Shoring the Foundation of Liberal Society [3 of 3]
addressing the why’s and how’s for governing a Liberal nation
Third Segment: The Economy
[First Segment: Personal Relations; Second Segment: The Political Process]
[For the record, I do have an M.A. in economics (Atlanta University — now Clark Atlanta University: 1988). My Thesis (in political economy, where philosophy and economics intersect) focused on money and distributive justice. For money, by the way, I have worked on houses.]
Introduction (seven paragraphs starting all three segments)
[The subject here is Liberalism. The other liberalism — with a lower-case ‘l’ — is one of several political ideologies that exist within Liberalism, each preferring certain policies and programs — or the absence of such things.]
Liberalism can be credited with a great many accomplishments. It has also been beset with limitations, however, both conceptual and practical, that have in turn limited the benefits of Liberal societies/nations to people. As time goes on, those limitations are overshadowing the accomplishments of Liberalism. As a result, people are beginning to question its value as an approach to governing society. It is becoming, as Brits are wont to say, ‘unfit for purposes’: cramped, cracked, and leaky. As is so often the case, its more observable flaws are the result of problems in the foundation.
A Liberal society is one in which justice is the goal of society and equality and liberty are understood to be the ‘twin pillars of justice’ upon which a just society must rest. Those two concepts are its foundation.
Since Liberalism was brought into the world we have learned that equality and liberty are not the ‘universal values’ the early Liberals claimed them to be. Indeed, there are no such things as universal values. As postmodernists have emphasized, the very notion of ‘foundationalism’, i.e., the existence of any universally accepted conceptual premise, is a nonstarter.
We humans do, however, have a universal propensity to form into groups. Groups are individuals who organize around premises they all accept (at least to a sufficient degree). Thus, Liberals are a group of humans organized around the premise that equality and liberty should underlie the governance of society.
So: a Liberal society/nation is one in which governance is itself governed by equality and liberty. That is, those two concepts determine in a general way — prior to any laws or even a constitution — how people should treat one another as they live their separate lives together in society and those two concepts inform the way the political process and the economy should be structured and how they should function.
Those are three universal aspects of all communities of human beings. Other people might name other universal aspects of communities, but there can be no such thing as a community of human beings that exists without personal interactions, a political process (the process of effecting choices for the community as a whole), and an economy (the process of producing/acquiring goods/services). Even a book club has all three of those elements of a community. Within Liberalism, then, those three aspects of social existence therefore comprise at the same time the minimum and the maximum of the reach of justice, in its most practical sense: how societal relations among human beings ought to be governed.
The purpose of this essay in three parts is to relate a way to fix Liberalism’s foundation, and how that can thereby fix other flaws in Liberal society that its foundational problems have caused. It would still be Liberal society, but it would be transformed.
Here, the topic is the economy. It is where the most visible changes to society from this upgrade of the Liberal foundation would result.
The economy is also easily the most difficult aspect of a society to which to apply governance. There is a legitimate danger that there can be too much governance, such that innovation and material improvement in the lives of all people can be stifled. The old Soviet Union stands as a constant reminder of that fact. On the other hand, the economy is nothing but choices being effected, and the minimum of justice in effecting choices (from the first Segment) must apply throughout the economy as much as any other part of society. If laws are needed to ensure that justice will be upheld, so be it. At the same time, within Liberalism economic outcomes must be the result of a just process; like the political process, any outcome resulting from a just economic process must be accepted as legitimate (as long as unjust actions on the part of individuals acting within it did not determine the outcome) [see — far — below].
So I have developed an alternative monetary paradigm that would make the existing economy more just, via a (‘livable’) “democratically distributed income” (DDI), i.e., one for which any (adult) citizen could become eligible. That would not involve taxes/public debt in any way, for reasons of justice, political feasibility, and Occam-esque simplicity. It could be adopted by any nation (though I do use the U.S., where I have always lived, for illustrative purposes). Many more positive benefits follow from that idea.
What follows will be rather dense in places, but I did want to convey in as few as possible (11), brief as possible paragraphs how fully developed this proposal is. Please: trying to pigeonhole this paradigm ideologically would be a waste of time that could only hamper ‘getting it’. For instance, one part of the paradigm that is off-putting to many people is that an absence of ‘trade-offs’ and ‘burdens’ in it would extend to even the richest people and the largest corporations: there would be no redistribution of anything nor any cost imposed on any employer; yet, there would be no unemployment or poverty for any (adult) citizen at any level of total output and the level of total output would be governed, passively but effectively, by demographics — and only that.
The paradigm is somewhat similar to Modern Monetary Theory (MMT) — its normative aspect — but it does not involve debt in any way or using taxes to withdraw money from the economy. Public debt/taxation would in fact be eliminated (see below). No person, committee, or organization would have any means, much less the authority to determine how much money (as currency) would be created or how much money (including currency and money created by banks in issuing loans) would be withdrawn from the economy: the supply of money (in total) would be fully self-regulating.
Creating money (as currency) will be addressed below. As for withdrawing money from the economy, by design a sufficient amount of money would be collected from the profits of corporations. They would be paying no taxes and no limit would be imposed on revenue, investment in the business itself (plant and equipment), or the compensation of any/all employees (sans bonuses), but a limit (based on profits) would be imposed on the accumulation of cash and extraneous assets. Other outlays would be restricted to legitimate business expenses. As now, the profits of proprietorships/partnerships would be the income of the owners of those enterprises. Individuals, however rich or not, would have to be indifferent to have any money collected. (Hopefully that would become a ‘badge of honor’ in the culture — though, unlike corporations, individuals could also contribute to not-for-profit entities.)
The DDI would be a guaranteed — bulletproof, actually — minimum income. Money (as currency) would be created as needed to fund it. The total amount of the income would simply be the amount of it multiplied by the number of people eligible for it. To avoid inflation, the income would have to start at something close to the current minimum and be increased gradually, but it could eventually equal the current median income, if not the average, or even more than that. Whatever its final amount, it would replace existing incomes as it increased over time. Universality of eligibility would be achieved by paying the DDI to three groups of people.
Less shockingly, it would be paid to retirees and to adults too incapacitated to work. It would replace, in the U.S., Social Security. [The Social Security Administration (and its equivalent in any other nation) could be extracted from government to become the Administrator of the Currency — and thus be independent of both government and the banking system (though a nation’s central bank or its central government could also administer it).]
The third group being paid the DDI would be — brace yourself — people employed in ‘minimum pay positions’. That is to say, for people employed in such positions their pay would not come from their employers (a business or government, not-for-profits being another matter), but would be the DDI. Whatever the amount of that income might be at any time, employers could designate any position to be a ‘minimum pay position’. However, an individual could choose to remain in/accept such a position or not based on (negotiated) total compensation: in the labor market employers would find themselves using benefits (as well as general working conditions) to compete for people to fill those positions. So for those positions the ‘arrow of competition’ (who’s in competition for what) — a neglected but hugely significant aspect of a market-based economy — would be reversed. All benefits of all employees, whether being paid the DDI or not, would have to be ‘in-kind’: goods/services, not monetary/financial, with the money going directly from the employer to the providers of the goods/services. (At the transition to this paradigm people would have sufficient knowledge of the total compensation for positions of interest to them, which knowledge would be passed along into the future.)
To ensure that there would be no unemployment or poverty, government would be an ‘employer of last resort’, offering jobs paying the DDI without benefits. That would make such jobs essentially free to government (while giving anyone employed in one that incentive to seek a job that included benefits of any kind). The DDI could also be paid as easily as not to one legally responsible adult in a household with at least one legally recognized dependent living there (the same income regardless of the number of dependents) — which in the immediate term would greatly affect the labor market, but opportunities for employment are supposedly going to be shrinking drastically in the near future.
To ensure that demographics would govern output (for the sake of sustainability), money (as currency) would also be created as needed to fund government — all government, from local to national — forevermore at the current per capita rate of total government spending: that rate multiplied by the population of the nation each year (including non-citizens who were residents). [I have devised one approach to apportioning that money.] That would put an end to using taxes/public debt for that purpose — unless spending exceeded somewhere the allotted amount, due to a public emergency or whatever. Taxation would at least be reset at zero. That would immediately provide a significant increase in disposable income for everyone. Given how regressive the total tax bill is in many nations (including the U.S.), in a relative way the poorest people in such nations would benefit the most from ending taxation.
The economy (the process of producing/acquiring goods/services) would become fully self-regulating, with total output governed by demographics. (Regulation within the economy, i.e., relating to the environment, workers, and consumers, would still be a matter of concern in the political process).
The paradigm is eminently actionable: though there are plenty of details that would have to be worked out, it could be implemented with a single legislative Act. Even if working it all out took an ‘economic convention’ (composed of elected or designated persons or a combination of both) a whole year, that would be as nothing. As noted, it could be adopted by any nation (though a nation’s financial infrastructure could make it more of a challenge) or a group of nations agreeing to share a common currency (without compromising the sovereignty of any nation). It could even one day, perhaps, form a single currency shared by every nation on the planet — with all peoples enjoying the material well-being of the most materially well-off.
Now, the two most important Liberal philosophers since the utilitarians of the late 1700's/early 1800’s were John Rawls and Robert Nozick. The former made the case for a politically liberal interpretation of Liberalism [in A Theory of Justice (1971)]. The latter answered Rawls with a right-of-center interpretation [in Anarchy, Sate, and Utopia (1974)], largely echoing John Locke himself (whom I referred to in the first Segment as “the original Liberal”).
Both Rawls and Nozick made it clear, if within different approaches, that within Liberalism justice is located in process, not by identifying specific, material outcomes and making their realization ‘what justice is’. That invites ‘the end justifies the means’. Emphasizing process does not guarantee justice, but any kind of, to use Nozick’s term, “end-state” approach to the governance of society — or any part of it — assures that the injustice in arbitrariness will result. To reiterate, only a just process can produce just outcomes; any outcome of a just process must be accepted as legitimate (as long as . . .). [To be clear, to undertake unjust actions to get a just political process or a just economy implemented is still to act unjustly; even if they are successful, such actions render that outcome illegitimate.]
We have seen (in the second Segment) that a democratic political process is a just process because in it all members of a community are taken into account. Since the political process is the process of effecting choices for the community as a whole, all of its members will be affected by choices effected in the political process. Justice therefore requires that all of them must have the opportunity to participate in that process. The ‘conditions of justice’ for the process thus become freedom of political speech for all and a just — democratic — distribution of the rights pertaining to all other forms of participation in that process.
What are the conditions of justice for a just economy, the process of producing/acquiring goods/services? As in the political process, the requirement to respect the capacity of all people to choose for themselves applies directly to all interactions among people in the economy — recall, from the first Segment, whether someone is acting to effect a choice for oneself or on behalf of any other person, organization, or cause: any business is an “organization” (just as political parties — and governments — are organizations). Again, respecting one another’s capacity to choose maximizes liberty among co-existing people. Also, just as there must be a democratic distribution of political rights, there must be a democratically distributed income, i.e., an income for which any (adult) citizen can become eligible.
That’s because money is to the economy as political rights are to the political process: necessary to be able to participate in it. [It is the case that people can act politically even if certain rights pertinent to that participation are denied, such as people denied the right to assemble gathering in public anyway to demonstrate their opposition to the actions of the people holding the offices of government (though the consequences for the demonstrators can be dire — but we have learned that enough people demonstrating long enough for any outcome in any nation can achieve their goal: in the end all nations are direct democracies, if enough of ‘the people’ have sufficient determination and courage).] Regarding the (existing) economy, it is simply not possible to participate in it without money. Even homeless people must get their hands on a certain amount of money just to survive. The amount of money a democratically distributed income must be is therefore at a minimum enough for a person receiving it to survive. Other than perhaps some practical limit for the sake of the functioning of an economy itself, which is necessary for society itself to exist, there is no necessary maximum that places a limit on it.
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For more about the proposal, “A Most Beneficial Economic Change” is a “2 min read” here in Medium with links to more articles, each from a slightly different angle within the field of economics — with nothing that I publish here behind the paywall. Note: the above is copied from “De-growth with Only Positive Effects.”