Recently, I was reminded of an old idea, and realized that much new life has been breathed into it by the current situation, and by the advancement of technology; the idea of Syndicalism, where workers would own their own means of production, with a clear distribution of profits that includes the workers.
While this basic definition is likely to leave out something that many syndicalists care about, I do think it covers the essence of what is special and different about the concept. Although, the actions of law enforcement which uphold the existing distribution of property rights, have clearly stood in the way of a simple syndicalism where the workers claim the means of production. I will now be exploring some of the traditional challenges to the syndicalist model, and how the current and forward looking conditions could open up new options to realize this paradigm by using marginal cost as a tool to get value for workers and consumers, rather than simply an absent owner.
Traditional Limits to Syndicalism
The original, and perhaps insurmountable, limitation to syndicalism is that if the means of production cost too much to afford, they are simply seized from current ownership and their current owners will marshal the forces of the state to use violence against those seizing assets legally owned by someone else. We should not expect this to change. I will not go too in depth on why we should not expect that to change, as that is beyond the scope of this piece.
This means, essentially, that any working syndicates will need some sort of sponsor who is willing to provide the needed funding for the capital required to produce some sort of good or service that labor adds value to. If interest-based financing is used, this will divert profits to money capitalists of some sort, violating the spirit of the movement. There are very few replacements for an angel investor; however historically, those successful enough to become rich have rarely been hesitant to become patrons for causes they want to see advanced in the world. I am confident that there will be at least some people out there, who have both the cash and the vision to support workers sharing in the profits of their labor, and who would be willing to subsidize the initial purchase of their equipment. We will talk more about funding and profit-sharing in a later section.
There are, however, other limitations that must be addressed. The primary barrier to a worker owned business, is that of securing a supply of raw materials, at a pricing basis that is reliable and low enough to operate profitably. This will include the cost of any needed transportation of the input materials, as well as getting the product to customers.
This is especially important if the overhead operating costs require a particular level of throughput to cover. If you raise the price of finished goods, you will sell fewer of them, and be worse off at competing with firms that employ workers at a set low hourly rate. If you are unwilling to pay the market rate for your inputs, or if for some reason there is a restricted market in your inputs, and the big players favor your competitors, you may have trouble acquiring sufficient inputs to keep your business running at a profitable rate. Luckily, some of the same trends that are putting a squeeze on the market price of labor, by increasing the ratio of dollars put to capital vs dollars put to labor, are also making each hour of labor more productive, which is a great opportunity for those wishing to capture the value of their own labor.
Near Zero Marginal Cost Goods and Services
A huge opportunity has been opened up by advancing technologies in the form of goods and services that have a near zero marginal cost. This means that, once you have the relevant capital in place (connected to the relevant infrastructure), the marginal cost of creating one more widget, or of sending content to one more consumer, is effectively near zero, perhaps even too small to bother billing. If one were only to bill the actual cost of delivering one more widget or delivering one more minute of content, the opportunities this presents for syndicates are astounding. In the case of digital goods, the marginal cost will be primarily for inputs like a very small amount of labor, or a very small amount of electricity. If the syndicate can properly track and calculate the marginal costs, the amount of surplus value they can create could be enormous. If you have an organization that is directly attempting to produce goods and services for the benefit of those who own it, even if these means saving money as a consumer, rather than simply profit from selling to others, you can create value beyond the ability of available cash flow to bid for it.
Currently, many digital services are allowing this, albeit with a slight twist: instead of being partial owners of the company, the consumers are actually paying with their own value, perhaps overpaying for it in many cases, and are effectively serving as workers by creating content for the digital platforms they are enjoying the use of. If syndicalists were to instead run a platform that allowed similar value creation, but made the users partial owners, rather than simply collecting the surplus value of their users, this could work just as well. However, what if the content users felt like producing was not content that was easy to monetize in order to pay for the infrastructure and overhead? What if the users wished to have the sort of privacy rights that would keep their information from being effectively sold to third parties? Considering the low marginal cost per user, there is actually a very simple and obvious solution to this concern.
Subscription Services: Present and Future
When a firm models how they will run their business, they need to make sure that the number of units (whether in goods or services) that they are selling will allow them to cover their basic costs so that they can continue to run the firm on a basis that is reliable and is not spending more cash than it is making.
This can be very hard to plan for, especially when you don't know in advance approximately how many units you will be selling within the relevant period of time. When your cost basis for overhead is high, and your marginal cost per unit produced is low, you are often left with the following dilemma: if you do not sell enough units, you will have an oversupply of them, meaning that not only should you hold onto them until you can sell them at a profit, but that you will need to scale down production for the next interval, which involves buying fewer labor hours from your workers, making it harder for them to pay their own expenses leading to lower consumer spending in the market, and generally, causing lower sales.
If you price your units too low, and even if you sell more units, you may not be able to sell enough of them to cover your overhead, even if you sell a large number, due to the insufficient profit per unit. Compounding this, you have to balance attracting customers with low prices, versus making more per customer, but getting fewer customers, as many customers are willing to pay only a lower price to a point, compared to paying higher prices.
Enter the subscription model: by lining up your customers contractually ahead of time, you can count on a flow of cash that will cover your overhead, plus a chunk on top that can handle the marginal costs which are tiny in comparison. Subscriptions come in many flavors. We tend to think of subscriptions as being for media content of some sort, but increasingly, they are also being used to sell physical goods as well. Amazon will give you 10-15% off of certain items, for having them delivered once per month.
Various subscription boxes can send you a monthly collection of items for a low monthly price, and the retail value of the contents often significantly exceeds the subscription cost. Even the Taco Bell app has jumped on the bandwagon, selling a "taco pass" that entitles you to order a taco for in store pickup, once per day, at no additional charge, with the pass itself costing less than half the price of thirty tacos. The expectation of having a dependable customer base is exactly the kind of reliable demand, at under retail cost, that not only keeps customers loyal, but also keeps workers employed.
The syndicates of the future could use the reliability of the subscription model in many ways, including trans-scribing or trans-subscription to other syndicates, providing a web of reliably delivered goods and services in a way that is reliably paid for. Rather than line the pockets of shareholders for large corporations, who do not share profits with their workers, syndicates could provide a high quality of life for their workers, while also providing lots of value at low price to their customers. Workers for syndicates could even get more out of their own money, with all of these great deals, and perhaps even have the opportunity to pay for some of what they need in, in work, instead of cash. The options abound.
The Changing Relationship of Capital and Marginal Labor
The increasing tendency of cutting-edge production to be highly capital intensive, and automated, is one of the biggest forces currently prying apart the once close relationship between marginal labor and profit which has often been labeled notionally as surplus value.
Leaving the heavy theory aside for the moment, the main trend lines of the ratio of labor to capital, as a percentage of cost basis, is clear. As the percentage of the cost basis that is not marginal labor is on the rise, the demand for marginal labor will drop, at least for the production of that good or service. Lowered demand tends to manifest in a falling market price for labor, if the supply is staying similar (or growing). In the abstract, this presents an opportunity to require less labor per worker per week, to accomplish meeting the needs of all.
In reality, not only is that opportunity not realized, but what often replaces it, is actually an increase in the number of hours per week that such a laborer need work to bring in the same income, further increasing the supply of labor (and pressuring its price lower), in feedback loop that ends with the unemployment of those who cannot find demand for their labor at a price that can pay their bills. Raising the minimum wage just raises the price of labor at which marginal workers will become unemployed.
This is where syndicates can really shine. If you are a worker/owner at a firm that produces something of value, you have the opportunity to use your own labor to add value in a way that is multiplied by the means of production that the firm controls, in a way that would just not be possible if the means of production were controlled by an individual, or by a corporation.
Modern means of production are often highly automated, which means that with a very limited amount of labor, you can add a lot of value to the input material. This opens up a space for contributing labor to pay for the things that you need, as long as the syndicate owns the means to produce what you need or desire to acquire. Workers can be scheduled based on the actual coverage needs to operate or oversee the operation of various means of production, rather than being targeted towards a certain number of hours per worker per week. This could result in more leisure time for the workers. At the very least, workers who are serving in a "standby" position, could make better use of their own time, by spending it doing enjoyable things online, while they wait for someone who needs them to operate the means of production.
Alternative Ownership and Arrangement Options
As we noted in the beginning, the biggest weakness of syndicalism is that it effectively requires an explicitly friendly government (or the failure of the government, with the accompanying power vacuum) to actually make it happen. As long as syndicalists are open minded about how they get their ownership in the first place, and to what extent they are willing to share it, there are actually some very reasonable options for getting a firm off the ground these days. Besides the obvious answers like government grants, we now have various crowdfunding platforms available online. Depending on the business model used, a good crowdfunding campaign could not only help you fund a launch for your firm, but also to secure an initial batch of subscribers, who are willing to keep paying for more of the good or service on an ongoing basis.
In particular, there is a huge source of value to be found for both subscribers and the producing firm, in low marginal cost production. If your business model has your overhead covered, you can offer goods or services at near marginal cost, giving you a huge pricing competition edge on your competitors. This opens up all sorts of hybrid models. You can cover your overhead with a small subscription cost for a large number of customers, then charge a relatively low marginal rate per unit, and still have some profits to reinvest in expanding the business, or to distribute among the worker/owners.
You could have a near market rate for regular customers, while having an option for customers to "buy in" and become one of the owners, with the ratio of worker ownership to buy in ownership being contractually specified from the start, and with rules about excess profits being split between workers based on hours worked, and other owners based on share of money contributed, and only paying marginal prices, since they helped fund the overhead and infrastructure.
Firms could diversify into providing the monthly needs of their workers. Rather than pay market prices for the goods and services they need, worker/owners could utilize the means of production owned by their firm or pay other workers to provide the marginal labor (perhaps on a monthly basis, for subscription services). Firms could also acquire and run their own residential communities, to provide needed housing for their workers, with an eye towards keeping costs down, since they won't be needing to pay interest on debts, meaning that they can offer their workers a much lower price than the open market. Firms could contract with other like-minded firms. For instance, a healthcare firm might agree to provide medical visits to another firm at a discount rate, in exchange for the other firm offering the healthcare firm a lower price for prepared food to be delivered daily. The possibilities are extensive.
Other Technological Good News for Syndicalism
There have been very few jobs that have not in some way been drastically affected by advancing technology. We store records electronically, rather than by hand. We process food in factories, rather than by hand. We use transportation powered by stored chemical energy, rather than transportation provided by the work of livestock. We use materials produced in industrial labs, rather than those grown in forests or fields. Increasingly, we are using greater labor-saving devices, rather than doing things in a labor-intensive manner. The end result has been that things are easier to do, to the extent that this has not resulted in an explosion in measurable individual wealth. Why might that be?
For a number of reasons, many of which are arguably not directly a consequence of economics, the distribution of the ownership of currency is very uneven. The result has been that many luxury items, are going to be underpriced (compared to how individuals value them personally), leaving the dollars bidding up the prices of commodities, which are desirable to be acquired for exchange, and not just to be consumed personally.
Underpricing phenomenon is currently a double-edged sword. On the one hand, it can allow people to get something that they value for approximately that asking price, at a price much lower than they would have been willing to pay. This effects wealth far beyond what the price in currency might indicate. On the other hand, this has driven up the price of goods and services that depend heavily on inputs which are commodified. There is so much big money chasing the control of goods that can be reliably sold to others, that any savings in goods and services, which are less dependent on commodities, will be erased.
With the advent of technology such as 3D printing, which can streamline the production of more means of production, syndicates could advance production beyond the whims of the market. In many cases, the market will see higher profits at meeting the needs of, say, 60% of consumers who desire a good or service, then pricing the rest out of the market.
Syndicates, especially those with a patron who wished to spread prosperity, could theoretically, keep producing until the needs of every possible paying customer was met because they don't have to chase maximum profits (and don't have to make enough profit to pay interest on any debts). You could have syndicates that are successful and established, acting to seed new syndicates, getting them to a state of autonomy, rather than them being perpetual debt serfs. You could have syndicates offering legal services, such as contract enforcement, made much stronger by the existence of blockchain technology, leaving a clear record of agreements, and any changes to them (and when those changes were).
Likely Response from Established Competitors
There are many competing ideas in the space of ownership, pricing methods, employment of labor, and division of profits. It would be naive to expect a simple welcoming with open arms from existing firms who are often based explicitly around competing for market share. Although the most obvious threat to the syndicalist model is simply the government trying to regulate it out of existence, this sort of “lawfare” is not the only challenge for the model.
Syndicates will only be as strong as the resolve of their worker/owners to hold true to those values. If a for-profit firm sees their success in the market and wishes to buy them out (perhaps even to shut the firm down) the workers must be compelled stand firm in their resolve to continue operating as a syndicate, and not to "sell out."
You might also see some sort of market collusion, in an effort to starve syndicates of the inputs [parameters] they need to produce their goods and services. We've already seen so much of this, in the realm of communication and media firms, with many smaller firms being denied access to infrastructure, banking, or online protective services (against DDOS attacks). It would not shock me at all if established firms used this “denial tactic” against syndicates competing in their sectors, perhaps even threatening to change suppliers, if their supplier also services syndicates.
There are no simple answers to this circumference, any required input that is being withheld due to market collusion will simply need to be produced by a company with compatible categorical ethics. Likely, this will mean a syndicate will need to be created to accomplish this production, so that it can be distributed to the syndicates that need this parameter to operate. Future blue-prints, and planning for advanced production in the first place, seem like the best way to avoid painful disruption to the flow of syndicate productive activities.
Syndicalism as a Viable Enterprise
Although the challenges are many, syndicalism is now a much more viable option, than it was 100 years ago. To the extent that syndicates and their customers are willing to commit to a subscription model, it is now a perfectly reasonable enterprise to envision, and I expect much interest in variations on this idea, spanning from resourced based communities: to what are essentially worker communes with extra legal protections, to a group of hair stylists who just want to be their own bosses. With modern computing technology making it very reasonable to organize the routine transfer of small sums of money, without the customer even having to show up at the firm in a physical manner, most of the challenges to the syndicate idea are essentially those of getting the initial resources together. The practical aims have more options than ever in terms of organizing a sustainable model, that lets workers keep more of the value they create.
For any of you who feel that this approach towards bringing value to the marginal workers are sounds too soft or would quote to me some variant of the argument "you cannot dismantle the master's house, with the master's tools," I am going to specifically disagree with you here. The metaphorical master's tools are exactly what built the house; those who would make changes to it, to make it their own, will need their own tools. In this case, all it takes is one set of tools, to build a new house, and who cares what the master is up to. If the master's house falls apart due to lack of labor to maintain it, and some building material becomes available at a discount in the process, that is all for the better. The existing system was willing and ready to starve you out, even if you complied with its demands, if it didn't have a need for you. It makes perfect sense to invest your efforts into creating your own system where you set the rules; let the old system worry about itself.
I am not personally a syndicalist, either from an ethical standpoint, or from a point of personal enthusiasm. However, I have seen many solid arguments from various individuals for these types of arrangements, referencing specific ideas, such as the incentives involved with letting workers keep a percentage of the value they create, rather than purchasing their labor as a commodity. The individuals who wish to pursue their own aims in this way, gain more options every year, and I consider that a healthy part of the mix of a market economy is where individuals can choose to pursue their own life values and goals, rather than simply trying to maximize the number of zeros electronically noted in their bank accounts.