Yes, and no. The cost and reward of a decision financially impacts the decisionmaker, although sometimes the magnitude of that effect can be pretty small due to the diminishing marginal utility of money. Meanwhile, something like closing a factory can devastate an entire town, and none of the factory workers, lunch counters, teachers, families, etc. have any say in the decision, whereas their day-to-day experience of their lives is impacted far more profoundly by that decision than the life of the factory owner is.
So it seems like if you want the decision to be made by those who have the most skin in the game, who are affected the most by its outcome, then private ownership of productive capital seems like actually extremely misaligned with that. Now, there may be other reasons to organize society that way, but if you want to align decision-making power with those who are most affected by those decisions, there can be no doubt that the most effective way to maximize that particular metric would be to have factories democratically controlled by the workers and/or the towns.
So it seems like if you want the decision to be made by those who have the most skin in the game, who are affected the most by its outcome, then private ownership of productive capital seems like actually extremely misaligned with that
There’s a VERY difficult temporal problem with that framing. That is, whether you’re talking about cumulative PAST investments as “skin in the game” or just the future rewards/value. I worry about the decision to have a factory in the first place AT LEAST as much as whether to replace the factory with an apartment or mall or whatever.
Right, the parent comment wasn’t necessarily intending to argue that all decisions about whether to open/close factories should be made by workers and/or towns, just to say that private ownership of productive capital does not in fact maximize the metric of “the cost or reward of a decision is felt by the decision-maker,” which was what you proposed.
I admitted in my comment that there might be other reasons to have private ownership of productive capital, one of which you identified—that building factories is good and we should organize society so as to encourage it. But I do want to note an imbalance: In order to create an operate a factory, many people/entities have some ability to affect the decision, which actually does seem commensurate with how they are affected:
Entrepreneurs/managers decide when an where to pursue factory projects
Providers of financial capital decide whether to lend or purchase securities, and if they do, they can receive monetary
Workers can decide whether to work in the factory at the offered wages/conditions, if no workers choose to do that there can be no factory
Towns can democratically choose to allow the construction of factories everywhere, only in certain areas, or even ban it completely; the residents of the town are affected in their environment, secondary business opportunities, and tax revenue by that choice
So, nobody can unilaterally open a factory, even in the relatively capitalist USA. They need buy-in from workers and towns, at a minimum, and often also banks. “The cost and reward of a decision” is felt by all these decision-makers, and they all have at least some ability to make the decision. Contrast this with closing a factory:
Owners of factories can close a factory unilaterally
As long as the decision to close a factory is for outsourcing or whatever, such that it’s profit-maximizing, financiers have no reason to stop that decision
Workers have no ability to prevent a closure, even though it affects them greatly
Towns have no ability to prevent a closure, even though it affects them greatly
The “reward” of a decision to close/outsource is felt by owners and financiers; the direct monetary cost of closing is felt by them if and only if that decision turns out not to be profit-maximizing, and even then, it often represents a small overall impact on their lives. The costs of a decision to close/outsource can be totally devastating to workers and towns, they feel the results to a far greater extent, and they have no ability to participate in the decision.
Tho it should be noted that given the way union / strike law is in the US, isn’t it also the case that workers can close a factory unilaterally? [Like, even if the owners could find other workers, they’re often prevented from being able to use those other workers instead.] And it is also the case that local governments can close a factory unilaterally (as happened recently for health reasons in many places).
So it’s not obvious to me that the owners are uniquely privileged in this regard; for any deal that requires the continued consent of all parties, any of them could back out even though it affects others greatly.
They are allowed to hire temporary replacement workers, and permanent replacements under some circumstances. Unions typically try to bring a lot of social pressure on said replacement workers (“scabs”) to discourage them from agreeing to be such a replacement worker.
Without property rights you don’t get people to invest to build factories. For a long time China was ahead of the West in many regards but without stable property rights you didn’t have capital investment and the economic growth that comes with investing capital to make humans more productive.
Yes, and no. The cost and reward of a decision financially impacts the decisionmaker, although sometimes the magnitude of that effect can be pretty small due to the diminishing marginal utility of money. Meanwhile, something like closing a factory can devastate an entire town, and none of the factory workers, lunch counters, teachers, families, etc. have any say in the decision, whereas their day-to-day experience of their lives is impacted far more profoundly by that decision than the life of the factory owner is.
So it seems like if you want the decision to be made by those who have the most skin in the game, who are affected the most by its outcome, then private ownership of productive capital seems like actually extremely misaligned with that. Now, there may be other reasons to organize society that way, but if you want to align decision-making power with those who are most affected by those decisions, there can be no doubt that the most effective way to maximize that particular metric would be to have factories democratically controlled by the workers and/or the towns.
There’s a VERY difficult temporal problem with that framing. That is, whether you’re talking about cumulative PAST investments as “skin in the game” or just the future rewards/value. I worry about the decision to have a factory in the first place AT LEAST as much as whether to replace the factory with an apartment or mall or whatever.
Right, the parent comment wasn’t necessarily intending to argue that all decisions about whether to open/close factories should be made by workers and/or towns, just to say that private ownership of productive capital does not in fact maximize the metric of “the cost or reward of a decision is felt by the decision-maker,” which was what you proposed.
I admitted in my comment that there might be other reasons to have private ownership of productive capital, one of which you identified—that building factories is good and we should organize society so as to encourage it. But I do want to note an imbalance: In order to create an operate a factory, many people/entities have some ability to affect the decision, which actually does seem commensurate with how they are affected:
Entrepreneurs/managers decide when an where to pursue factory projects
Providers of financial capital decide whether to lend or purchase securities, and if they do, they can receive monetary
Workers can decide whether to work in the factory at the offered wages/conditions, if no workers choose to do that there can be no factory
Towns can democratically choose to allow the construction of factories everywhere, only in certain areas, or even ban it completely; the residents of the town are affected in their environment, secondary business opportunities, and tax revenue by that choice
So, nobody can unilaterally open a factory, even in the relatively capitalist USA. They need buy-in from workers and towns, at a minimum, and often also banks. “The cost and reward of a decision” is felt by all these decision-makers, and they all have at least some ability to make the decision. Contrast this with closing a factory:
Owners of factories can close a factory unilaterally
As long as the decision to close a factory is for outsourcing or whatever, such that it’s profit-maximizing, financiers have no reason to stop that decision
Workers have no ability to prevent a closure, even though it affects them greatly
Towns have no ability to prevent a closure, even though it affects them greatly
The “reward” of a decision to close/outsource is felt by owners and financiers; the direct monetary cost of closing is felt by them if and only if that decision turns out not to be profit-maximizing, and even then, it often represents a small overall impact on their lives. The costs of a decision to close/outsource can be totally devastating to workers and towns, they feel the results to a far greater extent, and they have no ability to participate in the decision.
Tho it should be noted that given the way union / strike law is in the US, isn’t it also the case that workers can close a factory unilaterally? [Like, even if the owners could find other workers, they’re often prevented from being able to use those other workers instead.] And it is also the case that local governments can close a factory unilaterally (as happened recently for health reasons in many places).
So it’s not obvious to me that the owners are uniquely privileged in this regard; for any deal that requires the continued consent of all parties, any of them could back out even though it affects others greatly.
They are allowed to hire temporary replacement workers, and permanent replacements under some circumstances. Unions typically try to bring a lot of social pressure on said replacement workers (“scabs”) to discourage them from agreeing to be such a replacement worker.
Without property rights you don’t get people to invest to build factories. For a long time China was ahead of the West in many regards but without stable property rights you didn’t have capital investment and the economic growth that comes with investing capital to make humans more productive.