THE DILEMMA AND THE ESCAPE.

  1. Communism has collapsed. Socialism is under suspicion, and either losing elections (as in Europe) or knuckling under to business interests when elected (as in Canadian provinces). Everyone sees capitalism as the rising star, or even the End of History.
  2. Yet capitalism too is collapsing in a worldwide recession, more realistically called depression. And capitalist reform of the former Soviet Union is producing incredible hardships for the people. This also applies in Poland and the former East Germany.
  3. This double collapse (one complete, the other in progress) is the result of chronic overspending on armaments during the prolonged Cold War arms race. Lucky it did not end in nuclear war, but it did bankrupt both contending economic systems.
  4. Capitalism could recover only in a growing economy. But growth is precluded in the long run by the ecological imperative of “limits to growth” – it is not sustainable.
  5. So even if conversion from arms production is managed successfully, we are in trouble. Either we have growth in order to recover from the depression, only to succumb 50 years later to global warming and/or the exhaustion of oil supplies; or we make the transition to non-growth and have chronic unemployment, poverty, and inequality. Unless…
  6. Unless we totally change our economic system and the values we live by, in ways more drastic than Marx ever dreamed of, and do it without a violent revolution which could obliterate us through war.
  7. A totally new economic system is needed which does not depend on growth and works both efficiently and justly, as well as sustainably in perpetuity. We had better invent it and implement it awful damn soon.
  8. I am not the inventor, but it needs to contain the following elements:
  1. Production and consumption must be balanced at a level that would give everyone enough for their need and nothing for their greed.
  2. Production and consumption at balance must be such that all resources used, including energy, are not only renewable, but actually renewed, at least at the rates to make up for consumption. (A “sustained yield” operation.)
  3. Distribution of goods for consumption should not be totally dependent on work done; there must be a wholly secure safety net (without meshes that some can fall through) for those too old or too young or too sick or lame to work. We are not to operate on a “lifeboat ethic” (letting some sink so others, usually ourselves, can survive), but operate as a worldwide extended family.
  4. This can best be done by implementing a comprehensive guaranteed annual income plan, which would replace all other social benefit plans, and be linked to the tax system. A GAI plan would operate both within nations for individuals or households, and between nations through a U.N. fund.
  5. All people able to work should work, and have jobs available for them to work at. They could be self-employed. These are really two requirements: (i) willingness to work if able (inculcation of a work ethic) and (ii) a socially or individually arranged policy of full employment.
  6. Since self-employment possibilities are limited, work places available must be shared among all those seeking work, leaving no one out. Various choices of part-time and flexible-time schemes should be offered.
  7. Flex-time is also good for families in which both father and mother want to do parenting and also work outside the home; for them, family arrangements should be available. Some of this may be solved by working at home, using home-based computers, for outside employers. Such practices are already spreading.
  8. As much as possible should be done by market mechanisms, which are efficient, and can also be equitable as long as all buyers and sellers (including buyers and sellers of labour) are of approximately the same size.
  9. But since there is a natural tendency for some to get bigger while others get smaller (i.e. the rich get richer and the poor get poorer, because “the bigger it is, the faster it grows”, like invested capital), inequality would spontaneously increase. This must be curbed, or it will creates perceived inequity, result in undue exercise of political power through wealth, and increase production of luxuries at the expense of necessities.
  10. The curbing should be done through redistribution by means of a steeply graduated income tax, with all loopholes closed. The proceeds of this should pay for the guaranteed annual income plan. There should be no sales taxes of any kind.
  11. State-level planning of industrial production has proved in practice to be inefficient. Central planners can never have enough knowledge of the micro-economic events at grassroots levels. (On this Hayek is right.) However, governments at various lower subsidiarity levels (e.g. municipal) may be able to operate public enterprises efficiently enough.
  12. The proper and essential role of national governments is to enforce the strict sustainability standards mentioned at the beginning, and to run the redistribution scheme (steeply graduated income tax plus guaranteed annual income plan) .
  13. Community-level spontaneously locally formed cooperative enterprises should be encouraged. Measures should be taken so that they do not become bureaucratized, which is also a natural tendency of all organizations unless deliberately counter-acted.
  14. Incentives to entrepreneurs and innovators should work on the same principles already used to encourage inventors, i.e. a modified patent system. Profits from a new enterprise should not continue to accrue in perpetuity, but only until a pre-agreed percentage of return on investment plus the whole original investment is recovered. For MNCs operating in developing countries, such contracts are called “fade-out joint ventures” and have been used e.g. in Andean Pact countries.
  15. After the original innovator has achieved this pre-agreed reward for his socially useful innovation, the enterprise should either become the property of the employees, who could buy government-subsidized shares, and administered as a producers’ cooperative, or it should be similarly bought out by consumers and become a consumers’ cooperative. Cooperatives are good for maintaining equity, but not good at innovation, which is why the originators of new enterprises should be rewarded, but not in perpetuity.
  16. An effort should be made to have family or household incomes within a range of a 1:10 ratio, i.e. no one should be paid more than 10 times the lowest existing pay. The aim need not be total equality, but avoidance of extreme inequality.
  17. Since energy is the basic resource in any economy, the currency should be tied to energy as it once used to be tied to gold. (Energy shares instead of money are advocated by an organization called Technocracy Inc.) The government should be forbidden to issue more paper money than can be backed up by energy units, thus preventing inflation.
  18. The system would be non-dogmatic and open to a mix of methods – modified capitalism plus modified socialism plus modified Gandhian/Green/Buddhist economics. The only strict dogma would be absolute long-range sustainability in balance with nature.
  19. The system is really doubly truncated capitalism (with both a floor and a ceiling on individual and corporate wealth) mixed with grass-roots voluntary socialism, within a framework of natural balance and a life-style of voluntary simplicity without economic growth.
  20. Before I run out of letters of the alphabet, I will end this highly preliminary exposition.

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