I Public and private goods and evils

Goods, evils and control

Some goods are such that one person using them excludes anybody else from using them. They are, to that extent, private, in the sense of benefiting only one person. If they are consumed by a single use, like a piece of cake, they are necessarily private. At the other end of the spectrum, some goods, like lighthouses, are necessarily public, equally available to everybody. But many goods can be provided in either private or public forms. It is a fairly tenacious characteristic of our civilization that we tend to prefer as many things as possible to be available to us in the form of private goods, even when there is no technical necessity. We prefer private cars to public transportation, private to communal facilities in our housing and so on, even when it would be cheaper to rely on common provision of such goods. It is a natural result of and condition of a flourishing market economy that we should. The stimulus to compete lies in the advantage that is gained through the possession of private goods. If the best things in life are free, why work?

Nevertheless, many of the best things in life are largely free—sunshine and wind and rain, language and the treasures it contains, the beauty of people and streets, and many kinds of knowledge. Not one of these is diminished by being used, much less destroyed. The shared enjoyment of them itself constittes a good that is highly prized, as when our enjoyment of a play is enhanced by being part of a large and attentive audience. Moreover, there is a public aspect to most private goods, the landscape of houses and farms, the dress and comportment of people in public, the rhythm of life. In a healthy community many people contribute to the upkeep of such public goods because they prize them and enjoy contributing to them as well as receiving recognition for doing so. Why not make as much of life like that as possible? Why not supply as much of what we want as is possible in the form of public goods? People will work if they receive due recognition as public benefactors.

Before looking at these questions it is useful to look at bads and evils. The worst things in life are also “free” in the sense that they very often come to people quite independently of their having done anything to produce or attract them. Evils are not just the lack of some needed good. They are positive things like war, threats to our livelihood, epidemic disease and an atmosphere of distrust or hatred. Whatever one’s views about maximizing public goods 97there can be little question that an important task for any community is to protect itself against public evils. What is more controversial is whether people ought also to be protected against private evils. For our present purpose, however, what is important is that there is a significant difference between producing goods and producing evils.

There is, with a few ominous exceptions, no market for evils, only a market for the means of combating them. They appear in the market as “externalities”. The standard way of controlling them is by prohibition and penalty rather than by incentives not to produce them. To demand a price for not producing evils is extortion.1 The difficulty in controlling evils by prohibitions is that evils can easily be brought about by people doing what they are normally entitled to do. Merchants raise the price of grain, drive down the price of what people have to sell in exchange, and the result is famine, followed by epidemic disease and enormous social disruption and suffering. Famines, as Sen has shown,2 have usually arisen not from an absolute shortage of grain but from a collapse of people’s entitlements to buy it. They have nothing to sell that the market wants at that time at a price that is sufficient to cover their costs of survival. The market is an admirable mechanism for exchanging commodities between people with roughly comparable entitlements in situations where there is genuine choice available to both buyers and sellers. It can and does become the means whereby whole classes of people are deprived of effective choice when they must sell their whole energies to a few buyers at a minimal price, or where there are no buyers at all.

Not so long ago advocates of maximal market control of allocation of resources denied that these problems were serious any longer in the advanced industrial countries. But radically unacceptable patterns of distribution are, in fact, endemic in the market system. There is an inherent tendency for market success to generate concentration of ownership of resources and the power that that brings. There is a constant tendency for jobs to be destroyed by new technology, and the market cannot create new ones fast enough to avert great and undeserved misery in many cases. Clearly, where unacceptable results are the product of normal legitimate procedures, those results cannot be averted simply by prohibitions. There must be positive means of producing and allocating assistance to those in need and counteracting the unwanted consequences of market forces.

When the evils of unmitigated market control and the evils of bureaucracy are set against each other, the natural question to ask is whether or not there is some way in which the defects of each can be mitigated by the virtues of the other. So we have bureaucratic organizations designed to stabilize markets, control the concentration of capital, protect national interests in investment 98and employment and provide some “social security”. On the other hand, the bureaucracy is controlled by the constant comparison of its efficiency with that of “free enterprise”, by resistance to the taxation needed to finance it, and by the general requirement that it not endanger the profitability of investment. This kind of compromise is inherently unstable and under constant attack from both “socialist” and “free market” advocates. So we are led to raise the question whether there is not some way of establishing, on the basis of objective principles, what sort of goods are appropriately produced and distributed by market mechanisms and what by other procedures.

Knowledge, for example, is not only not diminished but normally enhanced and made more fruitful by being shared as widely as possible in a community of knowledge. For a community of knowledge is constituted by people with appropriate critical skills, cognitive interests and means of developing knowledge. A piece of knowledge that is absorbed into such a community is critically evaluated, related to a variety of other relevant knowledge and developed in new ways. Similar considerations apply to the arts and their products. It is inherently undesirable that either the means of producing these things or their products should be sequestered and made the exclusive possession of any individual or group.

The trouble is that neither the means of producing cognitive and aesthetic products nor the products themselves exist in a purely spiritual form. They have material components and conditions. Their material embodiments, books, pictures, scores, instruments and so on, can be bought and sold. The labour, the facilities and the materials involved in the quest for and communication of knowledge and other mental goods have to be paid for. The community can foot the bill. But resources are not unlimited. So there have to be ways of providing those resources, for example by taxation, and apportioning them to those who are likely to use them to best effect. If these matters are handled bureaucratically they are likely to be mishandled and given a strongly conservative bias. Rules, precedents and routine procedures are not conducive to innovatory, critical and excellent work.

So perhaps there is a case for making cognitive goods into commodities as far as possible and leaving the provision of their material prerequisites to be met by the sale of such things as copyrights, courses and entry to exhibitions and shows. Apart from questions of general utility, the effects of such a practice are clearly unsatisfactory. It works very well for pop music, films and some fiction. It does not and cannot work at all for highly abstract knowledge such as physical theory of for the more difficult works of art.3

The provisional moral to be drawn from these considerations is that abstract considerations in these matters are extremely inconclusive. Even when a good seems at a certain level of abstraction to be completely public, it inevitably 99has aspects that are private when considered more concretely. Again it is possible to change a given material or spiritual thing from a mainly public good into a mainly private good by suitable social arrangements such as specified property rights. Finally, these changes have effects not only on how much of these goods are produced and who gets to use them or profit by their production. They even affect what is seen as good (or bad) about them, for example whether cultural achievements are seen as primarily collective achievements or as primarily the product of the individuals most closely identified with the final stage of their production.

What ought to be up for sale?

We need to look case by case at the questions, What, precisely, are the things that are most appropriately exchanged on the market? And what kinds of organization are appropriate for producing and delivering other goods? Civilized nations decided comparatively recently that human beings should not be traded on the market, and so have abolished the sort of property title to persons that can be bought and sold. However, many lesser kinds of property in people’s activities, entitlements and liberties remain. It is a serious question whether or not these ought to be abolished.

For the market libertarian any restriction on freedom of exchange is suspect. The libertarian insists that people should, as far as possible, be able to do what they want to do. An important part of their doing what they want to do is their exchanging some of their possessions for others they desire more. Any socially imposed restriction on their opportunities for exchange limits their capacity to realize their desires. Our desires call for the co-operation of others. There are only three ways in which that co-operation can be secured, by coercion, by making it worth the other’s while, or by the other voluntarily agreeing to our desires. If coercion is excluded and voluntary agreement is rare, exchange must be the normal method of securing the co-operation of others.

Exchange involves the alienation of entitlements. I alienate my property and it becomes yours, most obviously in the case of material commodities, less obviously in the case of labour power, one’s capacity to work for a specified time. The Marxist critique of exchange sees this alienation of property as the reason for rejecting exchange. Exchange leads to a concentration of natural and produced resources in the hands of a few. The majority have nothing to exchange but their labour power, which they cannot use themselves because they have no property in the resources necessary for production. So they must sell their labour power. It will only be bought if the buyers can make a profit out of it, selling its contribution to products for considerably more than they pay for it. 100

Marx assumed that workers would want to abolish every vestige of a competitive market in labour power. His reason was basically simple. Workers sell their labour power only because they cannot get access to the means of production. If they could themselves take charge of the whole productive process they would cut out the capitalist and end exploitation. They might not be dramatically better off in terms of consumption. Resources would still need to be saved for investment and public purposes. But they would control their own destinies and their own labour. But Marx’s conclusion depends on a number of additional premisses, as he himself recognized. Granting the labour theory of value and the theory of exploitation, it is still unclear that workers would always object to being exploited, providing there were compensating factors. It is not uncommon, for example, for tradesmen who own their own tools and have enough working capital to set up on their own account to prefer to work for a contractor, in order to have a stable if smaller income, and relief from the anxieties and problems of running their own business.

The task that Marx sets himself in Capital is precisely to show that the system of capitalist exploitation cannot be sufficiently stable and benign to allow the working class to accept their exploitation. In the short run, as far as the workers in advanced industrial countries are concerned, Marx’s hopes have not been realized.

What many workers want is genuine freedom of choice in selling their labour power, protection against severe competition from cheap labour and reasonable security of employment rather than the abolition of all market relations. They have used their industrial and political power to regulate the package of labour power that is sold to employers, limiting the length of the working day, regulating conditions of work, establishing unemployment relief and various forms of protectionism. The question is whether the result is not to maximize the worst effects of each mechanism, the worst controls and the worst markets. The accusations are often made that the web of controls distorts the market allocation of capital by making productive investment less profitable than manipulation of controls and that labour is rewarded not on the basis of its usefulness but in proportion to its political power. There is clearly some justice in these accusations.

The problem, then, is whether some integral restriction on the development of commodity exchange might avert both capitalist exploitation and the cumbrous systems of state intervention that protect, moderate and direct it. The obvious answer is to prevent the private control of capital by vesting it directly in public trustees, while retaining a free market in labour and its products. If the system were to retain the flexibility and scope for initiative of a market economy the trustee bodies would have to be numerous, independent 101and competitive. There is clearly a crucial problem in deciding how these trustees are to be appointed and controlled. For the moment let us leave that aside and look at the tasks they would need to accomplish.

II Markets in land, money, labour and commodities

Land

Land, taken in its most general sense of natural resources, including the sea, the air and the biological resources of the planet, is the condition of all wealth. It is inherently limited in quantity and is often destroyed in use. The system of ownership of land based on first occupancy used to be defended on the ground that there was adequate unused land for those who were willing to face the task of bringing virgin land into production.4 But now that all the land has been claimed the original common right of access to land must reassert itself, at least to some degree. Those who deny this are led to deny that anybody has a right to life or the means of living.5 All that one has is a right to compete for them. That the competition is very unequal because some enter the game with plenty of land and others have nothing with which to compete seems not to disturb these authors. I do not think that anybody would embrace this barbarous doctrine were she or he not convinced that once one grants a right to life there follow all kinds of rights, that can only end in the worst sort of “socialism” or state despotism.

My task is to show that that is not the only alternative. Nevertheless, there are real difficulties here. If a nation increases its population to the point where it can no longer feed it, has it a right to the less intensively used land of its neighbour? What is the relevant group here? Has the individual a right to self-sufficiency on his own land, or the family, or the clan? What is special about the nation? On the other hand, according to the different technologies and patterns of consumption that individuals and groups adopt, they will have very different needs for diverse resources. Clearly they cannot have all the resources needed for just any lifestyle they happen to want. If resources are vested in geographically defined communities the easiest way to allow more equal access of all to natural resources—both productive resources and natural amenities—is by breaking down barriers to migration. But unrestricted migration would pose enormous problems, and, in the short run at least, be terribly disruptive.

There is no question of attempting to provide solutions to all these problems here. In time, given appropriate social changes, many of them could be mitigated. People would not want to migrate given freer trade, access to raw materials at prices they could pay and an adequate living space at home. The tendency of families and nations to procreate inordinately is largely an 102effect of poverty, insecurity and poor standards of child welfare and education. The question is not one of finding an equitable basis for dividing up property in land and resources between rival claimants but of finding ways in which appropriate opportunities to make use of scarce resource can be as widely available as possible. Just as importantly, resources must continue to be available to future generations. Enough of the earth’s topsoil and other irreplaceable resources has already been destroyed. The task must also be one of conservation.

What these considerations suggest is that the trustees of various natural resources might discharge their functions by making them available to anybody who wished to use them at prices sufficiently high to discourage their being used frivolously, and under strict conditions about conservation. As far as possible these trustees would be required to provide jointly enough revenue for public purposes to make taxation largely unnecessary. The common heritage of human beings would meet the basic costs of social security for all. So the problem of all benefiting from the use of natural resources would be largely solved, provided, of course, the most important resources were available to people anywhere in the world on acceptable terms.

In order to see how such a goal might be achieved it is essential to rid oneself of traditional notions of sovereignty. Instead we must envisage specialized authorities each entrusted with specific authority to regulate the use of some particular resource in a suitably defined area. One authority might regulate use of farming land, another forests, another fossil fuels, another various mineral resources, another water supplies, and so on. These authorities would need to be coordinated with each other within a given area so that mining would be reconciled with agriculture, water collection and storage with both and so on. At the same time they would need to be co-ordinated with other authorities of the same type in other areas to ensure a coherent policy of use of fossil fuels, of minerals, of agricultural soil and so on, ideally on a world scale. Finally, the revenues derived by each of these authorities would need to be disbursed in a co-ordinated way to provide for needs that are currently met by taxation, not just for inhabitants of the territory in which they happen to be situated but for all those who need the relevant assistance.

Obviously, to achieve such multi-dimensional co-ordination on a world scale by means of a central world organization would involve a colossal concentration of power, an extremely complex bureaucracy and an enormous complex of laws and regulations. There is no possibility of such a complex being controlled democratically. The distance between the individual voters and the ultimate decision-makers would be too great. It would seem to be inevitable that the bureaucracy would use its power in its own interests and that something like the so-called “Asiatic mode of production” on a world 103scale would result. Rigid and stringent control, surveillance and repression would be necessary to ensure that all regional chauvinism was eliminated. We could have peace and security at the price of a static, uniform and inefficient social order. The central authorities would be in a position to regulate almost all activities. If they were wise in their self-interest the result might be a considerable degree of security, equality and perhaps even contentment of a sort for most of humankind. It might come out quite well on a Benthamite calculus of pleasures and pains and even on some formal moralities of a Kantian kind. It might even be the case that people would come to accept it willingly. Given suitable technology it might not demand too much of them. They might have a great deal of leisure and accept the constraint of the system as the price of a life of ease and of play.

Such a world state is not all that unlikely a development. If a sufficiently ruthless and far-sighted nation-state were to gain absolute military superiority it would almost certainly be in its interest to force the development of a world-state by a gradual process of setting up and enforcing adherence to a number of international authorities over which it could exercise ultimate control. Each step might be a small enough diminution of sovereignty, and in the interests of enough of its vassals, not to provoke too much revolt. Only the first steps would be difficult.

It is not surprising that those who want to preserve diversity and flexibility in social life and minimize the role of uncontrolled authorities are afraid of making any concessions to the principles of common use of natural resources. It is, as we shall see later, very doubtful whether any stringent conception of distributive justice or equality could be put into practice without an all-embracing authority to establish and enforce it. If we do not want rigidity some looser form of co-ordination and regulation of the use of resources is needed.

What I want to suggest is that there might be a suitable kind of co-ordination and regulation on the basis of largely voluntary negotiation and co-operation between the trustees of various resources.

The key problem is to ensure that such trustees are responsive not just to the needs of the present but of the future, and not just to the desires of the inhabitants of the immediate vicinity of the land they are entrusted with but to the needs of all those who have a claim on its use. If this responsiveness is to be assured the members of the board of trustees must be representative of the wide group of people who have a legitimate interest in the way in which it is used. They must be in a position to resist the pressures to sacrifice future needs to present interests, and they must have adequate motivation to do so, in co-operation with other similar or cognate bodies. 104

My contention is that these requirements can be achieved if the members of these boards are chosen so as to be statistically representative of those with an interest in their decisions,6 and if the principal reward attached to their work is long-term recognition of the soundness of their decisions. That recognition will be well based and valued if it comes in the first instance from their colleagues and successors on their own and cognate bodies. It will be the main reward if the proceedings of these bodies are thoroughly public and widely reported in a form that invites public comment, so that corruption and misrepresentation are unlikely to succeed and will be punished if detected. It will be adequate reward if the society generally attaches great value to effective public service.

In order to ensure that they have a positive interest in serving those chosen will have to be volunteers. In order to ensure that they do not form an entrenched group they will not be subject to re-appointment to the same office. Continuity would be assured by replacing members one at a time at a suitable interval rather than as a group all at the same time. The period of office of members would need to be long enough to make it worth their while to go to the trouble of getting to know a great deal about the problems involved. To ensure flexibility, initiative and responsibility each group of trustees would have a free hand and not be subject to policy directions from any superior authority. Nor would individual members be formally subject to any directions from those whom they were chosen to represent. Their accountability to a constituency would be entirely a matter of the force of opinions and informal sanctions; decisions that were outrageous would not be obeyed by those affected.

It would be expected of the various trustee bodies that they would set up co-ordinating bodies of a specialized nature to ensure a satisfactory interrelation of decisions as they affected other bodies. Such co-ordinating bodies would be in a position to bring strong pressure against merely idiosyncratic or chauvinist decisions. In addition various voluntary organizations would campaign for the adoption of particular standards and policies. They would be analogous to the organizations that now represent various community groups and lobby for their interests.

None of these things, would ensure equal regard for all individuals and interest groups or uniformity of provisions for handling problems.7 The decisions of the various bodies would represent compromises between conflicting pressures, needs and aspirations. They would have to make unpopular decisions, increasing the price of resources to ration them and to generate funds for public purposes, often against the short-term interests of communities that are used to regarding those resources as their own. They would have to accept that very often the rightness of their decisions could 105not be demonstrated in the short term. They would try not to push change so quickly as to provoke revolt while responding as quickly as possible to the most important considerations. They would try to represent not the unreflecting desires of people but their long-term interests and those of generations to come.

From an economic point of view the prices charged for natural resources would be monopoly prices. They would feed into the price system as a largely exogenously determined variable. Nevertheless, the relative prices charged for competing resources, for example, oil and coal, would reflect market response to prices, as well as other considerations such as the environmental costs of say strip mining as opposed to drilling. There are already monopoly price elements in the prices of most natural resources, even when there are no concerted attempts to constitute a monopoly. Indeed, in so far as they are pure rents or simply returns for ownership rights, all such prices are monopoly prices, since they depend on the exclusive power of ownership. In this respect natural resources are contrasted sharply with products that can be reproduced at will by human labour and whose qualities depend on the quality of the labour put into them. My labour is mine in a way my land cannot be.

Moreover, many of the advantages of any given piece of agricultural land and almost all the advantages of any piece of land for commercial or residential building are the creation of public expenditure or of private expenditure by people other than the owner of the land in question. There is no good reason why, as Henry George argued, the whole value that accrues to land through its social situation should not belong to society. There is no reason why the aggregate revenue, from letting land should not be very substantial, covering the costs of most public services. The difficulties in introducing such a system are enormous, but it is the sort of change that could be made gradually, and the problems solved piecemeal, if there were sufficient support for it.

The abolition of private ownership of land would, of course, remove an important source of unearned income and the very wasteful diversion of time and resources into speculative investment in real estate and natural resources.

Money

In so far as money itself is a commodity it commands interest, a charge simply for the use of money for a certain time. In part the ability of money to command a price is a function of its relative scarcity. There are always people who want things now for which they cannot now pay, but hope to be able to pay in the future. Other people who want to keep money for the future are prepared to lend it now for a consideration. Some of those who want money now are consumers, who are in effect prepared to pay more to have what they want now than they would have to pay if they waited until they had saved 106enough money. Others are producers who can make enough profit out of the investment of borrowed money to more than cover the cost of borrowing it.

A variety of financial institutions serve as agents in the process of matching lenders and borrowers, assuming risks and spreading them over a large range of transactions so as to minimize them, and organizing asset backing against loans. Such institutions lend not only money that they actually possess but money that they hope to possess as a result of interest payments, repayments of existing loans and new deposits. They create credit. The creation of credit is always potentially inflationary. There is wide agreement that it needs to be controlled and that the state seems to be the only effective agency for controlling it. However, states themselves are borrowers who are under a very strong temptation to print money to finance their own operations. So they must in turn be controlled by an international monetary system that attempts to prevent them from creating too much credit, basically by refusing to accept their money at face value if it is inflated. The system is notoriously weak, because the political consequences of bankrupting a nation state are too high to contemplate.

At every level the monetary system favours the larger and wealthier unit against the smaller. The firm, the individual, the country with large assets and strong production resources can normally borrow relatively more money and on better terms than the smaller or poorer unit, quite independently of their respective needs for either productive investment or consumption. The credit system leads to a concentration of further power in the already powerful.

Moreover, governments and major institutions are reluctant to face the consequences of any large institution being bankrupted. So such institutions are commonly given assistance when they get into difficulties that is not given to smaller institutions. Their power is correspondingly entrenched, their risks minimized and their incentive to grow reinforced. All of this, of course, imposes costs that are born ultimately by workers and consumers.

As the mass of entrenched money grows the more or less fixed and guaranteed entitlements to interest and service payments on that money grows. The costs that have to be met before an enterprise can make a profit increase. So that these disincentives to investment do not choke economic activity a range of concessions must be introduced, special allowances for depreciation, subsidies, protective tariffs and so on. These in turn have to be paid for, increasing the rate of taxation and so on. For a while inflation helps ease the situation by reducing the rate of real interest on money, but the power of money reasserts itself to demand its due. Inflation encourages destabilizing speculation that must be curbed if the system is to survive. Nevertheless, astute operations in the money market are often much more profitable than productive investment. 107

There are two radical proposals for dealing with this state of affairs, the installation of a ruthless system of laissez-faire capitalism, in which all political protection for capital is removed, and some form of “socialization” of capital in the hands of the state. Both are radically unsatisfactory. The laissez-faire solution provides no way of keeping the state from interfering, granted that captalism tends to crises and both capital and labour will demand that it intervene, reinforcing the state’s own tendency to increase the range of its activities. Moreover, it fails to address itself to the point that capitalism itself generates central financial institutions of enormous power that have an interest in acting in concert rather than competitively to protect their power.8 State socialism involves the centralization of initiative, bureaucracy and insensitivity to consumer needs. It offers workers and enterprises a certain security at the cost of liberty and openness to change.

It would be possible to get the best of both proposals, without the most obvious disadvantages of either, if the major monetary resources of the community were vested in a variety of institutions that were constrained by market requirements but motivated in directing investment by a more comprehensive set of considerations than the market can reflect. Such institutions would grant or lend for production and consumption primarily on their assessment of the relative social utility of those investments, subject to the requirement that their lending be reasonably safe and not inflationary. Their lending would need to be co-ordinated by agreement among themselves and regulated by appropriate rules. Much the same patterns for constituting such bodies would be employed as were sketched out for trustees of natural resources.

The difficulties of ensuring that trustees of money act responsibly are, however, very much more serious than those of controlling the trustees of natural resources. And the tasks facing the trustees are very much more complex and difficult. The root of these difficulties is the general exchangeability of money and the range of economic functions it performs. A specific piece of farmland or a mineral right has a limited number of practicable uses in a given economy, and the consequences of using it in most of these ways will be fairly clear, granted that the relevant scientific knowledge is available. The trustees have a relatively precise problem to deal with. On the other hand, if they only have a certain amount of money, what criteria are to guide them in choosing among the infinity of things that can be done with it? How are all the independent decisions of trustee bodies to be co-ordinated?

There is no abstract solution to the problem. Historically, however, any functioning modern economy will have a variety of financial institutions with a range of explicit and implicit commitments to customers and to other 108institutions. A beginning could be made by injecting social requirements into the market by agreements among those bodies about the rate of interest for various types of loans, the sort of bodies that are to be eligible for loans or other support and so on. The amount of a given currency in circulation and the money supply generally might still be managed by a reserve bank operating independently of any state authority.

Fundamental overall co-ordination would still be secured by the market. However, the preferences expressed in this market would not only be those of people in possession of money, but also those of interests that cannot rely on private money, the interests of children and the yet to be born, community interests in public goods and the needs of people with special problems. Still there are problems about private accumulation of money as long as money means power. It is not enough to feed into the market all those needs that are not adequately reflected in the effective (cash-backed) demand of individual consumers. There is also the problem that some individuals or firms may have such a strong position in a sector of the market because of their wealth that their preferences dominate it.

Let us suppose, for example, that as a result of a revolution, state power has been used to expropriate most large concentrations of wealth and vest them in trustee bodies working in a market economy, and that the state power is subsequently abolished. There then seems to be nothing to prevent the people accumulating wealth except competition and social pressure. There is now no authority that can confiscate such wealth in virtue of its sovereignty. The legitimate power to confiscate is a state power, if anything is, and if we are serious about getting rid of the state that power must go. If we allow state power to confiscate it will be politically impossible to prevent the dynamics of state power from reemerging.

Are there ways in which a community of trustee-controlled economic agencies could prevent the emergence of large concentrations of privately owned wealth, or at least contain their economic effects within fairly narrow bounds? Undoubtedly they could if they were to co-operate amongst themselves. They could restrict the access of private corporations to natural resources and credit, for example, in cases where this seemed desirable. They could subsidize competition against certain corporations where they enjoyed a monopolistic or oligopolistic position. Such practices would be discriminatory, and according to some conceptions of justice, unjust. In the short run they might also be economically inefficient. But they could be effective, and in the long run economically justified. Even if they did involve an economic cost, the political good of preventing the excessive concentration of social power based on private wealth could be worth it. 109

The trustee bodies would be likely to reach agreement about practical plans of this sort only if there were a substantial consensus about the dangers to be avoided and the ways of meeting them. Such agreement would have to rest on objective and thorough analysis. A mere politics of envy would be unstable and blind. The point would not be to bring about some arbitrarily determined equality of wealth but to avert concentration of power that might endanger the public control of major economic resources. So the community might be quite tolerant of people amassing wealth for deferred private consumption or for purposes that were public in character, such as the promotion of some sport or the arts or even some unpopular set of ideas. It would certainly be dangerous if a consortium of trustee bodies arrogated to themselves the function of imposing particular moral ideals on everybody. Their function would basically be to attempt to feed into the market mechanism relevant public needs and to use their power against concrete threats to the system. I shall return to the question of public morality later.

What I am suggesting, then, is a compromise between market-libertarian and socialist means of allocating wealth to productive purposes and controlling the distribution of the product. There is no suggestion that such a compromise would be ideal, but merely that it could work and could provide a solution to contemporary problems, if only it could be brought about. In particular it would not, once established, require anybody to exercise state-like powers. It would have the sort of allocative efficiency that is claimed for competitive markets, with the proviso that some prices and conditions of use of resources would be set monopolistically. These monopolies would be justified as the means of expressing certain social preferences that could not be expressed effectively in the market in any other way. The trustees of these monopolies would be representative of the people affected by their, decisions and responsive to informed public debate. Social control of resources would be doubly mediated, by the market and by the democratic process.

The compromise would not satisfy those socialists who object to market relationships not only because of the concentrations of power and consequent exploitation that they generate but because of the kind of people and of social relationships that they produce. I shall discuss this objection more fully later. For the moment it is sufficient to remark that nobody thinks that market relationships can be abolished overnight. If market relationships are to be abolished there is no doubt that the way to start is by attempting to remove natural resources and capital from purely private control. The scheme I have outlined shows how this might work without the state and without attempting to replace the market with some unspecified means, of social decision-making. Moreover, it is open to development towards a fuller 110form of socialism if associations are formed that gradually extend the areas in which free co-operation replaces market competition.

Labour

I have argued that in regard to land and money the market could be modified so as to feed into it as monopoly prices and conditions of use those socially desirable requirements that are not otherwise reflected in market prices. The ground for the exercise of such monopoly power on behalf of the community is that wealth is to a large extent a product of the community, that its possession confers great power which needs to be controlled, and that there are interests, especially those of future generations, that can be protected in no other way.

Moreover, making wealth, natural resources or money, available on the open market to all at prices and under conditions set with an eye to the public interest seems a sensible and equitable way of assuring they will be well used. The specific use is up to the entrepreneurs, whether they be workers’ cooperatives or individuals, so that decentralized initiative is preserved. The success or failure of enterprise depends on the market. There is no need for further regulation.

But what of labour itself? Is it not also a product of the community that has educated it? The community has produced and transmitted the culture, technology and relationships that labour depends on in operation, and that give it its meaning and value. What is done with labour affects the future of the community just as surely as what is done with land or money. “Human capital”, it is said, is “our greatest resource”. Is it not, then, equally necessary that it be so directed that it is used for common purposes? Moreover, talents are very unequally distributed. If we are going to refuse to allow accidents of inheritance to influence the access of people to natural resources and money, is it not equally appropriate that labour too should be pooled, according to the maxim “From each according to ability, to each according to need”?

Such a pooling of labour is both possible and natural in small communities where the ties of mutual interdependence are strong and readily visible, where the contribution of each person to the life of the community is constantly being appraised by others and where there is little disagreement about what the contribution of each should be. The range of common goods is small but each person shares in the decisions, the work and the results. The individual counts significantly, having a say, making substantial contribution to the work force and to the enjoyment of the results. The larger the scale, the less the mechanism on which community depends can operate flexibly and the less satisfaction they can provide to most of the participants. Requirements become regularized and systematized. Routine replaces challenge, the individual becomes a cog in a machine, required 111to grind on reliably. Organization designed for efficiency removes all the variability, wealth of random communication and mutual interest that make a community.

To socialize labour by subjecting it to organization radically destroys small communities and thus destroys the possibility of a discipline that is not simply oppressive. So contract and enforcement of contract replace role and role-satisfaction as the social basis of work for common goals for most people, at least outside the ambit of friendships and family relationships. One sells one’s labour on the market for the best price one can get, alienating it for a specified time in exchange for the money one needs to live one’s personal life in freedom. Let us prescind, for the moment, from exploitation, from the fact that people are normally forced to sell their labour power for less than the value of its product. There are still many repulsive features in this situation. Kinds of labour are rewarded roughly in proportion to the amount of training and experience they require, even though much of that training and experience has been at community expense. Most jobs are insecure. A person can be dismissed without any failure on his or her part and without regard to the effects of dismissal on the person’s life. There is a continual struggle over the price of labour power which is also destructive in many of its effects on people and their relationships.

Nevertheless, in a large-scale society there seems no acceptable alternative to the wage contract as the basis of social co-ordination of labour. What can be done to ameliorate it? It would seem that the most desirable situation would be one in which everybody was assured of a minimal living whether they chose to work or not. The inducement to work would be a combination of the interest of the work and the rewards for doing things that people wanted to be done but did not want to do. In such circumstances one might expect a great variety of arrangements to emerge as people chose the sort of contracts that suited their interests, some seeking immediate monetary return, others long-term returns, others job-satisfaction and so on. In such a market one would expect the most unpleasant jobs to be the most highly paid, and prestigious and interesting jobs to attract little extrinsic remuneration.

Those who chose not to sell their labour on the market would not necessarily be a social burden. They might participate in different voluntary associations for whatever purposes they preferred. The activities of many of these associations would enrich the life of the community beyond their membership, as so many sporting, cultural, humanitarian, educational and political associations now do. In these associations the role of money would be reduced as far as possible by switching labour to relatively costless goods, that is to say, goods that provide sufficient rewards to the supplier in most circumstances to ensure that there will be an abundant supply. The existence 112of such a varied community life presupposes a variety of readily accessible material facilities, many of which would have to be supplied as common goods; libraries, computing facilities, playing fields, halls and perhaps communications equipment.

[It is now clear that the state of affairs postulated here neglects a number of important factors. If they are assured of welfare support no matter what they do or fail to do, many people, especially those from already disadvantaged backgrounds, will lack the motivation to educate themselves so as to be prepared to take an active role in the workforce where unskilled labour is in oversupply. The attraction of criminal sub-cultures for those with nothing to do that is socially approved and the problems of drugs further complicate the matter.]

The achievement of such a state of affairs is conditional on further substantial increases in the productivity of paid labour coupled with a substantial shift in demand away from products where labour is a cost towards those where it is, in appropriate circumstances, a benefit. A forced rise in the price of natural resources would probably assist this change, since there is a strong association between unpleasant labour and industries that involve a high use of natural resources. So, for example, people might get used to communicating electronically rather than travelling, using durable and repairable rather than throwaway goods, and using self-renewing or recycled resources rather than mining the earth. The object would be to transfer much work back to local and domestic settings and small co-operative groups where it would form part of a micro-economy of mutual assistance.

The most important economic difficulty in this scenario is that it would make food and housing relatively much more costly, since food production and distribution and building are such heavy users of fuel, soil and minerals, as well as of a good deal of unpleasant labour. Obviously it is very difficult to supply relatively costly items as free goods. Ultimately the labour costs have to be borne by those who work in the money economy. We seem to be caught in a contradiction. Suppose the non-monetary economy is highly successful in supplying most people with satisfying activities. In that case few will work for money and then only for a high return. The result will be that it will be impossible to sustain the supply of food, housing and material services. The rewards for undertaking the unpleasant work on which these goods depend will tend to eat into the product, increasing its price and making it impossible to sustain free support to those who do not do “productive” work.

On the other hand, very many people may not be satisfied with the sort of life that can be sustained mainly by the non-monetary goods. In that case they will try very hard to reduce the price of monetary goods. They will not consent to high prices for natural resources and they will be caught in a 113struggle over the price of various kinds of labour, attempting to raise the price of labour they find congenial or for which they are equipped and lower the price of all other labour. They will try to reverse the policies on which the free supply of public goods depends. In a democratic polity they may prevail.

The dilemma is serious, though not necessarily fatal to the project. There may be points of fairly stable equilibrium for very highly productive economies with diverse populations in which there is a rough balance of power between the forces that tend to undercut monetary rewards too drastically and those that tend to increase them at the expense of natural and common resources. Such a balance of forces would be the easier to maintain in proportion as the variety of forces on each side are dispersed and unable to bring consolidated pressure to bear on the outcome.9

Short of paying people a wage even if they do not engage in production for the market, there are other possibilities. Granted some generous assistance for the disadvantaged, a social insurance scheme that was both compulsory and “progressive” in its incidence would go some way towards securing the same object. One would qualify for benefits only on the basis of past contributions or one’s willingness to work at whatever job was offered. It would, of course, be easy to use such a scheme to conscript people for work in any situation where employment was hard to get. So unions would try to insist on minimum wages and conditions of employment, in effect preventing the market from driving down the price of labour power, in spite of its oversupply.

Libertarian economists insist that the effect of such restrictions is to make employing the unemployed less attractive. And so it does. Unfortunately for the unemployed, there are kinds of labour that a given market does not want at any price, and it is not always possible for labour to change its skills and capabilities. But the pressure that the market exerts on those who can change occupations to do so cannot be relaxed too much or its effectiveness in allocating labour will be impaired.

So once again we are in a conflict that admits of no stable resolution. The free market is attractive to the extent that one has a genuine choice about what to sell and what to buy. The worker without reserves is in the position of having to accept whatever price is offered or whatever conditions are attached to unemployment assistance. The interests of employers lie in driving down that price, and by and large employers do have reserves. At worst they can spend their capital. But supplying the worker with adequate reserves to tide him or her over the period of unemployment tends to reverse the advantage in favour of the worker. If there is no particular pressure on the worker to retrain or relocate how is change to be brought about in the interests of efficiency?

The difficulty is not resolved by making the workers corporately their own employer. The question is not just one of the allocation of resources between 114workers as consumer and producers. It is mainly a question of allocating work among workers. In so far as that question is decided by the political power of fractions within the working population there will always be conflict about how much protection from market forces is to be given to any one section of the workforce. For ultimately that protection has to be paid for by the insurance premiums that fall on the rest.

Such issues must be made into issues of equity rather than relative power, not only for the sake of equity but for the sake of reasonable security and stability for individuals, groups and the community as a whole. So there must be a judicial rather than a political approach to questions of what are fair conditions of work.10 The decisions will have to be in terms of community standards of fairness of opportunity, having consideration for the needs of all concerned and the good functioning of a free market. Such judgements would proceed not by the application of rigid standards but by piecemeal adjustments of entitlements in the light of problems that arose and of conceptions of what constitutes desirable change.

Once again I would urge that if these decisions fell to representative committees charged with disbursing public funds it should be possible, granted a suitable degree of social consensus, for acceptable judgements to be made and secure acceptance without recourse to state power. In addition to securing a livelihood for those the market does not want to employ and a genuine choice for those who can be employed, systems that offer a reasonable livelihood even to those who do not produce marketable commodities would be efficient in economic terms in distributing labour that was offered on the market. There would be less pressure to feather-bedding, more willingness on the part of workers to accept diverse and flexible conditions of employment, and perhaps a more stable consumer demand. Such a market might serve as a stepping-stone towards transcending market relationships if the non-market sector of the economy in which people produce public goods for the joy of it gradually subsumed more and more labour.

We are all willing to do difficult and unpleasant things when they are an integral part of some overall task that is highly rewarding. The essential thing is that the connection between the unpleasant elements and the overall achievement be close and personal. Such close connections can be preserved only in small groups where a team spirit can be sustained. Communitarians have rightly emphasized that the crucial social change that needs to be made in overcoming commodity relations in the case of labour is the reconstruction of production so as to institute teamwork rather than atomized relationships as the typical form of the organization of work. Considerable technological ingenuity will be called for in many cases. But in most it is mainly a matter 115of getting rid of the bureaucratic imperative for control from above in favour of more “horizontal” kinds of co-ordination.

Commodities and consumption

One of the central features of the philosophical background and practical force of the “mixed” economy that I am advocating is the rejection of any uniformity of moral ideals. There do, of course, have to be generally accepted moral prohibitions and duties that are enforced by public opinion. But these would relate only to a minimal morality, concerned primarily with the avoidance of evils. There are some questions about which substantial disagreements ought to be possible without fracturing the basic moral unity of the society. For instance, What characteristics are better or more praiseworthy or more important? What balance is to be struck between self-interest and altruism? What others have most claim on benevolence? and What sort of striving for ideals is desirable?

So it should be possible without too much difficulty to construct for oneself a relatively solitary existence or to form a highly integrated commune, to work very hard and accumulate personal wealth for consumption or to promote some end of one’s own, or to live in relative security with a minimum of possessions. There is no way in which such a variety of lifestyles can be accommodated without a great variety of goods being available in the form of commodities. What one would hope is that in a society where everybody was assured of the basic necessities of life on conditions that were not very onerous, and in which there was ample opportunity for everybody who wanted to participate in public life, the symbolic importance of commodities as status symbols would decline. They would become purely instrumental to practical purposes. Granted a rich community life there would be plenty of other kinds of satisfaction available.

Nevertheless, there is no reason for believing that even in a dominantly communitarian culture desires for personal wealth would disappear. I believe that it is essential that they not be suppressed but be given ample opportunity for fulfilment under suitable conditions. Attempts to force conformity to a communitarian ideal guarantee that personal acquisitiveness and ambition will find hypocritical expression in the pursuit of ostensibly altruistic goals. Providing these desires with legitimate and accessible forms of fulfilment is at least a condition of keeping them from dominating public life. If people are prepared to pay the price the community demands for the use of the means of acquiring wealth they should be able to do so. One may want to buy a yacht and sail around the world, another to acquire a house with a beautiful view, another to set up some project that no public body is prepared to support. Others may simply want to show that they are smarter than their competitors. 116

Again, the existence of commodity relations is the condition of free and flexible communal consumption by voluntary associations. No smorgasbord can cater for every taste. There are enormous differences in cost in satisfying diverse tastes, whether they be individual or collective. One commune will want a swimming pool, a sauna, a garden and a children’s playground. Another will sacrifice these things in favour of an inner-city location. The only way in which these various demands can be reconciled and costed is by the market. A great variety of amenities ranging from pleasant outlooks to building hardware to caviar have to be available as commodities. Correspondingly, as we have already seen, the labour by which people earn entitlements to these things must also be traded as a commodity.

We already know that commodity relationships and communal relationships can coexist. Every family, every voluntary association and every political movement offers instances of people who in some of their relationships work for common goals and in others for purely personal gain. No doubt the preponderance of egoistic behaviour may need to be redressed. But we are talking about a change of emphasis not a radical moral and social conversion.

Nothing can alter the fact that in any society short of paradisal abundance many people will have some unsatisfied desires and that the easiest way of satisfying them will be by such means as theft, misrepresentation, extortion and corruption. No doubt commodity relationships often encourage desires and make it easier to employ immoral means to satisfy them. Any foreseeable society is going to have the problem of preventing and rectifying crime. But what is of particular significance to the sort of society I am advocating is that the various public bodies be on the whole incorruptible, and do not become instruments of theft, extortion and oppression.

In the main my proposal relies on the fact that their membership is chosen by lot, changed regularly, and obliged to conduct all its proceedings in ways that are open to public scrutiny, especially the scrutiny of their predecessors and of those who hope to be chosen for office. Such scrutiny, however, can only work to detect systematic misallocation of resources, as opposed to episodic fraud, when the costs and benefits of what is done are clearly established. In the case of most of those costs and benefits there is no way of quantifying them except through market prices. No other sort of quantitative measure will do, because what has to be established is not some natural property of the things in question but how much effective demand there is for them. Even while goods are not directly marketable their value has to be established in relation to things that have a market price if any straightforward cost-benefit analysis is to be possible.

This is not to suggest that cost-benefit analysis based on market pricing is even in principle the ideal form of rational decision procedure for the 117allocation of resources. It is not, in my view, even in those ideal situations pictured in economists’ models, for it is by no means obvious that it is entirely sensible, granted the sort of being’s that we are, to try to be “rational” in the economist’s sense. Nor is it always morally desirable. The point simply is that even when we depart from it we need some common bench-mark that can be clearly established if we are to be clear about the way in which different proposals are to be compared.

There are many grounds on which one can argue that a specific cost-benefit analysis should be overridden. But few of these will be absolute prohibitions. Usually it is a matter of weighing something that is not directly quantifiable against something that the market can put a price on. Such unique and inalienable things as traditions, sentiments and friendships cannot be priced. But there may be prices that we are not prepared to pay to preserve them. It is desirable that we face such issues clearly, especially in public life. Not to do so is to encourage deception, mystification and manipulation, to ask to be deceived and defrauded.

It may well be that in time we shall discover other and better ways of accommodating a large variety of diverse preferences than by market relationships. Until we do we cannot have any positive reason for thinking that communism as the great ninteenth-century founders envisaged it is socially possible. There are, I believe, good reasons for wanting to go in that direction. But we can only go anywhere with the means that we have at hand and that will work within the range of conditions that we can bank on. Revolution does not create new relationships. They emerge out of gradual social change, especially the emergence and diffusion of new practices. New practices can be introduced deliberately only when they can be clearly described and taught. Even then they will not endure unless they become interwoven with the fabric of social practices and social motivations. For the most part we have to build new societies with the methods of the old because there are no other methods that we know how to operate. What is important if we are to change the results of using those old methods, is to change the combinations and circumstances in which they are used.