This is a response to Sam Altman’s essay on American Equity Feature image is HackerNoon’s MidJourney AI, Prompt “Lease-Schedule Auction vickrey auction as a response to wage labor”
Lease-Schedule Auction as opposed to Wage Labor
An additional option, while we’re considering radical shifts that might help our stability and prosperity: a ‘Lease-Schedule Auction’ model (or whatever name sounds better?) of capital-use, rather than Wage Labor.
As an example of how that might work:
You own a coffee shop; you rent the space, but you own the brand and the equipment - capital. You are the capitalist, in the Lease-Schedule Auction world, still. Yet! You do not offer wages to workers; instead, the workers who want to use your capital must each bid in a Vickrey auction for the time-slots they want to work. (This would be done a few weeks in advance, for a coffee shop, but a factory could be accepting bids for multi-year contracts.)
What is a Vickrey Auction? -- A Vickrey auction gets the exact same results as a normal auction, but fast and simple: everyone writes-down their HIGHEST bid, and puts it in a box. The highest of those bidders wins, and they pay the SECOND highest bidder's price. You are naturally incentivized to be honest; bidding too high means you pay more than you wanted, and bidding too low means you won't win it, even though you could have won in a normal auction. Always be honest about your true, highest bid.
In our coffee shop example, Julia bids $4 an hour for the 6am to 9am, and Tim bids $4.50… and Alice bid $5, so she wins the auction, and she pays the second highest price (Tim’s $4.50 bid) per hour, for the 6 to 9 shift. That auction is the ONLY way the capital-owner makes money; the workers get 100% commission. Every dollar crossing the counter is theirs. You make a living by having equipment that is in high demand at auction!
Consider also, the enterprising gourmet who does NOT have cash for all the equipment - they can rent your equipment during midnight to 4 am, making their delicious coffee syrups that they sell online! Make all capital-access rentals, instead of fiefdoms!
This properly aligns the perverse incentives of capital wages - that is, “Because I get paid $10 an hour no matter what my output, I can slack a little…” And the Boss is thinking “Because my employees all want to slack-off, I need to hire managers and sups to keep them busy!” And those managers’ total costs are twice your business’ profit margins, so you’d actually be three times as profitable (on the exact same revenue) if you could just ditch the managers without productivity flatlining.
That’s what Lease-Schedule Auctions do! If Alice bids $5 an hour for her shifts, she’s incentivized to work hard, so no manager is needed - overhead gone! Similarly, by taking wages away, there are no “Union/Boss Fights” - employees who collaborate to make things that they sell would need to form their own contract together, and the argument is between them, not you!
The only catch to this whole system: we would have to legislate the elimination of wage-labor as an alternative. It’s exploitative, and I say that while hating Stalin, Mao, Trotsky, Lenin, etc. In contrast, it’s hard to call “100% commission” exploitative. Managers are never going to switch on their own. And it would be our own shame to let them hold all of society back.
[[Details, added later: The Managers (who are often no longer needed in a Lease-Schedule Auction, because workers have 100% commission and rentals are paid regardless of whether people come to work) currently constitute 18% of the US labor force… and 30% of the compensation. A Lease-Schedule Auction puts that 30% into Capital Accumulation! Further, we have lost productivity from ‘sick’ days, turn-over, and low motivation, currently - those would be reduced in a Lease-Schedule Auction as well. Then, there’s all the Capital that goes under-utilized…
The Key Concept about Capital Utilization in a Lease-Schedule Auction:
Instead of you buying capital that you keep to yourself, as a moat, in a Lease-Schedule Auction you would buy capital to rent it to industrious people; you don’t want a moat anymore! You want everyone to demand your equipment, driving rental prices up. So, if we have mass Robotic Automation, that is ONLY a threat if a few rich people get to keep that capital behind their Moats! If anyone can rent those robots, then the robots benefit all the crafts and creatives, while the capitalists make money by being useful to others.]]