The Dictatorship of the Petty Bourgeoisie

A blog about business and economics.
Dec. 28 2012 12:23 PM

The Dictatorship of the Petty Bourgeoisie

I'm not sure I can adequately summarize Seth Ackerman's essay on market socialism* (I think John Rawls' term "liberal socialism" is probably a better one) in the new issue of Jacobin but suffice it to say that involves the idea of public ownership of all large-scale financial assets while retaining separate management of separate firms. If that sounds like the kind of thing you'd be interested in, you should just read it. The interesting issue it raises, however, is much more general than the specific details of the proposal and has to do with how a statist economic system deals with entrepreneurs and small firms:

And while individuals could still be free to start businesses, once their firms reached a certain size, age and importance, they would have to “go public”: to be sold by their owners into the socialized capital market.

Details matter here, of course, but one very plausible consequence of this would simply be to strongly discourage the owners of small firms from pursuing growth. And the big winners from that kind of disincentive to firm growth will be the owners of other small firms that simply aren't as lucky or well-managed as the growing ones. This is something that arises not only with radical proposals for collective ownership of the means of production. Any time you have a proposal to regulate "big business" while exempting small firms, you're partially regulating existing large firms and partially granting existing small firm owners protection from expropriation at the hands of rival business owners.

In general, this kind of small business promotion is not such a hot idea. If you look at Europe it's striking that Greece, Italy, Spain, Portugal, and Poland have lots of people working for small firms while Germany, Denmark, the UK, Latvia, and Finland have few people working for small firms. In other words poorer, lower-wage countries seem to have economies more dominated by small firms. Doug Henwood has emphasized that you see this at the firm level in the United States where small firms pay lower wages and the big/small pay gap gets bigger and more important as move down the occupational status hierarchy.

I'm not sure the reasons for this are fully understood, but it probably has something to do with the fact that as long as you're going to be bossed around it's desirable to be bossed around by somebody who knows what he's doing and can deploy the resources available to him in a reasonably skillful way. When a country prevents the emergence of large pharmacy chains, it's essentially bailing out inept pharmacy owners. In the short-term, obviously an employee of an inept pharmacy owner would rather have the owner bailed out than lose his job. But in the long-term, cashiers are going to be better off if they can avoid working for idiots which is more likely in a world where idiots can be driven out of business.

* Correction: An early draft attributed the article to Peter Frase.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The World

How Canada’s Shooting Tragedies Have Shaped Its Gun Control Politics

Where Ebola Lives Between Outbreaks

Gunman Killed Inside Canadian Parliament; Soldier Shot at National Monument Dies

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Paul Farmer: Up to 90 Percent of Ebola Patients Should Survive

Is he right?


“I’m Not a Scientist” Is No Excuse

Politicians brag about their ignorance while making ignorant decisions.


Driving in Circles

The autonomous Google car may never actually happen.

In Praise of 13th Grade: Why a Fifth Year of High School Is a Great Idea 

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

  News & Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
Gentleman Scholar
Oct. 22 2014 5:54 PM May I Offer to Sharpen My Friends’ Knives? Or would that be rude?
  Double X
The XX Factor
Oct. 22 2014 4:27 PM Three Ways Your Text Messages Change After You Get Married
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
Brow Beat
Oct. 22 2014 10:39 PM Avengers: Age of Ultron Looks Like a Fun, Sprawling, and Extremely Satisfying Sequel
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.