Kevin Carson:

Similarly, the labor theory of value is based, not on an inductive generalization from the observed movement of prices, but on an a priori assumption about why price approximates cost, except to the extent to which some natural or artificial scarcity causes deviations from this relationship. (Kevin Carson, Studies in Mutualist Political Economy, pp. 70-73)

J. Neil:

Translation: Kevin Carson has some blue-sky theory out of his ass — without looking at what happens in the real world

Now we have J. Neil Schulman, who claims to be an admirer of Ludwig von Mises, objecting to the use of aprioristic economic theory as “blue sky-theory out of his ass without looking at what happens in the real world.” Awesome.

Ludwig von Mises:

Consequently, a proposition of an aprioristic theory can never be refuted by experience. Human action always confronts experience as a complex phenomenon that first must be analyzed and interpreted by a theory before it can even be set in the context of an hypothesis that could be proved or disproved; hence the vexatious impasse created when supporters of conflicting doctrines point to the same historical data as evidence of their correctness. … Disagreements concerning the probative power of concrete historical experience can be resolved only by reverting to the doctrines of the universally valid theory, which are independent of all experience. Every theoretical argument that is supposedly drawn from history necessarily becomes a logical argument about pure theory apart from all history.

(Ludwig von Mises, “Epistemologial Problems of Economics”, Ch. 1, s. II.2)

J. Neil:

If Kevin’s theory could accurately describe price fluctuations in a free market, Kevin wouldn’t be making his living emptying bedpans for a living. He’d be a filthy rich Wall-Street broker.

1. Again. We don’t live in a free market.

2. And, now we have J. Neil Schulman, who claims to be an admirer of Ludwig von Mises, apparently objecting not only to the use of aprioristic theory in economics, but also believing that an accurate economic theory ought to produce quantitative predictions. Really, dude?

Do you know anything in particular about Ludwig von Mises’s economics? You just angrily dismissed to two of the three central ideas that von Mises is known for. (At least you didn’t bring up Kevin’s work on calculation problems in big corporations, which would have given you an opportunity to angrily dismiss the third.) All of which indicates to me that you are either ranting in utter ignorance, or else you just don’t give much of a damn about what’s true and what’s false, as long as you get to slam Kevin Carson in the process.

In either case, you ought to be embarrassed.

Marx was wrong.

There, that was easy.

It’s worth noting as well, in addition to the points that Roderick and Tracy make, that the relevant question, in this particular case, actually isn’t whether the economies of scale in online retail sales would be large or small under freed-market conditions. For all I know, they might well turn out to be considerable. (Certainly, there is a natural economy of scale involved in a lot of long-distance shipping and tightly-packed warehouse storage.)

But the real question here is what the economies of scale are, not only for potential competing retailers, but in all competing uses for the distribution center worker’s labor — since the question is not only whether the worker could make as good a living or better setting up as a competitor for Amazon, but also whether or not the worker could make as good a living or better in other lines of work outside the industry, or possibly outside of the cash-wage economy entirely. So there is not only the question of opportunities for entrepreneurial competition with Amazon downstream in the retail market, but also the question of opportunities for entrepreneurial competition with Amazon upstream, in the labor market.

If it is true (as Kevin has argued, and as I argued in Scratching By) that, absent the state, most ordinary workers would experience a dramatic decline in the fixed costs of living, including (among other things) considerably better access to individual ownership of small plots of land, no income or property tax to pay, and no zoning, licensing, or other government restraints on small-scale neighborhood home-based crafts, cottage industry, or light farming/heavy gardening, I think you’d see a lot more people in a position to begin edging out or to drop out of low-income wage labor entirely — in favor of making a modest living in the informal sector, by growing their own food, or both, quite apart from the question of economies of scale in the formal retail sector. If that’s the case, then, on the one hand, workers who dropped out wouldn’t have to deal with Amazon’s taskmastering at all; meanwhile, back at Amazon, in order to convince others to stay in, Amazon would have to offer them a corresponding premium to make it worth their while — whether in the form of wage increases, improvements in conditions, or both.

Will:

I sense you get pretty frustrated about the fact that you tend not to be persuasive to people with a background in relatively orthodox economics (or mildly heterodox economics).

Maybe. But if you use your sense of sight to read what Kevin wrote, it seems like part of what’s frustrating for him in the current exchange is that his views on benefits of specialization and economies of scale were misrepresented so that the crude cartoon version of his analysis could be waved off as “totally incompetent.” I don’t know about you, but I don’t find that a very auspicious beginning for a conversation.

There are lots of ways to discuss a view that you don’t find persuasive, and lots of people have criticized smaller or larger parts of Kevin’s writing on agriculture and local production. (I have, for one. William Gillis has, from a position arguably to the left of Kevin’s. Etc.) But there’s responsive criticism which attempts to clarify and hone in on the issue, and thee’s non-responsive attacks. What you’re doing in this most recent comment is something like the former. What you led off with is more like the latter.

And so I’m incredibly skeptical of the idea that more than a few people would find it worthwhile to support a restructuring of institutions to shift to a radically different structure of food production.

Well, the suggestion is not necessarily that lots of people would direct their economic activity towards restructuring etc. Some food faddists like that kind of thing, but the main suggestion here is that that would be an unintended consequence of the final prices for the produce of capital-intensive centralized agriculture with long-distance shipping rising relative to the final prices for the produce of more localized, informal, and labor-intensive county-scale, neighborhood-scale, or home-scale alternatives. (Note that you would see this effect even if absolute prices for all kinds of produce were to fall.)

The real price of food is declining. True or false? Real average wages are increasing. True or false? I think the evidence is very, very clear that both are true. And I think this largely explains the dramatic decline in the household production of food. But you apparently don’t. Why not? Would you agree that if the cost of food continues to decline as a percentage of the average wage, then the average-wage worker WILL hit a point where she is better off buying than growing?

1. What’s happening to real wages over time is a lot more complex than that, because, as I’m sure you know, modal workers don’t make mean incomes. When you separate it out by socioeconomic class, you get very different pictures for different kinds of families. Particularly over the last 35 years or so.

2. As specified, you haven’t yet given enough information to determine whether or not a wage-worker will or will not reach an equilibrium point where the trade-off of cash for saved labor is worth making. If tomato prices decline relative to wages for non-food-related wage-labor, then that would tend to favor doing the wage-labor, buying the tomato, and pocketing the difference — if there’s no comparable decline in the marginal time that it takes to grow the tomato yourself. But I don’t think that the antecedent of that conditional has been established.

And if your alleged facts are facts, why are they not exploited to create huge fortunes? If I’m a farmer with x acres, and I would get more output per acre by switching production techniques and substituting labor for capital, why wouldn’t I sell a bunch of my machines, buy a bunch of labor at the average wage or below, and make higher profits?

Well, if we’re just looking at the input side, and not the effects of (say) government action on competition, then Kevin’s alleged fact was that if you hold the acreage fixed, large-scale mechanized agribusiness will produce less total output than soil-intensive horticulture, but it will produce more output per marginal hour of labor expended on the acreage. The question then is whether it’s more profitable for the farmer to economize on the costs of labor or to economize on the costs of land and capital. For people with relatively little access to large, concentrated tranches of land and capital, the trade-off may go one way; for people with better access, perhaps even access that’s facilitated or directly provided by the actions of state or federal government, the trade-off may go the other way.

John,

1. It’s not my case. It’s Kevin’s case. He gives the argument for it in his book and a series of articles which I’m certainly not prepared to reproduce in full here in the comments thread. My point so far has simply been that specific criticisms Will has offered as a reply to the case are in fact crude misrepresentations of the case he’s allegedly replying to.

My own view is that Kevin probably overreaches on the extent to which centrifugal effects on agriculture will result specifically in sustenance kitchen-gardening. But I’m not prepared to wave that off as “bullshit” in the absence of a reply to the evidence he gives, and I’m not about to try and make the case that he overreaches based on the (clearly false) claim that he just denies the existence of benefits from specialization or economies of scale.

1. That said, it’s also simply not true that centralized growing of fruits and vegetables “aren’t subsidized” in the U.S. They receive far less in the way of direct federal subsidies (in the form of domestic price supports and export subsidies), compared to (say) cereal grains, soybeans, sugar, etc. But many vegetables (e.g. potatoes, onions) are bought up heavily through government purchase and donation programs (school lunch program, military procurement, etc.), many are included in government agricultural export financing and promotion programs (e.g. the Market Access Program), the market is just as heavily regulated as the cereal markets in favor of large incumbents by means of USDA and state and local regulations, they are covered by federal crop insurance bail-outs, and — this happens to be awfully important in the agricultural markets near where I live — benefit very heavily (especially with crops like melons, which are now mostly grown in the Southwestern desert) from government irrigation subsidies and engineering projects.

Moreover, Kevin’s point is not simply concerned with the effects of direct government subsidy to producers. It’s part of a larger case which significantly has to do with (among other things) the suppression of potential competitors and substitute goods, either by government-enforced cartelization, direct legal suppression of the product, by direct legal suppression of necessary inputs, or by the ripple-effects of economic distortions that make the inputs artificially expensive compared to how they’d be in a free market, or that make the inputs for centralized business models artificially cheap.

Is all of that enough to demonstrate that there’d probably be a large scale shift towards home food production in a free society? I dunno. In any case, we’re still talking about a really heterogeneous set of products (the economics of tomato growing are quite different from those of cantaloupe farms, and both are awfully different from banana plantations), and all this is no doubt beyond the scope of this comment thread. But it’s certainly a reason for believing that the market we have to look at now is pretty damn skewed, and so that pointing to revealed preferences under those market conditions is not a very reliable guide to what would be economically efficient in a genuinely free market, which was my point in mentioning all this stuff in the first place.

Will,

As you please, but to back someone into a corner you need to actually start with the position that they have, not some a strawman position that’s easier for you to attack. To attribute a claim to Kevin which he does not hold (for example, that there is just no such thing as gains from specialization or economies of scale, and that he is just in “denial,” rather than having given a specific argument with specific evidence as to why there are countervailing costs and diseconomies that are important in the case of a particular set of potential producers and a particular good) and then smugly ridicule this cartoon version of your interlocutor, rather than replying to the argument that was given you, is something quite different. To then describe your interlocutor as “totally incompetent” at economic analysis on the basis of this ridiculously crude strawman, when he has repeatedly and at length set out a more nuanced view, is awfully graceless, not to mention unreliable as a way of getting to the truth.

As for ad hoc rationalizations of prior convictions, I suppose that the charge against Kevin would be just if Kevin hadn’t ever set out in any systematic or comprehensive way to provide evidence for his claims that a shift, on the margin, away from wage-labor (yards, whatever) and towards home food production, might be preferable for some significant number of current wage-workers under free market conditions, or that state intervention systematically tends to favor hypertrophic centralized producers, to subsidize centralized capital-intensive agribusiness (and centralized, cash-lubricated capital-intensive business in general), etc. Or if he simply stopped and then refused to consider any kind of countervailing factors that might tend to push in the opposite direction under the conditions he is supposedly considering. But if he has provided such a systematic investigation and argument ahead of time, and has considered the countervailing factors, then we’re not talking about an argument ad hoc; we’re talking about the application of prior evidence to a specific case. And, well, you know, I hear he did already write some stuff about that stuff, even at some length. Maybe you think that what he wrote about it is underargued, or “terribly unconvincing,” or maybe even that it’s “bullshit.” But you’ve not yet given any reasons that anyone else can inspect or has any reason to care about for finding it so. Because, at the level of principle, I am fairly sure that no competent economist would deny that there are limits to the benefits of specialization and to economies of scale, that those limits are not homogeneous across all goods and all producers, and that large-scale government interventions may have large-scale systemic ripple-effects which tend to skew the trade-offs in some markets towards artificially centralized or capital-intensive equilibrium points. And on the level of detail, Kevin has presented some detailed evidence in favor of his take in many different books and articles, whereas you’ve offered “people like yards” and some contemptuous ad hominem swipes at smug urban eco-asshole basil growers, without any concerted effort to show that Kevin’s wrong on any particular point that he made. Maybe you don’t want to spend the time necessary to respond point by point, or even on one point. Which is fine; everyone’s got preferences and priorities. But if you’re not prepared to present a systematic response, then summary handwaving about what’s “bullshit” and what’s “terribly unconvincing” to you seems like an immoderate way to respond to an argument you’re not actually willing to reply to. And the fact that you don’t like the conclusion of the argument (that revealed preferences on this point under actually-existing capitalism reflect the influence of government intervention and not what people would likely do in a free market) doesn’t mean that citing the premises by way of explaining how Kevin came to the conclusion is an “ad hoc” response.

As for my own prior convictions, you seem to know more about my prior convictions than I do. Try finding anything that I’ve personally written which makes a detailed claim about how much wage-workers would shift towards kitchen-gardens for personal or family use in a free society. Insofar as I’ve argued about any of this stuff, it’s in the form of pretty broad claims about shifts on the margin, ceteris paribus, away from centralization, dependence on cash savings, and employer-employee relationships, in a free society. I’m not an especially good gardener myself, would most likely still be doing web development to pay for my food if laissez-faire broke out tomorrow and would be happy to do it, and generally have a much less detailed set of expectations about what free labor would look like in practice than Kevin does.

I do, however, have a pretty strong prior conviction in favor of playing an argument where it lies. And what I get really tired of is seeing Kevin put as much work as he does into putting out interesting, original, and detailed writing and analysis specifically on the question of economies of scale and benefits of specialization, producing reasoned responses to inappropriate and out-of-context applications of the economics of scale, division of labor, and roundabout production, only to see that work casually misrepresented and ridiculed as if he were simply unaware of, or trying to wish away, elementary pin-factory economics.