Social Economy: economics by social design
Copyright 2010, John Manimas Medeiros
Does an economic system achieve social goals?
This essay is rather long (35 pages) therefore I begin with a brief summary here:
-- This essay involves a valiant effort to discuss the past history of the United States intelligently in order to illuminate the political and economic problems of the year 2010 and how we got here, and how to correct those problems permanently. We have relied on an economic system that includes the profit motive and the sanctity of private property and individual initiative as the cornerstones. We have to see the problems this viewpoint has created and change our economic system by making social goals the fundamental principles of our economy. We need to design a social economy in order to bring our experience to bear on endless and destructive economic debates and the seesaw of prosperity and recession. This does not mean discarding the profit motive, or discouraging individual initiative, but only putting them in their proper place in an economic system that is designed to meet all the needs of a dynamic community, not just the needs of mythical industrious heroes and gamblers who bet on technologies and corporations.
-- Discussion of social economy as an economic system designed for the purpose of achieving social goals from inception. Social goals must be the primary goals and not optional "add-ons" in times of economic crisis, especially since economic crisis is usually precipitated by selfish and destructive behavior of the rich.
-- Discussion of historical causes of America's tragic discrediting of socialism and the ambiguous identity of American labor as slaves versus citizens with civil rights, and the treatment of social goals as questionable "programs" that are implemented or withdrawn according to the mood of a ruling economic class.
-- Argument that "unemployment" is a ridiculous quirk of industrialized society that is created by human activity, especially by three centuries of compulsive mechanization and elimination of the need for human labor. Therefore, unemployment is rarely due to the inferiority of an individual worker or "laziness" but rather arises from the success of the technological drive of the industrial class to manufacture every conceivable product by use of machines and only a handful of human operators.
-- Proposed solutions through implementation of social goals as permanent basis of a carefully designed economic system. All employees are employed by all of the employers all the time. Add the "social alliance" type of corporation and new rules (laws) that prevent the corporate "veil" from being used to hide crimes and subversion of the economy; include temporary incorporation and severe penalties for subversion of the economy. -- End of summary.
What is "political" economy?
When Karl Marx wrote Das Kapital (published 1867), he called it a work in "political economy." This phrase suggests how government policy is related to economic processes. The viewpoint of political economy can be defined as the proposition that political policy, meaning constitutional law and statutory legislation, exercise a controlling influence over how the economic activities of the society will work, and how such economic policies and forces will influence the social customs and relationships of the society. This would of course include any class divisions or class relationships and the economic and social differences that class encompass. For example, while Americans often like to believe that they have a "classless" society, there are obvious customs and practices that label people as being "first class" or "the upper class" or "high class." In fact, a common positive statement about a person or thing, such as a work of art, is that they have "class" or are "classy." People flying on planes can pay a higher fee for "first class" accommodations on the plane. The masses can buy a hamburger for $3.00, or one can go to a restaurant where a "ground sirloin on a fresh baked bun" is $24.00. The $24.00 burger is probably better than the $3.00 burger, but not eight times better. Part of the additional price is not for a better quality of sandwich, but for a better "quality" or "class" of restaurant. We do have class in America. Denial will not change this inherent quality of human civilization, which incorporates a habit of hierarchy that is "hardwired" or arises from genetics. We have a commercial class and an industrial class, and these two overlap or are allied and can be equated with the upper class, especially if we deem the "commercial" class to include bankers and investors. We have a middle class and a lower class or several subsets of lower classes: poor non-citizen immigrant workers, Hispanics who are relegated to low-paying jobs, African-Americans who have been relegated to low-paying jobs, Native Americans who also can be upper class or middle class when class is measured strictly by financial security. We, the general public, or sociologists at universities, can choose many ways to divide the whole of society into different classes. But we know that in many places and for many social interactions, if one can pay the fee, then one is in the same "class" as all others who have paid the fee. An ordinary average laborer, if they are willing and able to pay for a first class ticket on a plane, will not be refused. Participation in "first class" or upper class events do have certain unwritten social expectations in terms of hygiene and dress, but these are usually accessible and understood by persons of all "classes." Political power, meaning political office, is also a special type of "class" that would be viewed by many citizens as bestowing a unique categorical status that is different from simply being upper class because of financial factors. A United States Senator and a corporate CEO are both upper class, but they are not in exactly the same class.
What would be a "social economy"?
How might "political economy" differ from "social economy?" Most people would assume that "social economy" means exactly the same thing as "socialism." But that is not necessarily true. By "social economy" or "economy by social design" I mean the process, real or imagined, where a group of people or a whole society would design an economic system by starting with certain social goals that are deemed by the organizers to be the fundamental purposes of the economic system. In other words, the social design is the fundamental law, whether designated as "constitutional" law or rules for banking and investing, or rules for capital development, or for economic development, or labor law, and so forth. Whatever form of law we might use to label our "social economy," the essence of our exercise is that we are going to build, or control, economic processes and relationships in a manner that sustains the social goals first. This means that how capital is "owned" or managed, how the means of production are used and controlled, is not the fundamental driving force of the economic rules and relationships. The social goals come first, and after they are met there may or may not be flexibility with regard to applying theories of banking, investment, or finance, or of money. The proposition presented here is that beginning with social goals, or social design first, we can produce a better economic system, and we do not necessarily sacrifice any significant losses of benefits that might arise from a "political economy" or "capitalist" economy where the principle of private ownership and investment for profit appear to be the most fundamental laws that are believed, defended and sustained in a so-called "capitalist" society or "capitalist" economy.
What is capitalism and is it good, bad or both?
First: What is a capitalist? Generally, a person or group that owns capital or the types of property that are used to produce goods and services for a profit. This includes land, buildings, tools, equipment, energy generators, fuel, offices, and on and on. A farmer is inescapably a capitalist. A taxi driver who owns her or her taxi is a capitalist. The capitalist enterprise can be small, such as a well equipped garage, or it can be enormous, encompassing vast property holdings in several countries, valued at enormous sums, sometimes more than the gross domestic product of a small state or nation. But there is another definition of a capitalist, a more benevolent and admirable and even romantic one: an "entrepreneur" or an inventor, an industrial organizer. This second definition is closer to the original, because the original "capitalist" was a creative person who wanted to bring something new into the world, a new invention meaning a new way to accomplish a task, or a better tool or a better device or better process. Many patent applications are for a process rather than for an individual object or mechanism. There is an overlap between "artist" and "capitalist" because the process of "capitalism" involves the ongoing effort to have machines produce works of art, such as furniture, ceramics, images, clothing, dwellings, plumbing fixtures, electronic devices, and on and on. How a thing is made is an art, and a patent application has to describe a new art of some kind. Artists and designers become "commercial artists" and "industrial designers" in a capitalist society, so that the products manufactured by a highly mechanized industry approach the artistic quality of hand-made crafts. The word "manufactured" means "made with hands" although we all accept the meaning as being "made by machines." The true meaning of "hand-made" is produced with the minimum of mechanical devices and preferably only with the use of "hand" tools.
Clearly, the capitalist is originally a person who provides positive benefits for society. He or she is a combination of artist, money manager, supervisor and community organizer. Or, if a capitalist has only one of these skills, they hire others to provide the other skills in a business organization that became, in modern times, "the corporation." Since the accumulation of "capital" which originally means tangible and useful property, not money, and industrial production appears to provide substantial benefits for society, such as cheaper shoes, more food and clothing for the masses, better housing, better furniture, better personal hygiene and public health, we are led to ask: Why and how does capitalism come to earn a bad name? Another definition of a "capitalist" is a selfish, immoral pig who exploits people, especially the poor, to make profits and grow richer and richer and create a very expensive and luxurious life for themselves while not caring if others are sick, weak, injured at work, in need of help, suffering, or oppressed by the same economic forces that make the industrialist, banker and inventors super rich. How does this happen?
How does our economic system promote or obstruct social justice?
There are possibly a few ways to explain this problem, but the best one is that there are rules or practices in a "political economy" that place the right to own property without limitation, the right to make a profit, the right to hire and fire, the right to remain rich while others are unemployed or starving, the right to engage in unethical business practices such as fixing artificially high prices, or discouraging or destroying competition, and several other obviously self-serving and anti-social practices which are all deemed either acceptable or natural and unavoidable. In other words, if the society adopts an economic policy as a matter of "political economy" that some people can earn enormous sums of money, enormous profits, while the same system enables others to barely obtain enough money to survive, and everyone has a right to be motivated only to make a profit, then the social results should not be a surprise to anyone. Social goals are not achieved for the simple reason that they are not the fundamental law or fundamental purpose of that economic system. How could social goals be met if the initial and fundamental principle of an economic system is that the strong are free to fight, win, earn, take, make a profit, and make more profit, and make more profit without limit, with no social obligations to others, and everyone is expected to pursue the same self-serving and selfish goal of getting money for themselves, as much as they want, as much as they can obtain within the operation of the law? If social goals are placed last, they will be at the end of society's "to do" list, and when society is under pressures that require some items at the end of the list must be left undone, then it is the social goals, the goals of social justice, that are left for last and are often left undone. Such social goals are even discredited as "wishes" like the "wish" for world peace and dismissed as romantic or "bleeding heart" notions that do not arise naturally in the real world. In other words, the political economy that places the profit motive and the accumulation of wealth as the fundamental principle of the economic system, assigns most social goals to the world of "not realistic" or scientifically "unattainable." People are unequal and their lot is therefore unequal. The poor must be poor because they do not work hard enough or do not possess sufficient ability. No one need feel any sense of guilt or shame that our society includes people who are suffering from grinding poverty or social exclusion, because this state of affairs (social divisions) just happens naturally and cannot be changed. This is the way the world works. It just so happens that poor and desperate people make a great, low-cost work force for those who work hard and know how to use the system to their advantage. That is capitalism. And this is why it produces great wealth but not necessarily social justice; because social justice was not the initial goal in the first place.
What if social justice is built into the economic system?
So, what happens when social justice is the initial goal in the first place? Let's explore that question.
First, let's deal with an objection, that objection being that the so-called "capitalist" society of America does have social goals built into its economic system. We have labor rights, workers compensation, social security, unemployment insurance, job training programs, even public education. These are all fully accepted in America as legitimate social goals to be sustained by public policy and that can be labeled as part of the American "political economy." It is valid to argue that such social goals are based upon our written Constitution as well as the concept of "life, liberty and the pursuit of happiness" enshrined in the Declaration of Independence. This is true, but in order to understand the "power position" occupied by social elements in the American economic system, we need to openly examine American history and how these social goals were added in after the colonies became a federation of states in 1787.
In the beginning (1790), we had the Bill of Rights but we had a society that was extremely competitive, commercially oriented, and highly individualistic. We had communities, including socially and religiously cohesive communities, because people always live in communities. This actually means, really, that many of the original Americans of 1776 and 1787 were "communists." However, the occupation and colonization of North America was accomplished by a continuous process of negotiation followed by war, by more negotiation, by more warfare, again and again and again. The moving frontier, alleged or real, and the very real experience of "pioneering," which meant carving out a homestead or tiny cluster of farms in a wilderness of many threats, including potentially violent and vengeful Indians, hostiles from other countries, criminals, disease, climatic factors such as drought or flood that could destroy food sources, all combined to make life inherently dangerous. Individual strength, diligence and grit were required and admired. Bold risk-taking, a kind of courage and capacity to learn from direct confrontation with wild nature, as well as a willingness to violently remove the prior occupants, were built into the American character. This is why we have the traditions of literature and film that we have, including Moby Dick as the most likely "great American novel," a story of the guts and grime and confrontation with the vast powers of nature by men on whaling ships, as well as numberless films about the American "hero" who with or without formal education fights to the death for the concept of freedom. The American heritage is heavily laden with the concept that one has freedom because one works very hard, fights very hard, and takes whatever risk might be necessary to "live free or die" in the struggle. This value grew naturally out of the experience of the development of the United States of America, from the landing of the first ships with soft nobles planning to create profitable plantations, to the spiritual idealists who came to "carve a new Zion" of righteous communes out of the wilderness, and to the ongoing stream of immigrants who came from around the world as the USA added territories and states until it became the continental nation that was foreshadowed, and probably planned, by "manifest destiny."
How did history change economics?
History and the experiences of other nations, especially European nations, certainly added intrigue and interest to the influential role that the USA exerted on the history of the nineteenth and twentieth centuries. The point being, the idea that the qualities of the individual, especially one's willingness to work hard and fight hard is the primary source of one's fate, is engraved on the American mind. But this viewpoint does not serve well in a more complex industrial society. Each individual is a product of genetics and personal experience, especially childhood experience. Everything from disease, sometimes subtle, to all of the social and emotional experiences caused by one's parents, one's family, one's school and community, one's failures and successes, create who one is. Further, after the "pioneering" is replaced with the development of a scientific society that is driven by colleges and universities and research and development, the bull-working farmer and gritty railroad builder or "cowboy" is no longer the cornerstone of human progress. We move forward with the assistance of social scientists, chemical engineers, researchers, educators, and the accumulation of new knowledge and deeper understanding from every conceivable direction. And all this social and scientific progress begins to take place in the first half of the nineteenth century, when half of the American civilization is practicing a peculiarly cruel form of slavery, and actually defending it as though slavery is both natural and necessary for human civilization to thrive and reach the highest standards of human achievement. Those defending slavery actually make the claim that ancient Greece and Rome exist as historical proof that slavery is an element of every great society.
Slave labor versus citizen at work:
After the words of that Declaration of Independence, after the Bill of Rights and after the development of science and industry took off in the new and planned nation, half of the nation claimed that the society of the future would involve ten to fifteen percent free citizens living off the labor of eighty-five percent slaves. Further, the slaves would be placed in the category of property, like tools or furniture, have no rights, not even the right to a surname, no right to education, no right to live in contact with their biological family, none of the civil rights of citizens. This form of slavery was alien to both logic and history. Any argument that the subject slaves were intellectually inferior could not serve, even if true (it was not), as a justification for the extremely cruel and irrational demand that slavery continue as a permanent social institution. And slavery was of course an economic institution. This means that slavery was part of the "political economy." Slavery was known also in the northern states, and the north also sustained the phenomenon of the freeman of African descent. If the slave states had modified their law, economic and social policy, so that slaves could readily convert their status to "bonded servant" or "indentured servant," to have access to education and be awarded full citizenship following five to seven years of service, then slavery would have had a built in mechanism for fading away as the founding fathers had expected, and the American Civil War would not have occurred. This brief discussion of slavery in America and the Civil War over it is presented here to include the reality that American "political economy" has included the cosmic issue as to whether an employee or laborer ought to be a slave with no rights to citizenship or humanity. This is part of the problem of how political economy relates to "social economy" in the USA. While America has an exaggerated concept of the power of individual will, it also has the extreme viewpoint that labor has no rights, that a conscious design for a productive society and great civilization could begin with the principle that most people ought to be slaves. That should register as a source of intellectual struggle for Americans when they discuss economic plans and economic policies. Obviously, the sanctity of the individual willingness to work cannot be practiced rationally if society begins by disenfranchising and dehumanizing the great majority for the sake of the alleged comfort of a small and despicably inhumane minority of nobles. For a good description of what slavery really means in American history, I recommend The Hemingses of Monticello by Annette Gordon-Reed.
Work hard, obey the law, and destroy your neighbors:
Thus, through the nineteenth and twentieth centuries, we have the tension between our worship of the individual who works hard and takes risks, against the ridiculous concept that the main labor of society should be performed by slaves, or workers who should just do their work and shut up and disappear at the end of the workday. And there are important details in this history. The purpose of the worker is to earn a profit for the owner. This is the value of labor. There was child labor, young girls losing arms in textile machines. Also, men cutting logs and dying by falling into the river on a log run and knowing full well that a man rarely is able to come back up to the surface, and the family getting no compensation. Also, a man working in a sawmill having a hand cut off and just being dismissed with no help to address a period, short or long, of disability due to the physical and emotional trauma of an adult losing a hand. (A person born with one arm does not experience the loss of an arm.) There was labor with no relief, no time off for holidays or family events, ten hour days, six or seven days a week. This is an old story and some people may not like hearing it again. There were women who died in a fire because they were locked in the factory room (Triangle Shirtwaist Factory, March, 1911). Women fought for the rights of labor and the right to vote, in the twentieth century, not the seventeenth century. What does all this mean?
The development of labor law:
Workers compensation, limits on hours per day, laws that require overtime pay, holidays, time off, health insurance, employee benefits, all became incorporated into the American ideal of the individual who fights for freedom, because life has to be something more than eating, sleeping and existing. The pursuit of happiness requires some time to think, to rest, to contemplate, to plan, to conceive of a new self and pursue one's dreams. So the laborer climbed out of the identify of a slave, black or white, and built the identity of a person and free citizen, but not just by virtue of the individual will, or true grit, but with the help of political economy, public policy. The "robber barons" profited enormously from the technical task of building the nation in the second half of the nineteenth century and the beginning of the twentieth. They did what they pleased through the 1920s until the crash of 1929 and the Great Depression. While many of the super rich remained super rich, and could take "time off" from their difficult lives by way of summer retreats to their "cottages" -- palaces by average standards -- on the coast of the Narragansett Bay in Newport, Rhode Island (Go see them. Some are museums open to the public), the laborers cried out for help, pointed guns at the bankers who came to take their homes, robbed banks, lived in hobo camps, lost their place in the economy and in society. Which would they be now, the starving slaves, or laborers with rights and sufficient power to defend themselves? The "New Deal" of President FDR comes to the rescue. It was neither "new" nor a "deal." It was the affirmation and reinstatement of social goals and social economy in a society that went too far in allowing the rich to play with the economy as though it is a horse race or cock fight or a gambling table in a private casino.
Social goals are "add-ons" in the United States of America!
Look with open eyes and an open mind now: the social goals were added on in the 1930's. The social security system and state departments of employment, the enforcement of labor laws, the conservation corps and public works, the development of giant energy generation projects such as the Tennessee Valley Authority to uplift a multi-state region from "hillbilly" moonshine poverty and raise the dirt poor into a broader middle class. The important point here, the central point of this entire essay, is that in the United States of America, the country that some Americans like to call the greatest democracy in the world, social goals were not built into the economic system from the beginning, but they were added on as an emergency measure. Social goals were not the fundamental principles when the American economy was an infant, in its formative stages. The goal was get land and get profit. Take resources and get money. Every man for himself. Social welfare programs and "safety nets" were added during the twentieth century, mostly in the second half of the twentieth century. Even after the victory of World War II and the "Fabulous Fifties" and the new economy of the automobile and fast ticky-tacky housing, fast food and television, we rediscovered American poverty in the 1960s and needed another injection of social goals with President Johnson's "Great Society." While alleged conservatives complained of the dangers of "the welfare state," both the conservative and alleged liberal masses were not overly enthralled with the Great Society, which was accompanied by the War in Vietnam and the rise of drugs as the fastest path to liberty and happiness, though not necessarily to life.
Once again, with hindsight, we can see, if we look with objective eyes, that social goals do not appear to be built into the American economic process. They are added on, revised, tweaked, discussed, persistently attacked on the grounds that they make people weak, deprive them of motivation, ruin the economy by increasing taxes and wasting money. Social goals are not only added on as emergency or temporary measures, they are discredited as though they are treatment for the sick and lazy, those American individuals who are "un-American" because they don't work hard enough, are not ambitious enough, do not deserve to be "pampered" or "coddled" and should just be told to get to work and discard all the unnecessary frills that we might call "the rights of labor." This persistent American debate is a constant replay of slave labor versus the rugged individual, the self made gritty pioneer who neither wants nor needs the assistance of government and the oppressed slave who needs a federal armed force to make him a citizen with civil rights.
Social goals are an afterthought, a necessary evil, a temporary adjustment to compensate for the failure of individuals and the failures of society, even the failures of religion, an unfortunate intervention in the otherwise perfect operation of the rugged individual who conquers every obstacle through an insatiable appetite for land, property and profit. That brings us to today, the beginning of the twenty-first century. Will we learn from the economic experience of the last two hundred years? We will see the deficiencies in our system, what is missing from our Constitution?
What if social goals came first?
What would our economy look like if we started with social goals in the first place? What is a social goal? How would the placement of social goals as fundamental principles change our economic system? How would such an approach, properly designated as an economy based on social design permanently eliminate the problems that arise from the repetition of economic cycles and the infinite recurrence of poverty?
First, I would like to propose that we exercise a sense of humor just a bit and consider both a serious social policy of equality and how such a policy of equality appears to be included in the game called "Monopoly." According to Wikipedia, the Internet source of approximately reliable information (March 2010):
"Monopoly is a board game published by Parker Brothers, a subsidiary of Hasbro. The game is named after the economic concept of monopoly, the domination of a market [meaning production and sales of a product] by a single entity. Monopoly is the most commercially-successful board game in United States history, with 485 million players worldwide. According to the BBC, Monopoly is a redesign of an earlier game "The Landlord's Game" first published by the Quaker and political activist Elizabeth Magie. The purpose of that game was to teach people how monopolies end up bankrupting the many whilst giving extraordinary wealth to one or a few individuals. According to Hasbro, since Charles Darrow patented the game in 1935, approximately 750 million people have played the game, making it "the most played (commercial) board game in the world."
How fascinating is this statement that the first creative impulse to design such a game was intended to discredit economic monopoly, not make it look like a constructive or interesting process. The commercial game has been described as a "property trading game." It is also accepted as a kind of simulation game, that is a game that is supposed to simulate what occurs in the real world of buying and selling properties, also known as "real estate." Further, since a player can buy "Water Works" and buy one or more of four Railroads, the game suggests that it also simulates the practice of "investing," although it does not involve investing in new inventions or industrial production. However, if one considers the properties to be representative of any investment that can earn a profit, even though the game profit is earned as "rent," then the game does simulate investing.
But what does the game really simulate realistically in terms of economic principles? I am sure opinions would vary on this subject. How accurately does it simulate the way an economic system starts and functions? Clearly, neither I nor anyone else should praise or criticize the game on the basis that it was intended to simulate an entire economic system. But I propose to discuss the game in that manner because the game is familiar to so many people, and it does work well as an initial basis to discuss whether an economic system is founded on social goals, and if so, what those social goals are.
Equal chances to pursue life, liberty, happiness, and wealth:
Equality. There is equality as an element in the game according to at least three rules. One: each player throws the dice and takes their turn. Two: Each player receives the same amount, $200, for passing "Go." Each player receives the same amount of play money at the beginning of the game. When I played as a child, that amount was $1,500. And so we do see a kind of "equal opportunity" at the beginning of the game and in the process where each player throws the dice on their turn. Each player's progress in the game is subject to the same "luck" or whatever elusive laws of physics and probability influence the outcome of each throw of the dice. Rules for building houses and hotels and thereby increasing one's "rental income" are the same for every player. Another element of luck enters into the game through the occasions when a player obtains a "Chance" card or "Community Chest" card. Therefore, these elements place "equal chances" or equal opportunity as social goals in the game. Do we have such elements of equality in real life? In our real economic system? I don't think so!
In real life, we do not have every individual starting with the same amount of money or wealth to invest. In real life, there is a very broad range of monetary compensation that an employed person receives each time they "pass Go" or get paid for their contribution of labor to the needs of society. If the minimum wage were $8.00 an hour, and the total hours paid for each year were 2,000 (40 * 50 with 10 days missed, absent, or not paid for), then that level of compensation would be $16,000 per year. If a Chief Executive Officer, or an engineer, or an industrial production manager, or a lawyer or an investor received income of $1,600,000 per year, that would make the higher pay equal to 100 times the lower pay. And in our real world, some people receive income far greater than $1,600,000 per year. Therefore, in our economic system we have a group of people whose income is 100 times that of others and some whose income is more than 100 times that of others. Besides appearing to be very unequal, does this character of our economic system create economic problems? If so, how?
The game versus reality:
Note that if we started our Monopoly game this way, one player would start with $1,500 and another would start with $150,000. Would you have fun playing that game if you were the one starting with $1,500? What is the relevant point here? The relevant point is that if one wants to create an economic system by social design, meaning based on a genuine desire to accomplish pro-social goals, the matter of compensation for work, the lowest possible compensation and the highest possible compensation, have to be established by law or regulation. The relevant principle here is the principle of "cost of living" or "basic human needs" or "basic household needs." Do we want everyone who volunteers to work, to contribute according to their ability, have their compensation be equal to or greater than the cost of living? If everyone is expected to work in order to be compensated, have money to spend, and have enough money to meet their basic human needs, then what will be the legitimate and legal basis for maintaining a citizen in a status of "unemployed?" If a citizen is "unemployed," they do not have money, and therefore they do not have the "cost of living." They cannot meet their basic household needs. If this situation occurs, the social goal has not been met and the economic system has failed. In our current capitalist system, many or most people have been persuaded that when an individual is unemployed their unemployment is due primarily to their lack of ambition or unwillingness to accept appropriate employment. But this conclusion is dramatically opposed by the fact that for three hundred years (since about 1700) western civilization has been engaged in what we call an "industrial revolution" whereby some of the best minds of society have been highly paid to eliminate the need for human labor. We have been engaged in a process of intensive determination to mechanize every type of agricultural and industrial production, and use mechanically-generated power in place of human energy. This effort began with water wheels and treadmills and progressed to steam engines, internal combustion engines, electric power grids, electric motors, then complex milling and production machines, continuing into the twentieth century to perform every conceivable manufacturing, finishing and assembling operation, employing robots and computerized machines and computers to take the place of human labor in all of the managerial fields such as bookkeeping, accounting, cost analysis, production processes and even hiring decisions by means of electronically-scored psychological tests. Our civilization has devoted enormous resources to eliminating or reducing the need for human labor, and every business enterprise is free to dismiss any worker or thousands of workers as they deem desirable -- and they should have that freedom. However, since we have devoted our industrial and technological and cybernetic revolutions to eliminating human labor, why should we talk and act as though we have had no success? Why do we continue to pretend that even though we have run a three-century program to eliminate employment that we still need as many human employees as there are people willing to work? If this labor-saving or labor-eliminating program has achieved some success, and I believe it certainly has, then it follows logically that we will now have people without employment, not through some fault of the individuals, but because our anti-social economic system has succeeded in achieving its founding principle: profits over people. The right of the employer to dismiss people in order to protect profits takes precedence over the system's ability to protect people. This occurs, and has occurred again and again, because our capitalist economic system is not designed to accomplish social goals. It is designed as though profit for the industrial and commercial owners was the primary goal from the beginning and that goal is deemed to be both appropriate and socially benevolent, but it is not. It is an anti-social goal; it is a principle that makes profits for individuals and privileged groups more important than the social goal that each household have the cost-of-living, the price of their basic needs, at hand at all times. But what about the social programs that help the poor and the unemployed? Yes, what about them! Why are they necessary? They are necessary to meet basic social goals because the economic system fails to meet basic social goals. Unless social programs are "added on," we have an anti-social economic system, an economy that is against people.
Implementing social goals at the start of the economic game:
If you take "Economics 101" in college, one of the first things you will hear from your instructor or professor is: "The science of economics is politically and morally neutral." This means that the professional economist feels that the science of economics does not tell us what we should do, it only tells us what will be the economic results of specific economic decisions or policies. What will happen if we raise or lower interest rates; what will happen if we regulate rental costs; what will happen if we increase the prices of basic material resources such as lumber, iron or glass; what will happen if we print or coin too much money, or too little; what is likely to occur if there are no economic policies and the state puts into practice an extreme version of "laissez faire" (which means "leave alone" or "let it be") so that there are no government-enforced economic policies at all. This is why we have such phrases as "political economy" and "social economy." Because as soon as we implement economic policies such policies are "political" or "social" in that they are intended to achieve political or social goals. Another concept you would hear promptly in any beginning economics class is that the word "economics" originally means practically the same thing as "household budget management." The origin of the word roots are ancient Greek and this is what they mean. The person who is practicing economics is the person who makes decisions about how to manage the income and expenses of a household. As human society developed over the centuries, the concept of the household to be managed expanded to village, tribe, town, state, nation. No matter what the size of the societal enterprise, economics means managing the money and resources of the "household." So, one can see that one can apply certain types of goals in the beginning steps for setting up an economic system. An economy could be designed to support and maintain a particular form of social hierarchy, such as a Medieval hierarchy with royalty, nobles, supervisors, a commercial class, an industrial class, and approximately three-fourths of the population being placed in a class or classes that perform the heavy labor. Note once again that western civilization has, for the past three hundred years, devoted enormous resources, research and technological development toward the purpose of eliminating the need for the labor of that lower three-fourths of the Medieval hierarchy. I do believe that the essence of most of the social and economic problems of American Civilization arise from the insistence of the ruling classes that the Medieval hierarchy is natural and normal and cannot be changed. The economic system of the United States of America is designed, probably deliberately, to maintain the Medieval hierarchy. It is as though people adopted this societal design as a deeply ingrained habit or addiction, and they do not believe there are other choices. We have a rather wild conflict then, in our choice of social design and the technological commitment to eliminate human labor. What are we going to do for the three-fourths of the human population who need to be employed performing some form of "manual" labor, even though the "manual" part of the labor becomes more mechanical and electronic as time goes on. In our times today, we do not even have people making phone calls, machines can make phone calls for us. Machines can automatically transfer money, actually only a number or "measurement" of money, a subtraction from one account matched with an addition to another, a simple bookkeeping operation, but performed millions of times every day by machines doing what they are instructed to do by keyboard buttons. As advanced as our technology may be, we still have not changed our social hierarchy since the twelfth century. We suffer the illusion of change in the hierarchy, but the hierarchy itself has not changed, only certain standards of public health and daily living. The food and the dwellings are cleaner; we have been vaccinated for disease resistance; we have implemented some humanitarian policies to help maintain the physical and psychological comforts of the working class. The workers are maintained in a state that we call "freedom" and they do in fact possess and exercise political power through voting and other forms of participation in the "political process." Therefore, our medieval hierarchy has changed politically. Our economic system supports and helps to implement the political goals of broad participation in our political process. This is why it is valid to say that we manage our national "household" through a "political" economy. However, Americans have been subjected to an intense and continuous propaganda machine to discredit "socialism" and the effect of that constant force pressing against "socialism" is that the American people are afraid to create a "social" economy which means an economic system that is designed to achieve not only political goals but also pro-social goals. In other words, since we want people to be healthy and happy, let's design our economic system, and our social system or hierarchy so that the power of money, finance and economics will be dedicated to achieving certain social goals. It's really simple, if you are not terrified of socialism or of the ruling class.
We do have traditions that seem to be morally just on their face, such as the tradition that people work to earn money. Although this tradition applies to the working classes only. The royalty and nobility do not work in order to have money. They play golf while dividing up the wealth of the world, and they bathe and eat gourmet foods while fixing the prices of commodities and planning the unethical, but legal, ways in which they will create huge profits for themselves because of the ways in which the value of a resource or stock ownership of a corporation increases, usually due to the value added by the productive labor of the working classes. Inventors, managers and supervisors also can add great value to a product or a corporation, but they are persuaded that they are invited into the upper fourth of the Medieval hierarchy, and they are compensated accordingly. Industrial owners and investors also do at times contribute significantly to the added value of a product or corporation by way of their managerial decisions. But these honest, diligent and constructive people do not become the super rich in our society. The super rich are the ones who lie, cheat and steal from the creativity and productivity of others. They are not interested in improving the human condition as much as they are interested in maintaining their financial comfort and power. Even in a society that creates and maintains powerful political systems, devious human ingenuity continuously finds ways to obtain and apply financial power to advance or oppose social and political policies. The wealthy can be the best of friends or the worst of enemies for democracy. Because people are not all the same, the ruling classes and commercial classes do not always have the same effect. Some support democracy and social goals. Some don't. And that is the problem. If we want an economic system that achieves certain basic social goals, the design of the system, the rules, have to place the social goals foremost as the primary purposes of the economic system. In this way, the identified social goals will not be subject to political manipulation and political combat. There will be no debate over whether or not people should have their basic needs met, or whether a household should always have the "cost of living" in their pockets and in their bank accounts. Those goals will be achieved automatically because the economy has them built in. This kind of economic system would justifiably be called a "social economy" because it is deliberately designed to achieve specified social goals. The ruling classes, at least some of the ruling classes, have been labeling such social economy ideas as "socialism" or "communism" or "atheism" for about two hundred years, and so it takes conscious effort to come to a rational understanding that the discrediting of socialism has always been a "class act." Those whose positions of easy wealth and power are maintained by our "political" economy have been vigorously opposed to changes that would reduce their wealth and power. This is obvious, and has been pointed out exhaustively by many. However, the American people have been more patient and more tolerant of the rich and super rich than any other society that one can place within the envelope of "western civilization." Americans can be gullible, and they have been duped by the terrible screams of agony against "atheistic socialism" that have obstructed social and economic progress in America. This is why we have a strange combination of national characteristics: the largest and most powerful military machine; the highest levels of consumption of food and manufactured goods; the greatest overall wealth; but with a suspiciously low infant mortality; a shameful ratio of medical costs to the quality of medical care; tremendous personal debt (credit card accounts) promoted and manipulated by the commercial and investor class. What we have in America essentially -- and the Europeans have seen this for a very long time -- is a political democracy that is ruined or foiled by a Medieval economic system that draws all of the "free and the brave" citizens into economic slavery, precisely because the American economic system is designed as though the nation is one big plantation, or manor or sharecropper farm. The workers are politically free in terms of the civil law and political policies. There is freedom of speech and to travel or relocate, but this political freedom is severely compromised or destroyed by debt. Regardless of civil rights built into the law and political policies, a person cannot be free if they are tied down by debt. And it is just another waste of time and brain cells to get into the argument that people are in debt because they made bad decisions. Such bad decisions are promoted, overtly caused and literally expected by the American system. Anything that a citizen or a business wants to do is done by borrowing. It does not have to be that way. This system is neither natural nor required; it is a choice, and the choice can be different. Instead of having a system based on borrowing and debt we could have a system that promotes financial independence for the average household. We do have this choice. We just have not believed that we have this choice because the rich and powerful tell us, 24 hours a day every day of the week, that we have no such choice. We must not succumb to "socialism" they say, because if we do our souls will die. The truth is, if we create a social economy by design, our souls will sing, we will all become more human, more "pro-social."
The most likely social goals in a social economy:
The National Reserve Workforce:
We could have a single program to replace a set of other programs and the cost will be less and the economic cycles will be softened so that we only have periodic "slowdowns" rather than crisis-level recessions or depressions. All we have to do is adopt as public policy the following social goal:
All employers employ all of the people all of the time.
Private employers would support such a single program after they came to understand how it would benefit the nation, including them. Private employers could have greater freedom to hire and dismiss or lay-off employees. They can just say that a particular employee is not needed to meet current demand. Employees who are not employed by a private employer will be hired -- after a minimum two week "vacation" -- by The National Reserve Workforce (NRW). The National Reserve Workforce replaces all or most separately conceived social support programs, based on the tribal society principle that everyone is included in the economy, and society will therefore accept the offer of labor from every individual citizen, based on one's ability, and there is never an economic condition where the contribution of an individual is not needed. The NRW would be administered on the state and local levels. Therefore, there would be a [Name of state] Reserve Workforce and [Name of municipality] Reserve Workforce.
There are some important details that would need to be established. First, a person hired into the NRW will be paid for not more than 32 hours per seven-day week. The wages paid could be fixed by law, or something like minimum wage plus ten percent of the employee's average hourly compensation over the previous six months -- but not more than twice the minimum wage. Eligibility would have to be circumscribed to establish age limits and possibly a minimum period of previous participation in work or training or public service programs.
Reduce or eliminate use of "unemployment insurance" and "disability":
Unemployment insurance would then become an optional job benefit, not required by law. Disability insurance coverage would be an optional job benefit, and any employee who is injured or recovering from an illness or treatment, such as surgery, can elect to be in the workforce rather than claim a disability benefit, so long as there is some form of useful labor they can perform. No one is turned away from the NRW, no one is told "we don't need you," so long as one shows up for work and is credibly able to perform some form of useful labor. If nothing else, sweep a floor or wash a potato, or paint something or relay messages. The concept of "disability" can be revised to mean simply a set of limitations on the type of work a person can perform. Due to modern technology, a person has to be near death to be truly unable to perform any useful labor. We have substitutes for hands, feet, eyes and ears, appliances for verbal communication, typing, texting, and on and on. The word "disabled" could become obsolete.
A strong, documented workforce and military service recruitment:
Much of the NRW could be employed to perform ongoing public service projects, everything from constructing bicycle paths to maintaining parks and beaches, cleaning city streets, assisting law enforcement, providing supportive labor for public works and public arts projects. The NRW could easily serve in two other important ways: ongoing documentation of the health and educational status of youth entering the workforce, and documentation of youth who are qualified and willing to serve in the National Guard and Armed Services. This system would naturally eliminate, actually incorporate, the military recruitment function. It would make sense for the personnel of the NRW, including employees, to conduct training and recreational programs for youth. Such activities could be conducted in association with other non-profit organizations already in existence, such as Scouts, Boys and Girls Clubs, youth sports leagues, environmental and conservation projects. From time to time youth who are interested, and who appear to possess the skills required, could be invited to participate in training programs for outdoor rescue, water safety, civil air patrol, and disaster response, as well as emergency medical care. Some youth of appropriate maturity and physical condition could also be invited to participate in para-military training, a kind of sample for the youth and sample for military observers to assess potential for military service. The military could then extend the strongest invitations to those who appear to be best qualified and present as the most valuable candidates, candidates who are naturally self-disciplined, possess teamwork skills, and are able to make a genuine commitment to military service. Through this process, the military would have ongoing information about youth who are willing and able to serve and who are known to possess the qualities needed for military service, with a minimum of those qualities that are costly to military organizations such as serious medical problems and emotional instability. Such integration of ongoing efforts to monitor and document the developing military recruits as well as the developing workforce, could be conducted on an entirely voluntary basis. Through this process, youth who are willing to work hard to improve themselves will be documented for both important purposes -- formulation of realistic expectations for both the workforce and the raw material available for the armed forces. This is a savings function of the NRW.
Stability of labor resources and flow of money in the basic economy:
The greatest benefit of the NRW would be the smooth flow of economic activity without the cumbersome and "interruptive" processes of applying for and administering the array of bureaucratic social programs "added on" to make life livable for those who were previously categorized as "unemployed." No one is "unemployed" any more, but only employed temporarily in the NRW between one job and the next. Rent gets paid, food gets purchased, utilities and transportation are paid for because the employee is always employed. If compensation from the NRW is too low to pay all bills, there can be other public and private non-profit programs to address the problems of people in the NRW, but being "unemployed" is not one of their problems. They each have a resume. They each have aspirations, potential, a capacity for training and for development if that is what is needed. They would not experience any loss of health care insurance. They would not be forced to move or sell a home. Their situation would not need to be allowed to rise to the level of "family crisis." The community, state and nation would be there to assist the individual adjust and find their way to the level of employment that they need to meet their obligations and support their social and financial goals. Such a system would be far superior to the current array of social programs that have to be revisited constantly, reduced or cut-back, re-instated or expanded, reviving endless social and political debates about social programs and whether someone is wasting tax money. Having a person in the NRW receive compensation for their availability, whether actively employed or not, would keep the economic machine lubricated with the flow of money to pay the household bills. The is the engine of the economy. If people suddenly run out of money, a chain of disruptive effects disturbs the community. Through the NRW, the compensation for availability to work is sustaining, but not such a great reward as to satisfy a healthy worker permanently. The search for meaningful and acceptable permanent employment would continue. If the community, state and nation has nothing for the NRW employee to do, no useful labor to perform, that employee is still compensated for the period of availability (according to availability rules) but the individual is not blamed for not being needed. If the community, state and nation have nothing that needs to be done by the employee, the fault is in the society, not in the individual. We accept our responsibility for inventing and maintaining our economic system, and if our system does not need the labor of an individual, we must not penalize the individual for that problem. Such a NRW program would motivate us to research most diligently and most seriously how and why our economy brings about the unplanned separation of willing worker from work that needs to be done. Over time, those employed in the NRW would dwindle until they were primarily youth and individuals who have limited work skills or medical or personality problems that interfere with performance. The NRW could easily connect such employees with the remedial services they need in order to achieve employment goals appropriate for them.
Public health equals the strength of the society:
There is no tax dollar spent more wisely and more effectively than a dollar spent on public health. Public health and education are the two core functions of government. These are the things that the tribe, community, or nation must do as a group in order to sustain human civilization: promote and protect health and education. Politicians often manipulate their constituents by making a big issue of their patriotism, how much they love their country and how devoted they are to national security and a strong military force. So, try building an effective army out of a supply of sick, malnourished, ignorant and unmotivated youth. The best soldier is an individual who is healthy both physically and emotionally, who has appropriate social skills and personal boundaries, who possesses realistic self-confidence and who understands the role of self-discipline in the achievement of any worthwhile goal. The development of such a person requires an effective system of public health and education. Therefore, public health should be protected as a matter of national security, and health insurance, and minimal preventive medical care should all be implemented as the basic purpose of the government and the economy, and not dependent on the employment status of the individual. Public health and education programs, however defined as either public or private or mixed, must be built into the economic system as primary social goals. If the economic system, or some part of it, does not clearly support public health and education, that problem must be addressed and corrected, not by an "add-on" social program, but as legislation that supports these socials goals permanently. These social goals are the reason the economic system is designed and encompassed by law. It does not matter if some people call such legislation "socialism." An economic system that is created by social design may be considered to be a form of socialism, but that would be consistent with the people of the United States waking up and discovering that socialism is a positive moral value. The discrediting of socialism is one of the greatest tragedies in American history. By discrediting socialism, the ruling class protects only its own selfish interests, and the middle class joins in and does the same -- protects the selfish interests of the ruling class.
Regulation of insurance and the conduct of corporations:
Insurance, which entails the pooling of resources in reserve in order to protect group participants from a specified risk of loss, is the most socialistic of all human enterprises, and therefore insurance entities should be organized on a not-for-profit-basis. Insurance has an eminently social purpose, and should not be contrived to be a profitable business because such practice makes tragic human losses a source of financial gain.
The private profit, social alliance, and non-profit corporation:
Expand the types of corporations allowed, and make incorporation a temporary privilege subject to review and revocation for ethical and legal offenses or deficiencies in the social benefit they provide. This should be accomplished by adding the "Social Alliance" type of corporation, which would be allied with government in terms of having social and economic goals other than the simple self-serving monetary profit that has become the functional goal of private for-profit corporations. The law would also have to be amended in order to distinguish the two separate worlds of the private for-profit corporation and the social alliance corporation. The problem of the American and the multi-national corporation becoming a kind of evil government onto itself, grotesquely self-serving and detached from any social conscience or societal accountability, was created by a false doctrine and a simple error in human understanding. It all started with the ridiculous idea that an industrial or business corporation comes into existence to "make a profit," and that all people act upon "the profit motive." This was and has been accepted without question by economists and political scientists and sociologists as well as vast numbers of the general public. But it is wrong and has always been wrong. Investors invest in business to make a profit, but inventors and entrepreneurs and industrial engineers and managers do not work to build a business for a profit; they work to build a business in order to produce some improvement in a product or a process or even to improve the conditions of society. Take a closer look at the very real and important differences between an investor and an entrepreneur or inventor or engineer.
An investor is a person who has money and likes to gamble. They also like winning far more than losing. To an investor, to bet on a corporation (buy stocks or bonds) and win is a kind of "employment" or a means to support oneself. The investor is successful only if he or she "makes a profit." That means, they get a return on their investment that could be called "interest" or a "margin" or "a profit." Technically, in the world of business and investing, such profits are called "capital gains." Whether one holds ownership of stock in a corporation for a "short term" or "long term," the idea is to sell it for a price that is substantially higher than the price one paid for it in the past. Sometimes, the increase in value of a corporations stock is very high, twenty percent, fifty percent, and sometimes a hundred percent or even more. For example, a new corporation that owns valuable patents on a new type of electronic device might first offer its public stock for $10.00 a share. Three years later it could be valued at $50.00 a share. That is a "profit margin" of 500%, but over three years, therefore being like an "interest rate" or capital gain of 166.66% per year. The investor is happy, and does not care whether the corporation makes bombs, or poisons, or guns sold to soldiers who kill women and children, but might prefer to earn their "capital gain" on something less destructive, such as whiskey, chocolate, tires, wood furniture, or cookies. It is just that the product and its quality is of little or no interest to the investor, and in many cases the investor does not care whether the product is good for society or neutral or bad; just yield a "profit" for me. Money gives me power and choices, and I like it.
From constructive motive to profit motive:
Many people, including economists and politicians seem to have not noticed the full impact of the process whereby inventors, entrepreneurs and engineers who used to run corporations have been replaced in the CEO and corporate directorships by investors. This is why corporations -- run by investors -- do strange things like make their products of cheaper materials, change to a less effective design (from the customer's viewpoint), and lay off thousands of workers, even destroy retirement funds and violate environmental laws, and buy and sell "branches" or "affiliates" or other companies, and generally operate their corporations as though each one is race horse that must be used to win races while it can and then be sent out to pasture or slaughtered for dog food. Investors act strictly on the profit motive because they do not have the ability or the will to add to the good of society with an invention or an improvement in a product or process. To them, a corporation is a property that can "win money" by producing a "capital gain," and they do not care whether their products or processes are really good or really safe or dangerous and destructive. This is actually very different from the motivation of an inventor or entrepreneur or engineer. These types are human too, and would like to make a profit, but they act upon the concept of earning a profit through real constructive achievement. They have the "constructive" motive.
The socially constructive motive:
The original inventor or entrepreneur or artist or engineer dreams of making something better, thinks of a way to add something of value to meet a need of the society he or she is born into and wants to benefit. Some want to create in order to say "thank you" for the life that they enjoy; some just want to be helpful; some are just driven. Those who are driven have this wonderful but mixed blessing of a mind that persistently returns to thoughts of a particular improvement in the human enterprise, something that will grow better tomatoes, or a better tomato to grow, a better way to cultivate the soil, a better way to irrigate dry land, generate power, weave fabric, a better fabric, a cheaper wheel, a faster way to manufacture sheets of metal, and on and on and on, medicines, machines, new materials for the plastic and fine arts, new materials for house construction, chemicals intended to help us keep clean or stop insects from devouring our crops. On and on it goes, and this motive is so primitive we do not have any convincing evidence that it is produced or brought out by education alone, or by training, or on demand or by monetary rewards alone, or by civilization. When a cave man of 30,000 years ago, upon his wife's request, made a sharper spear point, the socially constructive motive was there. Most people will not create anything new no matter how much you pay them.
Creativity and inventiveness is a skill and a gift, a complex trait that appears to be innate, a genetic and personal character trait found in some human beings. Possibly the spark of it is found in all of us, but the fire rises in only a few. And it is wrong and at the very least a gross simplification and misleading to claim that the reason creative and driven people invent and create is because they want money. They will take money, because they need money. They need money because their ongoing impulse to create is going to require lots of money for the tools, machines and materials and their research and development, but what they really want more than anything is SUCCESS. Success for the creative and inventive means they find what they are looking for so diligently and compulsively. They find the design or the formula or the new process that adds some new benefit to the human inventory of tools. We have lots of tools, but never enough. We always want more. And this is the socially constructive motive that drives technological and social and economic progress, not greed and not a blind hunger for profit under any conditions.
Inventors and engineers and researchers and managers want technical success; investors want profits. The investor usually is not a person who knows how to add anything new to the human cupboard or tool shed or barn. They just know how to manipulate figures and money and they have a sense of probability that enables them to bet and win. They bet on many things, but they win the most when they bet on inventors and managers and engineers and good ideas and skilled teams of technologists and scientists. So, this is how investors, the alleged "capitalists" who are appointed to the boards of corporations and who own lots of the corporate stocks, make enormous disproportionate sums of money. Not by adding anything to benefit society, but by gambling. They probably deserve to profit from exercising this useful skill of theirs. By betting on the right enterprises they do provide the right enterprises with the capital that they need and that enables those enterprises to benefit society. However, there is a problem. The problem is that the investors have purchased the corporations, and the purpose of the corporation is no longer driven by the socially constructive motive. Having been taken over by the investors, who are driven by the gambling motive and profit motive, the purpose of the corporation is no longer what it was before, when it was owned by the inventor (such as Henry Ford or Thomas Edison). Now that the corporation is owned by the investors, the only outcome they measure seriously is profit. They pay only peripheral attention, if at all, to the quality of the product or service or process, or to the safety of it, or to the benefit it provides, or to better ways to operate, or the welfare of the employees who create the added value for everyone involved. Because profit for us comes first, the socially constructive motive fades into the background until in some cases it is totally gone. Then the corporation hides its errors and employs unethical means to lower or escape the costs of production and operation and they release toxins into the environment and they steal from their employees retirement funds and they manipulate their financial records and violate the law and ethical standards in secret and they fail society. They do all this because some dumb high school teacher or professor of economics, or even a political scientist, pretending to be "realistic," taught them that it normal and natural and possibly even noble to do whatever one has to do to "make a profit." This is one of the great American tragedies, that the upper class and the people who have no talent fall back on the ridiculous idea that it is somehow admirable to gamble in the legal marketplace and "make a profit" on the labor and talent of others. The thief turns out to be the most creative in a way, and steals from everyone. That is the reality that people need to see: the thief, disguised as an "investor," steals from everyone.
The solution in the three types of corporations:
The solution to this problem of the corporations owned by investors is to make a transition to three types of corporations: the private profit, social alliance, and non-profit corporation. All we are doing is adding the "social alliance" form of corporation and modifying the rules for the private profit corporation. Basically, since the private profit corporation operates as though it has no obligation of any kind to society, only a plan to make a profit for its shareholders, that private profit corporation needs to receive the reciprocation of operating within a society that has no obligation to it. And, we also need to change the rules to prevent the "corporate veil" from being used, as it is so often, to hide crimes and manipulate society with the corporate finances and economic power.
Next, from Creating the Social Alliance Type of Corporation (August 2009):
Proposed rules for: 1) The (traditional) for profit only corporation (Inc., Ltd, etc.):
For the first type, the for profit only corporation, my strongest recommendations are that the rules be changed to more closely monitor all such corporations for illegal activity that impacts the business community and the society, specifically:
A) One hundred year renewable period of incorporation;
B) Status of legal incorporation suspended or withdrawn for specified unethical or otherwise deceptive business or accounting practices;
C) Regulations by government restricted to public safety and public health restrictions, such as toys and other products for children, food safety, dangers and risks to the environment inherent in toxins and other manufactured chemicals that affect food, soil and water, and any other factor that presents an impact on public health or safety;
D) Regulations by government the same or similar to established regulations with regard to securities and stocks and investment practices;
E) A NEW set of regulations that strictly prohibits any government business involvement with this type of for-profit-only corporation. This means that the government would not make any loans or grants of any form to this type of corporation. This type of corporation would never be hired by government to produce a product for the government or to conduct research or research and development of interest to the government. Government would never be involved in training employees or prospective employees or paying for such training. The rationale here is a direct and strong response to the incessant complaints from vicious and self-interested capitalists who publicly state that they are opposed to government regulation but then want the taxpayers to pay for their failures, their pollution, and pay huge sums of money to keep them in business after they have destroyed themselves with poor business practices or with criminal or unethical behavior. The sharp point of such NEW policy is that the for-profit-only corporation is on their own financially. The taxpayers are fed up and it no longer matters what you manufacture or how many people you employ. If you fail due to your selfish or stupid business practices, or financial manipulations, or criminal or unethical behavior of management or directors, you die. That's it. We, the taxpayers are simply not interested. Your parts will be sold and your previous functions will be taken over by other business people and other business entities.
Proposed rules for 2) The private social alliance corporation, IncSA:
A) One hundred year renewable period of incorporation;
B) Status of legal incorporation suspended or withdrawn for specified unethical or otherwise deceptive business or accounting practices;
C) Regulations by government NOT restricted to public safety and public health restrictions, such as toys and other products for children, food safety, dangers and risks to the environment inherent in toxins and other manufactured chemicals that affect food, soil and water, and any other factor that presents an impact on public health or safety;
D) Regulations by government the same or similar to established regulations with regard to securities and stocks and investment practices;
E) A NEW set of regulations that define the form or forms of social alliances that can exist between a corporation that exists not only for profit but also to meet a public need or human need, and wants to maintain a mutually supportive and mutually controlling relationship with the public and taxpayers they serve through private business enterprise. This is called a "social" alliance while it is in many ways a "business" alliance, but a business alliance for social purposes. The social alliance means that this type of corporation actively maintains policies that support the concept of corporations existing to meet the needs of citizens and consumers and not for profit only. There are several factors and practices that would or should be included in the regulations of the social alliance corporation:
1) Government plays a role in identifying prospective employees and training, possibly paying for training in whole or in part;
2) Government takes an appropriate interest, depending on the specific business services or products, in research and development;
3) Government may hire this type of corporation, purchase its products or services, or contract for research and development;
4) Workers exercise a clearly enforced right to belong to a labor union;
5) Government may recommend or actively support decisions regarding the size of the labor force. Government is involved in decision-making and planning when significant reductions in the labor force are deemed necessary, toward the purpose of minimizing negative impacts on employees and their dependents;
6) Government may contribute to the costs of operation or invest in the corporation, or be involved in the investment strategies used to support the business and assure success;
7) Government provides for mediation and conflict resolution services for all forms of disputes or disagreements that may arise from the conduct of business;
8) Government employees may audit corporate business meetings or conferences and corporation employees may audit any government meetings or conferences that are likely to have an impact on the corporation business;
9) Allowable profit margins may be defined by government so long as having such restrictions or not having such restrictions for categories of SA corporations or for specific SA corporations is clearly supported by the public.
It is obvious that under this proposed system of three types of corporations, any corporation in the defense industry could not be for-profit-only, and that is reasonable and consistent with the national interest and any reasonable definition of the public interest. War should not be profitable, but those who produce products that protect the nation's security should make a reasonable profit for meeting this particular human need. Many types of businesses would seem to fall within the social alliance type, such as hospitals and food producers; and others clearly fall within the for-profit-only type, such as gambling casinos and manufacture of luxury products. Actually, when one thinks about this proposed "division" of corporations, it becomes clear that it is like creating a new economic system that allows people in business to choose either "capitalism" or "socialism" without being penalized for either choice. Any business enterprise that produces a product or service that falls within basic human needs would naturally fit better into the social alliance type, while any business enterprise that produces a product or service that is clearly a luxury, or that is well beyond basic human needs, would naturally fit better into the for-profit-only type. Still, many corporations would appear to be able to function in either category, depending on the preferences of the controlling shareholders. Also, there would need to be some transitional legislation to define and describe how we would make the change, within a relatively short but reasonable transition period, from our current system to this proposed system that gives the public, through their elected government, more control over the businesses that exist to meet human needs and not only for profit. These provisions would change the "fiduciary relationship" of a social alliance corporation manager, or trustees, to shareholders. The Social Alliance corporation would have an equal obligation to the employees and to the public and to the government.
Our current system of having only one type of business corporation, that is incorporated forever without any enforceable penalties for unethical or criminal behavior on the part of management, is not working in the public interest. White collar crime is notoriously destructive, often even subversive of the national economy, but results in light sentences or meaningless fines or gets no serious consequences at all. Some corporations are described as "too big to fail." I would argue that this is a designation that condemns our economic system, because if a corporation is really "too big to fail," then it is exercising a control over public policy that is contrary to democratic principles. We are supposed to be governed by the people, not by the people with money. The excessive influence of a corporate and financial oligarchy is far more destructive of our democratic process than any threat from foreign nations or external forces. This problem requires that we re-structure our economic system and substantially remove this excessive control in the hands of people who have demonstrated a capacity for selfishness and stupidity on a cosmic level.
PART 2: REGULATE CAPITAL INVESTING AND MONEY, AND REVISE LAWS THAT MAKE INVESTING NOTHING MORE THAN A LEGAL FORM OF GAMBLING:
1) Change tax law to treat capital gains same as earned income from self-employment; treat investment as form of legal gambling;
2) Severe penalties for white collar crime, designated as subversion of the economy.
3) Assign controlling powers of the Federal Reserve, such as interest rates and production of money, to the Secretary of the Treasury, with close Congressional control, not just "oversight."
1) Change tax law to treat capital gains same as earned income from self-employment; treat investment as form of legal gambling (which it is).
Capital gains income should be categorized and treated differently by virtue of the different sources of a capital gain. A capital gain from sale of a primary residence, or motor vehicle, or small pleasure boat, should be treated differently from the ongoing capital gains of a person who regularly buys and sells stocks -- for themselves and for others -- and uses their income from capital investments (or any part of it that is greater than $10,000 a year) as the earned income that they use to support themselves and their family. This type of "capital gain" should be re-designated as self-employment investment income, and be deemed to be the earned income of a self-employed investor, even if they are also employed by an investment company. Their tax rates should be the same as for any other self-employment income, and they should also be required to pay the self-employment tax the same as anyone else. There should be no other adjustments to "capital gains" taxes in this earned income category.
2) Severe penalties for white collar crime, designated as "subversion of the economy":
Unethical accounting practices and violations of laws by accountants and the managers or officers or trustees of a corporation should result in criminal penalties similar to the criminal penalties for murder and arson. White collar crimes need to be re-designated as a form of economic treason, subversion of the economy. Laundering money, illegal investments, insider trading, filing for bankruptcy in order to raid retirement funds and lay off older workers, should all be treated as subversion of the economy, and those who commit such crimes should be prohibited from owning or running any form of business for the remainder of their lives.
3) Assign controlling powers of the Federal Reserve, such as interest rates and production of money, to the Secretary of the Treasury, with close Congressional control, not just "oversight."
"Agricultural" corporations and freedom to farm (patented seeds):
JManimas Democracy Magazine of September 2009 includes essays on Total Cost Accounting and Absolute Liability as the logical means to require that the manufacturers and users of destructive chemical products pay for the damages. This section on agricultural products is here to address the problem of patented seeds, especially genetically modified seeds, that damage the environment by modifying natural plant seeds in a farmer's fields when pollen from the genetically modified seed is carried by the wind or by insect pollinators.
Possibly the most destructive act of Congress for all time was to allow genetically modified seed to be patented, even though the patented seed "rapes" natural, non-patented seeds by uncontrollable wind and insect pollination. The laws governing patented seed actually violate the American tradition and legal principle that property rights must be protected in order to protect individual freedom. When the pollen of a genetically modified plant is carried by wind or insect pollinators to the field of a farmer who has non-patented (natural) plants, the seed from those plants is genetically modified. The law states that the offspring seeds of that "natural" plant that are now genetically modified are the same seeds subject to the previous patent, and they are therefore the property of whoever owns the patent for that genetically modified seed. This is a total reversal of centuries of private property law. Since the genetically modified seed pollen was carried on to the natural farmer's field through no action or intention of his own, his natural seed has been altered and he has suffered a loss of property, and he should be compensated. The only just way to resolve this theft and destruction of natural seed and natural plants is to require the owner of the genetically modified seed patent to compensate the natural farmers for their loss of natural, non-patented seed. Another resolution, a kind of compromise, would be to shorten the patent period for genetically modified seed to seven years, and to require that for any seed that is modified to be more tolerant of a pesticide, the owner of the patent for such a seed shall be 100% liable for any damages, in any future place or future time, for property damages or environmental damages caused by that pesticide. The principle recommended here is that whoever profits from the manufacture of a pesticide should be held absolutely liable for any loss or damages that result, regardless of the chain of custody or use.
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