Striking FOR Capitalism

from Forbes

Around here we usually make fun of Bolivarian socialism by reference to the idiocies which Nicolas Maduro has been imposing upon the people of Venezuela. They do, after all, call their system “Bolivarian socialism.” Across the continent, in Bolivia, we also have a closely related Bolivian socialism. Evo Morales has often said that he takes inspiration from Hugo Chavez, and that the system he is using in Bolivia is similar. So, Bolivarian socialism in Bolivia then. Umm, perhaps both Bolivian and Bolivarian socialism?

This incident is not one to make fun of - Rodolfo Illanes, a government minister, has been beaten to death by striking miners. That’s not something to joke about. And yet it’s worth pointing out what the miners are actually striking against: socialism. They want the right to work with capitalist companies, the one and very thing which the government is determined they should not be allowed to do. There is of course a simple solution here which is that there should be a free market. No, not just the free market in who may buy and sell what, but a free market in which forms of organisation should be used to do what. This is something which we already allow – people can set up an organisation upon whatever lines they like. We do rule out slavery, child labor and so on, but other than that you can set up a socialist organisation, a cooperative, one owned by the workers, the customers, whatever you wish, as well as the more capitalist idea of a limited company with outside shareholders.

Those striking Bolivian miners are doing so for the freedom which we already possess. And why shouldn’t they also have said freedom?

The story itself:

La Paz (Bolivia): Striking miners in Bolivia kidnapped and beat to death the country’s deputy interior minister after he traveled to the area to mediate in the bitter conflict over mining laws, officials said.

Not good, not good at all.

Earlier, Romero said that Illanes had been kidnapped and possibly tortured, but local media reports that he had been killed by the miners had not been confirmed.

But late on Thursday Romero and Defense Minister Reymi said that the vice minister of government had been beaten to death by the miners, who are demanding more rights, including the right to associate with private companies.

That’s the odd bit there. For these protests have been going on for some time. From earlier in the month:

Bolivian cooperative mineworkers are threatening to radicalize their protests against legislative changes after the government arrested 11 miners during clashes with police.

Mining cooperative federations Fencomin and Fedecomin, which erected roadblocks around the country last week to protest against alleged changes to the country’s general cooperative law, gave the government a 48-hour ultimatum to release their members before occupying government buildings.

The background to this is that Evo Morales nationalised the mines (and all of the country’s mineral resources) soon after being elected in 2006. The cooperatives are able to gain a licence to mine such deposits. Great – but the government insists that such cooperatives cannot then team up with private sector companies. And that’s what the protest is about. Because the miners have realised the thing about mining – it’s a capital intensive business and cooperatives don’t really have any manner of raising large amounts of capital.

The National Federation of Mining Co-operatives of Bolivia, once strong allies of President Morales, began what they said would be an indefinite protest after negotiations failed.

Protesters have been demanding more mining concessions, the right to work for private companies, and greater union representation.

Again, this is a protest against the imposition of socialism, they are demanding the right to be able to work with and for capitalists:

The government says deals between the mining co-operatives and private sector companies is not allowed under the constitution and claimed the real objective of the protest is “blackmail” over changes to the law.

Just so that we’re all entirely clear here. This is not socialism as being price fixing, nor the government owning everything. This isn’t about the idiocy of the Soviet Union’s economic structures. Nor is it about central planning. This is about the proper definition of socialism in an economic sense – the communal ownership of productive assets, as opposed to the capitalist. A workers’ coop (say, Publix or WinCo supermarket chains in the US, John Lewis/Waitrose in the U.K.) is a socialist organisation. The workers within the organisation own the organisation itself. Those examples work very well. As do also Walmart, a capitalist organisation, and Tesco, similarly capitalist. The definition is in who owns. There are other variants, there can be producer coops (many farmers belong to one or another), it can be customer owned (the Co Op in the U.K.), management owned (most legal firms and partnerships) but the point of differentiation is that in a capitalist system it is outsiders who provide the capital and own the organisation, in a socialist one insiders.

Both have their advantages, both have their downsides. And how to work out which is the best one to use in a certain circumstance is one of the things we have markets for. As long as an organisation competes in said market then the market in forms of control is just fine.

What we actually find is that capitalist organisations can work very well as socialist organisations, capital intensive ones not so much. Take a stylised and not very accurate idea of a steel mill using a blast furnace. That might require $1 billion in capital to get up and running. You might end up with 10,000 workers at such a plant. That means, if the workers are going to supply the capital, that you’ve got to find 10,000 would be steel workers with $100,000 each to put into the project. I submit that this is unlikely to be successful as an enterprise. On the other hand say that we’re trying to write a new app. We need four laptops, eight months of time and a crate of Ramen. We might well find four programmers who would chip in to create that and in fact we do, the economic landscape is simply littered with people doing exactly that. And they, as both the workers and the investors, own the resultant company. It is, in our definition here, a socialist organisation.

At which point to the Bolivarian miners. It is indeed possible to go mining with little more than a shovel (spades are what farmers use) and a hard hat but you’re never going to make much money doing so. Income will be low, barely above subsistence level. What is needed is capital, vast great gobs of it, to buy the machinery to make the mines more productive per man hour of labor. And vast great gobs of capital is not something that Bolivian miners up on the altiplano have. Thus their desire to work with and for private companies who can provide that necessary and essential ingredient.

It is possible to say that the capitalists will simply be exploiting the workers. This Marxist idea that all value comes from labor and thus if labor isn’t getting all the value created then they are being expropriated of the sweat of their brow. It is also possible to be sensible here. The employment of more capital would enable the purchase of more advanced machinery. That would raise productivity per labor hour. That, in turn, would raise the wages of the miners. Thus, some of the extra value created by the addition of the capital flows to the labor. Or, if we’re to use the Marxist logic, labor is expropriating the value added by the capital. And, of course, why not? That is what we’re attempting to achieve in an economy after all, a general rise in livings standards for the general guy.

The Bolivian miners have realized this. They know that they will be better off if they can gain access to more capital. Capital which they themselves don’t have – and capital which can be only accessed by splitting the proceeds with the capitalists who have the capital.

Thus these protests. At heart the entire argument is one against the imposition of socialism. Again, there’s absolutely nothing at all wrong with socialism, in this sense of ownership, in certain times and places. However, it’s inappropriate in other times and places. Specifically, when large amounts of capital are needed. Mining needs large amounts of capital – therefore socialism isn’t the right structure for this activity.

But it is fun to see the workers striking in favor of capitalism, isn’t it?