point summarized is that less negotiation and more work is the most productive and beneficial system for all involved in the transaction.(yes, labor is a transaction)

I know that that is the claim. I was asking you personally. How much bigger do you suspect your paychecks were (proportionally, in percent for instance) and how much time do you believe you were spending negotiating (also in percent if possible)?

The book isn't that long and if you want to understand the property theory, you can't pull bits and pieces. It must be read in context as a whole.  Its not the damn bible. Two, the success of any system in your eyes is SOLELY determined on the size of the paycheck a "worker" takes home each week. That's extremely narrow. Buying power, growth, standar of living, and productivity are other important factors. My job, btw, is to negotiate buying and selling prices between my firm and our suppliers and customers (among other things). It takes A LOT of timeand is a great inconvenience. Whenever I lock in a price or secure a long term contract, my company is better off. The same goes for individuals. sales based income can fluctuate greatly and negotiating for the capital and means of production is very coswtly. Lunch break is over.

[Zhwazi]

I'll look at it later then. Also I don't understand why there cannot be long-term contracts between independent contractors without them forming a firm.

[LTKoblinsky]

I'll look at it later then. Also I don't understand why there cannot be long-term contracts between independent contractors without them forming a firm.

That doesn't even make sense? You're saying that individuals can't contract with each other? It happens. This in no way refutes the productivity or benefits created by entrepreneurs pooling resources and paying others to perform services on them.

[Zhwazi]

No, I'm saying "contracting is more efficient" does not lead to the conclusion of "firms are most efficient" directly, because contracting individually gets the supposed benefits of a firm (not constantly negotiating) and the supposed benefits of not-a-firm (higher incomes for workers).

[LTKoblinsky]

No, I'm saying "contracting is more efficient" does not lead to the conclusion of "firms are most efficient" directly, because contracting individually gets the supposed benefits of a firm (not constantly negotiating) and the supposed benefits of not-a-firm (higher incomes for workers).

OK, and business partners aren't a firm? They'll never want to hire anybody? New workers would have to buy their way into the company or do they get a free ride enjoying what others have built? They'll have meetings and votes every time an important business decision comes up? What if the jar fillers decide they want a higher price from the jar cappers and bottleneck the whole operation?

[Zhwazi]

No, I'm saying "contracting is more efficient" does not lead to the conclusion of "firms are most efficient" directly, because contracting individually gets the supposed benefits of a firm (not constantly negotiating) and the supposed benefits of not-a-firm (higher incomes for workers).

OK, and business partners aren't a firm?

It depends what they call themselves and how they feel like managing their finances.

They'll never want to hire anybody?

More that few people will want to work for them as employees.

New workers would have to buy their way into the company or do they get a free ride enjoying what others have built?

They would probably earn a wage until they could buy their way in. Many cooperatively-owned businesses are currently run on that model, and people that are new on the job market or have no capital of their own would be doing this. However, decisions would still be being made by these wage-only workers' colleagues, who will think of them less as costs to be minimized and more as the people that they are, so wages would be fairer.

They'll have meetings and votes every time an important business decision comes up?

Probably dedicate certain decisions to certain people, but for major broad-effect decisions, probably, yes.

What if the jar fillers decide they want a higher price from the jar cappers and bottleneck the whole operation?

There's already a widely-accepted solution to the prisoner's dilemma, and that's for both sides to cooperate.