Mods, I'm putting this in Philosophy because I'm trying to keep the focus on the philosophical reasoning, not the economic impacts, of company scrip. Thanks! :)
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One common objection to Objectivism is that in an Objectivist society, companies could pay their employees with company scrip. After all, it's in the contract! They HAVE to abide by it!
I think this is wrong, on a few levels. Most obviously, Objectivism does not hold that all contracts are absolutely binding. In fact, Rearden gave one criteria for a binding contract: both parties must recieve value as part of the contractual relationship. If one does not, the contract is not recognized. Furthermore, I think a more significant issue is that scrip is an anti-concept: an idea designed to negate a legitimate concept. In this case, that legitimate concept is property.
Money is a tool of savings and exchange. The notion, as illustrated by the origin of money outlined in The Wealth of Nations, is to provide a standard unit of trade to facilitate barter. Any barter economy will have a standard item for trade, be it metal, stones, shells, gems, or what have you; it's too useful a concept to not arise. It prevents barter from becoming a never-ending fetch quest. Money, the ultimate end of this process, has to have a number of features to function: it has to be relatively stable (ie, bread won't work because bread only lasts for a few days), it has to be dividable to some extent (this is why metals are frequently used), etc. Most importantly, it must be exchangeable for other goods and services, both across space and across time (at least, for a significant distance--one must be able to use the item for all exchanges one can reasonably expect to encounter in one's life). All of this is dictated by its nature: a tool to facilitate exchange.
Comapny scrip fails in these criteria. It's only exchangeable for goods and services within a very limited framework: it is only recognized within the company. In contrast, real money is useable pretty much anywhere (though penalties may be suffered using it outside the political area that uses it). This negates the utility of scrip as a tool of trade, by artificially restricting who one can trade with and, worse, placing the control of those restrictions in the hands of the person with whom you ostensibly traded services! Also, tying the value of scrip to an individual company negates stability--real money is of value as long as the society exists, and commodeties such as gold, silver, and gems are of value even outside any particular society. Even beads have value outside the society that uses them as money, though not very much. Company scrip has NO value outside that company, by design, and therefore if the company goes belly-up the scrip becomes worthless.
In reality, company scrip is not money. It is a tool not of exchange or savings, or even property of the person who receives it. When you give me money in exchange for goods or services, that money becomes my property--and while others may not agree with me on the value of that money, our difference is in how much money I need to give the person in exchange for their goods and services, not whether it can be exchanged. The same with goods--the cobler may not need the bread I traded for, but he'll still accept it in partial payment at least. With scrip, it cant' be exchanged with anyone but my employer, period. Ownership of that scrip did not transfer to me; it remained with the company. There is no other property where such a concept is accepted, for the very good reason that ownership and property are tied. When you recieve company scrip in exchange for your work, you get NOTHING. Scrip IS NOT a value to me, because it's your property, not mine, and under an Objectivist framework something I don't own is not, in this context at least, a value given to me.
In an Objectivist society, barter would be acceptable. Even delayed barter would be acceptable--ie, one could agree to accept payment later on for work done today. What would not be acceptable is such enslavement as scrip represents. Such conditions are not moral under Objectivist ethics, nor would they be considered a legal contract under Objectivist law. A viable contract to an Objectivist requires that both sides give value for value, and scrip does not do that because, as I said, scrip isn't a value due to the fact that giving of scrip is not, fundamentally, a trade.
In Objectivism value must be given for value in any trade. In any case where value is not given for value, trade has not occurred. Because scrip is not the property of the recipiant, it is not a value; therefore, giving scrip in place of wages is refusing to pay for goods or services provided. It's either theft or enslavement, neither of whcih is acceptable under Objectivism. So the solution to preventing this sort fo thing in an Objectivist society is simple: press charges. The company is in the wrong to even offer scrip, much less for workers to accept it.
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One common objection to Objectivism is that in an Objectivist society, companies could pay their employees with company scrip. After all, it's in the contract! They HAVE to abide by it!
I think this is wrong, on a few levels. Most obviously, Objectivism does not hold that all contracts are absolutely binding. In fact, Rearden gave one criteria for a binding contract: both parties must recieve value as part of the contractual relationship. If one does not, the contract is not recognized. Furthermore, I think a more significant issue is that scrip is an anti-concept: an idea designed to negate a legitimate concept. In this case, that legitimate concept is property.
Money is a tool of savings and exchange. The notion, as illustrated by the origin of money outlined in The Wealth of Nations, is to provide a standard unit of trade to facilitate barter. Any barter economy will have a standard item for trade, be it metal, stones, shells, gems, or what have you; it's too useful a concept to not arise. It prevents barter from becoming a never-ending fetch quest. Money, the ultimate end of this process, has to have a number of features to function: it has to be relatively stable (ie, bread won't work because bread only lasts for a few days), it has to be dividable to some extent (this is why metals are frequently used), etc. Most importantly, it must be exchangeable for other goods and services, both across space and across time (at least, for a significant distance--one must be able to use the item for all exchanges one can reasonably expect to encounter in one's life). All of this is dictated by its nature: a tool to facilitate exchange.
Comapny scrip fails in these criteria. It's only exchangeable for goods and services within a very limited framework: it is only recognized within the company. In contrast, real money is useable pretty much anywhere (though penalties may be suffered using it outside the political area that uses it). This negates the utility of scrip as a tool of trade, by artificially restricting who one can trade with and, worse, placing the control of those restrictions in the hands of the person with whom you ostensibly traded services! Also, tying the value of scrip to an individual company negates stability--real money is of value as long as the society exists, and commodeties such as gold, silver, and gems are of value even outside any particular society. Even beads have value outside the society that uses them as money, though not very much. Company scrip has NO value outside that company, by design, and therefore if the company goes belly-up the scrip becomes worthless.
In reality, company scrip is not money. It is a tool not of exchange or savings, or even property of the person who receives it. When you give me money in exchange for goods or services, that money becomes my property--and while others may not agree with me on the value of that money, our difference is in how much money I need to give the person in exchange for their goods and services, not whether it can be exchanged. The same with goods--the cobler may not need the bread I traded for, but he'll still accept it in partial payment at least. With scrip, it cant' be exchanged with anyone but my employer, period. Ownership of that scrip did not transfer to me; it remained with the company. There is no other property where such a concept is accepted, for the very good reason that ownership and property are tied. When you recieve company scrip in exchange for your work, you get NOTHING. Scrip IS NOT a value to me, because it's your property, not mine, and under an Objectivist framework something I don't own is not, in this context at least, a value given to me.
In an Objectivist society, barter would be acceptable. Even delayed barter would be acceptable--ie, one could agree to accept payment later on for work done today. What would not be acceptable is such enslavement as scrip represents. Such conditions are not moral under Objectivist ethics, nor would they be considered a legal contract under Objectivist law. A viable contract to an Objectivist requires that both sides give value for value, and scrip does not do that because, as I said, scrip isn't a value due to the fact that giving of scrip is not, fundamentally, a trade.
In Objectivism value must be given for value in any trade. In any case where value is not given for value, trade has not occurred. Because scrip is not the property of the recipiant, it is not a value; therefore, giving scrip in place of wages is refusing to pay for goods or services provided. It's either theft or enslavement, neither of whcih is acceptable under Objectivism. So the solution to preventing this sort fo thing in an Objectivist society is simple: press charges. The company is in the wrong to even offer scrip, much less for workers to accept it.
via JREF Forum http://forums.randi.org/showthread.php?t=267776&goto=newpost
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