3.1.2 Bases of the Economy of Humanism
Humanistic reform of the economy must start from the elimination of unemployment on which I elaborated in more detail in the article: Let's remove unemployment. The unemployment of workers leads to the exploitation of workers because the workers are forced to accept low paying work to be able to feed their families.
The unemployment of workers cannot form a sane basis for the formation of a good society. A good society can only develop on equal human rights. A just society requires the availability of work to everyone. In order to achieve a proper balance between the supply and demand of labour, it will be necessary to create a balance between the number of jobs and workers. In the case that job creation is not needed, full employment will be achieved by reducing the work hours proportionally to the unemployment rate. This is a political measure which needs to be accepted by people and must be conducted in both the public and private enterprises.
When unemployment is removed by reducing work hours, employers who need more labour must take it from other employers by offering more money because available workers do not exist. They will have to compete by increasing workers’ wages in order to attract workers from other companies. This will cause a chain reaction in which the workers’ wages will rise. If employers do not increase wages they would simply not have workers. This is simply a fair labour market.
Increasing the wages of workers will come at the expense of employers. Employers would not like it, of course, but they must understand that they cannot earn more if there is not a large enough consumer purchasing power. They must understand that the purchasing power of the society cannot be increased without increasing the wages of workers. They should understand that there is not a better distribution neither for employers nor for workers than the one achieved through a fair labour market. Shortening work hours proportionally to the rate of unemployment would ensure a fair distribution to society. A fair distribution will provide greater purchasing power to the people, which will ensure a greater flow of goods, again bringing greater profits to the owners of capital.
Shortening working hours proportionally to the unemployment rate will itself improve capitalism but my intention from the beginning was to achieve a lot more.
A better future requires a reconstruction of the economy as a whole. The introductory statement showed that the planned economy is more stable than the market economy, while the market economy is significantly more productive. A new economy will have to take the advantages of both systems and eliminate their deficiencies.
The planned economy may be exclusively based on associated ownership of the means of production. Association of the economy will take place on an exclusively voluntary basis, on the basis of the wish of the owners, and in no way in a forced manner. Private ownership of the means of production is backed by past labour and that is why its forced socialization comes necessarily across resistance and inconveniences, and practice shows that all such attempts have failed. Capital owners may voluntarily surrender their capital to the society if the society forms a new system of values that will replace the conveniences arising from the holding of capital. This will be achievable through an issue of past labour points.
Past labour points will not only present the voting power of people but they will also constitute a mix of government bonds and capitalistic shares in a humanistic environment. Such points will bring great safety to the owners, because behind them will be a whole community. Secondly, past labour points will bring secure incomes to the workers of the merged company of the commune. The more valuable the past work of workers, the more past labour points they will possess and the higher their incomes. In this case, society as a whole may find an interest in replacing private ownership of the means of production and other private properties for the equivalent amount of past labour points.
However, the owners of private capital may be unwilling to sell their property if their entrepreneurship achieves a desirable income. Such companies will continue their activities just as they do today. Will it harm the company commune? No, the system I have proposed may start running even if no single private entrepreneur associates their ownership with the commune. The system will then be based only on the existing collective ownership of enterprises and institutions. The system will show already there a significant progress; however, the results will be far better when private entrepreneurs join the associated economy of the commune.
Capital owners not interested in surrendering their ownership to the commune in exchange for past labour points will probably change their minds once they discover that the associated economy is more productive than their individual activity. This particular issue will be further elaborated later in this book. I have already mentioned that the reduction of working hours will reduce the privileges of employers and increase workers' rights. It will also reduce the difference between the earnings of employers and workers. In such an environment, capital will lose its significance. One may assume that capitalistic forms of value will lose their value over time and, therefore, the replacement of the values will be determined by the stock exchange for past labour points is to be expected.
The commune will also have to enable the inhabitants to sell their past labour points in return for money. That will make past labour points a sort of share which the commune inhabitants will trust. In such a system, private entrepreneurs may find a great interest in selling their ownership to the commune. Over time, the commune may become an owner of all stock-exchange operations, real estates and other values that inhabitants of the commune possess.
When an owner of a private ownership surrenders their ownership to the society, the quantity of their past labour points will replace the capitalistic system values and complement them with new ones that will allow society to prosper.
The new system represents an associated ownership of the means of production where all inhabitants would, let's call them so, be humanistic shareholders of the associated enterprises on the territory of a commune. When all enterprises in the commune become associated, as large-scale corporations do, into one economic whole, and then smaller organizational units in the form of enterprises would be formed in order to enable easier organization and recording of their business performance.
The united commune will have a single administration. Executive authorities of the administration will no longer tailor the economic policy and propose laws. Instead, they will assume direct administration in all fields of economic activity.
The principle of election of the commune's managers needs to be directly based on competing programs offered by the candidates for the managing position. The programs will define the work orientation in the economy, as well as the profit that the economy needs to realize in a certain time period. They will also have to define the operation of non-profit companies, and the conveniences that such a work structure needs to create for the society. The programs will need to contain answers to the problems of the commune.
The assembly or council of the commune will assess the offers and make a selection for the commune's administration. A managing board of the economy may be set up within the assembly. Such a board would not be elected in elections. Its members would be the commune's inhabitants holding the largest number of past labour points, or, more precisely, humanistic shares. The assembly of the commune’s board would from among the competing proposals for work organization select the best offer for the composition of the managing executive authority. The obligations and duties would be defined by a formal agreement between the commune's assembly and the selected management.
Production is a highly dependent process and that is why coordination with the centralized hierarchical management system suits it to a certain level. This form of decision-making allows central planning and, accordingly; a more steady economic activity; a labour distribution allowing full employment of workers with a balanced work burden; a more efficient coordination of action, and a fast decision implementation.
The communal executive managing authority analyzes the resources of all activities, and then distributes the work in the manner allowing the commune to achieve the highest productivity. The elected commune's management sets up the departments or secretariats in the commune with the consent of the commune's assembly. The secretariats may be those of administration, economy, building industry, trade, health care, education, culture, internal affairs, etc. It will be most likely that the managers of such departments will compete for these positions together with the managers of the commune as a group. But also the candidates interested in heading the secretariats apply for such posts on the grounds of a permanently open public competition. The president of the commune's executive council selects from among such candidates the persons who, with their specific activity, best complements the program.
Higher-ranking officials form the enterprises, set their purposes, and determine the resources pertaining to them, such as the means of production and number of workers. They also form competitions for lower ranking managing positions. Within the authority accorded to them by higher-ranking officials the candidates for the managing posts in enterprises and institutions propose the highest productivity they can offer. The best proposal receives the mandate from the higher-ranking management, together with the consent the enterprise's managing board, and organizes the work in the enterprise or institution. Lower ranking managers determine the rights and obligations of each work post within the mandate accorded to them by the higher-ranking managers, and for each defined work post may apply the worker who offers the highest productivity.
The managers’ authorities will be distributed in the manner allowing the commune to realize the highest productivity possible. The president of the commune's managing authority will be authorized to manage the entire activity of the commune. However, such management would not be efficient, because it is impossible for a single individual to make all the decisions that only one composite enterprise may demand. Moreover, it would hamper lower-ranking management and, consequently, the productivity of the collective would deteriorate. The president of the commune's executive board would allot themselves duties that correspond with their ability to contribute to larger work productivity in the commune, while the remaining duties would on a contractual basis be assigned to lower ranking management members.
Work organization in the commune may freely vary from a centralized production organization to a fully liberal business operation of enterprises, and the management of the commune establishes the work distribution and the decision-making power in production that will result in the greatest conveniences for the commune.
Such an organization of production has already been in place. Well, where do we see, then, the great progress of such an economic model? The humanistic form of production will bring the development of the labour market in a centralized system of division of work. Therefore the work will be more productive, more rational, and more stable than capitalism can achieve.
The Market of Work
Most of the problems of today's market economy are primarily based on the underdevelopment of the market economy. I will try to present that the main problem of the capitalist economy is not too much but rather not enough market. The goods are always on the market even if informally, since any goods will be sold if there is a good enough offer. Jobs are rarely on the market and this is probably a major problem in today's economy. A developed labor market will produce competition for every public workplace at any time. Workers will compete by offering higher productivity. Productivity will be measured by money earned, the amount and quality of manufactured goods, or by productivity evaluations obtained from consumers. A person who offers higher profits, more manufactured goods, better, cheaper and cleaner production will get the job.
Work competition as a form of employment at the market of labour represents a continuous open competition for all work posts. This means that any worker may at any point in time take the work post of another worker if they perform the concrete job more productively. Of course, in order to avoid possible instabilities in such work distribution the work competition will be performed in a highly regulated manner. It will be explained in the chapter “Work Division”. For now it should be said that such a relationship in production removes the privileges of the centralized process of production. The system will allow a permanent development of the production process and of the essential forces in the society. Last but not least, there is no more developed form of production than the one where each job gets the best available worker. Such production will bring a higher economic productivity than the capitalist form of production may achieve and that is the reason capitalism will certainly be pushed to history.
Needless to say, for such a form of production relationship to exist, the society must necessarily form an exact and efficient method of bearing responsibility of workers for the non-realized productivity at each work post. The system could not survive without this component. The efficient system of risk bearing is possible to achieve with past labour points. A greater right to work at each post needs to be exercised by the worker who proposes a higher responsibility for their work with the assumption they offers an equal productivity as other workers.
The scope of accepted responsibility will be established by a numerical value. Higher responsibility needs to ensure a higher increase of past labour points as a reward for the rise in productivity, and a larger deduction of past labour points as a sanction for insufficiently realized productivity of the worker. And vice versa, a less pronounced responsibility of a worker will bring fewer rewards and sanctions with the past labour income points, but also a reduced competition power for the performance of a desired work. If responsibility were defined in such a way, the irresponsible attitude vis-à-vis the work that existed in the socialist form of production would be definitely overcome, and prosperity in doing business would be ensured.
In the end, the new system will enable each worker (including leaders) to directly assess the price of their own current work according to the degree of the conveniences and inconveniences that the work brings them in relation to another work. In order for the current work price to correspond objectively to the work burden, it needs to be subject to work competition in the market of work. The job will be given to the worker seeking a lower current work price with the assumption that they offer an equal productivity and responsibility as other workers. Such a price determination will form the most objective price of current work that the authorities or trade union arbitrations cannot achieve. In such a system all workers would be satisfied with their level of realized income, because it is they who have chosen it.
The production of goods will no longer be bettered by markets of commodities, but by the labour market. Within the commune, enterprises will no longer compete with each other with the same products but will provide betterment of goods by work competition of workers. This will ensure high quality of goods but not over-production. It will be a more rational use of natural resources. The system of evaluation of producers by consumers will give a better view of production performance than the market of goods.
Such a system of production is becoming possible for the first time in the history of mankind because the development of computer technology has allowed us to efficiently plan, monitor, and process the productivity of workers, the values of their work and the responsibility they bear for their work in the system of fast changes in the work and work obligations. Capable Enterprise Resource Planning (ERP) systems already exist today, but they will need to adapt to the new business operating systems.
Democracy in Economy
In the proposed system managers have the right to decide in the name of society if they are in such a position; however, they will be accountable to the society for their decisions. Each member of society can assess the performance of managers. Negative assessments will cause sanctions and positive assessments rewards. Even though managers make good decisions they can be sanctioned with negative assessments from a large number of dissatisfied members of society. In such circumstances, no single manager can independently assume responsibility for decision-making regarding the regulation of the commune's complete economy because they cannot know with certainty how much such decisions correspond to the members of society.
This primarily relates to the formation of macro-economic policies of the commune.
There is no doubt that for this reason the management of the commune will include the commune's inhabitants in the decision-making process about the fiscal, income, and development policy of the commune. For the beginning the management of the commune will enable the population to directly decide on how much of their incomes they want to set aside for taxes. This will be done by filling out online applications. Taking into account that tax policy must follow the requirements and capabilities of society, delegates at the assembly of the commune will need to establish a minimum tax rate that allows society to function in an acceptable manner.
Taking into account that not all members of society have equally contributed to the creation of collective material goods, they cannot have the same decision-making power regarding the fiscal policy of society. The power of economic decision-making needs to be based on the quantity of past labour points, which is equivalent to the power of shareholders' voting rights in the capitalistic system of operation. This means that each individual will actually divide the total quantity of their own past labour points for the purpose of their own income and for taxes. A person with a larger quantity of past labour points will have a proportionately greater impact on the forming of the income tax policy.
The sum of the values of all individual statements of the collective money distribution, processed by computer technology, will form the division of the commune’s revenue for the incomes of all inhabitants and for income taxes.
The total amount of money intended for income for each inhabitants of the commune will be distributed in proportion to the value of invested work and to the value of past work expressed by past labour points.
The society also needs to establish the minimum income of the individual, which will define the range of incomes, by which it will regulate the relationship between solidarity and interest in work based on income. If workers are not interested in performing an inconvenient work, thereby lowering the commune's productivity, the society may by direct statement reduce the minimal income of workers. They would in that way stimulate, on an income basis, the workers to work more and thus realize a higher productivity and a larger share in the distribution of the operation result. On the other hand, if larger productivity than necessary is realized in the society, the society will then increase the minimal income and thus reduce the income-based stimulation for work. This will be discussed in more detail in the section: “The Distribution of Incomes”.
Income taxes will be linear for all incomes. The linear simplicity is necessary in order for the income tax policy to be formed directly democratically. Today's regulation of progressive taxation, which has the task of establishing social balance, will be replaced with the new income policy of the commune.
The revenue from income tax will be used for common spending. This money will be divided by the will of the people of the commune for money intended for the development of production and for money intended for collective commodity consumption. Taking into account that money is limited; the greater the amount of money intended for the development of production, the smaller the amount of money intended for collective consumption, and vice versa.
Cash assets intended for the development of the economy serve for the expansion of the productive forces, purchases of new means of production, or of complete installations that promote production. A larger quantity of cash assets intended for the development of the economy will engage social work and economic development to a larger extent, which would increase the quantity and quality of the means of production and, accordingly, the productivity. More sizeable investments in the development of the economy will ensure major social conveniences in the future; however, cash assets for current consumption would in this way decrease, which would also reduce the individual and social standard. Such a system will enable each commune to develop by relying on its own forces.
Cash assets for collective consumption serve to meet all collective needs of the society. They are used for the maintenance of the existing structure, and for the building of new social standard facilities. This includes funding commodity consumption spending in public health, education, security, construction and maintenance of infrastructure, etc. Cash assets for collective consumption may, to a certain degree, be distributed by direct decisions of the population, while later partial distributions may be directly made by interested and associated society members. Final distribution of the smallest consumption segments needs to be made by the authorized management, which need to be directly accountable to the society for the same. Increased funding for joint consumption would allow a higher common standard at the expense of other forms of consumption.
The allocation of money directs the economy and that means that the management of the economy will for the first time be directly planned by society.
Such a system can remove the shortcomings of the market and planned economies and ensure stability and prosperity. It is summarized in my article: The Future of Economics. The system will be described in greater detail in the following chapters.
What is the underlying concept of the new system? The system will put society on sound footing. It will give every person the right to participate in decisions affecting their or her interests in society. It will allow every individual to judge those who make decisions on their behalf. It enables the free activity of any individual and, accordingly, the finding of the way that is more suitable to the individual's nature and to society as a whole. Freedom enables the suspicion, formation of critical views, and the possibility of acting that, together with practice, creates an objective knowledge. Practice demystifies the categories of values and, therefore, allows for the breakdown of the dogmatic, non-critically accepted and alienated knowledge that is the cause of inconveniences in the society today. Practice is the only possible route to knowledge, the individual's power, the only possible way for discovering the correct standing and orientation of the society as a whole. This will form the process of disalienation of society.
In such a system the individual is forced to rely on their own forces in realizing their needs. Constant reliance on their own forces and the defined responsibility would teach the individual to accept the real objective perception of their own potency. This also means the acceptance of their own impotence in cases where they cannot surmount it. By getting to know objectively their own powers, the individual will live in accordance with their own nature. Such an individual would form the needs only where they have the power to realize them, which constitutes the essence of the individual's balance and of the formation of a constructive orientation in the relationship with the nature and society. Such a system can enable the satisfaction of natural needs of the individual and of the society, which brings harmony, peace, love and joy of living.
The new form of socio-economic relations requires the formation of new elements needed to establish: the price of work, work distribution, responsibility, the price of commodities, money accumulation, credit-monetary policy, working assets, development and amortization of the production, distribution of individual and collective consumption, as well as of the use of real assets. The new socio-economic policy will, within the limits of possibilities, be presented in greater details in the chapters that follow.
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November 13, 2013