Against Paul Ryan on Poverty (and socialism, labor, and moral hazard)

His concern for the poor isn't forced at all...

His concern for the poor isn’t forced at all…

Paul Ryan has released a lengthy document decrying how progressive policies have injured the poor, making the well-rehearsed argument that welfare programs encourage people to stay in poverty. Stop me if you’ve heard this one before: if people get less welfare the more money they earn through their own labor, then they are incentivized to work less. Heard it before? I’m not surprised. Decrying the dangers of the supposed moral hazard created by welfare programs is boilerplate conservatism, but the problem for conservatives is that just repeating a slogan doesn’t make it true. The conservative looks at the safety net and posits that it encourages people to slack off, concluding that socialist policies encourage people not to work. On the contrary, capitalism encourages people not to work by alienating them from their labor.

Engels on Labor in a Capitalist System
For Engels, labor is social, in that the ends of labor are exchanged in a social context, such that in individual production the

The second most famous philosopher with a gnarly beard named Friedrich.

The second most famous philosopher with a gnarly beard named Friedrich.

producer owns his products and thus, he is in control of the exchange of those products and consequentially his inter-relations with other men. In commenting on the producer’s ownership of the product, Engels notes, “It belonged wholly to him, as a matter of course. His property in the product was, therefore, based upon his own labor” (Socialism: Utopian and Scientific). In individual production it is the producer’s labor that gives him ownership of his products. Thus, in individual production labor determines the ownership of products, such that the producer determines his social-relations with other men based on the way he chooses to exchange the products that he owns.

In a system of socialized production, such as in capitalist market, labor does not determine the ownership of a product. Rather, in socialized production the owner of the instruments of labor appropriates the product. Engels remarks that in socialized production,

The means of production, and production itself, had become in essence socialized. But they were subjected to a form of appropriation which presupposes the private production of individuals, under which, therefore, every one owns his own product and brings it to market. The mode of production is subjected to this form of appropriation, although it abolishes the conditions upon which the latter rests (Socialism: Utopian and Scientific).

Thus, Engels charges that the socialized production of capitalism is based upon the idea in individual production that products are privatized in order to be exchanged in the marketplace. Yet, this gives ownership to the capitalists who have not labored on the product, but appropriate the product by ownership of the instruments to make that product. In this way, socialized production embraces the individualized exchange of products by capitalists, while maintaining the socialization of labor to produce those products.

In socialized production the producers do not own the products of their labor, but rather, they own their labor. Engels remarks of this inequality in stating, “The separation was made complete between the means of production concentrated in the hands of the capitalists, on the one side, and the producers, possessing nothing but their labor-power, on the other” (Socialism: Utopian and Scientific). The means of production determine the ownership of products in both individualized and socialized production, but whereas in individualized production the means of production are considered the labor of the producers, in socialized production the means of production are considered the tools that the producers use. Therefore, in a system of socialized capitalistic production the producers own only their labor-power.

Yet, because the producers own only their labor-power, this is the only thing they have to exchange in their social inter-relations with other men. Engels posits that, “we have seen that the capitalistic mode of production thrust its way into a society of commodity-producers, of individual producers, whose social bond was the exchange of their products. But every society based upon the production of commodities has this peculiarity: that the producers have lost control over their own social inter-relations” (Socialism: Utopian and Scientific).

Socialized production denies producers ownership of their products, such that they cannot exchange the products they produce. If the producers cannot exchange the products they produce then they do not control the way they interact with other men, as Engels posits that the only persistent form of social interaction is exchange (Socialism: Utopian and Scientific).

So, because the only thing producers have to exchange is their labor, they must enter into contracts with capitalists so that they may have money for the exchange of necessities. That producers must enter into such contracts is evidence of their lack of control in their interactions with other men, as they must enter into exploitative working conditions in which they are inferior to the capitalist, despite that the legality of the contract is based in part on the supposed equality between the two parties. Man can only withstand such alienation from his labor and unfair treatment for so long before he drops out of the system in a passive revolution against the system, even if his revolutionary nature is unknown to him.

Conclusion
Paul Ryan is wrong; socialist policies that create a safety net do not encourage persons to work less, rather, the alienating nature of capitalism marginalizes poor workers, forcing them to take any means that they may to avoid the humiliation and mistreatment they experience in a capitalistic system.

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  1. #1 by Larry on March 4, 2014 - 6:09 pm

    There is some plausibility to the idea that having a higher income will create an incentive to work less, but it all depends on the circumstances.

    If I’m struggling to get by, some extra income will be welcome, but there’s no fun in being poor, so I still have an incentive to keep working and improve my condition. Right-wingers don’t see it that way, however, because they like to believe that people with low incomes are generally either incompetent or lazy and looking for a handout. Hence, we shouldn’t make life easier for those at the bottom of the economic heap. It will just encourage their bad habits.

    However, if I have a high income, and am working 60 hours a week, some extra income could conceivably convince me to work less (although in truth there are lots of reasons why high-income people often work a lot). But unlike the low-income case, right-wingers are never concerned about more income making richer people work less. They don’t see more income as creating less incentive for people with high-incomes, because they view such people as hard-working, productive members of society who, if anything, deserve even higher incomes (lower taxes) so they’ll keep working and some of their wealth will trickle down to the rest of society. Hence, we should let people at the top of the heap keep as much of their income as possible, in fact, we should let them charge whatever the market will bear.

    It’s an ideal arrangement: Less money for the poor, so they will work harder; more money for the rich, so they will work harder. It all makes perfect sense.

    • #2 by ausomeawestin on March 5, 2014 - 11:46 pm

      Haha quite the paradox, thanks you sharing your thoughts on it, I appreciate your sarcasm!

  2. #3 by jmeqvist on March 9, 2014 - 1:40 pm

    Interesting entry, and I certainly agree with the perspective that you espouse here.

    However, I question the idea that social assistance is in itself socialist. I follow Esping-Andersen in thinking that welfare state policies cannot be understood as a single thing, but rather that there are three different kinds of welfare states (Liberal (ie USA, Canada, UK), Conservative- Corporatist (ie Germany, France) and Social Democratic (ie Scandinavia). Consequently, I do not think that social assistance is necessarily socialist as it is a fundamental part of the Liberal welfare state form. Any reasonable understanding of capitalism will recognize that capitalism will create losers who through no fault of their own need assistance, whether they need assistance because of a physical or mental disability, or because of losing their job through the creative destruction of capitalism. Thus, i tend to see social assistance as a necessary complement to capitalism rather than as something that is inherently opposed to it. In this sense social assistance is necessary to make capitalism minimally humane, rather than being something that somehow overturns the capitalist order.

    I find it somewhat strange, but at the same time predictable, that in America welfare means social assistance, when social insurance policies like Social Security are equally a form of welfare as Social Security is deeply redistributive, and tends to provide security to those who cannot work because of their age. I find this strange as social insurance and social assistance are both forms of welfare. But I find this predictable because social insurance can be presented as an earned benefit, because people pay directly into it through their own income, so it fits in with the American mythology of the self-made man who works hard to support himself.

    For the record, social assistance are typically government programs that provide support and are funded through general taxation. Typically social assistance is offered to those who need it. Social insurance on the other hand is funded through premiums paid on income and it is only accessible to those who pay into it, and what people get out of it is determined by what they have paid into it, in conjunction with other variables (their own income status) etc. Furthermore, social insurance is funded through insurance pools that are separate from general tax revenue. I imagine you know this, but in case you did not I just wanted to be clear.

    In essence, I am saying Paul Ryan is not just wrong in the sense that you have pointed out, but also deeply wrong in his understanding of the nature of social assistance, welfare and its relation to capitalism.

    • #4 by ausomeawestin on March 12, 2014 - 7:10 pm

      Thanks for this excellent comment! I appreciate you taking the time to share some of your knowledge on the subtleties of welfare policy; I’ve only taken a few seminars on the subject and so am grateful for your thoughts on the topic.
      You make a good case for social assistance not being necessarily socialist or in conflict with capitalism. I don’t think I argued for such claims in this entry; my argument was that socialized labor — a necessary component of capitalism according to Engels — pushes laborers to leave the labor pool due to mistreatment. Marx and Engels didn’t think that socializing labor was a good thing, they thought it was a process of production that made capitalism diabolical. So I don’t see myself as disagreeing with you in regards to the notion that social assistance is not in conflict with capitalism. I certainly agree with you that capitalism makes social assistance necessary for society to be just. I also think your assessment for the (unfortunately so) average American’s distaste for social assistance and approval of social security is correct. So, I am in agreement with you on all counts, I just want to register that I never meant to imply that social assistance programs are in conflict with capitalism. Thanks again for this great comment, I appreciate your contributions!

      • #5 by jmeqvist on March 12, 2014 - 8:30 pm

        Thanks for the compliment.

        I guess I was unclear, because I was not suggesting that you were arguing that social assistance was inherently socialist, but rather I was arguing against the view espoused by Paul Ryan and others which equates the creation of any kind of safety net to socialism. Such views are inaccurate and show a deep misunderstanding of both socialism and capitalism as you clearly understand.

        What spurred on my argument was your comment that “socialist policies that create a safety net do not encourage persons to work less.” I was trying to argue that by associating socialism with a safety net we are suggesting that social assistance is somehow inherently socialist, and that just supports the problematic narrative that Paul Ryan and others spread. But my argument was more of tangential comment relating to elements of your entry, rather than an objection to your entry.

      • #6 by ausomeawestin on March 14, 2014 - 7:10 pm

        Ah, I see, my mistake.

  1. Marx’s Critique of Hegel (and money, suffering, and March Marxism) | ausomeawestin

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