Thursday, November 28, 2013

Let's abolish capitalism

Does the common good arise from selfishness?

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” (Adam Smith, first scientific economist, 250 years ago).   
Adam Smith expected that an “invisible hand” would lead the individual selfishness to the welfare of the greatest number of people possible.
This is the basis of the capitalistic system. Also called free market economy, it is a system that tries to maximize the profits and competition.
It encourages egoism, greed and envy.
Those traits are opposed to the values normally acceptable in our daily personal relations, like trust, sincerity and mutual appreciation.
This contradiction divides us deeply as individuals and as a society. Should we be cooperative and help the others? Or should we only care for ourselves and don’t give a damn about the others?
If we pursue our own welfare as a supreme good, then it will be common practice for some to use the others as means for our own ends.

Does a “free” market exist?

It will be free if any economic agent could withdraw unharmed from any economic transaction. But many cannot do so, because they are to a great extent dependent on others. An employer can withdraw from a labour contract more easily than an employee, a lender in a loan contract, more easily than the borrower, etc.

Three common myths about capitalism

1.  There is no alternative to the market economy
2.  Any other system will lead us to poverty or, even worse, communism.
3.  Market economy is the most productive system as history shows; competition is inherent to the nature of the human being.
No economist has demonstrated there is no alternative, ever. Actually cooperation is a better solution than competition. True motivation is intrinsic rather than extrinsic, like it is competition. Best results are achieved when people are enthusiastic about an idea, and they are full of energy.
In competition, because goods are scarce, there are lots of losers. If you set your own personal value in being better than the others, you depend on the others being in a worse position, this is sickening!

The ten crisis of capitalism

1.  Concentration and abuse of power
2.  Disruption of competition and creation of cartels
3.  Manoeuvres to attract capital
4.  Prices often reflect power relations
5.  Inequality and fear
6.  Famines
7.  Destruction of the environment
8.  Consumerism
9.  Deterioration of values
10.                  Suppression of democracy

Proposal: Economy for the Common Good

1.   Polarity reversal in the incentive framework

The new objective of companies is to produce the maximum contribution to the common good, not to make the maximum profit.

2.   Redefine economic success

Today economic success is measured as GDP in the case of a country and financial profit in the case of companies. Both are monetary indicators.
Does GDP indicate if, in a country:
-      are they at war or in peace?
-      is there a dictatorship or a democracy?
-      is income is fairly distributed?
Does financial profit indicate if a company:
-      creates of destroys employment?
-      job quality increases or diminishes?
-      profits are fairly allocated?
-      takes care of the environment?
Financial profit offers information of how a company serves itself, not how it serves the society.
There may be a nexus between profit and common good but it is not necessarily so. A financial profit may exist together with job destruction, sexual discrimination and destruction of the environment.
The ECG will measure success by the social dividend, a non monetary indicator.

3.   The balance sheet of the common good

Will measure what is laid out in the majority of constitutions:
-      human dignity
-      solidarity
-      justice
-      environmental sustainability, and
-      democracy
The balance of the common good measures how the stakeholders (suppliers, customers, lenders, borrowers, employees, society) live these basic values.
In the intersections you find the indicators of common good
-      the usefulness of goods and services
-      labour conditions
-      if production is ecological
-      how clients are treated
-      solidarity with other businesses
-      sharing of profits
-      remuneration of women
-      if decisions are taken democratically
The result will be the assignment of “points”

4.   Reward the search of the common good

The more points on the common good a company gets the more legal advantages it should enjoy. Like:
-      VAT reduction up to 100%
-      Lower tariffs
-      Bank credits in favourable conditions
-      Priority in public biddings
-      Cooperation with public universities
-      Outright aid

 5.   Permitted uses of the surpluses

-      Investments
-      Provision for losses
-      Capital increase
-      Distribution to stakeholders
-      Loans to stakeholders
Capital yields should only benefit those who made them possible with their work. Only persons working in the company should participate in profits in an equitable manner.

6.   Optimum size

Growth in nature is only a means to reach the optimum size. So should it be in the world of enterprises.

7.   Structural cooperation

The ECG is a market economy and is based on private companies and money. So competition is possible, but the more companies cooperate among themselves, the better their balance sheet of the common good will be and their survival possibilities. From the present win-loose system, we’ll go to a win-win system.

8.   Cooperative management of markets

Economy of the common good is a market economy and markets fluctuate. If demand in a sector drops or if there is a sudden surge of the supply, how will it manage this?
In the actual win-lose system, prices will drop and companies will go bankrupt. In the ECG, the affected companies will convoke a “crisis committee” to seek solutions, like:
-      reduce working hours;
-      reduce jobs and retrain workers
-      reduce business and specialize in other fields
-      close business and find jobs for redundant workers
-      merge businesses
-      strive to find other solutions

 9.   Sabbaticals

All workers will enjoy a sabbatical every 10 years during which they will perceive the minimum salary.

10.                    Solidarity income


2/3 of the minimum salary in case of emergency

No comments:

Post a Comment