A Challenge for Moorobot

[BluffTHIS!]

I notice you didn't answer the question about Victorian Britain in the year 1830 either.

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I notice you didn't answer the question about Victorian Britain in the year 1830 either.

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I think that is a very good question that deserves an answer.

[Borodog]

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I notice you didn't answer the question about Victorian Britain in the year 1830 either.

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I think that is a very good question that deserves an answer.

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It's a fine question. The problem is that I have answered it, explicitly, specifically for BluffTHIS! in the past. But for you, M^6, I will do so again.

The relatively deplorable working conditions of the early industrial revolution are not a result of evil capitalists enslaving workers to exploit them and leave them in poverty. Workers flocked to the cities to work in such horrid conditions because those conditions were better than the alternative, which was brutal subsistence farming. "Subsistence" means literally barely enough to survive, which meant quite often, people didn't. And once they got to the cities, they worked in those factories again by choice, because it was better than the alternatives, which were nasty short brutal lives of crime and prostitution.

Furthermore the fact that wages were low was not a result of exploitative capitalists, but the restrictions of the capital structure at the time. Accumulated capital is required to lengthen production processes and increase productivity. This underlies a few phenomena. One, accumulated capital forms the basis for the demand for labor, because labor is required to employ capital goods in production processes. This creates the phenomenon of wages. Wages would not exist at all if it weren't for those dirty capitalists. Second, increases in productivity underly the increase of wages over time. Capitalists, in order to earn more profit, seek to increase productivity. They do this in two ways: they employ more capital, which means they must also employ more labor, which increases the demand for labor, which drives up its market prices (wages); secondly they seek to make each laborer more productive, through training, education, cleaner working environments, etc. Laborers also become more productive all on their own, simply through experience as their skills become honed over time. As their productivity increases, they become more valuable on the labor market, and their employers must increase their wages lest they lose those workers to employers who value them correctly. Hence not only are self-interested capitalists responsible for the entire phenomenon of wages (and their deduction from sales revenues, which were originally entirely profit), they are also responsible for real increases in wages (i.e. increases relative to the money supply). There is no possible way for wages to increase other than through increased productivity.

This sheds light on the apparently deplorable working conditions of the early industrial revolution. It was early. What does that mean? It means that productivity was necessarily low. The bulk of modern capital stock did not exist yet, hence the demand for labor was correspondingly low. Almost two centuries of producivity-increasing techniques had yet to be invented. Just think of Henry Ford and his assembly line. He was able to literally double the wages of his workers over night. Low relative productivity leads to low relative wages. Period. End of story. The world in 1830 was a different world than is the world of modern America, and the third world is a different world than is modern America. The absence of accumulated capital in each case means that wages simply cannot be as high as some people arbitrarily want it to be.

Redistributing from the producers makes the problem worse, because the taxation inhibits the capital formation process, which lowers the demand for labor. Meanwhile it disincentivizes work, the latter imlying that workers are inhibited in gaining skills and increasing their productivity and market value, thus limiting the honest wages they can earn.

Minimum wage laws make the problem worse, since by making the minimum cost of labor some arbitrary value like $6/hour, all those workers (voluntarily) providing a value of $5.99/hour or less are thrown out of work. They cannot gain skills, or an employment history, and are thrown into poverty and onto the dole, which again, disincentivizes work.

In fact the working conditions of the early industrial revolution in Great Britain were exacerbated by the Poor Laws, which were supposed to help them.

History is littered with "reform movements" which were simply thinly veiled union-backed attempts to limit competition, i.e. to elevate their own wages by denying the poor, or women, or children, or blacks, or Irish, or non-union members the right to work, thus limiting competition. Of course these measures only helped the unions at the expense of consumers (in the form of higher prices and fewer goods and services at lower quality, making everyone poorer) and of course, the poor, the women, the children, the blacks, the Irish, non-union members, etc. who are denied employment and hence wages, throwing them into lives of poverty, crime, prostitution, etc.

These organizations easily co-opted the social outrage of the economically ignorant (mostly inherited dilletants and aristocracy) who had no idea that the policies they advocated actually make things *worse* for the people they explicitly claim to want to help.

But hey, don't let the facts or human nature get in the way of how you feel the world ought to work.

[BluffTHIS!]

So what have we learned from Boro's response:

1) AC only produces the benefits outlined in the book in question in post-industrial revolution societies. I.E., it is incapable of working in low technology labor intensive economies. I'm sure he is willing to concede this point though in order to have an argument as to why AC was not responsible for the economic and social conditions of the lower rungs and majority of society in 1830.

2) That while he rightly says that the earliest reform laws like the Poor Laws were in fact detrimental, he neglects to mention that the provisions of those draconian laws were effectively written/modified by Benthamite/Malthusian influenced AC'ers. And he doesn't address the better and more effective reform laws of the rest of the century. Furthermore, he neglects to explain how despite the increasing reform measures of the later 1800s in Victorian Britain, the industrial revolution was not stunted.

3) Boro never addresses the possibility, likelihood and provable fact of oligarchical collusion by the monied capital owning elite to artifically keep wages below market demand, and to inhibit capital formation and upward mobility of the lower segments of society.

To see something similar in today's economy, one only has to look at the throttling effect of mostly unregulated predatory lending that has the effect of enslaving a statistically significant portion of society in credit card debt. It is very true that it is their own fault for taking such credit and misusing it, but the fact that it happens shows the need for some people to be protetcted from themselves against the rapacious greed of others.

In fact it is my contention, and Boro hasn't rebutted this, that as laziness is the reason pure socialism fails, greed is the reason pure AC fails. Even if it could be proved that they had a greater EV through investing capital in technological innovation that would produce higher paying jobs, though fewer of them per industry perhaps, the capital cheap road with thus minimal risk is labor intensive industries with poor working conditions. And once the economic oligarchy colludes to prevent not only collective bargaining, but also any laws aimed at ameliorating those conditions, then innovation is effectively stifled.

I mean why take a risk of investing in technology that may or may not work, and thus has a potential loss but which would require only say 4 laborers to produce with the aid of technology what 14 formerly did, when by oligarchical collusion and lack of incentive to invest, a labor intensive industry is always assured via poor economic conditions of the lower class and their dire needs, a permanent and unending source of cheap labor?

4) His arguments against the deleterious effects of mininum wage laws conveniently ignore that when the price of labor is higher albeit through artificial governmental intrusion in the market, then capital has a greater incentive to innovate technologically. While it is true such laws and backing of unions can be taken too far, it is not true that any such intervention at all is provably bad for the economy.

And this brings up a critical point. That the arguments of AC must be matched against those of a more limited socialism/limited capitalism, and not against those of a hyper socialist system which is sure to fail.

[Riddick]

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1) AC only produces the benefits outlined in the book in question in post-industrial revolution societies.

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I think Boro has explained this thoroughly in his monarchy post.

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2) That while he rightly says that the earliest reform laws like the Poor Laws were in fact detrimental, he neglects to mention that the provisions of those draconian laws were effectively written/modified by Benthamite/Malthusian influenced AC'ers.

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I don't believe there were ACers until the mid 20th century.

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3) Boro never addresses the possibility, likelihood and provable fact of oligarchical collusion by the monied capital owning elite to artifically keep wages below market demand, and to inhibit capital formation and upward mobility of the lower segments of society.

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How can this collusion occur without government protection?

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4) His arguments against the deleterious effects of mininum wage laws conveniently ignore that when the price of labor is higher albeit through artificial governmental intrusion in the market, then capital has a greater incentive to innovate technologically .

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I don't really understand this sentence, particularly the bolded part.

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While it is true such laws and backing of unions can be taken too far, it is not true that any such intervention at all is provably bad for the economy.


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Arguing for government intervention implicates the failure of the market. Point out a market failure and I will point out a government failure.

Thank you for the explanation, Borodog. It was quite interesting and somerwhat informative to me.

Not sure what inspired you to append the following, though;-)

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But hey, don't let the facts or human nature get in the way of how you feel the world ought to work.


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[Borodog]

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So what have we learned from Boro's response:

1) AC only produces the benefits outlined in the book in question in post-industrial revolution societies. I.E., it is incapable of working in low technology labor intensive economies. I'm sure he is willing to concede this point though in order to have an argument as to why AC was not responsible for the economic and social conditions of the lower rungs and majority of society in 1830.

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Wrong. Capitalism is a fundamental emergent phenomenon of human nature under certain cultural conditions. The fact that the accumulated capital stock was lower in the past than it currently is, and hence so was productivity, and hence so were wages, and hence so were standards of living is merely an obvious consequence.

Further, I am at a loss to understand why you think 1830s England was either anarchic nor capitalist, must less anarchocapitalist. England was heavily mercantilist (what exactly do you think prompted the American Revolution?), and had a very interventionist state (for the time; of course it was mild compared to the modern American state).

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2) That while he rightly says that the earliest reform laws like the Poor Laws were in fact detrimental, he neglects to mention that the provisions of those draconian laws were effectively written/modified by Benthamite/Malthusian influenced AC'ers.

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Wrong. This is patently ridiculous. Need I remind you what the "A" in "AC" stands for?

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And he doesn't address the better and more effective reform laws of the rest of the century.

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Like what? The only progress they ever made was the outright repeal of many of the Poor Laws, not their "reform", and that progress was wiped out later in the 19th and early 20th centuries when the same socialist ideas returned with a vengeance.

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Furthermore, he neglects to explain how despite the increasing reform measures of the later 1800s in Victorian Britain, the industrial revolution was not stunted.

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How do you know it was not stunted? Of course, you don't. You have no inkling of understanding of economic theory to inform your understanding of historical events. Standards of living are much higher now than they were in the 19th century. So are taxes. So is regulation. So is protectionism. So are corporate and individual welfare. Are standards of living higher because of higher taxes, increased regulation, protectionism, and welfare handouts, or inspite of them? You don't know, and of course you can't know, because you refuse to inform your knowledge of historical facts with economic theory. You see a corelation and assume causation. This is a straightforward logical fallacy.

Simple economic theory like that in my last post demonstrates that increased standards of living have come about due to capitalism, or as much of it is allowed, despite all of these interventions, which can only inhibit savings, capital formation, increases in productivity and wages. Increases in the general standard of living would have been FAR GREATER in the absence of these interventions. Yet you make no attempt WHATSOEVER to even ADDRESS theory. You wave your hands about. You refuse to tell me where the premises or the logic go wrong, because of course they don't.

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3) Boro never addresses the possibility, likelihood and provable fact of oligarchical collusion by the monied capital owning elite to artifically keep wages below market demand, and to inhibit capital formation and upward mobility of the lower segments of society.

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Bull [censored]. It's been addressed ad nauseum. "oligarchical collusion by the monied capital owning elite to artifically keep wages below market demand" ? Where do you get this [censored]? In the absence of coercive monopolistic interventions in the law (i.e. government), no such cartelization is possible. If everyone in an industry is colluding to keep wages artificially low, all any one firm has to do to dramatically increase productivity (and hence their profits) is offer wage rates that are just slightly less unfair than everyone else. The most productive workers from everyone else will flock to his company. This incentive operates for all participants in a would-be cartel, and makes it impossible for any such cartel to exist.

Not to mention the fact that there are always thousands of times as many jobs as there are workers to fill them. Any capitalist who does not bid the maximum to acquire labor will simply not get the workers he needs. He will suffer losses and go out of business. The whole idea is farcical.

"inhibit capital formation" ??? Evil capitalists are supposed to conspire with each other in order to . . . not get richer???

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To see something similar in today's economy, one only has to look at the throttling effect of mostly unregulated predatory lending that has the effect of enslaving a statistically significant portion of society in credit card debt. It is very true that it is their own fault for taking such credit and misusing it, but the fact that it happens shows the need for some people to be protetcted from themselves against the rapacious greed of others.

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Again you have no idea what you're talking about. The mountains of consumer debt exist for a reason. Do you know what that reason is? It is the government incentivizing consumtion and debt via an inflationary monetary policy. Banking in the modern world has nothing to do with capitalism. It is an incestuous collusion between banks and government to plunder consumers. That ain't capitalism.

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In fact it is my contention, and Boro hasn't rebutted this, that as laziness is the reason pure socialism fails, greed is the reason pure AC fails.

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Your contention is false, you have never even tried to support it logically. You have no idea what you're talking about. "Laziness" is not the reason socialism fails. Socialism fails because economic calculation is impossible. Socialism fails because economic information is dispersed throughout the economy and there is no way for the central planner or planning board to acquire it all. Socialism fails because there is no objective way to settle disputes over allocation of resources. Socialism fails because incentives matter.

Your myopic hatred of freedom is displayed by your terminology. "Greed"? Self-interest. It is not through the goodness of their hearts that the butcher, the baker, or the candlestick maker provide their wares, it is through self-interest. Every good and service around you is made possible by millions of people acting in their own self-interest, the vast majority of whom have no idea who you are and couldn't give less of a [censored] about you. But they create a life for you of monumental luxury and ease out of self-interest.

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Even if it could be proved that they had a greater EV through investing capital in technological innovation that would produce higher paying jobs, though fewer of them per industry perhaps, the capital cheap road with thus minimal risk is labor intensive industries with poor working conditions. And once the economic oligarchy colludes to prevent not only collective bargaining, but also any laws aimed at ameliorating those conditions, then innovation is effectively stifled.

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Your assertions are ridiculous. Competing companies seek to increase their profits by increasing productivity, lowering costs, capturing higher market shares through better products. Waving your hands about and claiming that they'd rather stop accumulating capital, rather not increase productivity, rather not gain market share, rather not reap higher profits, rather not become wealthier, is patently absurd. I can count on the "greed" of capitalists to keep innovating, lowering costs, increasing productivity, provide ever more and cheaper and better products, increasing the demand for labor and its market value and hence driving up wages. The more numerous and wealthier are the capitalists, the higher is the demand for labor, and hence wages as a fraction of sales revenues. I worked at a software engineering firm where 80% of revenues went to pay employees. This is typical. All other operating costs amounted to about 15%, leaving about a 5% profit margin.

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I mean why take a risk of investing in technology that may or may not work, and thus has a potential loss but which would require only say 4 laborers to produce with the aid of technology what 14 formerly did, when by oligarchical collusion and lack of incentive to invest, a labor intensive industry is always assured via poor economic conditions of the lower class and their dire needs, a permanent and unending source of cheap labor?

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Ridiculousness upon ridiculousness. All companies take risks because they want to make money. Profits require risks. Those companies that take risks and succeed are rewarded with profits and grow. Those companies that take risks and fail are punished with losses and must quickly change their ways or go out of business. Thoses companies that take no risks will soon be outcompeted by those that took the risks and succeeded, forcing them too to shape up or ship out.

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4) His arguments against the deleterious effects of mininum wage laws conveniently ignore that when the price of labor is higher albeit through artificial governmental intrusion in the market, then capital has a greater incentive to innovate technologically. While it is true such laws and backing of unions can be taken too far, it is not true that any such intervention at all is provably bad for the economy.

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So your argument for minimum wage laws is that it is good to throw people out of work to force companies to get along without them? Brilliant!

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And this brings up a critical point. That the arguments of AC must be matched against those of a more limited socialism/limited capitalism, and not against those of a hyper socialist system which is sure to fail.

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Handwaving. Limited socialism and limited capitalism both lead to the same thing: unlimited socialism and economic collapse.

[madnak]

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1) AC only produces the benefits outlined in the book in question in post-industrial revolution societies. I.E., it is incapable of working in low technology labor intensive economies. I'm sure he is willing to concede this point though in order to have an argument as to why AC was not responsible for the economic and social conditions of the lower rungs and majority of society in 1830.

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Are you implying AC was responsible? Because AC didn't exist...

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2) That while he rightly says that the earliest reform laws like the Poor Laws were in fact detrimental, he neglects to mention that the provisions of those draconian laws were effectively written/modified by Benthamite/Malthusian influenced AC'ers.

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Unless I'm misreading... Draconian laws were written by anarchists?

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And he doesn't address the better and more effective reform laws of the rest of the century.

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Does he need to cover every relevant issue in a single post? You're looking for a very high level of detail here. If you want a book, see the OP. Otherwise he can't possibly cover every single aspect of the situation in his initial post. I'm sure he'll address the "better and more effective" reforms now that you've brought it up. By the way, who says the industrial revolution wasn't stunted?

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3) Boro never addresses the possibility, likelihood and provable fact of oligarchical collusion by the monied capital owning elite to artifically keep wages below market demand, and to inhibit capital formation and upward mobility of the lower segments of society.

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He's gone over it many times previously. In a nutshell, it can't happen without government.

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To see something similar in today's economy, one only has to look at the throttling effect of mostly unregulated predatory lending that has the effect of enslaving a statistically significant portion of society in credit card debt. It is very true that it is their own fault for taking such credit and misusing it, but the fact that it happens shows the need for some people to be protetcted from themselves against the rapacious greed of others.

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Lending becomes a much riskier enterprise in a free market. Putting people into debt slavery isn't very profitable anyhow.

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In fact it is my contention, and Boro hasn't rebutted this, that as laziness is the reason pure socialism fails, greed is the reason pure AC fails. Even if it could be proved that they had a greater EV through investing capital in technological innovation that would produce higher paying jobs, though fewer of them per industry perhaps, the capital cheap road with thus minimal risk is labor intensive industries with poor working conditions. And once the economic oligarchy colludes to prevent not only collective bargaining, but also any laws aimed at ameliorating those conditions, then innovation is effectively stifled.

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You assume oligarchy and you assume collusion and you assume monopolistic cartels. Boro and pvn have provided many arguments why these things would not exist under a free market. The kind of collusion you're talking about just isn't viable without government.

Capitalism turns greed into an altruistic attribute. It's amazing that way. The "bad people" and the "good people" end up having the same goals: to give the consumers what they want. What they want is represented by what they are willing to pay for. In a free market there's little room for the kind of cheating and manipulation that government allows. Corruption is unprofitable and is therefore the domain of the stupid rather than the greedy.

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I mean why take a risk of investing in technology that may or may not work, and thus has a potential loss but which would require only say 4 laborers to produce with the aid of technology what 14 formerly did, when by oligarchical collusion and lack of incentive to invest, a labor intensive industry is always assured via poor economic conditions of the lower class and their dire needs, a permanent and unending source of cheap labor?

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Without oligarchical collusion the incentive to invest remains intact.

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4) His arguments against the deleterious effects of mininum wage laws conveniently ignore that when the price of labor is higher albeit through artificial governmental intrusion in the market, then capital has a greater incentive to innovate technologically. While it is true such laws and backing of unions can be taken too far, it is not true that any such intervention at all is provably bad for the economy.

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The price of labor isn't higher with minimum wage laws. It's lower. In the long run minimum wage laws result in lower pay. They create a buyer's market in terms of labor and allow employers to deflate wages. Fear of unemployment is a powerful force that causes some people to accept wages they would not ordinarily accept, and to undervalue their services.

Also incentive to innovate isn't always a good thing. If the costs of innovation outweigh the benefits, that innovation is bad. Plain and simple. The market can determine this with a high degree of accuracy, meaning that innovation comes when society is ready for it. Many people, including yourself based on this post, look at the benefits of innovation but fail to look at the costs. Innovation will come, but it can't and shouldn't all come right away. If you put $300 billion into research on nuclear weapons or spaceships, that's $300 billion that doesn't go into agricultural innovation or curing cancer. The loss of productivity makes it even more wasteful!

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And this brings up a critical point. That the arguments of AC must be matched against those of a more limited socialism/limited capitalism, and not against those of a hyper socialist system which is sure to fail.

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I don't think the hyper-socialists would agree their system is doomed to failure. And personally, I think trying to mix capitalism and socialism is one of the most dangerous of all strategies. You end up with the worst of both worlds that way. Capitalism actually becomes the tool for oppression that it's so often perceived as. When a market is based on coercion, the repercussions of that will be felt throughout human society.

[madnak]

Wow. I feel redundant.

[Borodog]

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Wow. I feel redundant.

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Not at all. Hearing the truth expressed in multiple ways through multiple styles of argument is always helpful.

Not to mention the fact that my periodic inability to control my frustration leads me to litter my arguments with sayings like "You're wrong", "That's ridiculous", 'That's absurd", which is uniformly counterproductive.

It's nice to be backed up by cooler heads.