So we can keep producing more items for the smaller work force to buy
An important issue discussed at length by Greider in "One World, Ready or Not". One subtle suggestion buried in the text is that if the holding of capital were more widely dispersed, that consumers would be less reliant on wage income. The 'Multiple Streams of Income' would improve their financial stability. So the problem is less one of lack of fruitful employment, but the maldistribution of capital.
The means exist to escape from this stale past and define a different social reality for the future: by democratizing capitalism, by ensuring that over time the ownership of capital will itself become broadly shared, dispersed among workers, citizens at large and communities, more or less universally. A new social being would emerge from this transformation- the owner worker-who draws income from both wages and capital assets, who is compelled by self-interest and social values to take responsibility for both. A realignment of wealth would certainly alter the outlook and behavior of working people. It is conceivable that, eventually, owner workers might alter the behavior of capitalism itself, including the stateless multinational enterprises.
Achieving this structural reform does not require the expropriation anyone's existing wealth; it does require changing the rules for capitalism, so that newly created capital assets-the factories built to expand production or replace the obsolete- are not simply accumulated by the same narrow class of wealth holders, but are broadly owned among all citizens. If governments were committed to this goal, they would begin by altering their relationships with private enterprise and scrapping the standard premiums- favoring instead the firms that distribute equity shares to their workers or communities, withdrawing tax benefits and subsidies from those who do not.*
The central mechanism for democratizing ownership, however, is reform of the credit system- enabling people without any wealth of their own to borrow the funds to buy shares of capital ownership, loans that will be paid back by future earnings from the very income-producing assets they have acquired. This approach to financing sounds radical only to those who are unfamiliar with how capitalism actually functions. In fact, it is the same means by which families acquire equity in their homes: instead of paying rent to a landlord each month, they pay off the mortgage loan that enabled them to buy the house. It is the standard method of corporations expanding their production: they borrow funds in financial markets to build a new factory and commit the factory's future revenues to paying off the debt.
Nelson Peltz, who used debt in this manner to build Triangle Industries into a large and successful packaging company, described the underlying principle: "The thing about capital is, if you don't inherit it, you have borrow it."2
His remark captures a choice paradox of capitalism: people do not usually get rich by saving money but by borrowing it. Every aspiring entrepreneur or inventor understands this well enough; so do the global financiers whose market plays are so highly leveraged with borrowed money. Yet this practical reality conflicts with the Calvinist ethos of orthodox economics that instructs people and nations to become virtuous savers. That is, they should accumulate wealth by not consuming, by not spending all that they earn.
pgs 417-418 |
