Collective Business Ethics

a tentative manifesto

In general, capitalist businesses are owned by private individuals, or by institutions representing private individuals, and are operated by people who the owners pay in money to do so.

A collective business is one which requires the labour of more than one person to operate it, and which is owned by all of the people who do that work.

Although it competes successfully in a capitalist market, a collective business has an internal structure very different from that of a capitalist business, and is distinguished by two principles. The first abstract, the second pragmatic.

Principle 1 : every hour worked for a collective business has the same value as every other.

Principle 2 : individual members of a collective business should avoid becoming entirely dependent on the income they receive in lieu of the share of the profit they expect to receive when this is booked at the end of the year.

The first principle is used to calculate how the profit that the business generates is to be divided amongst the members of the collective. The second is concerned with responsibility motivation and trust, and how to deal with the mixed fortunes of surviving in a competitive market.

Applied together they enable a collective business to remain cohesive, while ensuring that each member takes a fair share of profit.

Whether a business is collective or not, the property of labour that the business needs in order to operate is human effort, the ability to transform material reality into something of value that can be exchanged in a market.

This notion that work will create value has its origins in John Locke's idea of improvement and is familiar in economics as the labour theory of value. It is also the basic assumption of tax collectors and capitalism. For it is only on the basis that work produces value that individual capitalists are able to give workers jobs in exchange for money, which the workers are in turn able to use to buy the products and services they need to survive and that satisfy their private desires. And to pay their taxes.

Whether or not we are living in a capitalist world is a matter for debate, but to the extent that we are, it is only possible for capitalists to make profit if they pay the people they employ less than the value of the labour those people have contributed to the production process into which they were inserted.

This surplus value is used partly to maintain and develop the means whereby production can take place, and also to enforce and emphasise divisions of class, to buy expensive toys and fast cars and big houses, and accumulate wealth while those whose labour produced the wealth in the first place live in relative poverty. In a capitalist world, it is not the differing abilities of individuals that is the source of differences between rich and poor, but this naked relationship of exploitation.

In Capital, Karl Marx demonstrates that, even assuming the most favourable circumstances, when capital attempts to employ the labour theory of value to exploit workers, the rate of profit generated will always tend to fall. Even in theory capitalism is in a permanent condition of crisis. Which means that in the real world, where the situation is much less favourable, and where the massed ranks of the working classes are always already refusing resisting and revolting against all efforts to put them to work, it will always be necessary if capitalism is to survive that it seek out new means of extracting value by employing new labour in new processes of production.

“The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts to air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.”
[Karl Marx & Friedrich Engels, The Communist Manifesto, 1848.]

The expansion of capitalism is limited only by the emergence of communism - the form that social life takes when work is organised not so that private individuals can accumulate personal wealth, but in order to nourish a human community. It is the form that life itself spontaneously takes - the very power capitalism has been trying all the time to exploit. It is the ordinary ethic of human beings facing with sober senses, their real conditions and relations with their kind. Working in order to eat well, to sleep safely and to enjoy the comforts of leisure. Working, not in order to profit from each other, but because reason suggests that by working together they can improve their lives - all of their lives.

From the outset, communism must be distinguished from that which once existed behind what was once called the iron curtain, and from all other forms of socialism, the founding principle of which is accurately expressed in the slogan : “from each according to his means, to each according to his needs.”

This construction presupposes a situation of inequality upon which it is parasitic, and it is a recipe for all sorts of political manipulation and psychological terrorism, with armies of bureaucrats, experts and social engineers determining everybody’s means and needs, and regulating correct distribution of labour resources and information. Capitalism needs socialism in order to maintain a supply of willing workers. Socialism is the factory where labour is mass produced. It is not the radical alternative to capitalism as it often likes to believe. Communism is.

The general ethic of communism might be stated something like this : “if you want to eat well, to sleep safely and to enjoy the comforts of leisure you will have to work; but any job you do that benefits, nourishes or otherwise empowers the community, is as valuable as any other.”

In the real world however, work is not in general organised in accordance with this ethic. Nevertheless, the power of labour to improve - to produce something of greater value - remains the underlying principle. The difference is that between quality and quantity : a communist ethic expresses the social value of labour, while in the real world, the value of labour is measured with time and money.

When however this general ethic of communism is applied in the real world within the limited context of organising a business collectively, the administration of that business becomes simple and efficient, and the profit it generates can be divided objectively and fairly.

There is no need to distinguish between types of work since all work is equally important. All that is needed in addition to the standard booking of income and expenditure, is a simple record of the amount of time each member of the collective gives to the business.

The proportion of time each member has worked in relation to the total time worked represents thus the proportion that each has contributed to the total value of the business. And thus also the share of profit each will receive.

Although profit can be calculated at any particular moment by subtracting expenses from turnover, dividing up that profit in the form of money and deciding how much of it can be used to develop the business, are less straightforward. The major obstacle is the fact that movements of money are monitored carefully and controlled by banks governments and police, and that individuals in assorted conditions of greed hunger and emotional trauma are responsible for making these movements possible. Which means that the value of profit at any moment can be calculated on paper, but will never at that same moment be available for use.

However, governments collect taxes yearly and in order to do so require that businesses present accounts. So when the profit of a collective business is booked at the end of every year, it will be possible to determine that each who has given labour during each year will be entitled to a particular proportion of the profit. But this only means that each will have earned on paper a particular amount of money during the year in question. It does not say that this amount has been or will actually be paid out.

Which is where the second principle becomes important : individual members of a collective business should avoid becoming entirely dependent on their share of the as yet to be determined profit generated by that business.

Because we are individuals in a tax system, each of us must individually declare our income for the year. And because we live in a complex postmodern social democracy, we have to take responsibility for our own health care, personal insurance and pensions. We cannot demand that the collective do more for us than what we set it up to do - to be a business competing succesfully in the market.

So we do not give all of our time to the collective. We also have jobs which pay money so we can buy health insurance and pay income tax. Thus, we also ensure that we each have something to fall back on should some calamity occur and our business be declared bankrupt. And we each trust that when we are not working for the collective, our colleagues are.

We work thus in order to benefit the business as a whole, not to profit ourselves in particular. And while we take collective responsibility for the tasks required for our business to run well, we take individual responsibility for ensuring that we each have some way of surviving independently of the business should this ever become necessary.

Also, by ensuring that no one of us is completely dependent on his or her income from the collective, we create circumstances wherein conflicts of interest become less likely. For if one or several members become dependent on their income from the business, it may happen that in lean times they will be motivated to work proportionately more than their colleagues - which would mean working at the expense of their colleagues. It is a simple sum. If turnover falls while expenses remain the same, then the actual value of the profit to which each is entitled will also fall. Only if some members work more while others work less will their share of the profit maintain a particular value.

It does not of course matter how much each member works if that work contributes to the value of the business. It does matter however if particular individuals are motivated to work in such a way as to maintain a particular level of profit for themselves, rather than for the general benefit of the business.

In practice, the way that each does whatever work within any collective business is a matter for internal discussion and decision. It will likely turn out that some members put in more time than others, and it may happen that one person comes to play a central role, but so long as nobody is entirely dependent on his or her work for the collective, there will be no conflict of interest, and the business will generate income for everybody.

This income should not however be regarded as wages.

There is nobody giving you work in exchange for money. It is your own responsibility to find something to do that will add value to the business. The frequency and level of your income are dependent not on a contract of employment, but on the kind of market in which your business operates and on your desire to give over a portion of your life to the activities required for your business to compete successfully in that market.

You do not get paid a fixed amount for every hour you give. You do not get paid at regular intervals. Strictly speaking, you do not even get paid for the work you do, but for the time you give.

You just have to decide collectively to take responsibility for doing what you do well enough to sell it profitably in the market.

A Duncan © 2005

respond to : ethics@cycleworks.nl