rescuing their goal of a more just society from economic power
The founders of this nation were intent on establishing a more just society. At the time, that meant one with a more just form of government. Today, ‘a more just society’ must take the economy into account.
The single biggest difference between the U.S. of today and this nation at its founding is that capitalism did not yet exist at that time.
[Mention of that most loaded term pretty much requires anyone using it to stop to say what that person means by it. For me, ‘capitalism’ is neither more nor less than producing and distributing goods and services on very large scales: ‘the mass production of goods and services for sales in geographically extended markets’. To imbue capitalism with any more than that, to include private property or ‘free markets’, much less democracy (of all things), in its definition is to assign it a cultural significance it does not inherently possess.]
back to the point I was making: For that matter, at that time ‘the economy’ as a particular entity within society was not yet ‘a thing’.
The importance of that simple fact is impossible to overstate. Societal justice was limited to the political realm because at that time the idea of a distinct ‘economic realm’ was only just beginning to enter into any people’s minds. As a subject of study, ‘economics’ was just getting started: Adam Smith’s famous (and very prescient) book was published in the year of our nation’s Declaration of Independence; Jean-Baptiste Say produced his famous treatise, essentially inventing the study of ‘markets’, twenty-seven years after that; and it would be fifteen more years before the most famous critic of capitalism as a web of relationships of power, Karl Marx, was even born (1818).
Justice always means constraints on power. Societal justice is concerned with constraints on societal forms of power: power that can affect the whole of society.
So as far as our founders could have been aware, political power was the only form of societal power that existed at the time. Now, we recognize that the economy of any society joins its political process as an entity encompassing the whole of society. We can see that economic power can also be a form of societal power. Then, however, a ‘more just society’ — our founders’ intent — was limited to being a society with a more just form of government.
The form of government against which our founders were rebelling can best be described as a monarchical aristocracy: an aristocracy with a monarch at its apex. In an aristocracy, land is the primary source of all societal power: political and economic power. The two are so fused together in an aristocracy that they appear as a single thing.
For our founders the more just alternative to an aristocracy was not a direct democracy, but a republic. It is an indirect form of democracy: ‘the people’ i.e., eligible citizens, choose their leaders, to include the holders of elective offices. (Whether those elected leaders are there to act in what they think is the best interests of the community or to enact ‘the will of the people’ is an eternally open question.)
Even so, most of our founders did believe in a ‘natural aristocracy’, i.e., that there were, well, ‘men’ who were innately best qualified to govern the affairs of the community (whether the most local community, a state, or the nation). They wanted to merge that idea of a natural aristocracy of political leaders with a republican form of government.
The most aristocratically oriented of our founders did equate the idea of a natural aristocracy with the ownership of land. Upon its founding, property-based restrictions on participation in the political system did exist in states within this nation.
However any of that sounds to us these days, it included certain suppositions about government. It would be in the hands of the best of ‘men’. They would be well-educated and politically dispassionate (given that their core self-interests were already assured). Moreover, that they would be presumptive political leaders would make an ambition for political leadership among the ‘natural aristocrats’ unnecessary. At the same time, the point of establishing a republican form of government was to constrain societal power in its only distinct form that the founders could at that time recognize: political power.
For all of their chauvinism (and worse), all of our founders did support, as an aspect of republican government, freedom of political speech. That form of political power would provide all citizens a means to participate in the politics of the community (on some scale, anyway).
The recognition of that freedom infused a strong flavor of democracy into the vision of even the most aristocratically disposed founders. From the start, we have had a republican form of government within a more democratic political process. Whatever anyone might say about the theory of government of any of the founders, their intention was to have the most capable leaders armed with the best ideas for the benefit of society.
Over time the pool of people recognized to have the rights and freedoms to participate fully in our political process has been expanded. Now the only formal barrier that exists among all citizens for any form of political participation is age: a citizen must be of a certain age to vote or to run for any office. Our political process has been fully democratized.
The point of political democracy is the same as the founders’ intent: to allow the best ideas and the most capable leaders to come to the fore for the benefit of society. Neither the founders’ aristocratic-republican vision nor our fully democratized political process takes into account unlimited economic power.
With capitalism, (contrary to what Marx thought) property is displaced as the primary source of economic power. Money takes that place.
There is no given limit on the amount of money that can be made. Capitalism therefore represents unlimited societal power.
In the second half of the 1800’s, when capitalism got fully established in this nation (commonly called, for good reason, the “Robber Baron Era”), capitalists used the unlimited economic power their unlimited money gave them to capture government and subvert it to their selfish purposes. Nowadays ‘capitalism’, granted unwarranted attributes, has been turned into some sort of societal ideal. In many people’s minds the notion of a ‘natural aristocracy’ has been transferred from owners of land to ‘leaders’ in business. More and more, a lack of money restricts access to full political participation while a surfeit of money is a source of power the political process.
The unlimited power of unlimited money was used to destroy the intended functioning of the form of governance set forth by the founders of this nation and retained in this nation as we grew to have a fully democratic political process. Money has thoroughly corrupted our founders’ intentions for that process — not to mention their greater goal of a more just society.
Functionally, our political process has become completely subordinated to the economy. It’s been reduced to being a means for perpetuating money as the primary source of societal power.
I say we should — we must —make explicit the preeminence of political power over economic power. After all (and again contrary to Marx’s thinking), within society the political process is intrinsically superior to the economy.
What is the political process if it is not the process of effecting choices for the community as whole? One choice that any society must effect is to determine what the structure and functioning of its economy is to be.*
Political power is the means. Our political power resides in our political rights: run for office, vote, petition the government, peaceably assemble. Above all, we must use our freedom of speech. We must employ our political power to wrest a significant measure of economic power from ‘capitalists’: the ‘investor class’: ‘the rich’.
We can only do that by changing our economic system in a fundamental way. Yet, I am not suggesting that we should ‘overthrow’ capitalism. As even Marx emphasized, its existence is necessary to overcome material scarcity.
So we must wrest economic power from capitalists while retaining capitalism. Again, it makes ‘enough for all’ possible. (Even so, it must be noted that the benefits of local production for local consumption are almost impossible to exaggerate.)
To maximize freedom as well as the efficient employment of limited resources, we must also retain ‘the market’ as the primary means of distributing goods and services (and the capital that underlies their production). There is no substitute for markets where they work well.
That said, we must also realize where markets fail to serve the fundamental purpose of society “to…promote the general Welfare” (from the Preamble to our Constitution). The environment, health care, and education are examples of areas where markets, left to themselves, do not sufficiently promote the general Welfare — and housing is becoming one. Where markets fail society we must use the functional core of our political process, i.e., government, to improve the outcomes for society.
Heretofore, wresting economic power from the rich has meant using taxation to take money from them. Yet, using taxes paid by the rich to benefit society as a whole leaves society dependent on rich people.
[A person does not have to be the owner or the CEO of a business, or any kind of capitalist, to be rich. People can be more or less rich. ‘The rich’ are people who have, or have what they have having had, they ‘can afford to lose’.]
There is another way to establish the preeminence of political power and use it to reduce the economic power of the rich. Rather than taking money from them in the form of taxes, we could change the economic system in such a way that a sufficient level of material well-being for all citizens would not depend on rich people in any way: neither directly, as pay (or charity), nor indirectly, via taxes.
We can accomplish that by applying the “democratic distributive principle,” the principle that underlies the distribution of political rights in our fully democratic political system, to money, in the form of a “democratically distributed income” (DDI). Establishing such an income would reduce capitalists’ power over people. It could be established in this nation with a single Act of Congress.
The money for that income would be created as needed. So none of it would come from ‘the rich’, either directly or indirectly. It would contribute to the supply of money (as currency) for the economy.
It would not be paid to every citizen, but any (adult) citizen could become eligible for it. That’s what makes the DDI ‘democratically distributed’.
The exact amount of the DDI is to be determined, but it would be at least as much as the current median income is: say, at least $15/hr.; $600/wk.; $31,200/yr. That would become the absolutely, positively guaranteed — ‘bulletproof’—minimum income for any citizen (unless a citizen freely chose to make less money, as perhaps a ‘starving artist’).
The DDI also serves as a template to provide for a way to fund government — all government — without any taxes or public debt. The absence of taxes would obviously benefit people in the investor class. Currently, though, by buying public debt they actually get a tax rebate of a kind in the form of interest payments that are funded by taxes.
That bears being emphasized: the economic power of the rich would be vastly reduced, yet (along with everyone else) they would pay no taxes. Also, not one speck of property would be taken from anybody. To be absolutely clear, there would still be no limit whatsoever on how much money a person could make or how much property a person could acquire. That’s how revolutionary this perhaps rather innocuous-sounding idea is.
As ever in the history of civilization, in this nation today taxation is a means by which the rich maintain the primacy of their fundamental position of power in society. Whether the taxes on the rich are a bit higher or lower does not change that basic fact. Eliminating all taxes, including taxes paid by the rich, would fundamentally alter the relations of power in our nation.
The non-rich would also benefit more in a material way from abolishing all taxes. In this country, the smaller people’s incomes are, the more of their incomes they pay in taxes (taking into account sales taxes, excise taxes, and taxes on imports as well as income and property). So the smaller a person’s income is, the more that person would benefit materially from abolishing all taxes. With a DDI, the people being paid it would be the biggest beneficiaries of eliminating all taxes.
Although the money for that income (and to fund government) would be created as needed, the amount of money that would be created would be absolutely limited (in both cases) by demographics — and only that. An absolute limit on the creation of money (as currency) is necessary to have a stable economy, i.e., one that is self-regulating.
At present in our economic system there is no limit on the amount of currency that can be created. We have a chronically unstable economy that the central government and the central bank are attempting to ‘manage’ in increasingly desperate ways. In the absence — or the failure — of those efforts the economy would implode immediately and completely.
So the existing economy would actually be improved as a system by establishing a DDI. In the paradigm that I have developed for a DDI, in addition to a limit on the amount of currency that could be created there would also be other built-in protections against inflation.
Total output would be governed, passively but effectively, by demographics. There would be no unemployment or poverty at any level of total output. The amount of money available for government to spend would not be affected by total output. Sustainability would be increased (even without any additional regulation or any voluntary changes in behavior) as a side-affect of instituting a DDI.
The democratically distributed income could be limited to being the minimum income. Unemployment and poverty would be eliminated.
The DDI could be expanded (sooner or later) to become the pay for everyone employed in any business or government, further democratizing money. That would eliminate economic exploitation.
Either way, capitalism (as the mass production of goods, etc.) would still exist. Either way, markets would still be the fundamental distributive mechanism in our society. Either way, taxes and pubic debt could be eliminated. Either way, the economy would become self-regulating. Either way, sustainability would be increased. Either way, there would still be no limit on income or wealth. Either way, a democratically distributed income can be instituted with a single Act of Congress.
Applying the principle of democracy to money in the form of a democratically distributed income can ‘take this country back’ from those who have reduced our entire nation to being nothing more than the means to their own selfish ends. The benefits for society are astonishing: no unemployment, no poverty, no taxes, no public debt — among other good things.
It’s a big task. It can be done, but it can only be done if we, the people, take it upon ourselves to learn about this idea then use our political power — most especially speech — to make it happen.
[I am the author of this idea. It is not something I came up with this morning. I have been developing it for some time. It is thoroughly thought-out. The foregoing is only an introduction to the idea of a DDI: no one can make any accurate judgement about it based only on what is written here. One can see that it is not a ‘UBI’, which uses taxes for its purposes, and it has nothing to do with ‘MMT’, which has no limit set on how much currency can be created.]
further reading (all here in Medium):
more on the DDI economic paradigm: “Same Economy, Way Better Outcomes for Society”
more on justice: “Equality Is All We Need”
more on a DDI and sustainability: “Overcoming Sustainability’s Single Biggest Obstacle”
more on an expanded DDI: “A Fully Just Economy”
- There are people who maintain that a society’s economy should be truly laissez faire: absolutely separate and distinct from its political process, with even its own form of ‘justice’, i.e., the outcomes of free markets. The simple fact is, however, that no such thing is possible. The political process includes government — the functional core, actually, of the political process. The fuel of any nation’s economy is its money: its legal tender. No nation has ever existed without one. The legal tender is whatever a nation’s national government says it is. Moreover, that government determines how that legal tender can be created. Heretofore, in every nation “legal tender” has meant that which its government decided would be accepted for the payment of taxes and which banks could demand for repayment of loans. So even if taxes did not exist, legal tender would still be necessary for a banking system to exist. As a daydream a person can imagine an economy in which every loan from a bank included a negotiation for the means of repayment, but as a practical matter there can be no such a thing as an economy without a banking system and no such thing as a banking system with a legal tender — which is determined by the national government. Since there can be no such thing, as a practical matter, as a society without a legal tender, realistically, a truly laissez faire economy cannot exist.