Tuesday, July 24, 2012

Workers, Capitalists & the Free Market: Expectations

Is production possible without labor?

I think the answer to this question must necessarily be, no.

Even if a good is "produced" by natural circumstances, it still requires labor/action to bring that good into use.  Even if you fall asleep under a tree in the wilderness and notice a low-hanging apple, though no labor/action was used in the production of the apple (it is a natural-good), labor/action is required to bring the apple into use; one must reach up and bring the apple to the mouth and chew.

Therefore, if production, strictly speaking is impossible without labor/action, then all labor is the means of production; which is to say, each person who possesses the capability of action, possesses the fundamental means of production.

In the market we find ourselves in, there are a variety of institutionally enforced coercive distortions to market-processes; one of these coercive distortions, are the various barriers to entry in the market-place.  These barriers serve to restrict the number of persons able to enter the market-place and compete in the offering of goods & services.  Fewer people entering the market-place, the less competition in the market-place for the provision of those goods and services and therefore higher-prices and lower-quality-services are an obvious result, but less obviously, where do all of those disaffected potential providers of goods/services but who are barred from the market by institutions of domination go?  Generally, they will become the employees of  those who were able to successfully get past the coercive restrictions of market-entry.  Which is to say, that coercive restrictions put upon market-entry by regulations, permits, licenses, taxes, fees, assessments, duties and their ilk, all create conditions where there are fewer actual providers of goods/services and more employees.

Therefore, I think it noteworthy to point out: under free-market conditions the ratio of employees to employers that we experience currently, would be significantly less divergent.  If for instance, under current market conditions the employee to employer ratio is on the order of 20:1, if those coercive barriers to market-entry were to be removed, a significant percentage of workers would expect to be potentially benefited by pursuing self-employment.

It may also be significant to note that those who are paid relatively little, are those most incentivized by attempting to sell their services to the market-place directly; someone being paid as an employee at $10 an hour, has more potential to gain by selling the marketable products and services of their ability directly to the market than someone already being paid $100 an hour.

Those people who are paid relatively little, are also those who are likely to carry relatively little savings to invest in capital-goods that might make them more competitive, however the small-scale of their available resources means that they would be better situated for customization/specialization for the service of market niches, that would a larger-business attempting market their products/services more generally to the customers in the marketplace.

Therefore, it is impossible to make any definitive predictions of how free-market conditions will manifest, but since we can know with certainty the direction of those movements, I would venture to guess that under free-market conditions, absent all coercive-regulation of institutions of domination, we might see, relatively few laborer-employees, and the those that remained, due to a decrease in the supply, would demand much higher wage-compensation agreements.

Under free-market conditions, we would expect to see many, many more self-employed persons, independent contractors and more "capitalists"; and these capitalists in a market-place saturated with competition, we would not expect these to be the indolent-wealthy "capitalists" so often thought of today, but small to medium business owners each serving particular market niches, with relatively few workers, commanding relatively higher wage-compensation rates.

1 comment:

  1. Because there would be no legal barriers for market entry, those persons currently making the lowest wages, would be most incentivized to take advantage of market opportunities by marketing their services/productive-capacities most directly to the consumer, thereby cutting out the employer "middle-man". This new class of entrepreneurs, would likely be able to best capture local market niches; though they might ordinarily have the least amount of capital-savings for investment, by working for themselves and seeing possibilities of making more profit by cooperating with friends/family, pooling resources investing in capital-goods, there might be a probable expectation that these new entrepreneurs would begin saving in a free-market, where they have more opportunity for advancement, than under current market conditions in which high-consumption ratios to income are the norm.

    Because of the many workers that can be expected to leave the market to become small entrepreneurs, we might also expect to seek an increase in wage rates (as the supply of labor has decreased). Still yet, these small entrepreneurs will begin to compete with larger firms, which may not be as adaptable in those local niches.

    Many large firms will fold when "intellectual property" claims are treated as null and void on a free-market; these large firms used to reaping a harvest from rent-seeking will collapse and their capital resources sold as used capital resources for the growing number of small to medium firms (pharmaceuticals, chemicals, medical, software and many other industries will see their product price drop significantly, as smaller firms copy the "intellectual property" and offer the medicine at something near the actual cost of production)

    Employee-employer relationships will generally decrease (though salaried positions will likely remain steady), as sub-contracting becomes a more efficient way to get labor-tasks accomplished. These sub-contracting firms will likely serve a role much like a distributed labor-union; giving workers choice as to which agency represents them...

    I could go on, but I wonder if the Austrian-school of economics and "left-libertarianism" is really so far apart as I once imagined....