all labour contracts are equally peculiar in the sense that one of the contracting parties, the capitalists, are hiring something that they do not care for in the hope of wrestling from the seller something else, actual labour input, which is not specified in the contract (simply because it cannot be specified).Suppose I like teaching Accountancy & am running a for-profit Accountancy College. I hire any Professor I like but sack him if the students aren't happy to pay for his lectures. Ultimately, I end up with people I hired because I liked them who supply the 'actual labour input' specified in their contracts- viz. teaching x number of hours in a manner which enthuses and engages the students. Either that or I lose money and have to shut down my College.
All labour contracts are of this form. A capitalist likes a particular worker and hires him. If the worker doesn't supply the 'actual labour input' desired, the capitalist sacks him. There is no great difficulty at all regarding the specification of the 'actual labour input' involved. This can be done verbally or, indeed, not done at all. Workers who don't want to get sacked can figure out what they need to do by themselves- unless they can't, in which case they are sacked.
Varoufakis et al, clearly believe otherwise. Why? This is their explanation-
The oil-fired electricity generator: the input L that it needs to work, oil, is both measurable and corresponds (given the generator’s technical specifications) to specific levels of electricity output Q. A well-defined function Q = f(L) is, in this case, imaginable. Whether the firm pays for L units of input plus a rental charge to cover for the cost of producing the generator or for Q, there is no analytical difference.Actually, for analytical economics- which, unlike Marxist Economics, admits the existence of Knightian Uncertainty- there is a huge difference between the two situations. If you can buy electricity as cheaply and securely as you can generate it yourself, then it is folly to tie up capital in a generator. Analytical Economics would predict a 'natural monopoly' in Electricity supply simply because this reduces Uncertainty overall. Why? Machines can break down unpredictably. There is a 'law of large numbers' such that the more machines you have the lower the aggregate failure rate.
Notice, that a machine that does not perform is junked just as a worker who slacks off is sacked.
Jill, the worker: her input into production is labour . With the help of capital goods K (machines, tools, raw materials, etc.), Jill’s L produces output Q. Suppose that, just like in the case of the generator, L is measurable and that there is a well-defined function Q = f(L) that assigns to each level of L a level of output Q. Again, there would be no analytical difference between a situation in which the firm pays Jill wage w for each of her L units of input (while providing her the necessary K for free) or renting her the K units of capital goods, for a given rental price r, and then purchasing Q directly from her at a pre-agreed price p, [In short, wL - pQ ~rK.]If there is Knightian Uncertainty, there is a big analytical difference between the two situations. Assuming Jill has less fungible assets than the Employer, she gains more than proportionately by an overall reduction in Uncertainty and this creates an arbitrage opportunity by reason of the 'Law of large numbers'. Analytical Economics predicts that Jill accepts a lower wage in return for the security of employment as opposed to 'piece work'.
Suppose now that (a) the firm cannot observe L directly and (b) there exists no well-defined function linking Q and L because Jill’s labour input is not observable,In this case 'piece work' or 'gang-masters' will prevail. In effect, Jill will either be an independent contracting agent or else part of a work-group whose 'gang-master' is hired or fired depending on the Capitalists best guess as to aggregate marginal product.
Trucking in America is the classic example. Previously, truckers owned, or rented, their own rigs because the Capitalist had no means of checking on what they were up to. Thus they were independent contractors. Once the technology to track the movements of truckers became cheap, truck-drivers became employees of a particularly slavish kind.
No great problem arises for Jill's employer arises despite the fact that-
output depends not only on her work but on the combination of the labour input of many workers and, last, because in the context of social (as opposed to atomistic) production the productivity of human workers depends crucially on social norms and psychological factors that differ ontologically from the inner workings of an electricity generator and, thus, cannot be adequately captured by some mathematical function linking individual labour input to individual output.Mathematics can capture any functional relationship unless it is dogmatically Constructivist- a strait-jacket it isn't crazy enough to put on. An unknowable function is still a function.
There is no 'ontological' difference between discourses which currently only have 'phenomenological' as opposed to substantive models. There is an epistemological difference, yes. But Epistemology isn't Ontology. We now know Logic can exist without any Ontological commitments whatsoever. That's why Quantum Computing aint a perpetual motion machine.
Human beings link a machine, or a man's, output to an input. Nothing else can do so by its own agency.
Only human beings can establish 'equivalences' based upon some purely human criteria. It is utterly foolish to say-
In this case, there is no equivalence whatsoever between (a) a situation in which the firm pays Jill wage w for each of her L units of input (while providing her the necessary K for free) or (b) renting her the K units of capital goods, for a given rental price r, and then purchasing Q directly from her at a pre-agreed price /?. In this case, the capitalist has no alternative than to be an employer and to offer Jill a labour contract.No! Don't be silly! We all know what has actually happened over the last 30 years. Capitalists outsource this type of Labour. Competing sub-contractors emerge whose success depends on superior ability to hire more profitable workers.
Note 1 If such a function existed, then by observing output Q the firm would also be observing L. In most cases of social production, mere observation cannot help measure either a worker’s labour input L or her output Q. Labour input is hardly ever measurable (How would you quantify Jill’s productive effort? Would you plug her into some ergo-metre?) and, also, it is often impossible to tell which part of a collectively produced output is due to Jill’s labour and which is due to Jack’s, Tom’s, Dick’s or Harriet’s.Mathematically, such a function must exist. That it is unknown doesn't matter. What matters is that by hiring or firing Department heads or Subcontractors profits go up because more productive workers are retained and less productive ones are fired. This is a 'discovery' process.
Rubbish! Capitalists don't offer contracts of that type. They dangle the carrot of 'Security' in front of you but let you know that carrot will be snatched away if they find they can make more profit hiring someone else to replace you.
At the end of a successful interview, the new employee shakes hands with the firm’s personnel manager and signs her labour contract. What is she promising to offer the firm? It is a number of hours per week of his/her time during which his/her skills and potential effort will be present within the firm’s premises and a vague promise to work diligently.
But since no diligence-ometre can ever be devised (so long as the labourer is human), the only quantifiable part of his/her promise concerns the hours he/she will be spending on the premises.Wow! What a wonderful ivory tower it is that Varoufakis inhabits! In the real world, employees are subject to performance reviews and work measurement and ruthlessly sacked if that lowers real per unit labour cost.
Now, employers care not one iota for these hours. What they care for is the unquantifiable diligence bit which, unfortunately, cannot be specified.Capitalists are people with a different time preference. That's why the show more caritas to serial, intersubjective, time, not the 'duration' of Bergson whom Sorel called the French Marx.
They have been hiring 'Work Measurement' experts and streamlining the production process through 'Time & Motion for over a century. Lenin himself praised 'Taylorism'.
They care for Jack or Jill’s unquantifiable, immeasurable, actual labour input. This they hope to extract during the hours that Jack or Jill will be spending at work. Unlike other contracts which, at the moment of signing, conclude the relationship between buyer and seller, the labour contract is the beginning of a wonderful non-market relationship.This is the opposite of what happens. The Capitalist saddles himself with debt to acquire residuary control rights over every factor except Labour. His 'non-market' relationship is with Credit-as-Hegemony not the pure harlotry of the Proletariat.
Once Jack/Jill enters the firm, as an employee, he/she exits the market and enters a purely social relationship with other workers and with his/her employers.WTF? I get a job with Walmart and suddenly I have a purely social relationship with Alice Walton? Is that what happens?
In this sense, the employer-employee relationship is one of the last vestiges of the ancien régime which the market, despite its complete triumph everywhere else, cannot penetrate.Love is a relationship the market can't penetrate because it is ever virgin precisely because it is more yielding and self abnegating than any purchased slave thus defeating its hedonic defloration in advance.
No mathematical function can capture this complex non-market relationship and the way it transforms human inputs into the firm’s output.The relationship between employer and employee is fiduciary, not affectionate. Market forces oblige the Capitalist employer to exercise his fiduciary duty to sack those who love him in order to hire those who don't but who add higher value. Those market forces- like the law of gravitation- have a purely mathematical, functional, description. Firms that get that equation wrong, ceteris paribus, go to the wall. Firms which are closer to the right equation burgeon and devour their less right competitors.
The peculiarity of the labour contract results, therefore, from the peculiarity of human labour and its resistance to becoming machine-like.All contracts are between humans. Some contracts, including some labour contracts, are 'incomplete' because of information asymmetry, uncertainty, externalities, non-convexities etc. In this case the Coasian solution does feature things like 'embedding' or 'habitus' or 'Gramscian hegemony' or Sorelian 'mythology' or Frankfurt School type 'narrative' and so forth.
However these notions have no salience for Globalised Capitalism. Either the factory in Bangladesh has lower per unit labour cost than the one in Nicaragua or it gets shut down by people who have never been to either Bangladesh or Nicaragua and who have no 'social' connection to workers in either country.
Machines imitate human actions. If workers can imitate those same actions more cheaply then their jobs are safe. Not otherwise.
If humans could consent to becoming more like electricity generators, no doubt they would and then the labour contract would be no different from any other contract.Globally, most labour contracts are already 'complete'- which is why the 'precariat' is growing even at the expense of the 'salaryman'. Those which aren't are increasingly not 'Labour' contracts at all but feature standard 'Agent/Principal' hazards and residual control right contestation.
But, then again, if labour could consent to becoming another species of machinery, it would lose its capacity to produce value.Rubbish! I am producing no 'value' writing this post. If I just mechanically scribble some pseudo-Leftie shite, I could monetise this blog and also syndicate my bromides.
Varoufakis isn't writing nonsense because he was taught no better but because there's a market for shite economics from which he personally has done very well.
It is a delightful paradox that human labourers cannot consent to turn into machines, even if they want nothing more than the sweet oblivion offered by unconsciousness (or, equivalently, the blue pill in The Matrix). For, it is this ‘incapacity’ to abdicate freedom that makes value possible and the task facing economists so different from that facing engineers.Varoufakis is saying that profits arise because cunning Capitalists hire workers by pretending that all they need to do is show up during certain hours. The workers, fools that they be, do show up hoping to do no work and escape detection for delinquency because...urm...they are as stupid as Varoufakis. Then some Sci-Fi Matrix type shite goes down such that those workers who were determined not to do any work somehow get tricked into doing some work- coz, like they are actually human batteries in suspended animation being tricked by cortical implants into thinking they are living in a human society where they interact and form relationships and so forth.
Actually, the machines have taken over. They just use human beings as electricity generators- that is all.
Wow! Varoufakis published this shite in 2011. Did Papandreou have any idea how crazy this Judas of his really was? Why did not some Greek read this man's crazy book and warn the rest of the populace? Okay, one of the joint authors was Greek and has done well out of his complicity in this idiocy. But what about the rest of the Greek intelligentsia? Why did they not check out this fantasist's crazy book and spill the beans to the Greek electorate? Fuck is wrong with the Greeks? They have low alcoholism/drug addiction and are good, hardworking, sensible people. Intellectually, they are second to none. What the fuck happened?
Okay, we here in Britain have David Icke- whose books sell much better than this imbecile. But we don't appoint him Finance Minister. Well, we haven't yet. Theresa May is biding her time in that respect.
No doubt, Brexit Britain's moment of superiority to Grexit era Syriza will prove wholly evanescent. Let us put the boot into Varoufakis while we can.