Central to the evaluation of political philosophy is an examination of particular methods of assigning value to labor and capital.
Peeling away the rationalizations and propaganda, the assignment of value can be defined as the ability to control the behavior of another for one’s own benefit. When a plumber comes to my house, he fixes my own pipes for my own benefit; he receives no direct benefit from his work. But the transaction is reciprocal: I must offer in return something of equal value; he receives indirect benefit from his work in the control of my behavior. When both parties to a transaction hold equivalent economic power, no exploitation is possible. If a particular plumber charges too much, I am free to find another. If I am too stingy and don’t offer what the plumber considers compensation, he is free to find another customer. By using a reciprocal and non-coercive mechanism of setting relative value we maintain a system of mutual obligation to perpetuate a society of specialized individuals.
Unrestricted free enterprise fails when a small group commands significantly greater economic power compromising the ability of both parties to reciprocally set value. This failing is especially severe when the small group holds a resource necessary for survival. The ordinary employer/employee relationship is a classic example of a one-sided imposition of value. The individual worker needs his specific job much more than the employer needs that particular worker. Because of this imbalance of need, the value of the worker’s labor is set entirely by his employer; only pure altruism would encourage the employer to value that labor at anything higher than subsistence.
There are no external restrictions on the accumulation of abstract ownership; thus capital accumulates to an ever-narrowing group of specialists. As this group narrows, they gain more and more power to unilaterally set the value of the labor of people who do not specialize in the accumulation of capital. They have the ability to starve out a worker. The value of his labor, instead of being negotiated, becomes imposed. The capitalist can survive without the worker; the worker cannot survive without the capitalist. Eventually the very envy and greed that powers the engine of individual enterprise turns the worker against the capitalist class. He must find a way to restore the reciprocity of the process of setting value. The only means he has at his disposal is violent appropriation.
But collective enterprise fails for the same reason. It is all well and good to claim “collective” ownership of capital, but inevitably a group of people will specialize in controlling the capital “for the benefit of the people.” These specialists assemble based on their ability to manipulate whatever political mechanism has been chosen to administer the capital. The ordinary worker will still suffer from the selfsame tendency of this oligarchy to value labor entirely for its own benefit. Even worse, this political oligarchy does not compete even on relative talent at making good economic decisions; they will be far less effective as the equivalent Capitalist oligarchy.
In order to maintain reciprocity in the setting of value, both pure Capitalism and pure Communism must accept extreme limitations on individual economic and political power. In pure Capitalism, to prevent the unrestricted accumulation of ownership, ownership itself must be limited to that which an individual can personally and physically control. In Communism, some mechanism must exist to distribute capital to each individual with precise equality. Each system maintains reciprocity by essentially making impossible the specialization in the accumulation of capital. But each then tends to preclude the tremendous efficiency of large-scale enterprises, which require precise control of the underlying capital impossible to achieve by group decision-making processes. Only when advanced technology makes available to ordinary individuals the power to undertake large-scale enterprises would either of these systems be practical.
Western Democracy, rather than restricting individual power, maintains reciprocity by placing the collective power of the economic and political oligarchies in opposition. The workers, by virtue of their numerical superiority, elect a political oligarchy to control the use of coercion. The economic oligarchy, self-chosen by virtue of their superior skill at managing capital resources, maintains control of the overall economy. Both sides exist in a state of dynamic tension. The workers can coerce appropriation of capital; the capitalists can use their position to depress the economy. The balance of reciprocity will swing back and forth but tends to stay in a middle ground.
The maintenance of reciprocity is not natural to human beings. Even the smallest positive feedback effect will result in one group attaining disproportionate power and disrupting the negative feedback effects of reciprocity. Thus, humans do not spontaneously assemble into societies exhibiting entirely reciprocal economics. It takes both social and material technology and an understanding of the mistakes of history for individuals to make sufficiently rational decisions to maintain reciprocity in their economy.