Fixing the System

Over on my thread regarding the system and "personal responsibility" I drew two lines of comments from Dave and loosecannon. Both are worthy of discussion, so I will separate the discussion into two threads, starting with this response to loosecannon.

But it violates human nature for the majority to question the fabric of society. It even violates the tenets of "social contract" and democracy to some degree. The will of the masses is the will that counts in theory.

So you have to have a plan is what I am saying, and you need to work incrementally and you have to know what you are really doing.

I agree with your premise , but I know I am personally not up to the task of leading it.

So can you pick even one example and demonstrate how you would proceed?

Rather than starting with one example — which I happen to have — I will give you the overview of where the problem lies, and how to go about fixing it. We start with loosecannon’s frequent observation about "capitalism" being fundamentally flawed.

What does that mean? What is a "system," and more specifically, what is this particular system? As I point out from time to time, systems are between your ears. Social systems are a mutual adoption of those systems between your ears. The paper money in our pockets is "valuable" simply because we all believe that it is. If we all ceased to believe that, it would cease to have value. Are we going to dispense with our paper dollars, now that we know this? Probably not, because paper dollars are an extraordinarily useful innovation to regulate distribution. You just need a mechanism — that is to say, a "system" — to cycle those dollars into the hands of people who need them.

As a matter of fact, we can quickly determine that "capitalism" isn’t a single system, but an aggregate of a number of subsystems. Our property rights system, for example, predates capitalism by several centuries, and indeed was also central to that earlier system called feudalism. Obviously, it’s portable from one system to another. Similarly banking, as loosecannon points out, originated in the Middle Ages, as did capital investment to syndicate the risks of shipping — the first great capitalist enterprise.

Stick with me just a minute, while I show you the tiny innovation that gave rise to modern industrial capitalism. This is the insight. Small conceptual changes can yield huge social and political changes. To use Nazism as a simple example, I can turn Nazism from the highly corrosive ideology that it was, into a relatively benign form of extreme nationalism. That’s relatively, it still would have been corrosive. The way I do that is by changing Hitler’s version of nationalism from a "race based" nationalism to a cultural nationalism — the form Mussolini’s fascism took. Now, Mussolini was an asshole to be sure, but he wasn’t hell bent on exterminating entire ethnic groups. And by the way, in the early days of Nazism, this was precisely the bone of contention between Hitler and other far right politicians. Hitler’s "brand" was race, not culture, and his "struggle" was first against rightwingers who didn’t get his unique racial conception of history.

Back to capitalism. The small change that created capitalism, was a change in the law — take that, libertarians — that slightly altered the feudal conception of property rights. That small change took place in the late 17th century, and was called "enclosure." An early exponent of it was one John Locke. Prior to "enclosure," property rights were actually divided. The ultimate owner was the king, who doled property out to the nobility, who further subdivided property rights, including a set of "communal" rights to so called "common areas." Any condo owner understands this, since your parking lot, clubhouse, swimming pool, tennis courts, or whatever are the same kind of rights. In the middle ages, vast stretches of woods, fields, villages, etc. were such "common areas." The British Pariliament changed those rights, and allowed the nobility to "enclose" those common areas, locking the peasantry out. You want access to land, you pay for it. This drives agricultural productivity – the reason for the change. It also creates an army of landless peasants, who moved into the cities and went to work in the factories.

In fact, we can generalize about the handful of social institutions that have created modern industrial capitalism. Those institutions are paper money and "symbolic wealth," modification of medieval property rights, and the evolution of the business corporation. These last two have permitted the emergence of that uniquely capitalistic relationship between ownership and labor. Stated simply, the people who makes things, don’t own the things they make. This means that the right to profit from the sale of what you own has come to supercede the right to profit from the effort expend to make it. Wealth derives from ownership, not labor, or that’s how we conceive it.

And of course, that’s the whole problem. This is where "class" comes from. The ruling class is the owning class, and the "hard work" to "succeed," is simply the hard work of acquiring ownership rights. Hard work actually producing anything — including the hard work of developing useful skills — is grossly undervalued. Capitalism, contrary to the official ideology, is not about "innovation" or even "competition." It is about control over resources. Those who control the resources — by "owning" them — have all the power. In fact, "innovation" can actually threaten the control of the owners, which explains why certain innovations are not promoted under capitalism. It is why our cars run for three years, when they could run for twenty. It is why our energy infrastructure is based on a limited commodity called oil, instead of being based on renewable sources that are universally available, like say, sunlight.

So what do we do about it?

First of all, we recognize what ISN"T the problem. "Commerce" isn’t the same thing as "capitalism." Markets are not the problem, in and of themselves. Contrary to conservative ideology, there is no such thing as a "free market" that is wholly divorced from laws, regulation and government. The market, as it exists, is a function of those property rights that were modified to exclude communal rights. The legal infrastructure of capitalism is what separates ownership from labor, and turns the marketplace into an inherently "owner friendly" institution.

But wait. An strong argument can be made that property rights — pretty much as they exist — really are a bulwark against tyranny. After all, your own property — your house, your shop, your storefront — is in fact a basis for your own economic independence, provided other social infrastructure supports that economic independence. Not only that, but small scale accumulation, by which we mean small scale inequalities in relative prosperity, aren’t really the problem. The problem is a small owning class who controls huge percentages of the available resources, and uses that control to secure its own position. It isn’t property rights or the marketplace that does that. It is the business corporation, as presently organized. It is control over capital itself, through control of banking and finance. That is what you attack, and here is how you do it.

The obvious solution is to reunite labor with ownership, and the way you do that is through employee ownership of publicly traded corporations. You leave closely held corporations — small business — alone, recognizing small business as a legitimate source of innovation and economic vitality. Your giant bureaucracies must be majority owned by employees. Notice, we don’t eliminate private investment, we simply place labor in ultimate control. The CEO still answers to the owners, only the owners are also the employees. Instantly, this changes the business decisions that get made. Outsourcing to the third world in search of cheap labor is no longer on the table. Eventually, you will see management emerging from the ranks — which is how it should be. The important thing is that you will see business decisions that benefit the work force. You will see "profit" redefined as profit for the people who produce — which is the point.

Now, we will continue to need large scale industries, including some economic sectors that are in the nature of infrastructure. Chief among these is banking and the insurance industry. These will be nationalized. Watch what happens when we nationalize banking. There is no particular need to accumulate capital in a socialized industry. But banking will work exactly the way it works now. You deposit your money, you earn interest. You borrow money, say for your mortgage, you pay interest. That interest, absent administrative costs [see Medicare's 3% overhead] is revenue to the government. Same thing with insurance premiums. We just folded some of your tax burden into your house payment and insurance premiums. Do we outlaw private lending and private insurance? No we don’t. Some projects and some risks will not pass muster with the national banks underwriters. So private finance will pick up the slack.

Our socialized banking system will make possible policies designed to promote home ownership, particularly in our more blighted urban areas. This will encourage local efforts to do things like clean up neighborhoods, including specifically, crime control. After all, if you’re a homeowner, crack dealers on the street corner aren’t good for your property values.

None of these things is first, however. First is residential renewable energy systems. Instead of energy consumers we become energy producers, through a combination of renewable systems, primarily solar, and technological improvements in efficiency. Again, this improves everyone’s balance of payments, putting money in their pockets, even as it improves their property values. It promotes economic self-sufficiency, which is the ultimate goal — and is the reason corporate America doesn’t push this alternative. The present need for it is obvious, including government R&D to improve the technology, and perhaps tax credits and other incentives. This makes it a golden political issue, that puts the cheap labor cons on the defensive, and at the same time educates the public about what capitalism is really all about.

It isn’t about prosperity or economic independence for them They may as well know it.

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