Boring 7: Economic Democracy

I would like to bring together a number of ideas in practical programs, to show what sort of economy I am advocating. This is the "political agenda" corresponding to my economic theories. I say "theories" because, at this time, I do not believe there is one, overarching theory that embraces all economic activity. There are different analyses of how people make their living, depending on circumstances, just as there are different cultures in various environments. The only uniformity we might expect is that similar circumstances produce similar results (convergent evolution).

From each according to his ability

To each according to his needs

Workplace Democracy

Environmental Protection

Education

Medical Care

Production for Use

Meeting Needs

For the critics, who always denigrate anything democratic socialists say as either unrealistic, idealistic or impossible, most of the specific policies and programs I advocate are actually in successful operation elsewhere (some for more than 50 years).

I must also write a personal note: I grew up in a very wealthy community which was home to many members of the capitalist class. It is my direct experience that those folks apply "communist" standards to their families and friends. That is, no one goes without, and everything anyone needs (or wants) is provided. Every effort is made to give each person in that community every benefit and opportunity. Despite living in a gilded cocoon, recipients of such largesse are hostile and cruel to those not  members of their tribe.

My pleas and arguments are simply that everyone ought to be treated well, not just the wealthy and powerful few. It is not a matter of envy; it is a matter of justice.

From each according to his ability ...

I begin with this infamous Marxist slogan. It is especially sneered at in capitalist Western countries, where it is taken to represent some sort of Utopian sentiment and little else worthy of note.

Read more carefully, the words are almost a tautology. What else can anyone contribute to society, other than what he or she or it is capable of doing? Does it make any sense to assign a cripple to garbage collection? Could the class dunce teach physics?

The fact is all of us inherit and develop certain characteristics over time which make each person more or less fit for any given task. We hope each person will contribute the highest and best skill to society, not any less. What Marx had in mind with this saying is simply that each person ought to contribute one's best efforts. Marx did not recommend shirking work; he did believe that a well ordered society will find a useful and satisfying role for everyone. In this almost all philosophers agree: human beings require social recognition, so enjoy being appreciated and rewarded for the work they do.

The Marxist notion in no little way rests on the Kantian notion of the worth of the individual. Immanuel Kant invented the modern idea that a person should be treated as an end in himself, not merely as a means. It is the concept of the meritorious, free person that makes all the difference. Modern political democracy is founded on this idea. It immediately follows from Kant's proposition that people should not be enslaved or enserfed. Such a work relationship is unethical, hence immoral. The work relationship, in Kant's view, is something to be "legislated," which means it would apply to anyone in similar circumstances. Moreover, the relationship must be entered freely by self-legislating (free moral) agents. (Perhaps some sort of creature would volunteer to be a slave or zombie, but we would have good cause to question that one's sanity.)

Capitalists don't like this Marxist saying, because they fear its implications and the judgement which follows. Charlie Chaplin depicts an abused worker in "Modern Times", a classic film. Chaplin was a Communist, no friend of capitalists, so he was barred from returning to the United States for years. Although capitalists did not want to see or hear the message, what Chaplin portrayed in fact reflects what happens to ordinary people at work. (I've spent enough time in factories and other places employing the "lower class" to know this is true.) Working people are often treated like dirt - certainly not valued for themselves.

Most capitalists only think of their own profits, regardless what it costs line workers. This is all the more easy, if the corporate office is miles away in pleasant surroundings from the everyday pain and suffering of the assembly line. It is easy to induce one's capos to press the workers a little more, if one doesn't have to endure the trying emotions of doing it oneself.

I do give credit to those Santa Clara capitalists who invented Silicon Valley, and a more democratic workplace. I always respected INTEL management, for example, for its consideration of employees. On the other hand, some Silicon Valley firms still do things the old fashioned way. (This does not mean we have reached Utopia in Silicon Valley; far from it.)

In any event, a primary goal of a democratized economy is proper treatment of the workforce, following Kant's ideal. I want each person to develop his or her talents and abilities fully, and thereby live a satisfying life, contributing the maximum possible to society. This goal supercedes the mere making of money, even if you do have to make money to survive. It's a question of attaining worthy ends by appropriate means.

... To each according to his needs

The other half of the saying is also based on the Kantian notion, and a sense of justice (at least, my sense of justice). Consider this for a moment: How could it be otherwise?

What the saying proposes is that people should receive the care and attention they need. It does not say each person is entitled to everything, or whatever is wanted.  For example, all of us need food, clothing, shelter, medical care and education, as well as a useful role in society. Still, there are times of famine or other catastrophe which result in social breakdown, preventing provision of the necessities to everyone. This is something most people try to avoid. It is common for those not afflicted to help those who are under duress; for example, the government allocates billions every year for such emergencies. That nature denies people their needs is not an argument against the principle ('according to needs'), especially when the principle is widely affirmed in public and private acts. Most people actually agree with a suitably reworded principle: that we should help others, and that we ought to meet everyone's needs as much as possible.

Knowing the majority agrees with at least this half of the Marxist saying, classical economists and capitalists have tried mightily to make it mean something else, something more sinister. The saying is alleged to encourage work shirking, getting something for nothing.  It is interpreted as contrary to the Christian Biblical  injunction, 'man shall earn his bread by the sweat of his brow.' This sort of defense against the principle is not logical, not a refutation, but intends to demean and confuse it. (It is propaganda.) The more philosophical capitalist rejection of the idea implicit in the saying is usually based on Utilitarian arguments, or suppositions that it is impossible to meet everyone's needs.

The latter sort of argument usually  alleges scarcity. It is not enough that there should be temporary or even semi-permanent scarcity. Those opposed to meeting people's needs allege two things; firstly, that human "needs" are insatiable. For example, if today I want a banana, tomorrow I will want two bananas. This assertion is also a premise of Adam Smith's economics: everyone is greedy, insatiable. The refutation of this argument - an argument about the facts of the human condition - is that there isn't  any evidence, any study, that unequivocally supports it. People are greedy, but not all the time, and not endlessly. I don't know about the rest of you, but I can only eat so many bananas before I am sick of them. Most of the time (all the time that I know about), our appetites are self-limiting. Nearly all of us can only ride one horse at a time.

Now, it is true that there are a few human beings who seem unsatisfied no matter how many goods they pile up. Most of these folks sit in the designated corporate corner office, and are familiars of Wall St. They are usually the same ones alleging the greedy behavior of the rest of humanity (projection?). It is not clear to me that their greed contributes to society in the way the followers of Smith and Ricardo predict. I doubt much harm would be done, if their unbridled appetites were curbed. During the greatest growth period in American history - nearly three decades following World War II -  marginal tax rates were 90% on the highest incomes, and inherited estates were heavily taxed as well. The wealthy were relatively and absolutely far less so than they are now. So, I do not think most people are greedy in fact, and the few who are greedy could be bridled without major, negative social or economic consequences.

The second argument about scarcity is, again, factual: it is claimed there are simply not enough resources to meet everyone's needs. This claim is also a premise of Smith-Malthus-Ricardo's economics. In the more than 200 years since Adam Smith's time, this claim has become factually false - at least almost all the time. The fact is that there are fewer famines and other uncontrolled natural disasters now than there used to be. Today's calamities are almost always human-made, witness the famine in the Sudan and the one a decade ago in Somalia. Bad government, bad people and a feckless First World have combined to bring about disasters where they need be none.

It is true we do not have enough medical care to go around. Particularly short are the sub-Saharan Africans and southern Indians, who are suffering an AIDS epidemic. Of course, a lot of the epidemic is caused by the behavior of males in those cultures, who engage in unprotected sex with prostitutes. Women's Lib and some other cultural changes would go a long way to reducing the extent of the AIDS epidemic.

Western profit-mongers, particularly American pharmaceutical companies, are also preventing better treatment, since they insist on selling their drugs at high prices. They won't give an inch on  their "intellectual property" no matter how many people die. Thus we have an artificially induced scarcity. (What is happening, as always happens in these situations, is that illegal drug factories are springing up all over Asia to supply the need. People want to live.)

I don't give much credence to arguments based on scarcity. First, we have the technical means of improving almost everyone's life. Second, we are doing that, slowly but surely. Third, it is the screw-ups - petty dictators, religious wars and money-maddened capitalists - who are causing most of the scarcity. Note, again, that scarcity is an important premise in (neo-)classical economics, on which the classical theory of supply and demand rests.

The philosophical objection to meeting everyone's needs arises from the Jeremy Bentham's Utilitarian principle, as applied by John Stuart Mill: 'the greatest good for the greatest number.' According to that view, a calculation must be performed to determine the optimum value of satisfaction. The calculation is the weighted sum of individual satisfactions; ∑_i,j (n_{i *} s_j); where, n_i is the number of individuals satisfied in the amount s_j, for j levels of satisfaction. Nothing in this formula prevents a certain individual from appearing as many as j times, nor for a few individuals receiving extreme amounts of satisfaction outweighing the satisfactions of everyone else. Thus, the classic criticism (although not a refutation) of Utilitarianism: one person could be forced to suffer awfully for the benefit of all the others. In other words, the Utilitarian principle does not inherently forbid slavery, serfdom or a wide range of behavior usually thought to be criminal.

Neo-classical economics is explicitly linked to Utilitarian notions, which are involved in the reasoning about supply, demand, best price, etc. Practitioners of classical economics are assured what they are doing is ethical, and their judgements of others are moral,. by the Utilitarian philosophy. Greed is, after all, Good because it can be bent to good uses.

I, however, reject the Utilitarian principle where it conflicts with the more fundamental Kantian notion of human worth. So, doing well is at best a secondary consideration to doing good; to doing the right thing. My view is, when capitalists reject meeting people's needs, when they treat people as means only, they are immoral and should be condemned.

Where I start in  economics is meeting human needs equitably and fairly. Managers should be paid more than ordinary workers only to the extent that their skills are rare. Capitalists do not have any moral claim to the "Wealth of Nations," but the people do.

Workplace Democracy

The Germans have a far superior system to that of other First World countries. No doubt, it is not cheap, but it is desirable.

Workers should have elected representatives at every level of a firm, from the Board of Directors to the factory floor. These representatives, and any workers' councils, must be independent of management and unions; they must represent the interests of those doing the work. This notion is already in place among university faculties and professional workers (law, medicine, etc). Every worker is treated as a colleague, not as a robot or slave. This means each person has the right to express an opinion about the work, and management policies.

There are already many businesses all over the world run this way. People are more interested in doing excellent work, when they know they are esteemed for it. Moreover, line workers are very often able to make suggestions and improvements unforeseen by management. Japanese automobile manufacturers  listen to their workers, and so do the Germans, which is why they make most of the world's best vehicles.

Classical unions may or may not be necessary when workplace democracy exists. Traditional unions negotiate wages, hours and working conditions with management, but leave policy to the management. Workers are not much involved in the negotiation process, except in voting the final offer up or down. The notion is that management is merely hiring a pair of hands to do the work; that workers convert themselves into more-or-less well trained zombies on the job. We should have learned by now that slaves usually do shoddy work, as slowly and little as possible. Workplace democracy opposes this dehumanizing notion: each person has to be treated as a morally worthy agent capable of intelligent choice.

Environmental Protection

This is a straightforward consequence of the sustainability principle. The human economy must be limited to what the Earth (Gaia) can sustain indefinitely. "Sustain" has to consider species interactions, because it could be that our lives depend on some obscure algae or protozoan. Symbolically, I consider that a butterfly's flight in China may cause a tornado in Kansas. Sustainability is a difficult concept, because there are so many interactions, and we do not know exactly what is "natural." Nonetheless, a wide range of measures must be implemented under this heading:

Education

The effect of all of the foregoing programs is to require a large scientific bureaucracy to determine what is possible, what is feasible and oversee what is done. This is dangerous to democracy, unless a very large portion of the population understands what is being done. Therefore, increased educational standards are necessary everywhere: globally, everyone needs to have the equivalent of at least 2 years of college.

There needs to be a massive program which creates inexpensive, on going, part-time collegiate studies. The goal is an educated citizenry, not just people trained for a job (human robots). The current system is vocationally oriented, which is fine as far as it goes, but it is not enough.

Medical Care

This is one the world's oldest industries,  which long ago set as its standard the Hippocratic Oath. Doctors pledge to treat all comers equally to the best of their ability. Death and disease are great levelers, especially when only the doctor stands between someone and the grave. Scarcely anyone wants to die.

I have done medical research, and have been associated with medical practitioners for a long time. While not everyone agrees, and doctors do want to make a lot of money, the fact is the system that works best is universal medical care, usually State sponsored. This is far from a new idea: the socialized nature of medicine is apparent in all the pre-agricultural societies I know about. The idea of a "capitalist doctor" is totally modern, mostly an American invention. But, I believe "capitalist medicine" violates its own first injunction: 'do no harm' (by denying service to millions of people who cannot afford it, contrary to the Hippocratic Oath).

The American system of attaching health insurance to employment is grossly inefficient. Disease strikes people, not jobs. Moreover, the people who most need medical care - children, the disabled and the elderly - are the most likely not to be working. Health is a personal good.

Most First World countries, and some Third World ones too, have state-sponsored universal health care plans. None of them have rescinded those plans since inception. Recently, Canadians considered whether to privatize medicine, and soundly rejected that ballot proposition. No Western country has gone broke providing universal medical care, contrary to claims of opponents. A study was done in Canada before the recent vote which showed privatized medicine would cost more than the present government-run system. Similar studies in the United States show that between 20-25% of the costs of medical care are being pocketed by private plan administrators (not doctors). Sometimes administrative fees run more than 1/3 of premiums paid. The much derided Medicare has an administrative overhead of 6-8% (it used to be less), which makes it the lowest cost plan of any offered in America. The long and short of it is, the private system practised in the United States is the most expensive and inefficient way to provide medical care.

I think the Federal government should offer single-payer (State sponsored) medical care, whether through an insurance plan (as in Canada or Germany) or direct operation of a National Health Service (as in Britain). I am not opposed to the wealthy getting care through private, non-plan doctors, if everyone else's needs are met first. The poor do have equal claim to treatment as the rich, according to the Hippocratic Oath. This will solve the problems and control the costs. Most importantly, for my case, it is the ethical moral thing to do, because it is what human beings deserve.

Production for Use

The national government should have supervisory authority over the economy. This power is required to assure that incomes are distributed appropriately, and that needs are met.

People fear such a powerful government, and with good reason. Such a government requires oversight, which can only happen if there is an educated and active citizenry and appropriate political arrangements. So, my advocacy regarding economic supervision is contingent upon a suitable rearrangement of political institutions that returns power to the people. I don't intend to replace the authoritarian capitalist monster with a socialist one; I oppose monsters.

That said, the government is the appropriate mechanism for supervision of the economy in the interests of all the people. The present capitalist arrangements supervise only in the interests of the wealthy few, the elite class; I believe that is immoral. Because ours is an immoral - unjust -  society by design, it is justified to change things radically, hopefully peacefully. At a minimum, civil disobedience and conscientious refusal of service are justified in bringing about change. One form of refusal is the strike. There are also other forms of on-the-job anti-government protests.

The government should undertake the following programs:

The overall goal is to encourage efficient production of the things people need. All of us have to have food; we can get by without makeup and Viagra. The regulators have to be responsive to the people and intelligent in their methods. The United States was run this way during World War II, with no serious ill effects.  It was done, so it can be done.

Meeting Needs

I think John Rawls was correct in asserting the right of those least well-off to remediation of their situation, when feasible. Rawls argument, in A Theory of Justice, seems to be, if  justice is fairness, then the distribution of goods should be arranged to meet the minimum needs of the poor, if this is possible. What Rawls' principle prevents is the exploitation of under-classes, but it does not assert the wealthy have a positive duty to impoverish themselves if doing so makes no else better off. In Rawls' scheme, redistribution of wealth and incomes is warranted, and possibly required, if at least some members of society are benefited and no one else is significantly harmed. Rawls' principle can even be taken so far as to justify revolution and redistribution by force, when the have-nots are sufficiently downtrodden by haves whose wealth would make a difference. (Thus, the French, Russian and Chinese Revolutions, but, curiously, not the American War of Independence.) In determining how far this principle takes us, the question is what is "significant harm?"

Rawls appears to prefer capitalist arrangements (private-property societies), but acknowledges there is a legitimate socialist interpretation of his theory. It depends on what is agreed in his "original position" as to the disposition of incomes and property. While I am not Rawlsian in my ethics, I agree with much of the development of his social contract theory, taking, of course, the socialist interpretation. On that view, wealth and income are basically attributes of society, not individuals. Since the means of making a living (the economy)  are in the hands of the socialist State, with specific exemptions for entrepreneurs, it is easy to justify the nearly equal distribution of goods. This interpretation is in successful operation in several European countries, including Sweden, Germany and France.

My reason for adopting the socialist interpretation is very simple: the wealth of nations is produced by a cooperative effort of nearly all adults. We cannot do it on our own, even if that was possible in some places (e.g., the Wild West) more than a century ago. We could not have what we have without janitors, garbage collectors, barbers, seamstresses, movie stars, politicians, CEOs and everyone in between. Despite the claims of entitlement by the nouveau riche, most often their rapid ascent was due to pure luck - to being in the right place at the right time. It is also true, especially in "high technology" industries, that original inventors and developers rarely receive the full rewards of innovation ("nice guys finish last"). Usually, it is the second or third generation implementation that makes most of the money. The IBM Corporation has acted on that insight almost from the beginning. Bill Gates' MICROSOFT followed IBM's example, for example, in marketing WINDOWS ™. Steve Jobs' Apple Macintosh computers were first to market with a Graphical User Interface (GUI), but Gates walked away with most of the money. Philo T Farnsworth invented TV, and Armstrong invented FM radio, but neither gained much recognition or financial reward, despite many lawsuits. So, markets do not allocate income or wealth according to an inventor's "priority" or other methods of  determining social value or "intrinsic" worth (goodness). There is almost always a shrewder businessman or  better salesman who gets the goodies, not the one we feel deserves them.

It is the everyday outrages, such as those mentioned, that warrant moral indignation and correction. One of the things accomplished in the socialized State is the removal of unearned income in all its forms, and redistribution of that income throughout society. BusinessWeek (July 19, 2004, p33) notes that MICROSOFT is sitting on about $56 BILLION in cash. In the same BW issue, other corporations are found to be holding scads of cash they won't spend. These pinchpenny businesses aren't doing any hiring or building or growing: they're all standing pat, meanwhile paying their executives a Raja's fortune in salary, perquisites, and bonuses every year. Such corporations are not fulfilling their desired social roles, except for the small fraction of the population that is management. (They aren't paying workers more, and shareholders are not seeing share prices or dividends rise.) So, the corporations are unjust in holding back, because they making the distribution of income and wealth more unequal. In cases like this, the State is entitled to tax corporate wealth and income if it is not used in a more productive manner. Fear of taxation might encourage the business to be more innovative and productive; otherwise, the State will capture and direct the money to higher and better uses; i.e., "use it or lose it."

Taxing the upper classes is justified for exactly the same reasons as for businesses: wealth should be used responsibly to benefit society. I encapsulate this concept in the notion that the rich and powerful are trustees - stewards - of their fortunes; their possession is conditional upon the success of that trusteeship, measured socially. If someone makes an extra million, or doubles his possessions, that is a good thing only if others benefit as well; i.e., if society benefits. If all or most of the benefit accrues solely to the possessor, then society is justified in taxing and redirected those gains. How much should be subject to taxation (eminent domain) depends on conditions that vary from time to time. What I state here is a principle of taxation.

Wealth, not just income, should be taxed. It is not that wealth is in itself evil; rather, it is that wealth can bring about permanent distortions of the social structure. It is human nature to desire a benefit and an easy life for one's children and their children as well. If this happened for everyone, no harm would be done; but that is not the way of world (yet). Inherited wealth eventually becomes nobility, then aristocracy, and finally monarchy. Families holding inherited wealth rise above ordinary people, and do not report to justice as do others. In recent years, we've seen the effects in many criminal and civil cases of extraordinary wealth. For example, although only nouveau riche, O.J. Simpson was not convicted of the alleged murder. The permanently wealthy can afford the very best professional services in every matter: education, medicine, food, clothing, housing, transportation and personal care. They are involved in the operation of most large businesses and political entities, as well as the "high culture" of art and science. One member of the elite classes weighs as much as a million or more of the ordinary humans who surround them. At some point, their power and influence becomes excessive, and must be truncated. Inheritance taxes and other constraints on wealth are necessary to prevent social equality from being permanently undermined.

It's not that members of the elite classes are necessarily bad people. It is that their position, their role, gives rise to ill effects. "Human nature" makes almost anyone amenable to fulfilling the requirements of a role, so "good people" do not resist performing evil functions. The American South and Nazi Germany proved that.

All that said, the State has certain obligations to all of its citizens. People have a right to adequate food, clothing, shelter, medical care, education and work, according to their share in society. That right does not extend beyond the ability of society to provide. That right may be waived by those who refuse to contribute to the social well being. The State has the right to confiscate illegal or unproductive wealth and income, and redistribute both to the rest of the people. Meeting the people's needs is a far more important and basic function of society than the enjoyment of wealth, especially if that wealth is poorly distributed.

All that should be done is not prescribed for economic reasons. Political economy, as I have insisted from the outset, is not amoral "economy;" it is a value system based on ethical principles. (That's because the social and political orders are based on value judgements.) In this respect, my arguments specifically reject Utilitarianism and Social Darwinism because those philosophies justify the Capitalist and Fascist jungles, respectively. As I see it, both Capitalism and Fascism are applications of the law of the jungle: 'might makes right.'  They differ in the details of what constitutes might.  In Capitalism, it is money; in Fascism, it is Nietzsche's willful superhero.

It is not enough that you read my tract. A responsible member of an immoral, unjust society has a duty to change it into something better. The injustices of our American society start with the acquiescence and ignorance of the people. It is required to improve things by changing people's minds; by reminding them of the Social Contract to which (presumably) we are all pledged.

It is also required to "Speak Truth to Power," as we said 40 years ago, and still say today. That requires confrontation and action. That can only be done by directly challenging elected officials, and constantly demanding that they do what is right.

July 7-13, 2004

Last update: 11/07/2007

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