Welcome back.
First, I want to give a hint to everybody. If you like to study a subject, but you don´t have enough time (and money) to do it, a simple equipment upgrade can make wonders. I recently bought a popular e-book reader, converted some of the PDFs of my extensive
marksoc bibliography and uploaded them to the little machine. The change in my disposition to read and the rate at which I can comment on articles and write posts based on them is nothing short of astonishing. Do not attempt to read articles in your computer. You can print the articles (bad for nature, expensive and a pain in the head when you want to copy your notes into an usable digital format), or you go the e-book reader path. Notes made to articles this way cannot yet be shared with other readers in the way is done in
Google Docs, but it is only a matter of time until e-book readers can properly manage readable PDFs in their native format, or export documents with their remarks in the right place, including highlighting and notes, and from there to a full collaborative effort there is only one small step.
Second, from now on I will add a link to a
Glossary and
Bibliography post at the end of each new entry, so those of you new to the concepts in this blog can catch up, and the rest can have a long and nice list of articles to peruse and help with this project.
Third, today´s post! The theme of the current post is a central element in David Schweickart´s model of
woc-marksoc that I previously misunderstood. A
marksoc model consist in three parts: a free market, more democratic companies, and a more democratic way of allocating investment. The first one is implied in
marksoc (is part of the name). The second one is the core of the
woc-marksoc model, since cooperatives are expected to be more democratic than their capitalist counterpart. The
third point, however, can be achieved in varied ways, ranging from social planning to private profit-driven investment. It was my view that in
marksoc, cooperatives would be financed by banks that would constitute cooperatives in themselves, which would be guided by profit to make the best possible choices between the companies (existing or future) competing for its funds. However, according to Schweickart this is not the case.
Schweickart sustains that one of the main problems of capitalism is the dependence on "investors confidence". Capitalism needs continuous growth to work. There needs to be an increase in consumption to convince private investors that there will be profits to be made at the end of the road. Any bumps can be translated by some into a pessimistic outlook, and "their pessimism becomes a self-fulfilling prophesy" (Schweickart, 2008). Then, decreasing investment means higher unemployment, which it means less aggregated demand, and there we are, trapped in a downward spiral (as an example, the current situation in the United States described
here). Now, in
woc-marksoc we have a built-in corset for those people that own companies: they work there too, and they will be averse to act against their own workplace, so if they are not confident enough in the future to re-invest their earnings into new technology or an expansion, they will nevertheless look to maintain themselves occupied because they are the people on the line of fire. I am sure that most folks do not like to commit economic "suicide".
But what about outside investors in
marksoc? Namely, those that can make the initial "investment" in the form of a loan or grant? If those investors are
cooperative banks, they must also be reticent to stop all their activity, because they must keep the bank running to obtain profits. Closing the bank to do other stuff with the money would not work, since ownership is distributed between every employee involved. But we cannot ensure that cooperative banks will use its funds to make loans to cooperative companies, instead of choosing other investment paths that could generate higher earnings. Unless we make them do exactly that through regulation, of course.
The solution that Schweickart provides is to bring financial markets "
under conscious collective control". How does he plans to do that? Exacting a tax on cooperative companies, which the State will later redistribute to
social banks based on the population of each region of a country (
per-capita basis). I let him to explain here how this redistribution system would work:
These
funds are then distributed to local and regional investment banks —public
banks—charged with loaning them out to individuals and enterprises needing
funds to start up, upgrade, or expand business operations. Loan applications
are judged in terms of projected profitability, employment creation, and, if
the community so desires, environment enhancement.
Loan
officers are public officials, democratically accountable, charged with
effectively allocating the funds entrusted to them. If their loan portfolios
perform poorly, they can be discharged.
In this way, investment would be divorced from these harmful "animal spirits" that cannot agree in taking the economy out of the dump when the free market mechanism fails. But can we still talk about
market when investment is not guided by companies (banks) making independent decisions?
Let´s say that job creation is a decisive element to decide the continuity of a loan officer. Should this officer benefit companies creating lots of low-paying jobs over companies creating fewer high-quality jobs? Who decides if an investment portfolio has performed poorly? The State, the citizens of the region, or the employees of the particular bank? And what does
poorly means in this context?
There are many details to work on:
first, we have the big choice between cooperative banks and "social banks",
then the issue of the system of redistribution of funds gained through taxes over the capital stock of cooperative companies, and
finally the criteria utilized to distribute these loans between producer cooperatives (which, again, in Schweickart´s system are not like regular loans, more about this in my next post). Personally, I prefer a
woc-marksoc system comprised exclusively of companies
owned by their own workers, guided by their own interests (always under the law), with supporting government agencies that can bankroll investment in certain areas according to motives other than profits. It seems that I will have a hard time letting go of my
free market approach to the issue.
I will stop here, since the article I used as a base doesn't get much further. In my next post I will be exploring ideas about investment under the guidance of an article written by Bruno Jossa that lingers on this very issue (see Bibliography below). Please add any ideas that you can have about this, the comments box is below for you to use it. See you next time (soon).
Bibliography
JOSSA, Bruno (2004): "Book Review: Schweickart and Economic Democracy", Review of Radical Political Economics (36), pp. 546-561.
SCHWEICKART, David (2008): "Is Sustainable Capitalism Possible?", Beijing Forum: The Harmony of Civilizations and Prosperity for All -The Universal Value and the Development Trend of Civilization.
For the accumulated Bibliography and the Glossary please click here
