Challenging capitalism: a 12-step program

Over a year ago, I posted “What are the Game Changers?“, an attempt at sparking some strategic thinking for the broader left. Now that we’ve had a month of Occupation, building on the original Occupy Wall Street action, I’ve been wanting to put these ideas back on the table, so below I recycle much of that post and update it, plus adding some links for further reading.

Occupy has served notice to our elites (the top 1%) that people are not happy with an economic system that underpins enormous inequality of wealth and income, and is anchored in environmental destruction that is literally undermining the prospects for human civilization. But the movement is still one based on opposition rather than putting forward a common platform. So how do we move ahead to create a movement for change that will excite people about the world that could be, and put our ruling class on the defensive?

Another thing that has changed with the Occupy movement is that it names and challenges capitalism as an economic system, the manifestations of which are the root of most activist causes. Given the Spirit Level evidence on the health and social problems associated with inequality, a full-frontal assault on the causes of inequality is badly needed. And radical changes are also required that stop our economy from trashing the planet (or the planet will soon find its own ways of stopping us).

The idea behind “game changers” is that they fundamentally alter the balance of power between corporations (and compliant governments) and ordinary people – that is, between the top 1% and the rest of us. Game changers, almost by definition, need to be bold, and ordinary people need to see that such moves will improve their day-to-day lives. And for activists, it is about having a vision of the world we want, and a long game, like the Regina Manifesto, that leads us there (see Armine Yalnizyan’s recap of the large number of gains made).

Here’s a list of (and a short rationale for) a number of ideas that would fundamentally change the nature of the “game” rather than seeking modest improvements at the margins. They are rooted in challenging both the grotesque inequality of our society as well as a notion of achieving true sustainability:

Guaranteed income – The creation of a basic or guaranteed income at a sufficient level would greatly enhance the bargaining power of workers by removing the fear of destitution that forces people to take crappy jobs (or worse) in order to survive. It therefore puts upwards pressure on wages at the lower end of ladder. It might lead to a lower employment rate and reduced average hours of work, not necessarily a bad thing, but could also be a means by which society supports artists and other professions that are more marginal economically. A guaranteed income would have to be federal due to mobility issues, and probably would be best modeled on the OAS or CCTB with a long phase-out period, rather than a universal demogrant. This would also eliminate provincial welfare bureaucracies and the federal EI system, but importantly would consolidate all income support programs federally. This transfer would also be adjusted upwards to compensate for price changes arising from carbon taxes, higher energy prices and higher food prices, all of which are likely consequences of aggressive climate action plans. A good overview of the debate around a guaranteed income can be found here.

Sectoral bargaining – Unions have made some headway in the low-wage service sector, but small shops and high turnover confound organizing. Sectoral bargaining is an approach to unionizing the service sector that would give broad sectors (retail, restaurants, security, etc) a vote on whether to demand collective bargaining and if approved, different unions could then make their pitches on ability to represent those workers. This would quickly increase union density across the economy and lead to wage compression. For employers, it puts all work on a level playing field, so that there are no competitiveness issues, and wage increases would generally be passed on to consumers in the form of higher prices. Another related model to study is the German model of regional wage-setting institutions, which goes even deeper to include works councils (shop-level management practices that include workers in decision making) and co-determined boards (that give workers in large companies half the seats on the board).

Reigning in corporations – As documented by the Aurora Institute and the film, The Corporation, reforms to the way corporations are chartered are necessary. Currently, shareholders and executives benefit from limited liability (e.g. in the case BP oil spill, shareholders’ losses are limited to the price they paid for their shares), free speech (in advertising and politics), and deductions for entertainment and meals (boxes at hockey games, for example) – all of which should be eliminated or modified. A maximum level of executive compensation (related to the pay at the bottom of the company) could be established. Corporations also benefit from an expensive legal system that allows them to sue individuals (or intimidate by threat of lawsuit) for all manner of things. Corporations can be a useful organization form but they should have to prove their benefit to society, with sunsets on their corporate charters and a process for renewal. And to the extent that their useful economic activities could be performed by public enterprises, worker-owned enterprises or cooperatives, so much the better (it may be that coops resonate more with the Occupy movement than public enerprise).

Abolish intellectual property – Copyright and patents create monopolies that raise prices for consumers. Historically, laws have tried to strike a balance between the right of creators to benefit economically from their work and the rights of society to benefit from that work (which is inevitably the product of a whole society). It is not obvious at all that artists and inventors only create in the presence of strong IP laws. And in a world of large entertainment and pharmaceutical corporations with massive advertising budgets and huge upfront costs of production, this logic gets put on its head anyway. The result is that IP as we know it is a huge contributor the rising share of income going to the very top of the income distribution. Economist David Levine argues for going the opposite way: make Canada an IP haven where people from around the world can come specifically to innovate on the work of others, meaning this could create a lot of interesting tech jobs in Canada. [Note: I’ve had some pushback from low-income writers, who get a decent chunk of income from royalty payments; I’m willing to reconsider some provisions for small artists but let’s keep the big picture in mind.]

Reclaim the new “Commanding Heights” – Key sectors of the economy should be brought into the public sector through aggressive regulation, nationalization or creation of public competitors. In telecommunications, for example, Canada has the most expensive prices in the advanced countries due to the oligopolistic practices of a handful of large telecom companies. This could be remediedby regulating prices, nationalizing the “pipes” or using the CBC to create a low-cost public competitor that would force companies to reduce their massive profit margins. Similar cases could be made for banking, oil and gas, pharmaceutical drugs, forestry, mining – although the specific form and strategy would differ depending on the specifics of the industry. But we could also start small with a populist case for nationalizing the much-hated Ticketmaster.

Localize food – New arrangements that promote enhanced local food supplies, with sustainable agricultural practices would help in both mitigation of greenhouse gas emissions and adaptation to peak oil and climate change. This should build on farmers’ markets, buyers’ coops and community shared agriculture projects to include broad-based procurement of local food by public sector (schools, universities, hospitals, prisons, social housing units, BC Ferries, etc) combined with the extension of supply management to fruits, vegetables and perhaps other areas. This would be a benefit to farmers in terms of higher incomes, and, if well-designed, would end hunger and improve nutrition if in combination with an attack on fast food and convenience store junk (i.e. make unhealthy processed food the new tobacco).

Expand the scope of the existing public sector – This is similar to reclaiming the commanding heights but builds on areas where the public sector already has a strong presence. This would include developing an integrated system of early learning and care with the K-12 system, community centres and libraries (“hubs” of local public services with hours that extend well beyond the standard business day). It would expand the umbrella of public health care to dental care, vision care, physiotherapy and other preventative health services. It would bring natural gas distribution back into the public realm to re-create (in the case of BC) an integrated public utility for managing energy and demand-side management programs. It would create a consolidated Crown corporation to manage recycling in BC to close the loop on waste. A public development corporation, perhaps in combination with beefed up non-profits, could create and operate new affordable housing stock, and do so in a way that builds “complete communities”, where walking, biking and public transit cover most trips people need to make.

Radical democracy – 19th century democratic institutions are not adequately meeting the needs of 21st century citizens. Redefining democracy could include deliberative processes, referenda, participatory budgeting, lower the voting age to 16, campaign finance reform, etc (Judy Rebick’s book, Imagine Democracy, is a good starting point). Like the New Politics Initiative of 2001, this is about asserting a new way of doing politics, rather than just a suite of policies. The new democratic regime must also create new powers for municipal governments to act in the interests of local citizens.

Public money creation – There is no reason why money creation (i.e. the expansion of credit) should be the sole domain of the chartered banks. The status quo means money is created to support enterprises that will be profitable (but not necessarily socially or environmentally beneficial), upon which taxes must be levied in order to support public services. Delinking public services from capitalism would mean creation of money would follow democratic priorities. The potential for inflation would be a concern, so implementation would require a phase-in period. But it is worth noting that at the height of the boom in 2007, new money created through chartered banks was about $200 billion (an expansion of 10%, and equivalent to 12% of aggregate demand that year, but consistent with low inflation), an amount about the size of the total federal budget. The 2008-09 financial crisis revived the idea of money creation (rather than bond sales) to finance public sector deficits, and while the crisis has died down, looming deleveraging could make make public money creation a necessity.

Tax bads – Public money creation need not preclude good tax measures that alleviate other social and environmental ills. These include higher top marginal income tax rates to reduce inequality, Robin Hood taxes to reduce financial speculation, carbon taxes to reduce greenhouse gases, inheritance taxes to deter dynasties, and taxes on junk food, alcohol and tobacco. On the environmental side these taxes are instrumental to achieving prices that reflect the true costs of extraction, processing, distribution and consumption, and a shift towards closed-loop manufacturing systems.

Legalize pot and most other drugs – Perhaps this is not a substantive game-changer but this issue would allow the left to reclaim some space on the civil liberties side of the fence (and have some fun, too). It makes little sense to continue with prohibition, a system that fosters organized crime (which causes more harm than any health-related impacts of drugs), and criminalizes millions of consumers who are not doing any harm to others. Prohibition is a crusade that does not work in spite of massive public resources dedicated to it. Indeed, legalization would shine daylight on underground activities, create new work in Amsterdam-style “coffee shops”, and provide another source of tax revenue.

Carbon quotas – This is an alternative approach to carbon pricing (carbon taxes) that would allocate to households (or individuals within a household) a share of the annual (and shrinking each year) carbon budget. Because high-income families lead much more carbon intensive lifestyles than low income families, they would have to buy quota from households that had an excess – that is, the system is inherently redistributive, while providing greater certainty about GHG reductions than a carbon tax.

That’s my 12-step program, for now anyway. I’ve been more persuaded by arguments for greater cooperative institutions over the past year as a means of carving out economic space away from capitalist enterprise. But overall, these seem to form a good basis for challenging capitalism. Ultimately, I’m not arguing for eradicating capitalism, just shrinking it back to a more managable size. We like many of the consumption goods and services produced by private enterprise, like laptops and smart phones, and I see no reason to prevent access to these things as long as they meet stringent health, labour and environmental standards, and do not perversely concentrate income at the top. But for most of the core goods and services that meet basic needs, we need to Occupy the Economy.

17 comments

  • Christopher Albertyn

    Very good, and a statutory % link between the top and bottom earner in any corporation – you raise the top rate, the bottom rate goes up too; and restore the divide between commercial and investment banking

  • I good post, but we have a long way to go to convince most people these ideas aren’t totally insane. The NDP can barely get away with suggesting that income tax be increased for people with very high income.

    On local food, I don’t know why people have latched on to food transportation as one of the most important things to fight climate change, where there are many other larger and less useful sources. Why not fight all the doorless fridges and freezers in grocery stores?

    Carbon quotas would require putting together a huge new infrastructure to support tracking, trading and using carbon credits. It would probably result in more effort being put in to making a quick buck trading them then there would be put into reducing emissions. It would be like how the world of finance puts more effort into trading securities then financing new ideas. A carbon tax set high enough to encourage the necessary reduction and all the proceeds returned to Canadians as taxable income would be much more straightforward.

  • Finance, Finance, Finance. It is the investment function we really need to get hold of.

  • 13. corporate financial transparency: abolish bank secrecy for all transactions or holding over some threshhold amount. Transparancy enables journalists, NGOs and tax officials to scrutinize the financial doings and payings of corporations.

  • A good discussion list. A couple of comments:

    It’s worth considering revoking the status of corporations as “persons”, to remove or limit the veil that hides the directors and shareholders.

    Perhaps as well a more pro-active stance of adding legislated social responsibility for corporations – to go with with existing fiduciary responsibility to shareholders – would help.

    Be cautious with broad referenda and other forms of direct democracy – look at the California example. Perhaps better to support localization initiatives in general.

    Finally, FWIW, my short list of broad aims (and therefore a broad metric) for changes:

    A new order should encompass the following goals:
    – moderate lifestyles
    – a sustainable economy
    – an egalitarian society

    – Henrik

  • Great feedback, y’all.

    I agree about finance. That merits its own major point in the plan: Tobin taxes on regular transactions and speculation taxes on investments under a year; regulating derivatives.

    And perhaps cooperatives and credit unions merit a own distinct point, too, now that I reflect on it.

    I like the top income to bottom income idea, but not sure it alone merits a point. A long list of inequality reducing measures could be made, but not sure they really challenge capitalism as we know it. That said, legalizing drugs probably does not really do that either, so maybe it needs to be shifted …

    Darwin, local food is not about food miles and GHGs (the biggest culprits there is chemical fertilizers and pesticides, and over-consumption of beef). Instead it is about breaking out of food reliance on California and Mexico, which are gonna dry up, and a shift away from corporate agriculture altogether.

  • A couple of demands seem out of place.

    BASIC INCOME

    The first plank fails to address

    1) Structural and cyclical unemployment
    2) Desire to work and avoid the stigma of not doing something
    3) Inevitable downward pressure on wages as a result of implementation
    4) Privatization of the social wage (welfare being substituted, as your own article stated)
    5) Class origins of political advocacy and beneficiaries (working-class vs. lumpen)

    COLLECTIVE BARGAINING

    Sectoral bargaining doesn’t go far enough to address the bargaining power of private-sector workers. Instead, there should be wholesale absorption of all private-sector collective bargaining representation into free and universal legal services by independent government agencies acting in good faith and subjecting their employees to full-time compensation being at or slightly lower than the median equivalent for professional and other skilled workers.

    CORPORATIONS

    I don’t see anything wrong with limited liability. This is in contrast to corporate personhood, which should be scrapped.

    COOPERATIVES

    Spontaneous and organized occupations of workplaces, particularly those under closure threat, should be backed by pro-workplace eminent domain. Other progressive applications of eminent domain would be included in the non-selective encouragement of, usage of eminent domain for, and unconditional economic assistance (both technical and financial) for, pre-cooperative worker buyouts of existing enterprises and enterprise operations.

    COMMANDING HEIGHTS AND MONEY CREATION

    We don’t have time to re-examine specific forms in some cases. In the case of the entire financial services sector, there shouldn’t even be credit unions, but rather one huge publicly owned monopoly. Why so? Credit unions still imply no public management over M0, M1, M2, and the entire money supply generally.

    On the question of land, public ownership and rental tenure over all land, preferrably arising out of earlier applications of economic rent in land via land value taxation. I’d go further to say that a massive land value tax should be more than adequate to replace indirect and other regressive taxation based on labour (any payroll taxes) and on consumer goods and services (like GST), and also income taxation for at least low-income workers.

    RADICAL DEMOCRACY

    You forgot replacing elections with random sortition. Other than that, you also forgot the Paris Commune on public officials’ compensation and their full recallability.

  • First legalize pot. Then get hold of the investment function. In that order. The investment function will be much more fun that way.

  • Yah but if you legalize pot it won’t be as fun to grow.

  • forget finance, pot and the environment. What we really need to liberate is Hollywood and the media industry.There is nothing more powerful than the thousands of channels that pour the concrete of social construction down the throat of the global village than ownership of the content in the hands of a few.

    Nothing touches this power- nothing.

  • Actually, much as I like all these ideas, I don’t see these as “game-changers” — or even as particularly bold. How about these as a couple of examples of real game-changers:

    The property rights in newly produced goods belong exclusively and equally to those whose labour produced the goods.

    All persons not in management positions have property rights in their jobs. They can sell their jobs or be bought out, but being “fired” or “laid off” constitutes expropriation.

    Property rights in housing belong to the occupant(s).

    In short, unless we change how property rights are allocated, we aren’t really changing anything. Capitalist theory is built on the assumption that property rights are “complete” — that there are no externalities. Capitalist reality is about generating rents by producing externalities — I get the benefits, you get the costs. And this reality is legally encoded in property law.

  • The first part on goods for some reason excludes services, as in “property rights in newly produced goods and services.”

    I have issues with the second part, the one about jobs. I myself prefer a fully socialized labour market whereby the state or polity is the sole de jure employer of all workers in society, contracting out all labour services to the private sector on the basis of comprehensive worker protections. This directly addresses the issues of wage theft, casual labour, pay equity, and later on of public enterprises hoarding labour.

    I agree with you on housing; there should be resident association guarantees beyond the privilege of homeowners and towards the formation of separate tenant associations, and all residential writs of possession and eviction for the benefit of private parties should be limited to cases of tenant neglect.

  • Chris November 20, 2011, 2:54 pm:
    “The property rights in newly produced goods belong exclusively and equally to those whose labour produced the goods.”

    That’s labor fetishism of a problematic kind close to liberatarian/propertarian thinking. It implies that those incapable of producing goods, like the severely disabled, deserve no economic resources. That would be unjust. We don’t need MORE claims of exclusive rights to resources and desert talk. On the contrary, we need to call the bluff of the upper tier talk of their own productivity (“productive class” and so on) by explaining the fundamentally SHARED AND COLLECTIVE nature of production in a complex modern society. No one produces anything alone. Every human being born has an unconditional right to a fair share of the goods.

  • Good discussion points. We will have to have something solid to offer people should the economy tank especially in 2013 when the interest rates are slated to increase. People need will need jobs and we’ll need a political/economic system that is more egalitarian and considerate of the environment and resource management.

  • Interesting list, and there’s a lot in there, but I CANNOT believe that you suggest having supply management for fruits and vegetables..

    Really? Create a cartel on the producer side for those kinds of products?

    I was also a bit disappointed that there wasn’t enough use of market mechanisms in your discussion.

    My one overarching comment is that it tends towards the statist model (i.e. public ownership of key sectors) and union model (your arguments around unions) when both of these institutions are not held in high esteem.

    I was surprised when reading Chris Hedges death of the liberal class, how little respect for unions there is even among those who might benefits from their protection.

    Those are my two cents.

  • The excessively high esteem that people have in the market is how we got in this mess.

  • Well, it is true that the right loves to hate marketing boards, the fact of the matter is they do two things, at least in BC in the egg, poultry and dairy supply managed sectors: 1) provide higher and decent incomes to farmers who tend to work long hours for meagre pay; and 2) make BC virtually self-sufficient in those areas, an important feature as we head into worsening climate change. This means higher prices and we’d have to factor that into income redistribution policy, but a price worth paying IMHO.

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