Democratizing ownership of the means of production
“I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.” — Ronald Reagan
An increasing number of our most esteemed economists are proposing the above as the best cure for the pernicious and persistent flaws of corporate capitalism. From its very beginning in the early 1600s when Amsterdam’s United East India Co. formed a modern corporation to spread the risk of spice trade journeys, capitalism has fostered the unscrupulous short-sightedness that has continued to plague us.
In fact, it was only a few years after that first corporation was born that financial scandals began to rock Amsterdam. And these were soon followed by other get-rich schemes, and then the famous tulip bubble.
Concerted efforts have been made over many years to use government regulation, including anti-monopoly laws, to make capitalism more friendly to society at large. But, even when these efforts have succeeded for a time, as did the New Deal, the moneyed have finally managed to use their influence to defeat them. The past 30 years in the U.S. have demonstrated this once again.
The capitalists seek only to maximize short-term profit and care little about the consequences of their activities. The consequences include environmental destruction, ever-increasing economic inequality, and deleterious effects to the health and welfare of their workers and everyone else. Worker and consumer owners have broader and longer-term interests.
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Not only does the risky speculation of the big banks cause financial crises, but the increasing inequality of wealth causes depressions as the majority of people lose purchasing power. Most capitalists keep forgetting the famous advice of Henry Ford that you have to pay your workers enough that they can afford to buy your products.
So many of our best economists are arguing that neither corporate capitalism nor state socialism works. (State socialism in Russia was supposed to democratize ownership of the means of production but it failed, mainly because the government also tried to use centralized planning instead of a free market.)
Our economists are proposing increasing employee, consumer, municipal, regional and national ownership and control of the means of production combined with a free market for goods and services as a “truly American form of community sustaining and wealth democratizing transformative change.” The quote is from Gar Alperovitz’s book, “What Then Must We Do? Straight Talk About the Next American Revolution.”
Actually, his proposals are neither uniquely American nor revolutionary. Europe and America have already had a considerable history of perfecting forms of municipal, state, consumer and employee-owned and -controlled enterprises.
In fact, roughly 40 percent of Americans already belong to at least one such enterprise, be it a consumer-owned or municipally owned power company or a consumer-owned credit union or mutual insurance company, or farmers’ marketing cooperative or employee-owned company producing goods or services.
It is interesting that even the archconservative founders of the Chicago School of Economics recognized that corporate capitalism leads to problems with monopolies and enterprises deemed “too big to fail.” Henry C. Simons, for example, said the state should take over and manage all industries in which it is impossible to maintain effectively competitive conditions. Simons also joined eight of his colleagues in calling for the nationalization of the Federal Reserve Bank and too-large-to-fail banks.
In fact the current propaganda put out by the ultraweathy who own and run the big corporations to the effect that free and unfettered capitalism can produce the best result for everyone has never been proposed by the majority of respected economists anywhere. It is, to quote myself, a load of manure.
It is easy to imagine more and more consumer-owned or municipally owned enterprises and marketing cooperatives. But what about the great big corporations? Well, Alperovitz says, “… the U.S. government nationalized a very large auto company during the latest big crisis (GM), and also one of the world’s largest insurance companies (AIG), and it could easily have done the same with some of the big banks.”
But once these companies became profitable again, the U.S. government returned them to private ownership. It would have been smarter for the government to insist they become employee- or consumer-owned.
He also points out that the federal government gave $45 billion to Bank of America and Citigroup, $25 billion to JP Morgan Chase and Wells Fargo, and $10 billion to Goldman Sachs. Of course that was our money. And then the Federal Reserve Bank created tons of money (by increasing the national debt), which it lent to member banks at virtually no interest.
The banks that received all these really no-cost loans were supposed to make more credit available to “Main Street.” But instead, they just took the no-cost loan money and bought U.S. Treasury bonds on which we taxpayers are paying a considerably higher rate of interest. The ensuing profit was money they got for doing nothing at our expense. They then happily used their ill-gotten gains to revive their crazy speculative frenzies, which are almost everywhere expected to lead to another banking crisis before long.
When that crisis comes, we better finally get the message. Don’t give the big banks a penny in taxpayer bailout. Let them fail and immediately nationalize the ones that fail, along with the Federal Reserve Bank.
Mary Boland’s column appears on the third Saturday of each month. She is a retired teacher and journalist, a proud grandmother and a longtime resident of Carbondale.
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