America Beyond Capitalism
December 17, 2004 6:06 PM   Subscribe

America Beyond Capitalism
What a "Pluralist Commonwealth" Would Look Like
from the author of The Coming Era of Wealth Taxation (pdf)
posted by y2karl (22 comments total)

Thanks Karl. Good work as always. I dont care what they say about you and your rants but I for one, support you, Good work, friend.
posted by crusiera at 8:49 PM on December 17, 2004

"...I for one, support you, Good work, friend."

Are you sure you don't mean "comrade", comrade?
posted by mr_crash_davis at 8:55 PM on December 17, 2004

Friend is a twerm of endearment so I meant it Mr. Crash.
posted by crusiera at 9:24 PM on December 17, 2004

you twerm.
posted by quonsar at 9:54 PM on December 17, 2004

"Comrade"? What an asshole thing to say. I can't wait for conversations about economics to move beyond absurdly limited notions of competing "capitalist" and "socialist" teams, each convinced of their own perfection. Ugh.

I hadn't heard of this guy at all, y2karl, so many thanks. One of the more intriguing front page posts I've seen recently. I really love this bit from the first link:

Institutional restructuring, we tend to forget, is exceedingly common in the long sweep of world history. The difficulty lies in pulling ourselves out of the present moment to consider our own possibilities in broader historical perspective.

There have been five large-order political realignments over the course of American history, from before the Civil War to the Progressive era and beyond. Each has occurred in the face of arguments that nothing of great political significance was feasible. Further realignments over the course of the 21st century are not only possible, but likely...It may even be that far-reaching change will come much earlier and much faster than many now imagine.

*Marvelous* stuff. And just before, this:

Already states and municipalities in all sections of the country have moved forward to create—and systematically build political support for—many new political-economic experiments and strategies. Federal fiscal and other decisions are now producing pain and reassessment at every level.

In fact, just below the surface of conventional reporting, literally thousands of on-the-ground efforts which illuminate new principles have been quietly developing for the last several decades. In California, the state pension fund plays a significant role in state development. In Glasgow, Ky., the city runs a quality cable, telephone, and Internet service at costs far lower than commercial rivals. In Harrisonburg, Va., a highly successful company owned by the employees makes and sells cable television testing equipment. In Alaska, every state resident as a matter of right receives dividends from a fund that invests oil revenues on behalf of the public at large. In Alabama, the pension fund directly helps finance worker-owned firms.

New ways of thinking about public/private that transcend old-school notions of capitalism v. socialism are the shit, y'all. Why should the corporate welfare whores have all the fun blurring the lines? This really is marvelous, marvelous stuff:

Traditionally, a distinction has been made between "reform," on the one hand, and "revolution," on the other...The kind of change suggested by these emerging efforts involves an unusual combination of strategic approaches. Like reform, in the main it involves step-by-step nonviolent change. But like revolution, the process is oriented to the development of quite different institutional structures to replace traditional corporate forms over time. It might appropriately be called "evolutionary reconstruction."

A politics based on evolutionary reconstructive principles does not abandon reform when it can achieve important gains. On the other hand, such a politics explicitly seeks to understand and to foster the longer-term foundational requirements of the values it affirms. It is not satisfied with, nor misled by, occasional electoral gains that do little to alter the direction of long-term trends. It is a politics of historical perspective and commitment to the long haul.

Well, so much for Democrats leading it. But still, this *is* the shit. Thanks again, y2karl.
posted by mediareport at 11:48 PM on December 17, 2004

Yes -- thanks for the link - a refreshing read.
posted by RubberHen at 12:11 AM on December 18, 2004

I'm as up for reform as the next guy, but replace '21st' with '20th' in this passage, and it sounds just like a breathless science for kids magazine from the 50s:

The United States is the wealthiest nation in the history of the world. By the end of the 21st century it will have the technological capacity to increase the income of all its citizens many times over or to radically reduce work time and thereby allow a new flowering of democracy, liberty, and personal and community creativity. The new century could be—should be—one of innovation, hope, even excitement.
posted by athenian at 12:27 AM on December 18, 2004

I hate to be the turd in the punchbowl, but I'd be more interested if he provided some numbers or business models to back his argument up, or at least linked to some. For those of you who are interested in the employee-owned cooperative approach, you should check out these guys.
posted by Planter at 2:35 AM on December 18, 2004

Here's another link to some resources on Mondragon.
posted by Planter at 2:36 AM on December 18, 2004

Further realignments over the course of the 21st century are not only possible, but likely.

If you're looking for me, I'll be in the section cheering for libertarianism.
posted by ZenMasterThis at 6:01 AM on December 18, 2004

I'd be more interested if he provided some numbers or business models to back his argument up

The article is just a summary of the argument developed in his book, where the numbers are (presumably/hopefully) presented. I had a similar reaction, but this is such a refreshing change from the tired liberal/conservative debates I found it worthwhile on its own. Thanks, y2karl!
posted by languagehat at 6:53 AM on December 18, 2004


The Concentration of Wealth

A second reason I believe we may be on the cusp of longer term more fundamental change—and why the developmental learning characterized by the movement's achievements are so important at this stage—has to do with the way wealth is now owned. In any one year, the top 20 percent of the U.S. population garners for itself roughly 50 percent of all income. The top 1 percent regularly takes home more income than the bottom 100 million Americans taken together. A growing understanding of this is evident! The ownership of wealth has always been highly concentrated in the United States. In recent years, however, it has become almost Medieval in nature, and particularly for the kind of wealth which really matters: financial wealth, at the heart of the nation's productive economy. Many Americans own at least a share of their homes, i.e., that which is not mortgaged. But a mere 5% at the very top own more than two-thirds of the wealth represented by America¹s gigantic corporate economy, i.e., financial wealth (mainly stocks and bonds.)

People are beginning to raise more and more questions about these extraordinary concentrations. At one level are those calling for wealth taxes; this includes, for instance, Yale law professors Bruce Ackerman and Anne Alstott, who urge a 2% tax. Economist Thomas Michl has urged a net-worth tax, and Law Professor Leon Friedman has proposed a 1% tax on wealth owned by the top 1%. Robert Kuttner, Robert Reich, Kevin Phillips and Jeff Gates (among many others) have also urged that wealth taxation now be put on the American agenda. Even Donald Trump has proposed a one time 14.25% net-worth tax on Americans with more than $10 million in assets.
But taxing is only one element in a serious response to wealth concentration. The more fundamental answer is building new forms of wealth which benefit larger numbers of people directly. Many people working on democratic cooperatives do not like Employee Stock Ownership Plans (ESOPs) both because most are not democratically-controlled and because the distribution of ownership within most ESOPs is highly unequal. What is interesting to me, as an historian, is the developmental trajectory: Over the last several decades ESOPs have grown from a few hundred to more than 11,000. More people are involved in ESOPs than are involved in unions in the private sector.
There is also increasing debate among people concerned with ESOPs about “next stages” and about voting control, as well as about legislation to enhance both participation and greater equality of ownership. Quite radical plans have been offered by Clinton adviser Joseph Blasi, on the Left, and the very conservative Republican Congressman Dana Rohrabacher, on the Right.

A National Federation of Democratic Workplaces Can Lay The Foundation for Historic Change

... I think it likely that the question of "who should own capital," once posed, may ultimately move to this fundamental question-and also to renewed interest in local (and possibly larger-scale) public ownership: The latter trajectory, as noted, is already under way at the local municipal level, and the painful logic of a decaying welfare state points to capital and asset ownership as the only alternative way (if there is any way at all!) to address serious issues of redistribution. Indeed, the handwriting is already on the wall-and not simply among progressives. The foundations of the current ESOP laws are, in fact, easily traced to the late Louis Kelso, a creative San Francisco corporate lawyer who long ago proposed that income from new capital formation ought rightly to flow in significant part to all citizens (and who developed schemes to achieve this goal). A similar basic argument can be found in John Roemer's proposal for "coupon socialism," and in the work of the late Cambridge economist and Nobel laureate James Meade; still other writers-Robert Kuttner and Bruce Ackerman, for instance-have recently proposed various forms and uses of capital grants. (It would not be surprising if conservatives who urge a "privatization" of Social Security on the grounds that the ownership of capital is-or should be-important to achieve public purposes may one day see this idea come back to haunt them!)

Who Owns Capital?
posted by y2karl at 8:07 AM on December 18, 2004

great post. there's a lot of (mostly banal) commentary on chomsky's blog entry on this subject.
posted by blendor at 10:49 AM on December 18, 2004

Libertarianism is a political theory of 14 year old white boys and Ayn Rand.
posted by bshort at 11:45 AM on December 18, 2004

Of course we're also seeing corporations fighting back against government-owned companies, for instance the recent victory in PA regarding municipal-owned ISPs.
posted by billsaysthis at 11:50 AM on December 18, 2004

But, Wait! There 's More!

Roemer thinks --- though this is not how he puts it --- that both competitive markets and socialism contracted mésalliances when young and easily entrapped (to unlimited private property and central planning, respectively), but that now, in their maturity, they can and should divorce these undesirables (both rather brutish creatures, really, and one, at least, more than a bit of a whore) and wed each other, and he sketches a portrait of their connubial bliss.

There is no central planning board, like the Soviet Gosplan, commanding factories to produce so many million tons of steel and size 12 leather boots. Instead, all goods, including labor (land, oddly, is not mentioned) are allocated by markets; there are many banks, making loans at interest to competing firms, who pay dividends to those who own stock in them, and are, quite cold-heartedly, allowed to go bankrupt when bad luck or stupidity force them to it. There is international trade, free in goods, somewhat restricted in capital. Market forces impel firms to efficiency and innovation, at least as much as they do today.

Clearly, a rather old-fashioned marriage, with markets as the bread-winner. Where, then, do we find the socialist better half of the union? Not in the welfare-state provisions (though there is a full set of them, like china), but in the stock market. Stock prices are quoted not in currency but in coupons, issued to citizens on attaining their majority, not convertible to cash, and reverting to the treasury at death. The price of a firm's stock in coupons will, presumably, reflect both the current value of its dividends and expectations about its future performance. Citizens can buy and sell shares in firms directly, or, more plausibly, invest in mutual funds.

A Future for Socialism by John E. Roemer from The Bactra Review

In their new book, Yale law professors Bruce Ackerman and Anne Alstott offer a plan to distribute capital among a particular "subset of the people." Their plan, they argue, derives from both liberal and libertarian ideas. Ackerman, whose previous scholarly work divided American history into distinct "constitutional regimes," is perhaps best known for his recent testimony before Congress that the impeachment decisions of one elected Congress do not carry over into the next. Alstott's main work has been in the fields of tax and social-welfare policies. Their proposal is very simple: On completing high school and reaching maturity (age eighteen), every American would receive as a matter of right a capital allotment of $80,000 from the federal government. For those who choose to invest the capital in further education (rather than, say, a small business), the money would become available in $20,000 annual allotments beginning immediately; for others, it would become available, again in annual allotments, beginning at age twenty-one and ending at age twenty-four. (The presumption is that spacing out the payments would allow time for people to weigh their choices before spending the money, and the withheld funds would earn interest in the intervening years.) Note carefully that the subset of people targeted to receive capital is not the poor, not farmers, not the old, and not the very young: It is young adults entering maturity.

The cost of this plan--roughly $255 billion a year in 1997--would initially be financed by a 2 percent annual tax on the assets of the top 40 percent of wealth owners. Once the system was up and running, Ackerman and Alstott speculate, it could be financed through a trusteeship tax on estates: At death, most recipients would be expected to pay back their $80,000 plus interest--which would come to about $250,000. (Much of The Stakeholder Society is devoted to specifying technical details of how the scheme would work, and answering numerous objections that have already been raised. There is also a somewhat secondary discussion of how to alter Social Security to make it a "citizen pension" financed by wealth taxes.)

Clearly, Ackerman and Alstott think the best thing a young person can do with a capital stake of $80,000 is invest it in a college education (indeed, the $80,000 figure derives from their estimate of the cost of four years of college). What makes this a libertarian idea is that individuals can do what they like with their $80,000 share--no strings whatsoever are attached. You can spend your money on education; you can spend it on becoming a partner in a small grocery store; you can spend it on illegal drugs. The point is that receiving a capital stake is not at all the same as receiving a paycheck: Not only does it offer a measure of economic security but it also offers a brief moment of opportunity to invest in something productive. The free use of capital, they hold, is the key to individual responsibility. The authors also hope that providing individuals with a significant amount of capital will help nurture the kind of alert citizenry a democracy requires: It will "enable all Americans to enjoy the promise of economic freedom that our existing property system now offers to an increasingly concentrated elite."

The $80,000 Solution by Gar Alperovitz, a review of The Stakeholder Society by Bruce Ackerman and Anne Alstott.

This is the economic and ideological context in which we would like to explore a range of possible institutional devices for imposing significant social direction on the pattern of capital accumulation. The general idea is this: There already exists in capitalist societies large pools of capital that are controlled by public and quasi-public bodies. Endowments of public universities and pension funds of unions and governmental units are typical examples. Modest efforts occur, from time to time, for these kinds of capital pools to be used to impose social constraints on investment. Perhaps the best-known example was the concerted effort to divest university endowments from investments in South Africa during the apartheid period. From time to time, certain kinds of pension funds, have also vetted investments on the basis of some criterion of social responsibility. More radically, in the 1970s in Sweden Unions and the Left of the Social Democratic Party proposed that union-run wage-earner funds be used to gradually over time gain significant control over Swedish corporations. The proposal came under concentrated attack and was modified to such an extent that the final version lost these radical features.

The question, then, is whether a broad institutional redesign of the rules governing such public capital pools would enable them to play a much more significant role in constraining capital, of imposing democratic direction and social priorities to accumulation. In particular, pension funds already constitute a vast pool of capital, and under various proposals to convert existing pay-as-you-go tax-funded public pensions into asset-based pension schemes, this pool is likely to increase significantly in the future. Is there a way of organizing and funding such large, national public pensions in such a way that they can be used proactively to discipline corporations and reduce the capacity of capital to escape public regulation? Should such designs emphasize the power of “exit” by restricting investments to “socially responsible” firms, or should they also use “voice” by investing sufficiently in “bad” firms that the fund could have some real say in the behavior of the firm? Can such political uses of pension funds be reconciled with the dependence of people on revenues from the funds for their retirement? And can such redesigns of the power-relations linked to pensions simultaneously enhance democratic capacity to shape capital accumulation and resolve the fiscal dilemmas of pensions provision in an aging society?

Using Pensions for Social Control of Capitalist Investment

The Real Utopias Project

Envisioning Real Utopias
posted by y2karl at 12:08 PM on December 18, 2004

Missed the The Stakeholder Society link, I did...
posted by y2karl at 12:12 PM on December 18, 2004

Utopian thinking, by it's very nature is dangerous. Because eventually, the fact that we live in an imperfect world will rear it's ugly head. The utopian will then be confronted will something that dosen't fit his vision of what the world should be and he'll have to eradicate it. And we're back where we started from.

Think pragrammatically. We need platforms, not platitudes.
posted by jonmc at 12:46 PM on December 18, 2004

A prudent survey of the material linked oft makes for cogent commentary.
posted by y2karl at 2:53 PM on December 18, 2004

The article is just a summary of the argument developed in his book, where the numbers are (presumably/hopefully) presented. I had a similar reaction, but this is such a refreshing change from the tired liberal/conservative debates I found it worthwhile on its own. Thanks, y2karl!

Yes, I do appreciate the links, so thank you y2karl; I just have grown a little jaded of the promises of a "new way" of economics and business that don't have enough hard support in the form of numbers. As for the book, I will check it out at the bookstore to see what sort of support he's got in there.

As for the sort of theory they are developing, I would be more comfortable with their proposals of taxation if I saw more work evaluating why previous taxes have failed to achieve the ends they are trying to achieve with these new taxes. Income taxation was, as discussed in the third link from the FPP, meant to be a progressive tax. The blurb above under "Concentration of Wealth" implies that wealth concentration has increased. But why haven't previous progressive measures worked? I am suspicious of new proposals that don't examine the failures of the old.
posted by Planter at 4:54 PM on December 18, 2004

The model also projects the development over time of new ownership institutions, including locally anchored worker-owned and other community-benefiting firms, on the one hand...

Now where have I heard that before? The proletariat owning the means of production. I swear it sounds familiar.

Snark aside, the notion that such a system would -- or could -- come into being and be supported by a democratic political system is laughable. Saying it doesn't make it so. Nothing short of all out armed revolution would accomplish these changes, and nothing short of totalitarianism would maintain such reforms (at least in the short term).
posted by pardonyou? at 6:42 PM on December 18, 2004

I believe the term currently being bandied about would be "armed reform"
posted by soulhuntre at 11:47 PM on December 18, 2004

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