Off topic: could you be so kind as to reply to this comment on your own blog?

O.K.

Your analogy shows how it could work, but not how it does.

Sure. My comment was intended to answer the conceptual question you asked — “How is wide-spread adoption hampered if not through hampering of performance?” — by pointing to a possible mechanism — politically-imposed barriers to entry. (As it happens this is a mechanism that’s of some importance to left-libertarian analysis, in general.) It wasn’t intended to answer the additional empirical question of whether or not this really is a factor holding back the prevalence of worker-owned enterprises, or, if it is, how much or how little that factor matters compared to other contributing factors. That’s the sort of thing we’d need to look at economic data to prove or disprove. My point here is simply that the data we were looking at right now (about the performance of those worker-owned enterprises that do manage to clear barriers to entry under state capitalism) doesn’t prove what you initially seemed to think it proves (that their lack of prevalence is not due to being somehow more hampered by the state).

Since government interference doesn’t stop after a company is started, I don’t think it does.

I am not sure how this is supposed to cut against the claim? I’m not sure how this cuts against the claim? Certainly “government interference” doesn’t stop after a company has started, but “government interference” is not homogeneous. There are different kinds and the several kinds may each differently affect people who are in different sorts of material and institutional positions.

There are a lot of controls that specifically create problems for startups and not for incumbent companies (since they depend on things like the cost of initially obtaining licenses or legal recognition, the need to start out with artificially high levels of initial capitalization, the costs of competing with already subsidized incumbents, etc. etc.). These might disparately hamper entry without disparately hampering performance for those who have successfully entered.

On the other hand, there are some controls and costs that are persistent over time, which don’t go away simply in virtue of getting yourself established in business. But if we look only at those, I still don’t see how it changes the conceptual point. You have to consider what is not seen as well as what is seen. It may well be that the limited number of worker-owned enterprises that can clear those costs, not only at entry but over time, will — provided they do that — proceed to outperform capitalist-owned enterprises. But that doesn’t tell you anything (yet) about how many worker-owned enterprises might be able to do just as well in a freed market, but are not able to clear the persistent costs. (Again, think of the racetrack. Suppose it is full of hurdles. Well, you’d expect to see the same result, wouldn’t you? The Reds that can jump may well beat the Yellows every time. But if the Yellows are generally better at jumping than the Reds, then most of the winners will be Yellows nevertheless. But it’s not clear that adeptness at clearing politically-imposed hurdles is the sort of thing that people ought generally to have to cultivate. In any case it is not the same thing as adeptness at running on an even market track.)

And why would the hurdle (or hurdles) be more difficult for the reds? Why would starting a worker-owned firm be more difficult than starting a non-worker-owned firm?

I don’t know. I can think of some possible reasons that I could suggest tentatively.

For example, the overwhelming difficulty involved in any startup is very often initial capitalization. But there are many sources of capitalization (conventional business loans, VC funding, angel investors) that are much harder for worker-owned enterprises to get at than they are for capitalist-owned enterprises. (If your management model won’t allow absentee investors a seat at the management table, you’re less likely to attract absentee investors. If your plan is to start something that the state tax laws would see as a not-for-profit enterprise — as many co-ops are — then it’s nearly impossible to get any kind of bank loans. Etc. But the fact that there is such a rich financial industry looking to lay out capitalization for your competition; and the fact that banks are so conservative in the kinds of business models they’re willing to deal with; and the fact that workers and their friends and families have so little money or personal credit of their own to pool towards starting up the business, whereas professional-class managers and capitalists and their families and friends have so very much; and the fact that the fixed costs that you need to cover in initial capitalization are in the first place so very, very high are all facts that are not exactly innocent of politics or of the effects of money monopoly.) Similarly, it may be (I’m not committed to this claim, but let’s consider it for the sake of argument) that there are basic coordination problems in scaling up worker-ownership beyond a certain number of workers or a certain scale of operations. It’s certainly possible — very large enterprises cause all kinds of communication problems, and if your model of management is based on everyone talking to and consulting with everyone else, then that becomes geometrically more costly as the number of people in the enterprise increases. It may be that beyond a certain size the only practical way to deal with this difficulty is to start adopting different, more vertical models of management, and vertical models of management may not be the sort of thing that worker-ownership is very conducive to establishing. But if so, that’s a competitive problem for worker-owned firms only if firms need to be or become very large in order to stay competitive, or in order to stay afloat at all. But, again, the predominance of very large firms, and of firms which someday might become very large — and the difficulties that small firms have in sustaining themselves — are also not things that are innocent of political privilege.

That said, I think that this is an area that needs a lot more research and a lot of empirical data. But for the research and the data to have much import, we have to get some conceptual issues straight (since it is the conceptual issues that guide our ability to understand what the data might mean). My point was to answer the latter kind of question, so that we can get a better grip on how to study the former.

Wittgenstein’s “end” to philosophy altogether would be some way of living with, and using, language in which linguistic inconsistencies and their resulting philosophical conundrums cannot arise at all. Wittgenstein doesn’t spend much time with this notion of a final treatment. . . .

I dunno, doesn’t he? It seems like this sort of “end of analysis” is importantly part of the goal of the Tractatus, and the struggle against that picture is part of the important shift in PI. To live with language in such a way as to end philosophical puzzling would be to become perfectly adept as a logical grammarian — to succeed in catching and keeping the will-o’-the-wisp of logical form. But if there is no such thing to catch, or no such thing as catching it . . . .

I’m rather inclined to think that if we take seriously what Cavell (for example) has to say about the “projectability” of concepts — and on the late Wittgensteinian themes that Cavell is drawing on here (on the urban geography of natural language, etc.) — then I think it has to be part of the nature of a certain sort of language-game — of any language-game of the sort you could reason or explain in, say — that there could not possibly be a way of living with language that does not raise the possibility of philosophical problems. To live with a language where concepts and linguistic structures can constantly be projected into novel forms is to live with the pervasiveness of risk, doubt, misfires, mistakes, confusion, — since to acknowledge the possibility of projection just is to acknowledge the risk of failing to cotton onto the novel uses, or to shift contexts appropriately, or to recognize the interplay between the old usage and the new, or . . . .

And often we should like to be perfectly adept at these things, but (1) it seems clear that we cannot do that with any set of ex ante rules about what good language ought to look like (as the positivists seem to have thought); (2) it also seems clear that we cannot do that with any set of ex ante principles about what good linguistic therapy ought to look like (as AoTLP seems to have been hinting); and (3) setting all that aside, it’s not clear that we possibly could count as being perfectly adept by any means within us (what if the conversational context is not something that’s always up to us, but depends on future contingents about what others will play or non-play? what if it involves external objects, like the meter-stick in Paris or the chemical structure of water, which may not be epistemically transparent to us? etc.). And it’s not even clear if this, were it possible, would always be desirable (what if projection serves a tentative or exploratory purpose, not just an analytical or declaratory one? not to allow a certain degree of risky or even confused behavior may simply be to close us off from some funky new neighborhoods that language might otherwise work itself into. . . .).

Ofer,

I agree with you that it is very important to watch how people use terms in conversation, and to pay attention to the ways in which libertarians arguing for “capitalism,” and progressives (for example) arguing against “capitalism,” are often really arguing about two different things. And it can often be really useful to look carefully at the label “capitalism” as a source of some of the miscommunication. So, props on that point.

But (1) I’m a bit puzzled by the claim that “capitalist” just means someone who uses capital goods. I don’t know of anyone who’s ever used the word that way with the exception of this post. Historically the way people used the word was to describe someone in a particular line of business — as someone who makes most or all of their income by their ownership of capital, rather than other sources, like the proceeds from land or personal labor. (That is, who owns capital but does not make income by working directly with it — but rather rents it out for a fee, or else employs other people to work with it and takes the profits.) Certainly, if you went around calling someone an “oxygenist” in an economic context, I wouldn’t expect that that meant “someone who breathes oxygen;” that sounds a lot more like “someone who makes a living furnishing oxygen for profit.” Anyway, part of the point of the free-market anticapitalists that Julia mentions above (Proudhon, among others) is that a lot of the worst features of modern economies seem to be the result of a political and social system dominated by the interests and privileges of professional capitalists — not in the sense of capital-users, but in the sense of employers and financiers. What they wanted was not for nobody to have capital, but for everybody to have capital — their own capital, rather than having to rent it out from a monopolistic class of professional capital-providers.

And (2) given this, when some of our fellow libertarians go around defending (for example) giant corporations or third-world sweatshops — and while many of us do not do this, many of us do — it’s not clear that the difference between those libertarians’ defense of “capitalism,” and their critics’ opposition to “capitalism” is just a matter of differences in the use of words. It’s not just that sweatshop-defending libertarians are using the word “capitalism” to mean “free markets,” and defending that. Rather, what they have in mind seems to be a particular kind of causal claim. They think that they are for free markets. And they think that free markets will (among other things) inevitably tend to produce giant corporations and sweatshop labor conditions in very poor parts of the world. So they think that they need to defend that, in addition to defending free markets, on the principle that if you endorse a system you need to take what comes. But the thing to do here is not to back up and say, “Well, they should keep defending what they are defending, but they should stop calling it ‘capitalism,’ and call it something else instead.” Rather what they need to do is see that the central causal claim about free markets is false. Actually-existing sweatshops are not the result of free markets; they are ripple-effects of massive government violence and a toxic system of international government-driven debt financing. And genuinely freed markets would not tend to produce sweatshop conditions; they would tend to produce a vibrant economy of small worker-owned shops, the bankruptcy of most of the Fortune 500, vigorous competition to provide the best wages and working conditions, much more localized forms of production, forms of exchange that often operate outside of formal employment or wage-labor, etc. etc. So libertarians should go on defending half of what we have defending — the demand for freed markets. But we should also recognize — and insist — that the economy that they produce would look nothing at all like the privilege-riddled corporate economy that we have today. In fact in many ways it would look much more like the kind of human and social relationships that political progressives and Leftists claim to want. But achieved, not by economic control or political legislation, but rather by competition and the economic forces of liberated people.

Ofer: It’s hardly surprising to learn that the terms were popularized by Karl Marx in Volume 1 of his book Das Kapital (1867).

Julia: Marx didn’t coin the term “capitalism”. It was first used by free-market anti-capitalists to describe the system of monopoly.

Ofer: That’s why I said he popularized it, not coined it….

That’s not right either. Marx uses the word “capitalism” (*) only twice in Capital Vol. I, and less than a dozen times in all three books combined. (And those are some big, fat books to combine.) You can search for yourself if you want using a verbatim Google search over site:http://www.marxists.org/archive/marx/works/1867-c1/ (Vol. 1), site:http://www.marxists.org/archive/marx/works/1885-c2/ (Vol. 2), and site:http://www.marxists.org/archive/marx/works/1894-c3/ (Vol. 3).

Later Marxists wrote about “capitalism” all the time, of course. But they got that terminology mainly from earlier, non-Marxist and anti-Marxist radicals, not from Marx. (**)

(* Actually Kapitalismus, since he did not write Das Kapital in English.)

(** Early users of the term who might actually count as having “popularized” it include Louis Blanc — in his book Organization of Labor the 1840s — and Pierre-Joseph Proudhon — in his book War and Peace in the 1860s. Both were extremely influential at the time they published and helped set the language for a lot of the anticapitalist movement, including for Marx and his followers. But the term was not really very “popular” at all until the early 20th century when all these folks, Marx included, were long dead: http://books.google.com/ngrams/graph?content=Capitalism&yearstart=1800&yearend=2000&corpus=0&smoothing=3 http://books.google.com/ngrams/graph?content=capitalisme&yearstart=1800&yearend=2000&corpus=7&smoothing=3 http://books.google.com/ngrams/graph?content=Kapitalismus&yearstart=1800&yearend=2000&corpus=8&smoothing=3 ….)

martin: What barriers to entry which are not in essence hampering of performance?

Performance for whom? Of course barriers to entry hamper — or, often, simply prevent — the performance of (would-be) new entrants. But not of incumbents. That’s what makes them barriers to entry. But let’s suppose it’s true that, if both clear a barrier to entry, worker-managed firms outperform other-managed firms. Still, that doesn’t tell you whether worker-managed firms and other-managed firms are equally capable of clearing the barrier. If not, better performance won’t be enough to secure greater prevalence. So it goes in markets where peaceful competition and entrepreneurial discovery are politically inhibited.

Imagine you have two tracks for two teams of sprinters, the Reds and the Yellows. Both tracks have a hurdle just after the starting line. Now, the Reds can all run faster than the Yellows. But most of the Yellows can jump hurdles, whereas only a few of the Reds can. Now, if they went racing on an even track, the Reds could beat the Yellows every time. When they go racing on a track with a hurdle thrown at the start, the Reds who can make the jump will still beat the Yellows who can make the jump. But the Yellows will win most of the races, because no matter how fast the Reds could run only the few who can make the jump can stay in the race long enough for their running to matter.

martin: Why don’t they apply to the worker-owned firms in the article?

Typically they evade some of the relevant barriers to entry by reorganizing an existing capitalist-owned firm into a partially or fully worker-owned firm, by means of an ESOP buy-out — rather than by starting from scratch with a new operation. But there are a lot of barriers involved in that mode too — it’s a huge headache from a legal and logistical standpoint, and very expensive; it’s effectively not even an option unless you already have a huge publicly-traded firm with a hefty budget for lawyers and accountants. Etc. Why does it ever happen? Well, because barriers to entry are hurdles, not force fields. They are difficult to clear, and to the extent that they are difficult entry will (ceteris paribus) be less prevalent than it would otherwise be. But that doesn’t mean that it will be nonexistant. Some of the Reds can make the leap. But the question is why they should have to.

Through barriers to entry?

crispy: "it's not like, looking at these names, you're wondering about the players' race"

Only because white folks got so boring in the past couple centuries. Back in the day the Puritans had this down -- speaking of the Lord and punctuated names, we'd be remiss if we didn't mention Praise-God Barebone.

http://en.wikipedia.org/wiki/Praise-God_Barebone

And if that's not enough for you, well then there is always his son. . . .

Nicholas If-Jesus-Christ-Had-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebon.

http://en.wikipedia.org/wiki/Nicholas_Barbon

doubt that slavery is what Academic Monkey meant by dealing in people….

Probably not. But it does seem to be one of the most prominent examples in “historical societies.” That, and family relationships — which of course have their own sort of violence and their own fettering “bonds.” I am not being fair here, of course, but I do think it’s important to remember and to stress that, if we are supposed to be viewing this historically, those non-monetary ways of “dealing” with each other could offer their own kinds of shittiness and inhumanity — to say the very least. But to the extent that that’s true, I wonder how much the problem really is a problem either with monetary or non-monetary relationships — and how much it is a problem with the social or interpersonal context within which those relationships occur.