The Moorish Wanderer

The Civil Service, The Bureaucracy & The Citizen

This is a piece I wrote for Talk Morocco, the August issue being “Red Tape” in Morocco. You will find some interesting pieces on  how foreigners and nationals alike have to deal with bureaucratic inertia. I thought perhaps a wider picture
is needed
to understand why Civil Service Isn’t Working.

No one can deny it: the civil service is vital for any society. With the level of complexity the post-modern societies reached -including ours- the need for a group of individuals devoted solely for public service is increasingly compulsory. I am sorry I have a bias for the civil service, even though I suffered, like many other fellow Moroccans (and foreigners, when those had the unfortunate opportunity to deal with the ‘idara) who didn’t need a paper for their everyday business? Who hadn’t had enough from long queues, rude civil servants and stupid remarks regarding their applications? But the work of government, the ultimate cement holding society together, has to be carried out. I know the red tape can be of invaluable help when it is rightly and properly managed. My piece here argues some ideas on the issue.

The civil service is an ancient institution in Morocco. It is the institutional aspect of the Makhzen. Whether you believe in its present existence or not, the Makhzen provided the backbone of the Moroccan civil service for many centuries.
The pre-modern civil service was not a public service per se. The idea, as A Laroui or J. Erckmann noted, was more about taming the tribes and imposing the Sultan’s power, rather than serving the public and improve its standards of living. The civil service, as it were, was about maintaining, consolidating, imposing and displaying the imperial power to the rebels or potential ones.
The ultimate goal being of course, the complete submission of the tribes to subjects. The paramount pretext to endless “Harkas” was the Prophet’s saying about Muslims need to be submitted to a Khalifa’s authority. The Sultan, as God’s and the Prophet’s  representative, has the duty to do so.
Laroui managed to see in the Makhzen the first foundations of modern government. The need of civil service is therefore of an early stage. The modern aspect of it might lay in the attempt to “organize” as it were the basic means for collecting taxes and enforcing the Sultan’s power. Despite all the medieval aspects of such arbitrary administration, there remained two arguments for any modern power that were already taken as sovereign symbols: Regal privilege of circulating money and the Legitimate Monopoly of Violence.

One might wonder why they were subjected to this brief historical review-and I do apologise for it is quite incomplete and subject to debate moreover-. It is essential to bear in mind that the past institutions do shape the present ones. However concealed their influence is, it remains so, and perhaps even stronger than one might think. The “modern” -or shall we say, European-style- civil service came in with the Protectorate. For the first time in Moroccan history, the tribes have been tamed; the borders and the land have been controlled, even if it was divided up between the victorious colonial powers. Even with this so-called “modern” state apparatus, the core working hypothesis of the whole she-bang remains the same: square the territory, and squash any glimpses of autonomous will. It has been Morocco’s plight to witness the unhealthy mating of French Jacobin centralism, and the Makhzenian perpetual lust for control over the tribes. It may come to a surprise for many of us, but deep inside every civil servant one meets in one’s life to deal with administrative matter, there’s this tradition that makes administrative journeys of hellish nature.
A bureaucracy like this does not meet the requirements Max Weber designed for the true administration. In facts, the whole post argues that the Moroccan bureaucracy is not really one. That’s because the academic definition of it involves a battery of conditions our civil service cannot meet, because of its intrinsic nature.

Let me now present Weber’s definition of Bureaucracy: “characterised by an elaborate hierarchical division of labour directed by explicit rules impersonally applied, staffed by full-time, life-time, professionals, who do not in any sense own the ‘means of administration’, or their jobs, or the sources of their funds, and live off a salary, not from income derived directly from the performance of their job. These are all features found in the public service” These are features of positive connotation: an organization with pre-defined set of rules is unlikely to block, or for its members to take bribes or to bribe for a specific requirement.
Max Weber tends to use a lot of his Ideal-Type methodology, and in real world, no civil service matches that ideal, though some services managed to get closer than others. Nothing of the sort for Morocco, though. Let me walk you through some facts and figures.

Morocco has an overall civil workforce of some 684.889 civil servants (2004 figures) These figures are of course pre-DVD, the famous Départ Volontaire Demandé, following which the current size of the civil service should be around 640.000, ceteris paribus (a reasonable assumption based on the facts the civil service no longer recruits huge amounts of workforce). This number is distributed as follows
Our civil service is not, in broad terms, incompetent, in facts, according to the Rapport de Développement Humain (a report His Majesty ordered for the 50th independence anniversary), our service is doing quite well compared to African opposite numbers. Its mapped distribution follows quite closely the population’s pattern of distribution. In its own administrative capacity, the civil service has no intrinsic problem of its own.

There are however other problems that out-range these positive points: Though civil servants are evenly distributed among the population, the evidence shows that services are very centralized: central services (Education department not included) gather 80% of the overall workforce. The civil service, in other terms, is mainly administrative, and centralized-oriented on the top of this. Furthermore, the civil service is ageing, 60% is more than 40 years old. (This figure is bound to be a bit lower now, because of the DVD, but no more than 10% or so)
Finally, there is this question of income. The figures are rather confusing. In absolute terms, the civil service absorbs a lowly part of the GDP (about 13% in 2005, 10.2% in 2008, IMF figures) nonetheless when compared to the total taxes the Moroccan state levies on the economy, the figures are much more important. According to the Finance Ministry, the total fiscal levy amounts to some 24.5% of the GDP. That means a huge amount of it is devoted only to the payment of their human resources (basically, some 40% of the total budget income, According to the 2008 Budget).
The issue is the civil service costs quite a lot, and furthermore its income distribution is quite random, all of which creates frustration among all services, and increases the probability of corruption, passe-droits, nepotism and the like.

According to the figures some department are employing large numbers of civil servants, but these receive a lower share of the total income spending. For instance low-grade civil servants (echelon 4 and below) represent 13% of the total workforce but receive only 5% of the total Personnel spending. These are people that didn’t enjoy much real increase in their income for the past years, particularly when one bears in mind the fact that the average working experience oscillates between 20 and 22 years. Surely in these conditions, the temptation of taking a bribe or abusing their position grows on the frustration of income inequality. I would like to add on last batch of data before I can put discuss some policies that could, in my opinion, bring a bit of change about. Remuneration is a plight and is considered so, as the reports points out: “…Pris en otage par une vision purement budgétaire, le système de rémunération qui comporte de nombreuses insuffisances, constitue l’une des problématiques essentielles auxquelles le gouvernement est actuellement confronté.” (p.117)
The report goes on the various shortcomings of the civil service payroll:
– une grille de rémunération obsolète, dont l’établissement remonte à 1973 qui ne joue plus son rôle d’instrument de classification des emplois, car une masse importante de fonctionnaires changent de grade sans pour autant changer de fonction. […] De nombreux fonctionnaires plafonnement dans leur grade après 21 ans de services sans perspective d’avancement alors qu’ils sont encore en milieu de carrière et loin de l’âge de la retraite.
– l’absence d’équité en matière de rémunération, en raison du caractère excessivement large de l’éventail
des salaires : le rapport est de 37 pou 1 entre le salaire le plus élevé et le salaire le plus bas dans la fonction publique marocaine, alors qu’il est de 7 pour 1 dans les pays à économie comparable.”

And finally: “À ces dysfonctionnements en matière de rémunération, il importe d’ajouter l’absence d’un système de promotion fondé sur le mérite. La promotion de grade qui reposait depuis des décennies sur le principe du quota n’a pas résisté aux pressions syndicales qui a amené le gouvernement à plusieurs reprises, à offrir des promotions en masse au profit de milliers de fonctionnaires.”

Just as the bald man from Lena said: “What Is to be Done?” I discussed in another post the possibility of a high level of decentralization (actually, an effective Federal Monarchy) with civil servants much closer to the citizens.
That means an increase in the local administration staff to a ratio of 1 federal (central) civil servant for every 2 local or regional civil servants. One way or the other, the trade-unions as well as the civil servants will have to come to the idea that their income is not guaranteed, that they must produce an evidence of their work, thus introducing a parameter of performance in the service.  These are implemented for the high levels of officials, and they prove to be working. When one speaks of high-ranking officials, one does not refer to the “high-flyers”. Unfortunately, firsts and upper seconds graduates from the Ecole Nationale d’Administration do not count as high officials.
We need a clearer system in the way the civil service recruits its officials, especially for high-entrance levels (those involved in policy-making) a graduate from Polytechnique, Centrale or HEC might be bright, but when lacking knowledge of public service, results can be counter-productive. The problem is, our top-level recruitment is still handicapped by a certain partisanship, and if I may, of tribalism. I do hope that things will change a bit, and allow in professionals, rather than technocrats, to run the job properly.

Finally, there is a need for a firmer and more direct citizen’s control over their civil servants. It is their money that pays for the administration, and they have every right to know what is done with it. Basically, a first step would be to abolish the sacro-saint administrative principle of “indiscriminate channelling of resources” (Principe de non-affectation des ressources), without which things can get clearer for the taxpayer.
Academia provides rich resources for the ways citizens can get involve in controlling the way the civil service behaves and acts. This permanent control deters (or should do so) the service from turning its bureaucracy into an inert body without which nothing can be done. The way I advise to follow is to “hit’em where it hurts”, i.e. the money inflow and the power to produce their own legislation. When those are transferred to local government, say, to smaller autonomous administrative entities, then things become much simpler for the citizen to control.

Please enjoy this fantastic excerpt of “Yes, Prime Minister”

Ramadan At The Gates

I don’t think this month is holy any more, nor does it still bear some genuine religious significance to the people. It is, I must point out, a subjective point of view. Indeed, Moroccans (at least those I saw in Casablanca or Rabat or today in Marrakesh) are ostensibly reading the Koran in public places. I noticed the mosques were never so full of faithful as they are this time of year. But on the whole, it does not feel like Moroccans get in touch with their spirituality. It does however look like more of a parade of spirituality, and it is going out of proportions. There is this stereotype I hold on my fellow citizens as being hypocritical, but surely it was nothing like that.

There is something I find quite strange, though: Every Ramadan, dissident voices claim their right to break it, and every time, the orthodox voices cry their shock and anger to that handful of Kuffar that have no respect for Islam or to anything this Umma holds dear to its heart. Some even get raving mad, fortunately only on Facebook walls or Hespress comments. Yet it remains so that Moroccan society is growing intolerant, or at least seems to be so. Last year MALI group tried a spectacular direct action but were prevented from doing so. Do we have some comprehensive explanation why some Moroccans feel very sensitive about this?

Let me just put it in simple terms: fasting Ramadan, just like praying are two rituals part of the five pillars of Islam. However, these pillars are ranked in order of precedence and it goes like this: 1. Faith, 2. Prayers, 3. Charity, 4. Ramadan, and last 5. Pilgrimage.

In other words, its is much much more serious breach of Muslim faith not to pray than not to fast Ramadan, and even more important to care about the needy than to fast during the holy month. Until now, I have never seen someone harassed by the crowd because they did not attend the Friday prayers, as far as I am concerned. There was this unfortunate occurrence when a particularly zealous member of my family tried to talk me into “mending my ways back”, but that was it (the person in question avoided me for the rest of the evening, and that was a relief).

Their reaction would have been quite different if I was not fasting, I can tell you that. While the last pillar (pilgrimage) is compulsory only to those able to go to Mecqua, Ramadan remains effectively the last pillar all Muslims should observe, and yet it is, according to some surveys I am going to discuss, the most important one.

The Moroccan Penal Code, Article 222, is quite clear about it: Muslim Moroccans are not prevented from not fasting Ramadan, they are forbidden to do so in public.

Celui qui, notoirement connu pour son appartenance à la religion musulmane, rompt ostensiblement le jeûne dans un lieu public pendant le temps du ramadan, sans motif admis par cette religion, est puni de l’emprisonnement d’un à six mois et d’une amende de 12 à 120 dirhams

How could anyone -save for those of our fellow citizens with Jewish ascent- prove that they are not “notoriously known for their belonging to the Nuslim faith?” And what about a Moroccan that reverted their faith to Christianity? do they have to produce a baptism certificate? And what about the atheists or the non-believers? Do we need a paper stating our non-belief from Richard Dawkins? And why being so hypocritical about it? Why would the Moroccan judiciary punish anyone break-fasting in public, but turn the blind eye on those who do so but away from any public fuss? Doesn’t it encourage hypocrisy? or Doesn’t it simply give in to the fear of Fitna?

For Fitna here would be some Muslim fanatics taking on those they consider apostate. Article 222, just like Article 489 (on homosexuality), Article 490 (on illegal sex) and 496 (female adult with a tutor authority) reminds us that Morocco, for democratic and tolerant it boasts to be, remains handicapped with a reactionary set of laws as well as state of minds, and impaled in deep contradictions that cannot be explained but in sociological terms. I must point out that nowhere in the penal code an article punishes a Moroccan national for not going to the Mosque, or giving money to the poor, or even for lacking faith in Islam. Why do we focus on Ramadan, and not on the rest?

Let me be clear about it: I am a staunch supporter of secularism as a political solution for religious issues. The law of the land needs to be set up by men, and these held accountable to the nation. That also means that the His Majesty should not benefit from the extra-constitutional powers his status as “Commader of the Faithful” permits him. In other words, Islam, just like other religions, remains a private matter, thus effectively rendering the public sphere neutral to any spiritual lobby.

I cannot however understand the sheer contradiction of it all: it is fine not to pray (I mean, people do not necessarily see it as a blatant lack of faith) it is legal -within the boundaries of the law- to drink alcohol (bars are public places as far as I know), but jamais au grand jamais, one should break Ramadan fasting, especially not in public. At the best it is frown upon, at the worse you get caught up by the police. In the land of contradictions, one stands beyond bemusement.

Let us take a leaf from the RDH 50 report. The one about society, families and youth, and especially about religious values as seen by the Moroccan youth. According to the survey, and it seems to be the general case, the youth are longing for a change, compared to the previous generation (namely their parents) either by refusing the norms (no prayers, no Ramadan) or by accepting the norms as they were, but in a different way, so that the inter-generation differences remain seen.

By doing so, the Moroccan youth do no “invent” as it were, atheism or agnosticism, nor the “new wave” religious observance. They simply move within the social context they are living in, and the choice is then made accordingly. There was a time (1961) when agnosticism and atheism had the upper hand:

seuls 5% des enquêtés estimaient que la religion tenait une place plus grande que dans la génération précédente. La majorité (80 %) affirmait l’étiolement de la religion. Parmi les constatations recueillies : « les jeunes se détachent de la religion », « il y a un sur mille qui pratique », « plus de 50 % ne font ni ramadan ni prière », « autrefois un musulman était renié par sa famille s’il épousait une chrétienne, aujourd’hui non », « la religion est l’opium du peuple », « les questions économiques sont plus importantes1 ». Doit-on conclure au recul de la religion chez les élèves marocains d’après l’indépendance? En tout cas, quel que soit le rapport des élèves à la religion, les questions prioritaires de leur époque étaient politiques, économiques et sociales. La question de la sécularisation progressive des sociétés, du recul de la religion, doit être nuancée. Les processus de changement ne sont ni linéaires ni irréversibles. Les recherches récentes sur le rapport des jeunes à la religion vont dans ce sens”.

I like the last sentence because it is the adequate and informed answer to any of those making speeches about the irreversable victory of Islam over the unfaithful.

That happened some 50 years before. What about now?

“Selon une enquête menée par M. Tozy au début des années 1980, seuls 8 % font la prière régulièrement, 26 % occasionnellement et 49 % ne la font pas. L’enquête de 1992 révèle que 54% des étudiants font la prière. Alors faut-il conclure à l’absence du religieux lorsque seuls 8 % des étudiants font régulièrement la prière et au retour du religieux lorsque la proportion des pratiquants « augmente »? Ni l’un ni l’autre. Nous avons dit que le retour du religieux (si cette expression a un sens) n’est pas un processus irréversible. S’agissant toujours de la pratique de la prière, l’enquête de 1996 enregistre une « diminution » de 10 points par rapport à celle de 1992”.  That is quite odd, as pointed out later on: “Tozy remarque l’incohérence, voire le caractère contradictoire des réponses : 85 % des enquêtés avaient un rapport ambigu à la religion. Ceci montre qu’il est difficile de partir d’un seul aspect de la religion (la prière, le port du voile etc.) et d’affirmer soit la sécularisation soit le retour du religieux.

These are the conclusions the report reached on religious values and Moroccan youth:

– The present situation is neither that of secularism or mass-islamization. All that comes up from the finds is ambivalence, ambiguity and contradiction in the choice of religious symbols as well as individual and collective behaviour towards Islamic rituals. (including therefore Ramadan)

– The religious references are more and more of exogenous  nature. family no longer provides them, and the Youth are looking for them elsewhere (Satellite TV, Internet, University, etc….) thus proving a much more heterogeneous choice in terms of  “religious apparatus”

What about Ramadan then? It may be related to the kind of relationship we have with food and the ritual of eating.  The HCP studies still point out that Moroccans are still devoting an important part of their income on food and edible material.  Basically, Ramadan is considered to be the most visible aspect of religion one can display, and some sort of unhealthy consensus has been created on that.

It seems Ramadan created itself into a taboo, and those who dare challenge it must be punished, following this newly esablished norm. I consider it to be new because the non-faster were more visible say, 30 years ago than they are now. Can the Moroccan society live with a fraction of its population deviant from that norm? of course it can, it has proven to be easily adaptive. What lacks is the basic condition of an open debate, for a taboo is not subject of such talks, and it seems to me, the blame is on both sides.

Oh, and Ramadan Mabruk. May we all put on a bit of weight in the name of Allah.

A Journey To the Museum

A few days ago, I paid a visit to the Resistance and Moroccan Liberation Army, a visit I was planning a long time ago, but kept cancelled because of unforeseen circumstances. I have now.
The museum itself is quite spacious. I was surprised, because when one gets in, the ground floor, though large, is relatively poorly furnished: a conference table with three or four chairs by your left, a huge wall full of pictures circa 1956 above it. On the right, the whole Alaouite dynasty, right from Moulay Ali Cherif to the King Mohammed V. I was at first skeptical about it all. What, the whole museum boils down to a few pictures. That’s not a museum, that’s an amateur exposition. Plus there was no one there. Admittedly, holidays and upcoming Ramadan explain it, though I am confident the representative Moroccan citizen has other areas of interest, hardly of historical nature, I guess.

The Conference table, and a large fresque on the background.

The guide then asked me if I wanted to go upstairs: There are other things to see in the 4th and 5th floors as well. Blimey, FIVE floors of relics and stuff related to the Resistance and Liberation Army!

I realized then a lot of money was put in this museum, which is ironic, considering how the monarchy was scared to death by any hypothetical threats the MLA or the urban resistance were to its hegemonic projects. That’s why the immediate years following independance were quite bloody, with the resistants betrayed and cutting each others’ throats, to the monarchy’s supreme benefit. Anyway, that’s the past, isn’t it? Plus the official line now is that of a very homogenous resistance, monarchists everyone last of them.

A very Soviet-like propaganda picture. I like how the star is shaped, very Soviet-like indeed.

I then proceeded to the second floor, with hardly any difference to the ground floor. It is all pictures and eulogies to the late King Mohammed V. Photographs of good quality, well framed and with interesting comments. I saw the crown prince Hassan in his Scout Uniform during the Sultan’s visit to Tangier, April 1947, of famous memory. In any case, it remains an invaluable heritage for the future generation to seek.

Then, the third and fourth floors turned out to be more interesting. You can find there relics from the glorious tale of urban resistance and feats of the MLA-North. Pistols, false papers, machine-guns… They even managed to display on dummies uniforms of the MLA, with the distinctive cap they wore. I didn’t find time for the rest of the museum, but It would be my pleasure to go back in there. Anyway, if you have some time to spare, pop out there, it’s really worth it!

Soldier, north sector. He is wearing the standard MLA cap, holding a (captured) French Sub-machine gun. Crica 1955.

More picture here.

Oops, They Have Done It. Again.

I believe there are such things as gifted amateurs. But at the Maghreb Arabe Presse, just as well as in the Foreign Ministry, the people in charge are professionals. When they are about to commit some cock-up, they proud themselves to do it wholesomely, and they never forget to reiterate it, to make sure it is done properly. Indeed, just like a year before, Morocco refused the Human Development Index (HDI) findings and argues for a better index reflecting the huge efforts Morocco consented during the last decade (actually, it just focused the criticism on its shortcomings).

The Foreign Ministry published a communique, following which it criticizes the HDI findings, essentially, as they put it, because it “failed to capture the quantitative and qualitative progress Morocco achieved during the last decade”. The communique also casts great doubts about an index “based on 2004 data, a year before the INDH was launched, and therefore could not integrate it in its computations”.  Well, our officials seem to be sore losers; Besides, the UN are not going to change a whole index just so that our country, particularly just because our ranking fell to a pathetic 130th rank. It is no good to criticize an indicator that puts the light on how pathetic all the development strategy went wrong.”طاحت الصومعة، علقو الحجام” as they say. And it is not like the HDI failed utterly to capture any hint of progress: They do recognize, in good faith, that Morocco: “Between 1980 and 2007 Morocco’s HDI rose by 1.20% annually from 0.473 to 0.654 today”. So it is not like we scored that bad. It’s just that other countries are actually doing much better than us in terms of poverty eradication and the like, as the graph below shows:

I would like to briefly discuss the HDI’s intrinsic methodology. According to the methodology paper they put on, the index “is a summary of  human development. It measures the average chievements in a country in three basic dimensions of human development“. These are listed as follow:

* Life expectancy at birth

* Adult Literacy and Gross enrolment ratio (number of pupils actually at school compared to the overall children at age to go to school)

* GDP per Capita.

The index then takes into account other parameters as well, making it increasingly comprehensive as the variables grow more complex. It can there fore be safe to dismiss the criticism of the HDI as being “carelessly carried out” as a feeble and baseless one (For those with doubts still left, there is a more technical paper here that should be convincing enough). The computations used to get an overall result are crystal clear.

The results are a bit "back-of-the-envelope" of the kind, but the result are definitely robust

What seems to be the criticism here (and I have to say, the Foreign Ministry produced quite a feeble argument) is on the criteria. Of all the three, Morocco has a lot to do, and on others, Morocco failed utterly. You can download here all the data the UNDP used to calculate our index (and therefore, our ranking).  Just a few figures to look at (all the figures are circa 2007):

* Adult (15 years old and above) Literacy rate: 55%

* GDP per Capita (PPP US $): $ 4108

* Population living below $2 a day (2000-2007): 14%

* Female estimated earned income (PPP US$): $1,603

* Male estimated earned income (PPP US$): $6,694

As I mentioned before, there is an exhaustive list to look at, but the figures are, truth be told, a blunt evidence of failure. I am not saying the various missed out totally inequality, or did not address at all child poverty and the like. But these policies failed to deliver, or meet the deadlines and the requirement. Let us look now to what other countries did in terms of Human development compared to Morocco. I’ve taken the liberty to prepare a graph with a group of countries, with data available here for a broader comparison.

HDI Comparison Table. Morocco is outperformed by other countries over a long period of time, so it is more a matter of structural weakness, rather than just delayed policy effect

What about the INDH then? The communique’s cornerstone argument was that the HDI did not fully take the INDH effect into account, which could lead to a negative bias on our efforts and commitment for a development strategy. Let us then have a look at the INDH figures too. According to the plan, some 10 billion MAD were channelled to development projects over the 2006-2010 period. These spendings aim at, as they put it, reducing the levels of poverty and social exclusion. It strikes me as odd that, at any time, test requirements were prepared. I mean, the money is spent, there is an audit, everything is checked, that’s fine. I was actually amazed at the level of detail the INDH got to. Very good indeed, and it is right it should be so.

But at no time there is a battery of commitments, something that might go like: the INDH is commited to reduce child poverty by a% over the period, or find a suitable shelter for b thousands homeless third-age people. 10 billion is a formidable sum of money to spend, and I am sure the cooperatives and/or charities that get the money would carry out their job just fine, but at the end of the day, isn’t the task of the goverment to plan, anticipate, forecast for that kind of policy? Isn’t it a basic scientific approach for one to set some failure test with respect to targets? Otherwise, it looks as though it’s all propaganda, and on the top of it, international organizations cannot get proper accounts of it.There remains the possibility I might have overlooked this data, so if there is someone kind enough to provide me with the data, I would be very thankful.

Recently, Oxford University produced a very exhaustive poverty index. The evidence is compelling, Morocco is doing worse, compared to countries like Tadjikistan, Syria, Jordan or Turkey. The index is gaining credibility fast, and is about to be added to the UN’s index nomenclature. Would the Foreign Ministry issue a statement on the matter as well?

Our officials should look for a simplier explanation why our rankings stagnate or worsen: the policies they carry out, while delivering good results -and even that is a matter of debate- are not that good. The results, when compared to other countries, are mediocre, or below the expectations. It is no good to critcize an indicator just because it shows you failed, or did worse compared to other countries.

A Socialist Economy For All

In Economic terms, Social Democracy has defined itself de facto. It has led, indirectly or not, to the financial meltdown the world is struggling with today. Democratic socialism, or even Communism are yet to redefine their terms, economic policies-wise.

Allow me to dismiss the old-fashioned economic stereotypes on Communists and Left-Wingers. The stereotypes that they are pro-Statu quo, still clinging on to an evaporated ideal of a centralized, planned economy. These days were over well before the Berlin Wall came down. If anything, New Communism, with its Alter-Globalization stance, embraces a different way of dealing with economics. Not as yet refined as Capitalist economics is in theoretical terms, but I am quite confident a generation of young economists can find a way through.

In any case, it is essential for the reader to bear in mind that the “mother source” of Communism, i.e. Karl Marx, never stated that communist economy should be planned, it was never mentioned how it should be organized, save perhaps for the motto “From each according to his ability, to each according to his needs“. In facts, most of Marx’s work was mainly a scientific attempt to produce a wholesome criticism of the capitalist production mode. Later in his life, he took interest in the mathematical aspect of economics, something that would have been of great use if his great mind was put to it. In any case, his criticism never got round the idea of “banning” markets, that’s for sure.

I promised my friend a post on how I can claim being a socialist, and still uphold the essential aspects of a capitalist economy. How I can find striking similarities in the theoretical groundwork of pure market and pure centralized economies. I shall give my best in this in two parts. First, the basic principles that are common to the two models, and then, a timid attempt to give a simple model of what I believe to be a socialist and democratic economy.

First, I have to say that the statement about Market vs Centralized economies is a bit over the top. When I first came across it, I did not believe it at first. Then, when the canvass of economic formulae was laid before my eyes, I hit upon it. In simple terms, the essential common points are as follow:
– The main economists that shaped the neo-classical models, those that are the core theory of market economics, where mainly (save perhaps for the Fascist Vilfredo Pareto, who, later in his life, accepted a Senator’s position in Mussolini’s Italy) of positivist stance.

And in the late 19th century, being positivist meant, in a way, being in favour of social harmony and progress. That was the case for Walras, but also for Jevons. These defined themselves as social-democrats, which, before 1904, meant they were much more left-wing than those today. The very idea of a Homo Economicus, an iron balance of pain and pleasure is the ideal of a Übermenschen, but in a “good way”. I put the brackets on advisedly, because I mean the Superhuman can be any body, and not an elite among the commons, all of which has a certain flavour of left-wing.

– The intrinsic determination of price market: Smith may have fathered to image of invisible hand, but Walras’ own image is more interesting: He talks of an “Auctioneer” (Commissaire Priseur). In his mind, there is an invisible actor that centralizes prices on both sides (Demand and Supply) then equates them all so that each one’s wealth is maximized. In addition to that, the Price of all prices, i.e. money, is defined as the last recipient of the remaining surplus (what is left of everyone’s maximized utility). I think I went a bit fast, so let me sum it up through mathematical formulae.
1. At the beginning, there is an assumption of universal initial endowment of goods.

 

 

Not just money, goods too. That means for households their labour force, and occasionally some money with unknown value. (Each agent in the market has m-1 goods and a sum of money as initial endowment) That also means for firms some capital or some money, equally of unknown value (value will be determined further on through price clearing mechanisms). The Auctioneer then centralizes all available data, including what everyone asks as a price (how these are determined is something economists did not fully answered until Arrow & Debreu came along, and even their explanation remains incomplete) The Auctioneer, through maximization under constraints of available resources, displays prices, market prices that is, for all individuals and firms to make their deals.

2. Centralized economies, in their theoretical models, differ very little from that scheme. The difference is that prices are not determined through each one’s utility, these are defined as a whole. Here, the Law of Large Numbers makes individual and collective wealth converge into one single item, all of which makes market and centralized economies look alike. The actual economies that we witnessed throughout history are, of course, quite different. Planned Economies failed not because of their own nature of Planning. They failed (and I must stress this is only my opinion) because they kept on producing non-productive goods and spoling the labour force. Non-productive goods means here Arms and Space industry. Capitalist economies, on the other hand, in order to kick out an possibility of communist subversion, managed, or made the impression to manage, an economy devoted to human capital, the so-called “Society of Mass Consumption“.

The Soviet Union, for instance, had experienced a brief period of that kind of economy, when Khrushchev came to power and tried to strengthen the Communist Party’s hold by producing more consumption goods. Same goes along for China after they abandoned Mao’s dogma. There are other factors of course, and my statement remains doubtful until some serious econometric study was carried out, but I am quite confident the theoretical parameter, i.e. the idea of planned economy, is of little consequence over the whole outcome.

The next bit is going to be a bit far-fetched, I am afraid I am going to stretch my knowledge of economic models to its limits. In a nutshell, my model allows for the following players to make their bidding in two times on the economy: The Firms (Banks and Goods-producing firms alike) that rally within employers’ union, and the Workforce that rallies behind trade-unions. These two groups of players are shadowed by the State and the Central Bank. Each player (including the authorities) have incentives and their own maximization program, which might come to the expense of others. Nonetheless, an optimum must be reached. I hold all players to be rational and all of them accept the idea of a cooperative set of games.

The workforce has the following system to solve:

 

 

 

 

Where W is the wage sought for a period t.

The wage W* is the equilibrium wage and is function of the equilibrium inflation rate π*.

Indeed, if the workforce asks for a large rise (meaning a large C) they would end up fuelling inflation, and thus effectively damaging their real income. Alternatively, they choose between a wage rise on their labour (with a fraction α), or they could cash in the dividends from the companies they own (with a fraction 1-α).

Here lies an idea I am very fond of: the extensive use of cooperatives as a form of socialist enterprise. All the aspects of a free market economy remain, save for the property regime, under which all workers have shares in their companies.

The dividends, on the other hands, do not have an impact on inflation, because of some further aspects that are to be discussed later on. Finally, I must admit there is at least something incongruous about the said model. Usually workers do not foresee inflation, but because these gather within trade-unions, the assumption holds, as the trade-union forecasts it for the benefit of its members. On the basis of these forecasts, the trade-unions claim a certain wage rise following constraints on output, inflation and interest rates.

The GDP is broken down as follows:

 

Where the Gross Domestic Product is the sum of each player’s contribution: Wages as marginal labour productivity, Profits as marginal output productivity, governement spendings (function of net wages and profits) and last, the sum of Liquidity Loss functions. These are the “lazy” way for the Central Bank to do its job by manufacturing inflation, instead of increasing interest rates. A job I referred to in a post earlier on.

In any case, my vision of a socialist economy remains, as someone puts it, very “moderate”: an open-Market economy where long-term stability on unemployment, inflation and growth is achieved through mass private ownership of one’s company, and the systematic involvement of unions (employees and employers alike) in defining the targets to meet.

Then there’s a bunch of other ideas, like free public transports to reduce the number of private cars (reducing thus effectively CO2 emissions) slimming down the civil service to an efficient corps of dedicated and professional civil servants (ideally, administrative costs relative to that of investment should be of 1 to 4 ratio), the abolition of VAT, and levy taxes on the large fortunes, while getting small amounts of taxes from a wider base.

There are other things I cannot afford to enumerate pêle-mêle, I need time and skill to study these policies a bit further. I know it is quite blur, but I am working on getting the necessary skills to describe it further.  In any case, the policies I support have one crucial criterion: the need to address any privilege, any inequality that is likely to degenerate into a rent.

I am well aware inequalities cannot be fully addressed, but there is a wide margin on narrowing these to a state such, as Tocqueville stated: “Among a democratic people, where there is no hereditary wealth, every man works to earn a living. Labour is held in honor; the prejudice is not against but in its favour“.