In my previous post on Communist Economics, I established that communism would have to be based on standards of use rather than standards of exchange.

THE “COLLECTIVE WAREHOUSE”:  EVERYTHING OUTSIDE OF THE BEDROOM

Under communism, we might consider everything outside of the bedroom to be society’s “collective warehouse.”  People would be able to take things out of that collective warehouse and use those things as they saw fit.

Perhaps each individual could be allowed to legally designate a small space of specified dimensions as his or her “bedroom” that would have extra privacy protections and restrictions on the ability of others to use their personal possessions (such as toothbrushes or dildos).  The dimensions would have to be legally specified so that, for example, a person couldn’t designate a huge warehouse as his or her “bedroom” and use that warehouse to hoard useful wealth and thereby prevent others from using that wealth.

Think of things that you wouldn’t want others using under any other circumstance solely due to the “ick” factor.  Those could be considered “personal possessions” and could be stored in a private space such as a bedroom.

Everything else, though, would be the collective warehouse.  Yes, that’s right—others would be legally entitled to “break” into your house (if you were foolish enough to try to put locks on your house in the first place) and USE your stuff—but only if you were not using it.  Likewise, you would be legally entitled to “break” into others’ homes and use their stuff when they were not using it.  Perhaps local councils could figure out a community inventory system for keeping track of where each thing was last seen and maybe a scheduling system for when everyone in a community might get to use a lawn mower or a ladder or other things like that.

Workplaces would replicate this system on a larger and probably more organized scale—each workplace could “break” into the premises of another workplace and use their machinery and tools when those things were not already in use, and vice-versa for that workplace getting to use other workplaces’ tools.

This way of living would require a huge change in mentality at first, for sure.  The first impulse of a lot of modern-day Americans would be to grab their guns and shoot the first person who tried to “break” into “their” house to use that portion of the collective wealth, not trusting that this communist system of use would endure, and trying to ensure that, if society slipped back into a capitalist society centered around exchange, then they would be able to physically hold onto as much of “their” “property” as possible.

But over time, with enough iterated reciprocations where Americans got to see that, just as others could “break” into their homes and use their stuff, they could just as easily “break” into others’ homes and use their stuff, even the most possessive and territorially-minded Americans could get used to this new way of living.

No, the real difficulty with this system would come in those inevitable circumstances when two people very very badly wanted to be able to use the same item or service at the same time for mutually-exclusive purposes.

These scenarios could be made increasingly rare by creating more and more of a condition of “superabundance” in society (for example, sharing the use of pens or pencils is hardly a big deal in society nowadays because they are so easy to come by, and in America there are more than enough pencils for everyone to be able to use a pencil, even if every American wanted to use a pencil at the exact same moment).

However, we should be realistic about the likely progress towards “superabundance” for other, more complex goods and services.

For example, not everyone will, at first (or even for quite some time) be able to pilot his or her own helicopter.  Perhaps there might be a situation where three people are arguing over the use of a helicopter in a particular place on a particular day.  One person wants to use it to help fight wildfires.  Another person wants to use it for coast guard rescue.  Another person wants to use it for a personal hiking trip.

If two or more people claim that they REALLY REALLY need to be able to use a helicopter for different purposes at the same time, then society will simply need some set of standards of use to determine who will get to use the helicopter first, and who will be put on the waiting list to be the next in line to use a helicopter as soon as one was freed up for use.

WHO GETS TO USE WHAT AND WHEN?

A number of things could factor into the decision:

The principle of charity:  who NEEDS it more?  This is likely to be quite subjective, although in the case of things like medicine, there should often exist objective ways of determining what medical supplies or procedures a person will need in order to survive and recover.  Still, society should be wary of “utility monsters” and incentives to increase and “weaponize” one’s own subjective sense of suffering in order to “win the charity olympics.”  Considerations of charity would need to be balanced with another criterion:

The principle of social benefit:  who will use this resources to create the most benefit for society?

Under capitalism, money is “supposed” to be a measure of one’s cumulative social benefit that one has provided for society with one’s own labor.  However, money is quite an imperfect measure of this for all sorts of reasons that would be well-known to Marxists, so I won’t go into this point right now.

In the last post, I speculated on how there could be a personal “prestige” index compiled by various voluntary and/or official organizations (perhaps multiple competing ones in order to give no single organization a monopoly on this important societal function).  The interface for users might look like facebook or something similar, with a certain amount of “thumbs-ups” next to a person’s name, profile picture, and ID number.

Councils at various levels (local, regional, national, international) might take such “personal prestige” indices into account when awarding first usage of a good or service to one party or another.  Likewise, in order to motivate people to produce the correct goods and services that society wants, councils could award certain non-exchangeable perks to people with particularly high prestige points.

How might these organizations compile their indexes of everyone’s personal “prestige” so as to make it not entirely a subjective and nepotistic popularity contest?

HOW TO CALCULATE THE “SOCIAL BENEFIT” OF A PERSON’S ACTIVITIES

Let’s think about the activities that we would want to reward:

• Activities that create goods or services that have high “factor utilization.”

This indicates that the supply of this good or service is relatively scarce.  For example, if America’s existing stock of helicopters is being used by someone 24/7 all the time, and the waiting list is huge, then that is a sign that society needs to produce more helicopters.  On the other hand, if it is determined that, on average, only about 2% of size-15 black dress shoes get worn, then society probably does not need more size-15 black dress shoes, and so we should not supply scarce resources to a factory making those shoes.   Perhaps we should also not be rewarding the factory workers/planners with extra non-exchangeable perks for making these redundant shoes instead of having the good sense to retool their factor to producing something else.

A good or service could have a factor utilization ranging from 0% (let’s say everyone magically stopped getting sick in any way, and all of our doctors suddenly had nothing to do but sit around playing internet solitaire) to over 100% (if the good or service was being utilized at the maximum possible rate, AND there was still a waiting list).  If 100 million people had stated on a waiting list that they wanted to use a certain brand of smartphone, but only 50 million of those smartphones existed, then the factor utilization rate would be 200% in this case.

• Activities that create goods that have the smallest percentage of preferred inventory duration and/or inventory stock.

For some consumable goods, society might want to vote on setting a target of excess inventory.  Consider milk and cheese, for example.  You might figure that society’s preferred target for milk inventory is 14 days (because that’s about how long milk will last without spoiling).  Let’s say that society only has a 7-day supply of milk available (estimated by noticing how quickly people are taking milk out of warehouses and how quickly new shipments are arriving.  And remember that there is no incentive to take milk out of a warehouse and hoard it in your own home because your own home is just another part of the collective warehouse, and someone could just as easily take one of your unopened gallons of milk from your fridge as they could from a nearby warehouse).  Then you would say that the milk inventory is only 50% of the preferred inventory.

Let’s say cheese keeps for 4 months, and society has only 1 month of cheese.  In that case, cheese would only have 25% of the preferred inventory.

The lower the inventory percentage (or, the higher the unfulfilled inventory percentage—50% and 75% in the cases above, respectively), the more urgent it is for society to reward those who work on making more of those things.  On the other hand, if the inventory of milk were 28 days, then the factor utilization rate would be 200%, indicating that about 1/2 of the milk was probably spoiling before it could be drunk.

One could do something similar with capital equipment.  Let’s say that buses will, on average, wear out after 200,000 miles and need to be scrapped and completely replaced.  Let’s say society votes to set a target for buses in use to have an average of 50,000 miles on them in order to provide some buffer so that when old buses break down, there are plenty of newer ones ready to fill the gap.  However, let’s say an independent survey finds that buses in use have, on average, 75,000 miles.  In other words, the demand for bus usage is so high that older buses are routinely getting pulled into service, with an inevitably higher rate of breakdowns, delays, and accidents.  It might be that new buses are coming off the assembly line at the same rate that old buses are being retired, but only because some buses are being run past their optimal lifetime to delay their retirement.  In any rate, the target for vehicle miles is 33% lower than the actual average vehicle miles.  So the “inventory” of buses is only 67% percent of what it ought to be.  The lower this inventory number, the more society needs to reward people who work on making buses with more “prestige points.”

• Activities that take only a socially-necessary amount of resources with low factor-utilization and/or high inventory duration and turn them into goods and services with high factor-utilization and/or low inventory duration.

Let’s say that you are working on providing a good or service that is in short supply (which is GOOD!), but you are using up machines and raw materials that are in even shorter supply (BAD!)  We would not want to reward this.  So we would need to create a metric that would take both factors into consideration.

Or let’s suppose that you are working on providing a good or service that is in short supply (which is GOOD!), and you are using up machines and raw materials that are plentiful (also GOOD!), but you are using 1000-times the normal amount of those plentiful raw materials and machine parts to do so.  Even though those raw materials and machine parts are plentiful now, if everyone did like you just did in this case, they would quickly become scarce.

So some calculation of the industry standard, of the amount of “socially-necessary labor-time” in the inputs, would be needed.

• Activities that benefit more people rather than fewer.

Suppose that helicopters have a 10000% utilization rate and bicycles have a 200% utilization rate.  In other words, there might be 1 million helicopters capable of full-time operation, but 100 million people on the waiting list to get full-time use of a personal helicopter.  On the other hand, there are 50 million bicycles in nearly full-time operation, but 100 million people on the waiting list to get full-time use of a personal bicycle.  If you just went by “factor utilization,” then obviously the smart move is to work on making helicopters rather than bicycles.  However, imagine that, for the cost in time and materials to build one helicopter, people could instead build 1000 bicycles.

 

Heck, make the example even more ridiculous.  Suppose that 100 million people have signed up on a waiting list to go on a space tourism mission to orbit Mars, and only 10 people will get to go.  The utilization rate is 1,000,000,000%.  Does that mean that society should plow all of its effort into setting up missions to Mars?

Part of the “problem” is that signing up on waiting lists has been assumed to be free up until now.  After all, we don’t want to hamstring people’s ability to request items based on any sort of measure of exchange-value.  That was the whole point of getting away from capitalism.  Under communism, what people want and need, they can get—as long as the stuff has already been produced in the first place!  If the stuff has not been produced yet, then there is the waiting list.

For goods and services that people have already habitually consumed that communist society will inherit from capitalist society, the accounting is fairly simple.

Let’s go back to the example of milk.  Suppose that, based on previous usage habits, it is estimated that supermarkets have a 14-day inventory of milk on hand, which is right at the societally-chosen target.  Good!

Now let’s assume that people suddenly develop more of a taste for milk, and milk usage increases.  Well, the inventory duration of milk will drop.  This should, somehow, send both the signals and (non-exchangeable perk) incentives for people to produce more milk.  Milk production will increase enough to restore the inventory duration at the desired target.  Vice-versa if consumer tastes suddenly switched from milk to something else.  Then the inventory duration would go above the optimal target, and signals & (non-exchangeable perk) incentives would be transmitted to people to produce less milk and more of something else.

 

Suppose that milk producers increased their production of milk.  That production process would draw upon, for example, glass bottle supplies.  The milk producers would, of course, not pay for glass bottles.  They would just go to the collective warehouse and obtain some glass bottles.  Then the glass bottle inventory duration will fall below target, and signals + (non-exchangeable perk) incentives could be communicated to people to produce more bottles.

By the way, going back to the milk producers for a moment:  there will be a certain number of “socially-necessary” glass bottles that a milk producer would need to use in order to bottle milk.  However, there could be milk producers who handle the bottles clumsily and break half of them.  These milk producers would be asking for twice as many glass bottles from the glass bottle suppliers in proportion to how many actual bottles of milk they would be producing.  If those inept milk producers handled all of their inputs like this, and some independent inspector found that the inept milk producers used inputs that required twice as much socially-necessary labor-time to produce as other milk producers used, then the inept milk producers might have their “prestige points” cut in half.

BUT WHAT ABOUT HOARDING AND GLUTTONY?

Now let’s assume that people try to hoard milk.  Ah, but first of all, why?  What would be the point?  And second of all, how?  Their ownership of that milk that they are not using will not be enforced.

Now let’s assume that some people take milk out of the supermarket, only to dump it in their backyard.  Each day they are seen carrying away gallon after gallon of milk.  And yet, when their neighbors raid their refrigerator, they don’t find any milk.  Let’s assume that people can do some elementary math and figure out that there is no way that these people are actually drinking all of that milk.  Well, then there would need to be some punishment for wasting social wealth—perhaps a loss of “prestige points,” or something more drastic, depending on the situation.  But REALLY, I mean REALLY, someone would have to be fairly pathologically anti-social to pour milk down the drain just to spite the rest of society like this.

For normal people, their actual usage of goods and services will naturally be limited by the number of hours in the day and by the natural appetites of human beings for things like food, alcohol, massages, etc.

Remember, we are talking about USE, not ownership.  There is no limit to how many things a person can own under capitalism.  Bill Gates could own ten thousand cars if he wanted to.  And yet, there would be a limit enforced by the hours available in each day on how many of those cars Bill Gates would actually be able to drive around.  Under communism, those unused cars of his would be made available for others to use when Bill Gates was not using them.

You see?  No money required to coordinate any of this!

Ludwig von Mises famously thought that communism would have a calculation problem without prices.  However, some clever people figured out that you don’t need prices.  All you need is “calculation in kind.”  That is to say, when there is a shortage of something, you produce more of it.  When there is a surplus of something, you produce less of it.

For any particular production process, there will always be a limiting factor.   This is called “Liebig’s Law of the Minimum.”  If that one limiting factor is holding you up (let’s say you are making milk, but you are out of glass bottles to bottle the milk).  Well, society can incentivize the production of that limiting factor until it is no longer the limiting factor, and something else has become the limiting factor.  Let’s say that there are no acute shortages of anything.  Let’s say society has produced stockpiles of every single product and raw material.  Well, in that case the product with the highest factor utilization and/or lowest inventory duration would be the product most likely to become the limiting factor in the near future, so society would get the signal to produce more of that.

This will all be easy to figure out for habitual production lines that communism will inherit from capitalism.  But what about those spaceflights to Mars?….

A hundred years ago, people scarcely dreamed of spaceflights to Mars.  It was not a widely-held want or desire in society.  But maybe 50 years from now…who knows?  Who are we to say that new wants can’t be invented, that desires can’t change?  Who are we to say that the proles should have only modest desires, that they should be content with their basic needs, their most urgent desires, being met?  Capitalism promises much more!  (Of course, it doesn’t deliver hardly any of it, but if capitalism even demonstrates the chance that YOU TOO could someday become wealthy enough to hire your own spaceflight to travel to Mars, or do whatever else you want to do, then that still would beat the certainty of “barracks socialism,” of being limited to one’s bare needs being met).

How should we judge the necessity of producing one of these new wants?  After all, when something like spaceflight to Mars first becomes a want, its supply will still be zero.  “Factor utilization” would be infinitely high.  “Inventory duration” would be infinitesimally low.  By those metrics, it will seem imperative to society to plow everything into making these spaceflights happen.  But intuitively, that doesn’t seem like a good idea.

One thing you could do is hard-cap the utilization rate at 100%.  So, in other words, working on providing some good or service that was in acute shortage (over 100% utilization, with no inventory and with waiting lists) would provide you with some set level of “prestige points,” regardless of how severe that acute shortage was (how long the waiting list).

That way, people could decide which shortages they felt like personally tackling:  the more easily achievable shortage of bicycles, or the more ambitious shortage of spaceflights to Mars.

Either way, they would receive maximum “prestige points” for contributing average work to these projects—average, that is, as judged by their peers in workplace surveys.  Prestige points could be slightly increased or decreased depending on if a person worked slightly worse or better than average, as rated by his or her peers.

And remember that voluntary organizations (possibly competing organizations) would be busy gathering all of this data on inventory durations, factor utilizations, and prestige points.  And councils would afford more weight to those voluntary organizations whose data were deemed more trustworthy.

I would hope that some smart people could consider these considerations for calculating social benefit listed above and come up with some handy equations that would give a clear algorithm to each individual in society of what economic activities they could be doing at any instant to earn the maximum number of “prestige points.”

I will continue working on that algorithm next time….