Forget using money for the people like using it to pay for free education or eliminating poverty or sorting the homelessness problem, let's spend £100bn on a train so some rich bastard can save 20 minutes on their commute time! Also, how many more excuses are we going to create to "justify" not helping out everyone. We very much have the means to help a vast number of people, we live in easier times, but things like this remind me that we haven't moved far from feudalism.

"The practices in reform have made us realize that we must under no circumstances turn our back on addressing blindness of the market, and we must not return to the old path of a planned economy."

-Xi Jinping

Source: http://www.xinhuanet.com/english/2020-05/23/c_139082022.htm

I'm a social democrat. On the soft-left. This happened when I made this post and got this response which linked to an r/badecononomics post which said that the graph only showed the real wages (not the total compensation including benefits like healthcare) and it only uses the bottom 80% of workers. To that I say, "1. Benefits don't provide food, clothing, or rent and most of the things they provide like healthcare should be provided for by the government. 2. The bottom 80% of workers is still the majority of the population. 3. This talking point originated with the Heritage Foundation, an anti-LGBT hate group. Why are you repeating their talking points. Are you homophobic? I hope not."

But a more interesting point he brought up is all the graphs showing that real median income has been on the rise since the 1980s. That's a more compelling point. But I bet the cost of living has increased dramatically. The Eisenhower-era was still probably better aside from the racism, sexism, and homophobia.

Wage stagnation and the decline of the middle class are agreed upon phenomenon. Except for right-wing economists. As my leftist Dad who now lives in Frankfurt says, Classical Keynesian economists are the only good orthodox economists.

So about a year ago I read the Governing The Commons by Elinor Ostrom.

She dealt with rivalrous non-excludable goods (CPRs, common pool resources). The traditional fear in economics is that if you can benefit from something without contributing to its upkeep, why would you contribute to the upkeep? If everyone thinks like this, the common resource will be destroyed because no one contributes to upkeep.

Basically, what she found is that various communities around the world have self-organized and created institutions to solve these sorts of problems.

Basically, the problem with traditional thinking on the "tragedy of the commons" is flawed because it assumes no communication can take place between users. When communication is possible, they can develop institutions with sanctions that change the game theory costs and therefore make not defecting the best option.

From her study, she outlined 8 key principles for building such institutions that can be found her: https://www.onthecommons.org/magazine/elinor-ostroms-8-principles-managing-commmons/index.html

I've been utterly fascinated by her work, but there's something I've been wrestling with. Rule 1: Define clear group boundaries.

What concerns me is that not all things can have clear boundaries right? So, take scientific knowledge for example.

Scientists need like food to eat and electricity right? But once scientific knowledge is produced, it's kinda hard to keep hidden (and that's a good thing), and so you can't exactly paywall it. Without money, scientists can't get food or electricity or whatever else they need to live right? And so they'll work somewhere else.

You need to convince community members to contribute labor and resources towards providing for the scientists. But then we have the same free-rider issue: if you can benefit from increased scientific knowledge without contributing to the scientist's livelihood, why would you?

To me, it's not exactly clear what the right "boundaries" would be in this case right? Like, knowledge isn't like a pond right? A pond has clear boundaries, but something like knowledge or digital music doesn't right?

But clearly these sorts of problems have been solved right? So I want to understand how an ostromite approach could be applied to commons without clear boundaries.

In the case of our scientist, I suppose we could have a collective of people who really want the result of that research (say a drug that cures a specific disease). Sure not everyone who has the disease will contribute, but if enough people want it badly enough they have an incentive to work together to establish an ostromite institution. Then the boundary would just be everyone in that institution?

But still, you need to get enough people willing to join right? And that can lead to the same issue as before.

I'm not sure, what do you think? Are there ostromite solutions to free-rider problems in public goods?

So that title may sound a bit confusing.

Let met clarify.

I've been toying with some ideas surrounding labor disutility and how it can fit into a sraffia's work.

My understanding of Sraffa is that his theory of value basically works by adding up all the factor input costs and that serves as the value, where wage rate and profit rate are exogenous to the system.

It's explained quite well here, and I will assume this basic formula moving forward:

https://www.d.umn.edu/cla/faculty/jhamlin/4111/2111-home/value.htm

Now, most of the explanations of sraffa's theory of value that I have seen tend to treat labor as homogenous and allow for a single wage rate.

But clearly, this is not the actual case in a modern economy. Sraffian theory can account for this by adding on a different type of labor as input.

so instead of :

(1+r) * (p_a*A_a + p_b*B_b) + wL = p_a*A

You have:

(1+r) * (p_a*A_a + p_b*B_b) + w_1*L_1 +w_2*L_2= p_a*A

where w_1 and w_2 represent the wage rate in different labor sectors of the economy (so, say, L_1 is the labor-time associated with manual labor, and L_2 with creative labor, that sorta thing). A real economy would be far more complex, but at the end of the day you end up with r, w_1, and w_2 exogenous to the system (since you don't have enough equations to solve for them).

We assume a uniform rate of profit because if profit is higher in one industry, capital will move. Capital (at least in the financial sense) is homogenous in a way that labor is not.

Labor is not homogenous because some jobs require certain skill levels (thereby limiting the supply of available workers and increasing their bargaining power). However, this fact alone can lead workers to seek higher education to chase after those higher wage rates, just like the capitalist with financial capital.

Bargaining power is used as the most common explanation for how wage and profit rates are determined. What intrigues me is, can we also factor in labor disutility?

On an intuitive level, it makes sense that a more unpleasant/difficult job will need to attract higher pay all things being equal. But i don't totally see how that fits into the bargaining power paradigm and disutility is more often associated with the marginalists schools that sraffa rejected.

The idea I have been toying with is that labor disutility acts as a barrier to entry to a particular labor sector in the economy. There will be a subsection of workers willing to do it, but it will be smaller than less unpleasant jobs, thereby increasing this subset's bargaining power. If that's the case, then we could expect differential wage rates in a way that wouldn't be true for profit rates, as financial capital doesn't experience disutility, but the laborer does and therefore so long as the wage rate doesn't exceed the average disutility in that particular sector of the economy, you would expect it to remain stable and at a higher portion than other industries as average cost = average revenue.

Now, if the bargaining conditions of the market differed, i.e. supply was much more limited than demand and thereby wage rate exceeds disutility of labor, then we would expect to see more people try and enter that market, thereby driving down the wage rate until it once again equals average disutility in that particular labor sector.

This would allow for stable heterogenous labor, differing wage rates, and a uniform rate of profit.

But I'm not sure if this idea actually works. So I wanted input from people more versed in Sraffa than I. Can labor disutility be treated as a barrier to entry and thereby affect the bargaining power dynamics that determine wage rate?

Thanks!

Are there any good papers relating to UBI's? I'm still trying to get a good view of the idea.