Navel gazing

With all the talk about "democratic socialism", these days, including attempts to define the term that make it essentially indistinguishable from "New Deal Democrat", I've spent some time thinking about how I would describe my own political/philosophical leanings to an interested stranger. Every day is different, but today I am thinking "radical democratic socialist" because I do NOT think that capitalism with a human face is sufficient. Private ownership of capital is essentially incompatible with democracy (which is why I've sometimes argued that "democratic socialism" is a tautology). Further, paying people, let alone paying them generously, just for owning stuff, let alone just because they already own a lot more stuff than anybody else, is morally indefensible.

On the other hand, I need to add something like "pragmatic radical", because I know that wishing don't make it so, and I do not believe in letting the best be the enemy of the good (or even of the "better than now"). Morally, it is better to do something to make things better, for at least some people, than to do nothing. Pretending to a high moral stance from "keeping your hands clean" is not actually better, morally, than being "compromised" by accepting, and working for, limited reforms. Life is short and (to quote a prominent liberal), in the long run we are all dead.

This leaves out a lot. Feminism, anti-racism... or, better, pro-POC... "embracing" LGBTQ (a phrase I learned recently from a friend, and like so much better than "ally"). I like to think of socialism as not limited to the economic realm. Socialism is democracy, taken to its ultimate conclusion. Socialism is the end of all exploitation, all preferential advantage or privilege of one group over another, for whatever reason, from whatever source.

Taxes

It is true, as I understand it, that the modest amount of progressivity left in the Federal tax code means that most income taxes are paid by people who are at least moderately well off. It is also true that Federal income taxes, proper, are only a part of the overall tax burden, and when you factor in other taxes (FICA, sales taxes, gas tax, state income tax, real estate taxes) the overall tax structure in this country becomes regressive (poorer people pay a higher percentage of their income in taxes, overall, than rich people, and MUCH lower than the super-rich. That is a reason activists often give in explaining why having rich people pay more in income taxes is fair.

But there's another reason I think is even more important. Wealth, ALL wealth, ultimately derives from profits - i.e., from something like a rent for the use of your property - and not from labor. This is true even if a high income is disguised as salary. NOBODY's labor is "worth" more than 200 times the median. Ultra-high CEO salaries come from their ability to control property (their own, and that of shareholders).

And profit is essentially a privatized tax - a tax that we pay on every good and most services that we consume, but that goes strictly to the benefit of a small class of individuals. (Small in percentage population terms; rather large in absolute numbers.) Profit represents the owning class blackmailing us by threatening to withhold the means of production, which would mean that we could not, with our labor, produce anything at all. And the more that wealth becomes concentrated, the stronger the stranglehold that property has on us, and the more they are able to squeeze out.

What progressive tax rates do, in a capitalist society that refuses to simply expropriate private owners, is to reclaim part of that private tax, for the public benefit. More progressive tax rates actually represent a LOWERING of the private tax that is capitalist profit.

And that is why progressive taxes are fair.

Property

Until maybe the middle of the 19th Century, most of the world thought that it was sometimes just for one person to own another.  In any given instance, whether one person owned another was a matter for legislatures to legislate, and courts to decide (and, of course, for the individual conscience of the property owner).  Now, we no longer feel that way.  Slavery is considered to violate a fundamental human right, and therefore to be beyond the limits of what a legislature may impose, or a court enforce.  On the other hand, we (most of us) hold that that it is sometimes (often!) just and meet for one person to own the means another person requires to live, and to hold that property, and profit by it, even if that means the other person goes homeless, or starves, or sickens and dies.  How much of the means of life one person owns, and another does not, is a matter for legislatures to legislate, and courts to decide (and, of course for the individual conscience of the property holder).  And for determination by the sacred market.

But there is no inherent reason why one property “right” is more obvious, just and eternal than the other.  The right to own slaves was completely obvious to an ancient Roman, or a medieval Turk, or an antebellum Southerner, and to almost everybody else in their eras, and in between.  The right of private individuals to own capital seems obvious to most of us.  Maybe someday that will change.

Entrepreneurial

Thomas Piketty, on page 572 of Capital in the 21st Century, worries that an excessive tax on capital income would “risk killing the motor of accumulation.”  He means entrepreneurship. 

So what if it did?  Profit-driven innovation is not innovation for human need.  It prefers idle whim, if  backed by cash, to the most urgent necessity without.  If inequality is extreme, this disfigurement of priorities is demonstrably exacerbated.  We have people watching TV on iPhones, while others go hungry and homeless.

I begin to suspect that the entrepreneur, as conventionally conceived, is as useless as the capitalist – and I am convinced that the capitalist, qua capitalist, has no social value whatsoever. 

If all capital were socialized, if all decisions about how to allocate material resources were made by some democratically accountable process – David Schweickart’s model of “Economic Democracy” shows one way this could be done* – if no one, ever again, would ever be paid just for already owning stuff, do we really think that all innovation, all creativity, all progress would stop?  And suppose it did, or even just slowed dramatically, couldn’t that just be because people no longer saw any need for it?  And wouldn’t that be a good thing?  It would mean people thought things were good enough, and no more change was necessary.

I don’t think that’s likely.  People are curious, creative, inventive – even just for the sake of those qualities, in themselves, but especially if they see need.  People like to do good work.  They like to be productive.  They like to help.  They like to make a difference.  If someone saw a need, and the need was real, in a truly democratic world, they would convince others to go along, and resources would be made available, both material and in the form of people’s time and creative energy.

Desire for personal wealth is one possible human motivation.  The theory of the invisible hand shows that, in some cases, this motive may suffice for a greater social good.  The theory does not prove that it will always so suffice, nor that it is the only motivation that can do so.  And the theory certainly does not show that greed is the motivator best-suited to curing humanity’s ills.

*David Schweickart explains the system he calls “Economic Democracy” in his books Against Capitalism, and After Capitalism.

Natural that it be paid

Thomas Piketty, on page 423 of Capital in the 21st Century, says, “If capital plays a useful role in the process of production, it is natural that it should be paid.”  Actually, I think it is not. 

When I read those words of Piketty, back in October of 2014, I wrote in my notebook, “It is only the separation of property ownership from labor characteristic of capitalism (but not unique to capitalism) that makes this seem reasonable.  If all the wealth in the world were evenly distributed (but still privately owned), and everybody labored, then I would expect to use my own property in my work.  I would expect my labor to bear return, more than enough to cover any of my property used up in the production process (otherwise I am falling behind).  But I would not naturally think of paying myself a rent on my own property.  I would not demand a return on my capital, per se.  It is only the fact that some have not enough property, while others have more than they need, that makes paying for the use of capital seem ‘natural’”.

Rereading those words, I have a couple of additional thoughts. One is that there is no reason to assume that property should be privately owned, rather than somehow held in common.   Then, also, I question whether I would necessarily expect my labor to at least replace the capital “used” in it.  Certainly, this would not necessarily be true if there were other, intangible, benefits to the labor.  The real point is, I would expect my labor to bear fruit in some fashion (otherwise, I would not labor).  And I would use whatever material goods I had access to in pursuit of my ends.  But the idea that “my” capital should be “paid” is not necessarily intuitive.  Consider also that, outside of capitalism, saved property does not generally multiply.  Food stockpiled may be a hedge against starvation (as long as the stockpiles survive vermin and decay), stockpiles of fuel or clothing may guard against the cold, etc.  But if I do not add to them, eventually my stockpiles will be used up.  “My” fruit trees may naturally replenish their fruit, with little labor on my part.  But most kinds of “stuff” do not naturally multiply on their own.  I see no reason that it should be “natural” to assume that they would.

If you leave cultural bias aside, there is nothing more natural in an ethic that people should profit from “their” property than in an ethic that those who have more than they need should share with those who do not.  People trained to “classical” (i.e., capitalist) economics may be tempted to assert that the former is enforced by the “invisible hand” of self-interest, whereas the latter necessarily requires collective action to counter “natural” selfishness.  That reaction unjustly deprecates people’s very real impulse to selfless, generous social behavior, which exists alongside their impulse to self-interested greed.  But besides this, it denies the massive cultural edifice we have erected to the protection of private property, starting with definitions of same, complex and controversial, which we have created so that people may know what is and is not “their” property, because people do not necessarily spontaneously see this the same way.  Then there is almost the entire body of contract law, most of the police and court systems, arguably even much or most of the military. 

The resources that go into regulating the “natural” relationship of people to each other’s private property are enormous!  There is no obvious reason why the social structures required to support an ethos of sharing would be more unwieldy than those we have erected to support an ethos of greed.  And they would probably generate a far, far better world.

Government control

One “common sense” argument put forth against socialism, in the (limited) sense of direct government control over the economy, is that the government cannot be trusted to invest wisely.  They may keep non-viable enterprises going, for example, pouring in money drawn from better-performing portions of the economy, in order to win votes.

As a prima facie argument, this strikes me as silly.  After all, private capitalists cannot be trusted to invest wisely, either, and to the extent that they do, they invest for their own benefit, not ours, and the public weal follows as a side effect, if at all.  It’s not that I don’t believe in the existence of the “invisible hand”.  I just think its reach only extends so far.  Maintaining jobs in a money-losing business that produces a useful commodity may actually be a perfectly reasonable public investment in some circumstances, but not one that would ever appeal to the private capitalist.

On a more detailed, implementation-focused level, of course the anti-socialist objection is not entirely ridiculous.  If we have publicly managed investments, we do want them to be managed well, and managing investments well is not a trivially easy job.  We also need to protect ourselves from outright corruption.  Addressing these issues is partly a matter of management, of checks and balances, of trying to design a system as free as possible from irrelevant, systematic distortions.  But to get a well-balanced, robust plan of public investment that takes all direct and indirect costs and benefits into account, I think we would need a much more participatory planning process.   (Note that taking ALL direct and indirect costs and benefits into account is something that capitalist enterprise management NEVER does.)

Can we get a suitable democratic planning process within our current models of government?  I do not believe in the blanket statement, asserted by some on the left, that “you cannot tear down the master’s house using the master’s tools.”  But some of the master’s tools are in fact rather specifically engineered to serve the master’s purposes, and are not so readily adapted to the needs and purposes of the folk.  In my mind, our really-existing systems of representative government are examples of such tools.

Representative governments originated, in Europe, as a way for kings to appease the aristocracy, and eventually the richer bourgeoisie, without ceding too much central control.  Some constitutions, of course, were constructed as a conscious break with the rule of kings; however, the one such “revolutionary” constitution I know something about – our own in the U.S. – was consciously created to keep hoi polloi at arm’s length, and guarantee effective control by the richer classes.  Obviously, there have been modifications in these constitutions over the centuries, most of which (I think)  have been in the direction of greater democratization, but there still is a long way to go.  Most ordinary folks participate in democracy only by spending ten minutes every 2-4 years in voting  (if they even do that).  “Debate” takes place between politicians and pundits in the commercial news media (primarily), and is, to most people, at best a spectator sport.  People’s own discussions tend to take place amongst small groups of their own friends, and can influence the broader process of policy formulation only to the extent they happen to be queried through the passive (and eminently manipulable) process of polling. 

A truly democratic process would have people involved in interactive debate, with both themselves and opponents as participants; a debate taking place in a public forum that fed directly into the decision making process.  Listening to arguments pro and con, and being forced to make a meaningful decision afterwards, focuses the intelligence, I believe, like almost nothing else.

The punditry would assure us that people just don’t want to be that involved in their own government.  Maybe that’s only because they’ve never had the chance.

All the Money in the World

"If you had all the money in the world, it would be worthless." At the risk of ruining the appearance of sagacity, I will 'splain my thinking.

If "money" is defined as "gold" or "cattle" or something else which has use value as well as value as a medium of exchange, then the statement in my "status" would not be true. If you had all the gold or cattle in the world, it would be worth something. But money, qua money, has value only in its role as facilitating exchange in a functioning economy. If it became TOO concentrated, it could no longer fill this role. Most people having no money, they would have to acquire goods and services they didn't produce themselves in some other way (e.g., barter or rapine), or they would have to introduce some other medium of exchange in lieu of "money" (e.g., cigarettes in prison or post-war Europe), which of course would then technically be money, in which case the people who had concentrated the official "money" in their hands would no longer have "all the money in the world".

In any case, my thought experiment ran that IF you had "all the money in the world" its extreme scarcity would make it useless as medium of exchange, and it would no longer be "money". Of course, social disruption and change (of the political system, or economic system, or both) would happen long before that that time. The relevant questions, to our own radically unequal national and (even more) world societies are: "What kind of change?" and "When?"

The Root of All Evil

The root of capitalism is the principle that the possession of property entitles you to a claim on the fruits of someone else's labor.  There is no moral justification for this.  It is on a par with "might makes right" or "the Devil take the hindmost."  Capitalism is thus corrupt at its very core, whatever social benefits it might be deemed to have in any specific time and place.

The logic of capitalism only makes sense if there is an unequal distribution of wealth.  If everybody had equal wealth, there would be no sense in property employing labor; rather, we would tend to evolve a system where men and women collectively used their property and their labor in order to socially produce things (since social production is more efficient than individual production).  Equal distribution of wealth would tend toward a cooperative society, rather than a capitalistic one.

So capitalism arises only in an unequal society; its essential logic guarantees that.  The logic of the working-out of capitalism increases the initial inequality.  If you have only a small amount of property, it is very difficult to make it grow.  Generally, only your constant labor can keep it from shrinking.  If you have a large amount of property, however, it is very difficult to PREVENT it from growing.  The process of being paid for the use of your property returns the borrowed property plus a dividend, over and over again.  The more property you possess, the larger the dividend.  If the amount of property you possess is very large, it becomes virtually impossible to spend the dividend.  Even if your wealth is a bit smaller, only a modest amount of self-restraint is necessary for savings.  So the wealth of rich people grows and grows.  Yes, it is possible for a wealthy person to "go bust" because of bad investments.  But it doesn't happen very often.  And even a wealthy person who, with great fanfare, has  "gone bust",  generally has more residual wealth than a person who wasn't rich to begin with.  Squalor turns out to be relative.

Capitalism is inherently incompatible with democracy, because capitalism concentrates concentrations wealth, and wealth is inevitably power. There is no way to decouple the relationship of wealth and power.  Regulatory tinkering, such as campaign finance rules, can only act as an impediment, an inconvenience to the wealthy when they act to assert their money-power.  Capitalist countries, then, even with republican governmental forms, tend to devolve into de facto oligarchies.  This process can be resisted only by constant vigilance, to limit accumulation of wealth, to restrain the free political exercise of wealth, to balance people power against money power (unions and voter empowerment campaigns).  This vigilance is a lot of work.  When we have won some improvements, "we the people" tend to slack off.  The capitalists never do.  The differential rewards for them - the incentives - are just too immediate and great.  Thus, when times got somewhat better in the postwar period - at least in Europe, the U.S. and Canada - the people became complacent, and in the mid-1970s the capitalists, with their neoliberal/Reaganite/Thatcherite agenda, counter attacked.  And so, here we are today, with economic inequality and poverty at record levels, with a stagnant economy, but with many capitalists declaring "recovery" despite the fact that so many remain unemployed, many, many more underemployed, and almost all of us economically insecure.

So it turns out that not money, but private capital is the root of all evil, arising only in conditions of inequality, sustaining and promoting inequality, and undermining democracy.  Ultimately, if we want secure and just economies, we need to decouple property and income, by recognizing that all capital is socially constructed, and must be socially owned.