Takahiro ASAWA,

The Ethical and the Economical
The Capitalist-Nation-State and Associational Companies : Introduction


The ethical and the economical - these are the two issues I want to raise here. The pursuit of ethical values and the pursuit of efficiency seem to oppose each other and impossible to reconcile. Modern society has become too economical without paying much respect to ethics - this is a common cry of today. Major sociologists, therefore, find their missions in finding out how to be ethical or to sustain morality in the "economical" modern society. Auguste Comte's emphasis on morality is a good example. Organic solidarity - or moral education - is the famous theme of Emile Durkheim. They are mainly concerned with the question how to use a certain modernized version of ethics to limit the "too economical" modernization - to use one pole (ethical) to slow down the other (economical). A risk of reactionary - the return to a moral yet restrictive community - is, however, inherent in such questioning.

In fact, the economical - the pursuit of efficiency - itself is not entirely an immoral thing that has to be limited. Without pursuing efficiency, ethical activities cannot often continue. The economical is essentially to do away with social wastes, i.e., hazards for flexible exchanges - which can be ultimately an ethical thing. The two opposing poles - the ethical and the economical - can actually point to the same goal. Without attempting to accomplish the two seemingly antagonistic attitudes at the same time, neither the ethical nor the economical is achieved in the long run. Rather, we have to switch constantly between the two attitudes. This is our condition. For example, if someone started an ethical movement, but failed to organize it efficiently, participants would get frustrated, end up in accusing each other for failures and thus act "unethically." Without being "economical", it is difficult to remain ethical.

On the other hand, when I observe capitalism producing huge amounts of waste and causing economic disturbance constantly, another question comes to my mind: without being ethical, can we sustain the economical? Capitalism is not ethical, sure, but is it even economical?
Without the private ownership, there is little motive for the efficiency. Nevertheless, the adherence to it can undermine the social efficiency. Its renouncement - especially technological information - is "economical" from a global viewpoint and the humanity's well-beings. The recent hustle over the use of anti-AIDS drugs in Africa without legal patent fee is a good example. In science, people almost freely interchange their ideas and discoveries. In spite of obvious social benefits, such a custom cannot be generalized in wider society, because there exist conditions inherent in human exchanges: we do not want to give up our products without receiving equivalent in value. We have to abolish the private ownership, but we cannot do away with it, either. The ethical accusations against capitalism will cloud our eyes - we have to closely and objectively examine how these conditions emerge. We have to clarify the social conditions that are making the collaboration of the ethical and the economical difficult.
Today, economical transactions mean exchanges using money. We express our judgments of value through money. It plays a pivotal role in human relations and connections. And this reliance on money necessitates the emergence of capitalism. In order to examine such structures, we still owe hugely to the later works of Karl Marx. For the theoretical analysis of capitalism and the nation-state, I will draw upon his works, along with several other works of sociology and political economy.
Merely clarifying social conditions, however, could lead to determinism. Such theoretical labors can indicate what kind of movements are not the alternatives to capitalism, but are hard to propose a potential alternative. For such a purpose, it is my firm belief that we have to explore, not only the theory, but the real movements existing now. Fortunately, I have encountered one suitable company, Two-One in Japan, that is managing to be both ethical and economical by employing numerous original methods. Because this company has an internal structure that can be called an association of workers, I will term such a company an associational company.

Theoretical Discourses

There are numerous amounts of works about Marx. Because Marxism has always been political, however, the interpretations of his works are often ideologically biased. More or less simplified explanations, rather than rigorous scientific examinations, have generally promulgated, such as describing him as the inventor of the class theory. The question why this simplification happened itself could be the subject of a sociological research. But Marx wrote complex analyses of capitalism. For example, he started his Capital with the analysis of the form of value - money. Rather than the traditional Marxian emphasis on the production relationship, he himself has focused on money and credit - because essentially the latter formulates and models the relationship of the people. Money, like language, determines how people communicate with each other.

Several attempts to establish an economy alternative to capitalism have failed and remained feeble - or they have turned into "another capitalism." The problem of these movements was the misunderstanding of how capitalism works. Marx criticized classical political economy; but as is clear from his descriptions, he was also criticizing the past socialist movements from Left Ricardians (the Chartist movement) and Owenian corporatism, to the French socialists and anarchists (Proudhon, collectivism of Louis Blanc etc.). German social democrats, such as F. Lassalle, were not exempted from his critiques. Marx himself, however, left only a few sketches of the possible alternative society. In German Ideology, he has even stated that communism should not aim at a certain ideal:

Communism is for us not a state of affairs which is to be established, an ideal to which reality [will] have to adjust itself. We call communism the real movement which abolishes the present state of things. The conditions of this movement result from the premises now in existence.
(Marx, Karl, The German Ideology)

There is no question that Marx's followers had trouble imagining the socialist society. Marxism was, therefore, basically formulated in the line of Engels - the former Chartist. The central theses of Marxism became the base-superstructure theory, historical materialism and the claim that the source of surplus value is only the exploitation of labor - none of them original to Marx and emphasized by him. It was Engels who included these ideas, borrowed from Left Riccardians or the German historical economists, such as Wilhelm Friedrich Schulz. Following Marx's remark quoted above (this part was written by Marx), Engels found his "premises now in existence" - on-going monopolization and the state capitalism. Engels' final hope was that, by simply switching the head of this structure, he would get a state socialism - the planned economy and the mutual ownership of the means of production. Of course, Marx also states such a program several times, especially before he studied Political Economy seriously. Lenin's Soviet socialism basically followed this route. In fact, in his later years, Marx was envisioning the possible communism as the association of cooperatives formed by free individuals (e.g., Civil War in France). In this sense, his idea was not entirely different from early Soviets or Rate - or even from one of his biggest antagonists, P.J. Proudhon.
At any rate, his later critiques of political economy - Grundrisse, Contribution to the Critique of Political Economy and Das Kapital - attest his complex, still uncontested understanding of capitalism. Not only the two classes - capitalists and workers - but numerous kinds of economic players appear in his works. For instance, he repeatedly states the difference between money-dealing capital and moneylenders. Such analysis in detail is not too trifle. The former economizes the use of money, while the latter provides money. This distinction is important to discuss the question where interest emerges. I will present a theoretical discourse that is concise yet very attentive to these and other important details.

It is not only the classical works of Marx that form the backbones of my theoretical argument here. In fact, it was rather some of recent studies that inspired me to reread Marx from a different perspective.
The renowned Japanese intellectual Kojin Karatani has learned a lot from other Japanese students of Marx, such as Kozo Uno or Hiroshi Iwata. But his recent work from the 1990s, Trans-Critique (recently published in English by MIT) has in many ways superseded previous works. For instance, his continuous focus on merchant capital or the circulation process (commodity markets) is important, especially since it goes against the traditional Marxists' emphasis on the production industry. Without focusing on them, it is entirely impossible to grasp how capitalism realize surplus value - there is no surplus value if commodities are not sold well in markets. If the theory that surplus emerges in the production is true, whether they are sold is no longer a question.

Also Karatani's concept of the capitalist-nation-state as the modern developed structure of the essential three forms of exchange - market exchange, reciprocity and appropriation-redistribution - is original, although he has just sketched this theory briefly in his book. In this concept, works of Georg Simmel, Benedict Anderson and Theda Skocpol, for instance, beautifully fit in. Skocpol claims that the state has its own mission - appropriation - and is not a mere tool of capitalist classes. I will substantiate this capitalist-nation-state theory by drawing on these and other numerous sociological works.
Karatani's other essential theme has been money. The use of money in market exchanges will lead to the positional differences of sale and purchase. Surplus value will emerge in the transfer of goods from a cheap price system to the higher. The exploitation of workers is simply about the distribution of the surplus value thus emerged. The point is that without money such surplus will not emerge; but once using money, the society inevitably becomes capitalistic. We can expect only gradual changes in various micro segments.
Also to understand the capitalistic process and structure rigorously, the works of Shigeru Iida - who had specialized in the finance or credit theory of Marxian political economy - are indispensable. He emphasizes the functional difference between commercial and bank credit. Such difference seems too trifle, but misunderstanding in detail can be fatal. For example, Proudhon's alternative movement, the Bank of People, recommended the general use of commercial credits, which replace the money issued by the Bank of France. He failed to recognize that interest essentially emerges in bank credit, not in commercial credit. When used in simple exchanges or payments, money does not bear interest. It is in the custom of loaning, where interest becomes a crucial issue. But Proudhon believed that the general use of commercial credits will stop the interest-bearing. He was missing the point. The inevitability of bank loans soon brought back interests. In fact, when Karatani proposed the use of alternative money, he was also unclear about this distinction. Not the alternative money, but the alternative credit is the question we have to explore. I will review several past movements or systems accordingly to find out what could be a "possible" alternative instead.

The Case of Two-One

A typical example for the reconciliation of the ethical and the economical have been cooperatives. They are, however, usually not entirely "economical," serving as the escape grounds for industries that can no longer expect sufficient rates of profit in capitalism. Classical forms of a cooperative were modeled by Robert Owen or the Rochdale group and legalized by congresses of various countries. We do not necessarily have to follow these legal forms. We can choose a structure of a company and its associations more freely - probably legally a joint-stock company with a cooperatives-like structure - to stay economical and realistic enough, but also to remain ethical.
For such a purpose, I will present a case-study of one attractive example. It is an eyeglasses retail-chain in Japan called Two-One. This company is legally a joint-stock company, but it has numerous features the usual type of profit-seeking corporations does not have - what becomes clear from the five mottoes of the company:

  1. All the profits gained from a business year will be shared by workers, and also used as a reserve to discount merchandise, thus contributing to customers.
  2. Only workers own stocks and they all participate in management.
  3. We will allow no unnecessary intermediate sections, most importantly human resources.
  4. We will disclose the company's business achievements, financial affairs or salaries.
  5. We do not set any norms or goals for employees.

As I researched the company, I encountered numerous techniques and methods - not at all limited to these five - to achieve a both ethical and economical way of business management. What I was mostly impressed by was that these methods have solved several issues I found crucial and hard to solve from the theoretical analyses mentioned above. Moreover, Two-One has been "economical," growing steadily by average 10-20% a year. I will term such a company as an "associational company."

In my research, I have tried to illuminate the following points:
First: the inner-structure of the company. It resembles cooperatives. Especially, the method they use to decide bonuses for workers is unique. As I have explained, only workers share the stocks - the bonus, therefore, means two things: dividends and the evaluations of jobs. The unique part is that they evaluate each other in the intranet, instead of bosses or human resources sections doing the evaluation. They claim that it is actually impossible to judge "accurately" the quantity of each employee's contributions. Rather than spending too much time on evaluation, therefore, a representative hands in a rough evaluation sheet of all the workers to the intranet. Then, everybody sees it, suggests minor adjustments, and they stop at where everybody feels treated "fair enough." By decreasing the cost for human resources in this way, each worker rather receives a higher income. This results in a cut-down of costs and satisfies workers. I have questioned how these systems work concretely, along with the dividend system and other financial methods.
The second point I have focused on was the franchise-chain system. In Japan, the term refers to the "independently-owned" shops that have alliances - rather than chain shops which are owned by the main headquarter. In this regard, the relationship between each shop and the entire alliance is similar to the cooperative association of free individuals. Two-One has even devised this system and made it more associational.
The third point of the research is the relationship with other companies, especially with producers. Though sounding strange, they claim to have attempted to "buy higher and sell cheaper" - what seems to be the opposite of the capitalist goal. I wanted to know how exactly such a thing could be possible.
These are the essential points I have clarified in the interviews. Conclusions thus achieved will be valuable for anybody who aspires to start an ethical and economical company.
Of course, we still have enormous questions to be answered. For example, Two-One is merely a single company; it will be more difficult to form larger associations of such companies. Two-One is merely a peculiar case; it may be impossible for other companies to imitate. How about a different industry where great amounts of investment are necessary? The relation with the state system is also an important question. I have to confess that I do not have concrete answers to these questions. But as of now, I am satisfied with presenting only one example - at least, this will be the hope for the people who are suffering in today's capitalist-nation-state structure. The development of associational companies and their alliances will be one of the crucial issues of the twenty-first century - to be both ethical and economical.