this post was submitted on 22 Sep 2023
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I want to first point out that the government being corruptible is not a problem that capitalism just solves. Almost all countries today are capitalist, and that doesn't prevent their governments from being totalitarian or corrupt or mismanaging their resources (Russia as an example).
The government still has all the power. But now there's a small group of people who can influence that power (let's not kid ourselves - mainly through corruption) to the detriment of everyone else.
A centrally managed economy is not the only alternative.
Workers of an organization can be the owners of that organization, rather than a few wealthy elites or the government. That way, they see the fruits of their labor rather than it being syphoned off. They have a say in how the organization is run, they can vote on who manages it and replace them when the way it's managed is bad for the workers.
Let's say ownership of a company automatically goes from its founders to all workers (this might well include the founders) when it reaches a certain size.
What would incentivize anyone to try to start a company in such an environment? Why not guarantee the founders a certain percentage of the profits even if they decide to stop working when the company changes ownership? Where does the capital come from to build a company in the first place? Government - hear me out. Taxes still exist, and continue to pay for things like infrastructure and healthcare and education and housing (these things are probably better managed by government than markets). And part of the tax revenue goes into an investment fund that is managed locally (think city, and/or county level). Citizens have direct voting power over what projects get financed with their taxes.
More pragmatically, a first (I would say reasonable) step would be to limit the amount of power an individual can get. Nobody needs a billion dollars to live, much less hundreds. Change the incentives: implement aggressive progressive taxes.
Heavily tax vacant houses and invest in affordable housing. Stop subsidizing the aviation industry and the fossil fuel industry and the meat industry and instead invest in healthcare and education and public transport and farmers.
Capitalism is a nightmare without regulation. Simply start by adding more (good) regulation and enforcing it consistently.
I was curious too so I did a quick search. Here's what I found:
https://www.researchgate.net/profile/Aaron-Buchko/publication/229592641_The_effects_of_employee_ownership_on_employee_attitudes_An_integrated_causal_model_and_path_analysis/links/5fc6ea9245851568d132333d/The-effects-of-employee-ownership-on-employee-attitudes-An-integrated-causal-model-and-path-analysis.pdf.
https://www.nber.org/system/files/working_papers/w5277/w5277.pdf
A cursory read suggests that ownership increases job satisfaction and commitment, though the correlation with job satisfaction is less strong. Overall a positive, perhaps mild effect on employee happiness and potentially positive effect on firm performance.
So your suspicion that ownership doesn't have a strong effect on employee happiness seems to bear out.
My main argument wasn't about individual employee satisfaction though. The point was that worker ownership of organizations gets rid of the owning class (effectively: if everyone is an owner, the class conflict dissolves) while keeping markets and competition, making central planning less relevant.
I was trying to suggest approaches that are neither radical nor utopian, and like you pointed out yourself, that we already employ effectively. The main proposed difference is scale: past a certain size, all companies would be worker owned.
I don't think markets are bad. Uncontrolled concentration of wealth is.
I'm skeptical of the claim that well-regulated capitalism is the best option, but depending on just how well-regulated it is, I agree that it can be a good option.
Though one might argue at that point whether you're really still talking about capitalism. For instance, the main characteristic I have an issue with is capital accumulation. If we regulate that one out I think we're going to get much better outcomes. Would the result still be considered capitalism?
The problem with just regulating capitalism while keeping the core mechanisms is that if wealth accumulation is still allowed to happen, resources will tend to concentrate in the hands of a few. This is not only inequitable and wasteful but more importantly it gives them power, which they will inevitably try to use to chip away at the regulations.
I mostly agree with your points on housing. On health I'll say that many of the issues you mention are either the result of or at least exacerbated by the influence of capital on government.
I think conflating capitalism with trade is wrong. Trade (and markets) existed long before modern capitalism. So did the concept of money.
I agree that the way you described it, it sounds very natural (not that that really is an argument, but whatever).
But the reality of capitalism is that the Y I'm buying from my profits is not some other commodity (as your example implies).
Y is someone else's business that also sells X. Or some completely unrelated business that sells Z. Or Y is a bribe to the mayor so that the city buys all its X from me, even though I don't have the best quality or price. Or it's a "donation" to the new mayor's campaign, leading him to remove the rule that one person can not own more than 3 homes in the city, so I can buy more houses and rent them out and make more profit.
It's capital I use to open X businesses in other cities. Maybe someone already sells X there and the local citizens quite like their service. They don't care for my X. But I have enough capital to start aggressively underselling, at a loss to myself. Now it doesn't matter that my service is worse, or that the people had some loyalty to the local X seller. I'm selling at half the price, it's a no-brainer to buy from me. I wait a few months and the local X seller is now out of business. I can raise my prices back up, nice. This works quite well, I'll repeat it in other cities. If someone catches on and complains, I'll just bribe the mayor to look the other way. Or I'll buy the local newspaper and have them paint me in a positive light.
I agree that blindly throwing money at a problem is not a good solution. Unfortunately this basic insight is often abused into an argument that spending on social programs shouldn't be increased at all, or worse should be decreased.
Well targeted social spending is actually profitable for the government. Healthy, housed, educated citizens produce a lot of value.
Agreed. But capitalism provides both the incentives and the means for corruption.
Why do you think it is that punishments are minor and sporadically enforced? Could it have something to do with people who have so much money that they can influence laws?
Do you think it's unreasonable to say, as a way to combat monopolies and corruption: "You can't have that much money. There's clearly no other use for such sums than gaining undue power. Past [insert specific net worth maximum], 100% of what you make will be taxed and/or distributed to your workers"?.
Yes, there are always incentives for corruption. But capitalism ads to and intensifies those incentives. People with unfathomable amounts of wealth have power over others. And they're not elected, you can't vote them out. They can fuck your life and there's really not much you can do about it.
Maybe the richest people don't "make anything" until the asset is sold, but their incredible net worth still gives them power. That's the issue at the end of the day.
Many critics of anti-capitalists seem to think workers are envious of the money that the ultra-wealthy have. I don't think this is the case.
It would perhaps make sense to be envious of millionaires who can afford anything their heart desires and don't have to work at a job they hate in order to be financially secure. I think for most people, that second part would already be more than enough. But to be envious of billionaires? I think this is not the norm. What billionaires have over millionaires is power. Most people don't want power, they just want a happy, meaningful life.
The problem with capitalism is that it facilitates and encourages those few that do want power. For most of them it would be more beneficial for society if they didn't get it.
The rich are already hiding their wealth. Trillions in offshore accounts suggests they don't need to be taxed aggressively in order to try to hoard their money like dragons.
Again, I was suggesting we don't let it get that far. What's the billion dollar asset you can't make liquid? A company? If it's that valuable you should simply not be allowed to own/control it alone. Really, if it's that big it should be broken up in the first place.
Where does the money go? To the government, same as it does now.
I'm not really sure I understand the hand greasing fear: the government gets the money anyway, it's in the law. What's the scenario here? Rich guy bribes IRS bureaucrat to not take his money? That will be a lot harder when the rich guy doesn't have billions and the IRS bureaucrat has enough money (and good enough social support) for a comfortable life.
I also think speculation isn't good and we should get rid of it. I really don't care about your $600 sneakers and neither should the government. But at a scale that matters (not hundreds but hundreds of thousands - if you're buying 1000 sneakers you're also not in the clear) you should not be allowed to buy things for the purpose of re-selling them, except if you're actually providing a service (like a supermarket, for example) - and even then I think there should be limits on how much you're allowed to mark up the products vs. what you paid for them. I think in general there should be a cap on margins. You shouldn't be able to ask for 10x what it cost you to make a product, especially if you make millions of them.
We're talking past each other a bit I think. I've been trying to convince you that having billionaires is bad and we should have a world where they don't exist. I'm not sure that I have, but now you seem mostly concerned about how we get there.
When I said the money goes to the government, I meant profits past a certain net worth. I concede that this is more complicated for unrealized gains. So here's a tentative solution: if you have unrealized gains that are worth more than the threshold, you're forced to realize the amount you're over at the current market price and your profit gets taxed. This would be the process when we're already in the new system, without billionaires.
If we're talking about the process of getting rid of billionaires: are you a billionaire? No? Do you have enough shares of Apple where you, perhaps with the cooperation of 5 other shareholders, outvote all other shareholders? Or can exercise strong pressure on the board/CEO? No? Then I don't think anyone should be coming for your shares.
But if the answer to one of those questions is yes, all your shares past the threshold are divided among the workers employed by Apple. If you're worried your remaining shares will go down in value in the future, just sell them now. Maybe you're even allowed to sell a certain percentage before your shares are redistributed.
For discussion's sake, my own idea of a decent threshold would be in the tens of millions. Perhaps $80M. It's arbitrary and I'm not particularly committed to that number. But you best believe I'm nowhere near worth that. And neither are 99.9% of people. It would of course be kept in line with inflation.
If we're still talking about the initial asset seizure with the sneakers. If I own 10% of a $1T company, I have a net worth of $100B. I'm not taxed 90% of that, $99_920_000_000 (99.92% in this case) worth of the stock is divided among the employees of that company. If I want, I can sell $80M worth of stock before that, but anything that brings my net worth (excluding my remaining stock) over $80M gets taxed at 100%.
If the stock doesn't appreciate in price and my net worth didn't increase in some other way, I'm not getting taxed again next year on my stock. This "getting taxed to 0" concept is a misdirection to try to confuse workers about progressive taxes. You get taxed until you're at the threshold (which is still much more than most people will ever have). You're not ending up poor, or even middle class.
I agree with your last paragraph. But both the corruptors and the corrupted have a strong incentive to keep the status quo. They always will, in capitalism.
And besides that, being extremely wealthy doesn't just give you political power through bribes. You probably have powerful friends, many of them probably owe you a favor or two. If you control a big company, you can even push governments around out in the open: if your state doesn't write/keep laws that make me more money, I'm going to close up shop in your state and leave 10% of your workforce unemployed over night. Unelected people simply shouldn't have that much power.