Tuesday, April 19, 2011

The Essential Social Problem Is the Economic System

The right wing and its parties want to cut back social programs and benefits. Big corporations want to lower their taxes and make sure that government money is funneled to them, eliminating competition for funds from social programs and benefits. Business wants its regulation removed, it wants de-regulation so that it can operate with impunity.

The conservatives want austerity for the people, they do not care….so they offer to us the solution below:

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Putting citizens on a bed of nails

At the same time, Liberals and socialists have run out of solutions and grasping for answers they are using their final trick:

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Levitation of the economy………..which is not likely to happen.

But in all seriousness they are not able to solve the fundamental economic problems with their limited ideological toolbox.

We are living in a significant and critical period, where paradigms of the left and right are being challenged, where the right is advancing but History is going backwards. Meanwhile the left flounders and new thinking is needed. Millions of working people are being confused and misdirected by conservative ideas and are attacking their own economic interests against “big government and high taxes”, becoming in essence foot soldiers for big corporations.

Today activists react by defending these institutions with protests and strikes, pressure on politicians and aggressive electoral campaigns, they have no choice, they cannot let hard won gains for working people be destroyed.

But the problem is that in the long run this reaction does not attack the core problem, it merely, if it is successful or partly successful, restrains the attack and gives temporary respite and protection. The quintessential issue of economic systems is left untouched.

In a capitalist system, the regulation of firms is necessary, social benefits are necessary, job programs for the poor and unemployed are necessary, national health care is necessary, retirement benefits are necessary, defense of union rights is necessary, aid to communities is necessary and much more. Why? Because capitalism has historically shown that in its quest for profit it has not produced any of these things freely. These gains were won through hard struggle over many generations.

The right says that the problem is regulation, restriction, government intervention and government takeover. However, there is NO historical example where deregulated capitalism created universal healthcare coverage or decent pensions for ordinary people. Even in the US before the crash when the US was at its most robust economically under a Republican administration, in 2007 15.3% of its citizens were without healthcare. While another 44 million were enrolled in Medicare for retirees and 40 million in Medicaid for low income individuals. This puts the total percentage of people needing government healthcare assistance at about 42%!

The world has never seen this promised land of deregulation and never will because the race for maximum profit does not pause to help working people or the poor. The invisible hand of Adam Smith fills its own pockets not ours. The benevolent corporation exists but it is rare, it is an exception, a lucky player with a new technology in an industry with an exceptionally high rate of profit.

Though capitalism is showing signs of recovery from the 2008 recession and financial collapse, we can say that capitalism is spiritually dead. The right tells us, “Oh no, that was regulated capitalism that died, not de-regulated capitalism.” But we must pause and remind them that the mortgage crisis was caused NOT by regulation but by de-regulation of the industry. Banks gave out house loans to people without jobs and then sold those mortgages as mortgage backed securities around the world. If ever there was a need for regulation this is a prime historical example.

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What is the true wealth of nations?

While the right attacks the very concept of government, use of a government is the only way that working people and the poor can get their needs met. They must rely on the government because they certainly cannot rely on business, for they are the problem in the first place. Through their self organization and their support of politicians and parties, ordinary people try to get some state power to meet their needs.

These battles, this activism, their striving to use government in its own interests is absolutely necessary and just. But this is not an entire strategy for working people because in the end these efforts leave the capitalist system intact! The state is used to contain corporations and its system but no alteration is made to the system, the core of capitalism is untouched. The game remains the same while what we need is a game-changer.

Because of this there is no decisive victory, there is always the threat of reversal and retreat. The continuing and eternal battle makes us ever alert, and gives us purpose but give us no long run solution. We are caught in an historical standoff.

If the strategy based upon the state is enlarged by activists then the state takes over the economic system, this is Socialism, of course. But the 20th century has shown that socialism in either its soft form (social democratic-liberal) and hard form (communism) does not function well. In both cases socialism has led to economic stagnation, though its intentions were not this at all -- but to help the people and create a new order that was compassionate and Human.

In summary, state based strategies do not work well because:

1] Stress on the state leads to a standing civil war that cannot be won in a decisive way because the economic system lies outside the government and continually assaults the people

2] Socialization of business does not work because the state cannot run businesses. Healthy economics requires millions making decisions and running firms. This results in innovation and competition. Politicians and bureaucrats no nothing of managing companies, and certainly cannot make national plans on their own.

3] Also, bureaucracy is an ever present tendency in government, it begins to sap resources and energy and results in higher taxes.

Socialist economics does not work in general though aspects of it do such as municipal utilities.

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The end of the rigid state controlled economy

The demise of socialism means we need to look at a new economic system, a system that is market driven but not driven by today’s singular value and goal: profit.

This might be called a Metric Market Economy or a Diverse Economy because it has a diverse range of measures and targets. Profit would only be one goal among many. New metrics for performance would include product quality, customer service, environmental impact on a local community, investment in community, programs for diversity in the workplace, limitations on executive compensation and much more.

Firms in this kind of economy would have to perform in all of these new measures to get investors and customers for its products and to have communities want them as residents.

Fundamentally, a metric market economy or diverse economy would have values that are Human.  A new type of firm would try to satisfy all Human needs and not simply the accumulation of money.

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 Created by: Fazal Ahmad

Secondly, a metric business would be concerned with Nature, the environment, animals. This new kind of economic system would be concerned with all living things, Human, plant, animal and more.

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A metric economy is flexible and creative, it offers a diversity of tools needed and it has a rich range of metrics for all issues.

Capitalism provides only one tool, the only one it knows which is profit and money, and this is its quintessential problem.

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A larger economic tool box

The new economic system provides:

·         Leagues which are organizations for consumers, investors, communities, and many other social groups who can participate in rating companies and their products

·         A variety of democratic ownership forms from coops to democratic corporations

·         Support for small business and the entrepreneur

·         A Diverse market of competition which produces innovation and lower prices

·         New stock markets, investment banks and other financial institutions which set firms up on a metric basis and create metric stocks and bonds

·         A new way of defining “money” which is now old money plus new metrics combined together

·         New MBAs that think in the new terms of this new metric system, optimizing its targets and its new financial tools

·         A new measure of national economic performance called a GMP, Gross Metric Product, rather than the outdated GDP measure

·         A new arrangement of power where consumers, investors, employees and communities have direct participation in the economy when before capitalism locked them out

·         A new citizen  arises who is all things -- worker, owner, investor, consumer, resident of a community and more

At the same time, this new economy does not see itself as only power or institution in society. A metric economy is aware of its limits, so it shares its leading place with other entities, with other institutions such as government, education, healthcare etc. The metric market economy understands that we have multiple values and views in society, thus must have multiple institutions and powers. Economics while trying to create its own diverse of values is still only one part of a larger cultural diverse.

This new economy can and must be built through two paths at the same time:

1] In the private sphere, entrepreneurs, activists, MBAs and others create new businesses, found leagues and build new stock exchanges and investment banks

2] Government action in the form of legislation can require metric reporting by companies. Companies can be encouraged to go metric through tax breaks, grants and access to government contracts. Laws can assert the rights of investors and employees aiming for democracy in companies.

Over time, with these two activities, the role of the state as bulwark against capitalism declines because the regulation or guidance of the system is now done internally and not externally. Companies will behave more ethically in general, wages and benefits will increase, exorbitant compensation for executives will cease. Firms will do their part to restore the environment, hire minorities and try to reduce unemployment in a community and much more

The State will begin to focus on its most essential role: Aiding in formation of a national economic plan, regulation of business for the most serious infractions, the tasks of fiscal policy central banking, and become a forum for citizen input.

But very importantly, the government continues its role in aiding the less fortunate, in job programs, public education, national healthcare and more. Metric businesses cannot take on all functions of a government, still many issues are best handled by a State. Programs to reduce bureaucracy and waste can be established.

The Metric Market Economy or Diverse Economy is the best solution to the twin failures that we face today. It gets us out of both boxes of history and give us a fresh and creative start with endless possibilities.

Cage Innoye

For more on a metric market economy please see these:

·         The booklet, For a New Economics,  https://sites.google.com/site/axxiadnewsandideas/ebook-download-p-11

·         And specific articles on the Axxiad News site such as:
        -Will There be a Recovery from Capitalism?
-5 Themes of a “Metric Market Economy” or “Diverse Economy”
-What is Economic Power?
-Wanted: New MBAs, New Entrepreneurs, New Economists
-Create Money!

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