At least one critical similarity is that this plan relies on people ignoring economic incentives, and tries to handwave this away by pretending that people will cooperate in the face of free rider dynamics in the hopes of future payoffs. If that was true, game theory would be a lot simpler.
Are you on Data Secrets Lox? That is much more the place for this sort of discussion, and it would let us talk about whatever you like without transgressing the no politics board.
I’m not handwaving anything I wrote a whole section about how experiments contradict this and what could explain this:
“Experiments have shown that people randomly allocated to do tasks in groups where they can elect their leaders and/or choose their pay structures are more productive than those who are led by an unelected manager who makes pay choices for them.[20] One study looked at real firms with high levels of worker ownership of shares in the company and found that workers are keener to monitor others, making them more productive than those with low or no ownership of shares and directly contradicting the free rider hypothesis.[21] It turns out there are potential benefits to giving workers control and a stake in the running of the organization they work for. This allows workers to play a key role in decision making and reorient the goals of the organization.[22]
One explanation for this phenomenon is that of “localized knowledge”. According to economist Friedrich Hayek, top-down organizers have difficulty harnessing and coordinating around local knowledge, and the policies they write that are the same across a wide range of circumstances don’t account for the “particular circumstances of time and place”.[23] (For examples of this, read Seeing Like a State by political scientist James Scott) Those who make the top-down policies in a traditional company are different to those who have to follow them. In addition, those who manage the company are most often different to those who own the company. These groups have different incentives and accumulate different knowledge. This means that co-ops have two main advantages:
Workers can harness their collective knowledge to make running the firm more effective.
Workers can use their voting power to ensure the organization is more aligned with their values.
Interestingly enough, I have yet to come across a co-op that uses the state of the art of social choice theory, so they could potentially get a lot lot better.“
The specific handwave I’m referring to is Amartya Sen’s.
“In the case of the free rider hypothesis, these ‘rational fools’ act based on such a narrow conception of self-interest that they don’t take into account the obviously damaging long-term consequences of their behavior, both to the firm and ultimately to themselves. Normal, reasonable people—who are different to rational economic man—are usually happy to put efforts into a collective endeavor that will deliver benefits for them in the long run, even if that means foregoing some short-term gains.”
This sounds like it would predict that people reliably cooperate on prisoner’s dilemmas, and pick stag in stag hunts. In reality, of course, that’s not a thing! Cooperation exists, but tends to require coordination mechanisms. Worse, it sounds like it’s advocating an incoherent decision theory. While there are certainly times where it’s wise to make a choice that isn’t the best in the most narrow, myopic possible sense (Newcomb’s problem is the obvious example, or superrationality dynamics), that’s very different than putting efforts into collective endeavor in the hopes of collective success.
The evidence you cite is interesting, though Lao Mein’s evidence suggests it isn’t a slam dunk. But Sen is committing a fallacy here, and the same fallacy as was often used in support of socialist regimes. As such, it’s a valid answer to tailcalled’s question.
I cite four different studies that show that the theory doesn’t match the observations, Lao Mein doesn’t cite anything. This is the most extreme version of being a selective skeptic.
He cites the observation that socialized firms have not taken over the economy. That’s clearly true and clearly relevant. Your response was that you’d already explained why socialized firms might not take over even if they were productive. What were those reasons again? Reviewing your post, it looks like it might be the difficulty of gaining investment and brain drain from the most productive workers leaving, but both of those reasons would be strong arguments against socialization. Rose Wrist’s ideas for gaining investment anyway are interesting, but until socialized firms actually do raise enough funding to compete, saying that they theoretically maybe can sounds remarkably hollow.
The point of evidence is to see things that are more likely under one hypothesis than another. In the world where socialized firms are better, I do not expect to see them failing to take over. In the world where they are not, I do expect that it’s possible to generate arbitrarily long lists of pro-socialism citations.
The strength of a case depends on the strength of the evidence, not on the number of citations!
I cited controlled experiments, you counter with an observation that I have already responded to in both the post and the comments:
I explained this in this section:
One issue that arises with starting a socialist firms is acquiring initial investing.[27] This is probably because co-ops want to maximize income (wages), not profits. They pursue the interests of their members rather than investors and may sometimes opt to increase wages instead of profits. Capitalist firms on the other hand are explicitly investor owned so investor interests will take priority.
A socialist firm can be more productive and not dominate the economy if it’s hard to start a socialist firm.
The strength of a case depends on the strength of the evidence, not on the number of citations!
At least one critical similarity is that this plan relies on people ignoring economic incentives, and tries to handwave this away by pretending that people will cooperate in the face of free rider dynamics in the hopes of future payoffs. If that was true, game theory would be a lot simpler.
Are you on Data Secrets Lox? That is much more the place for this sort of discussion, and it would let us talk about whatever you like without transgressing the no politics board.
I’m not handwaving anything I wrote a whole section about how experiments contradict this and what could explain this:
“Experiments have shown that people randomly allocated to do tasks in groups where they can elect their leaders and/or choose their pay structures are more productive than those who are led by an unelected manager who makes pay choices for them.[20] One study looked at real firms with high levels of worker ownership of shares in the company and found that workers are keener to monitor others, making them more productive than those with low or no ownership of shares and directly contradicting the free rider hypothesis.[21] It turns out there are potential benefits to giving workers control and a stake in the running of the organization they work for. This allows workers to play a key role in decision making and reorient the goals of the organization.[22] One explanation for this phenomenon is that of “localized knowledge”. According to economist Friedrich Hayek, top-down organizers have difficulty harnessing and coordinating around local knowledge, and the policies they write that are the same across a wide range of circumstances don’t account for the “particular circumstances of time and place”.[23] (For examples of this, read Seeing Like a State by political scientist James Scott) Those who make the top-down policies in a traditional company are different to those who have to follow them. In addition, those who manage the company are most often different to those who own the company. These groups have different incentives and accumulate different knowledge. This means that co-ops have two main advantages:
Workers can harness their collective knowledge to make running the firm more effective. Workers can use their voting power to ensure the organization is more aligned with their values. Interestingly enough, I have yet to come across a co-op that uses the state of the art of social choice theory, so they could potentially get a lot lot better.“
The specific handwave I’m referring to is Amartya Sen’s.
“In the case of the free rider hypothesis, these ‘rational fools’ act based on such a narrow conception of self-interest that they don’t take into account the obviously damaging long-term consequences of their behavior, both to the firm and ultimately to themselves. Normal, reasonable people—who are different to rational economic man—are usually happy to put efforts into a collective endeavor that will deliver benefits for them in the long run, even if that means foregoing some short-term gains.”
This sounds like it would predict that people reliably cooperate on prisoner’s dilemmas, and pick stag in stag hunts. In reality, of course, that’s not a thing! Cooperation exists, but tends to require coordination mechanisms. Worse, it sounds like it’s advocating an incoherent decision theory. While there are certainly times where it’s wise to make a choice that isn’t the best in the most narrow, myopic possible sense (Newcomb’s problem is the obvious example, or superrationality dynamics), that’s very different than putting efforts into collective endeavor in the hopes of collective success.
The evidence you cite is interesting, though Lao Mein’s evidence suggests it isn’t a slam dunk. But Sen is committing a fallacy here, and the same fallacy as was often used in support of socialist regimes. As such, it’s a valid answer to tailcalled’s question.
I cite four different studies that show that the theory doesn’t match the observations, Lao Mein doesn’t cite anything. This is the most extreme version of being a selective skeptic.
He cites the observation that socialized firms have not taken over the economy. That’s clearly true and clearly relevant. Your response was that you’d already explained why socialized firms might not take over even if they were productive. What were those reasons again? Reviewing your post, it looks like it might be the difficulty of gaining investment and brain drain from the most productive workers leaving, but both of those reasons would be strong arguments against socialization. Rose Wrist’s ideas for gaining investment anyway are interesting, but until socialized firms actually do raise enough funding to compete, saying that they theoretically maybe can sounds remarkably hollow.
The point of evidence is to see things that are more likely under one hypothesis than another. In the world where socialized firms are better, I do not expect to see them failing to take over. In the world where they are not, I do expect that it’s possible to generate arbitrarily long lists of pro-socialism citations.
The strength of a case depends on the strength of the evidence, not on the number of citations!
I cited controlled experiments, you counter with an observation that I have already responded to in both the post and the comments:
You are not engaging with the evidence I cited.