The idea is to remove private investment from the system, the next problem is how. Under private investment many things besides capital that do react wrong to market pressures for varies reasons, are under private control. There is no "counter pressure", keeping these systems healthy. But not all of these systems have the same problems with proper market pressures.
Industry: consumer products/services, retail
- A "promote small over large businesses" solution. This is easy because small businesses already exist, it doesn't require immediate action. Large businesses don't have to be bad, as long as their popularity is based on free market choice and not financial warfare, it is apparently what the people like. Large businesses suffer from these problems: because profits are concentrated they create demand for excessive luxury markets, they move wealth away from the area it is created to the area where the owners live and spend their money, it stimulates general power concentration. Small or locally owned businesses do better: profit is spend on relatively normal items, stimulating the area in which the business operates. Large businesses can be more efficient and more economically resilient. A law that stipulates how much the profit in a company can be concentrated may be useful. When this threshold overflows, money has to be shared with the base. This way geographic exploitation by large chain companies can be controlled. Typically consumers can reach a large number of different such businesses in an hours travel. Garages, bakeries, clothes-shops, etc. Typically not: water out of the tap at home.
Industry: monopoly sector
- A "nationalize monopoly sectors" solution. There are a great many types of business where market pressure does not work well, because of infrastructure problems. When there are 10 shops selling food needed in an area, each could be a different company. Where one large food shop could operate, two half that size would be fine as well, and offer consumer market pressures between them. Now picture a kitchen with 10 taps, 10 complete water systems side by side. Out of every tap comes a different water from a different company, and companies compete for price and quality. Certainly this provides market pressure, but the cost of 10 concurrent water infrastructures is much higher then the theoretical downside of a nationalized water supply under democratic political control. Nationalizing has a downside: it can be bureaucratic and slow to react to new demands of consumers, however it also has an upside and that is that it is non profit. Water is a good example of something which needs nationalizing: 1. the infrastructure prevents efficient consumer market operation, 2. the product just needs to be the same reliable water, year in year out. Postal services are another example: if we have 10 postmen come by every day, and a row of 10 different post-office-boxes, we run a high risk that every choice has to be much more costly because the volume of post has to be divided between all competing companies. With the lower volume per company, the cost of maintaining the infrastructure and paying all postmen, has to be divided between fewer posted items, so the cost to the consumer per item goes up (isn't it obvious ?!). My favorite example remains to be the railway: picture 10 complete railways side by side, possibly using different competing systems. Will either be able to run with the low cost of one nationalized rail company. Run trains for different companies over the same railway ? Travelers want to be somewhere at a certain time, they are not going to be there 60 minutes early because they want to travel with one specific train company. The overhead of all these different companies does the system little good, and in addition profits need to be payed. The railway can also not be allowed to go bankrupt, which allows management to gut the company for short term profits, correctly assuming that government will eventually step in and fix the problems for them.
The great fallacy of privatizing companies that are unsuited, is that a privatized management is somehow able to energize the company, rushed on by its own limitless greed. The politicians betray their own lazy nature: from the position of a company employee it is confronted with management either way, political or private. Politicians should take a hands on approach if they want certain monopoly sectors to perform better, rather then hire someone else. If they want to hire someone else declaring themselves incompetent in the process, they shouldn't have come to politics in the first place.
Industry: semi monopoly sector
- A "divide and conquer" solution. Some sectors lie somewhere between systems that have a total infrastructure like tap water, and sectors that have no or little in the way of a high cost infrastructure, like restaurants, bars, clothing shops. One example can be hospitals. In large cities there can be numerous different hospitals and in many cases `costumers' (diseased people) will be able to make a practical choice between them. If one hospital gets a reputation for bad heart surgery, costumers may choose to go elsewhere, eventually ending that heart surgery department. This is useful market operation, the hospital may decide to revamp their heart unit to win back trust (fire that drunken surgeon), and all can end well. However if hospitals are allowed to be private enterprises, they will start catering to the rich because that's where the money is at. People who work hard but earn few will get second grade care, rich - possibly criminal - people get luxury rooms with 5 star service. This is morally not acceptable. A hospital is neither something you can grow from a humble beginning, it is a large capital investment in trained staff and machines, medicines. Although its infrastructure isn't pervasive, it is costly. Public health in any case is a public concern, not comparable to the fashion colors of fall. Hospitals seem to operate somewhere between general enterprise, and the clear monopoly sector. Consumer market operation is possible and useful, but to give it free completely seems doubtful for many reasons.
A solution can be to allow people to choose to which government owned hospital they go. The government can force all hospitals to provide the same care to each patient, for instance against zero cost circumventing needless bureaucratic overhead from financial insurance constructions. Health care not concentrated in hospitals could be left to the consumer market. Another area like this might be schools. This area is probably the most difficult to design because it is in between two more simple systems (free market or nationalized).
- A "fractional ownership" solution. This is probably a futuristic or archaic idea: every person gets to own for life without right to sell his/her share of the resources of the area or even planet. In areas that are not complicated this can work simple: farmers get their share of soil and can work on it. If they want more, they hire it from someone else, but own the products on the land. The reason that someone can not sell it, or hire it away for eternity, is that it is also a safeguard when someone becomes unemployed. If someone is unemployed, he/she can farm their land. Fisheries and even mines could be included in this scheme. People could swap their explicit resource with someone else. In a more futuristic setting, people could hire their resource to a bank type enterprise. It could manage many resources, hire them out when possible. In theory (but perhaps not in practice), this can provide a new kind of social security. People will own enough land to swap under their home, only having to pay for the home, no land-ownership speculation. People who live above each other retain a lot of resources, these can be hired out: people who live small get a natural reward.
Some area's of the world live primarily from trade, regions around major ports for instance. In other regions enormous profits could be generated from a single mine. Should everyone hold a portion of the harbor, and an angle of the mine shaft, where does "everyone" start and end, the local town, country, continent, Earth. Mining and strategic points such as harbors could become object of war. This is not what we would want, of course. The logical solution seems to nationalize these areas, "unique infrastructure element". The government could take in hand exploitation of things like this itself in some way. There is usually some kind of natural limit to the resource: a large port serves a land behind it of certain size, a mine serves a certain section of the market (if 10%, then 10% of the Earth surface could be its natural size). Political realities will probably dictate what the area will be.
I will agree that this system seems quite futuristic, possibly fantastic. I like it though, it seems so elegant and natural. Obviously a percentage N needs to be given to raw nature.
More: there are all kinds of rules possible to make the markets free and fair
- A "eventually the company passes into workers hands" solution. When someone builds a business from scratch, that is usually a creative and productive job (depending on the type of business). When the original "entrepreneur" goes away it currently has power to do with the business as it pleases. It can sell it to investors, liquidate it, or leave it to its children for instance. None of these people can claim the expertise the original entrepreneur has had, none of them has therefore a claim to a natural right to lead the company. The obvious solution is: the company must be left to the workers, who comprise the second part of the success of the business. They have more expertise then investors (financial gamblers), and in any case have most interest in keeping the business going successfully. The problem is: how to make the transfer happen smoothly. What is in it for the original entrepreneur, and how can it be prevented from destructive activities just before worker take over. The "win over" part can take the form of a pension from the company for the entrepreneur over a period of N years (for instance 10), or for life. This is not enough in many cases, liquidating the company may yield much more money then a pension could. The entrepreneur may have personal funds invested in the company and wish to free them, which is a fair demand. Because the workers will have to run the company (and/or hire/fire their own future managers), it seems natural that the workers and previous entrepreneur negotiate the take over. Goal of such negotiation can be: leave the entrepreneur without "unfair" debts, and provide a reward in the form of a pension. This means that an entrepreneur does not have the power to sell its company, not without consent from the current workers.
- A "workers more power" solution. Workers usually get badly payed, far below the value actually created, because they lack power. The job market shifts power to employers because there are fewer employers then employees, it is a "buyers market". One obvious solution to this is to subject employers to the same power of hiring/firing: making it possible the workers can hire/fire their owner/bosses. This situation occurs naturally from the above "company eventually passes into workers hands" solution. Once workers control management, they can decide how profits are distributed, and how new employees are hired. The beauty of this system is that the economy will have a wide variety of differently organized businesses. The cooperatives will have to compete against the dictatorships for the favors of the consumers (but not for the favors private investors who only want profit and low wages, because there aren't any if things go right), etc.
Some people seem to like the idea of ``complete integration'', where there are no companies and no market pressures between them and with the consumer public. Everything is decided by applying direct intelligence, ``production to satisfy human needs, not profits'', a consciously planned world, everything nationalized and therefore in a state of monopoly. I think this is a naive idea, resulting from the simplistic idea that private investor profit-seeking is the same thing as productive company profit seeking. Once this simplistic idea has taken hold, everything that is in favor of "market pressures" has to be bad, and the next step is to nationalize and monopolize everything under direct democratic control.
The limitations of this `conscious planning' idea are clear when they are applied where they can work.
Trade is a device to protect both trading partners against being deceived: the partners do not give away freely but demand an immediate proof of productivity from those they give something to. They don't give a pound of grain to a king, unless the king agrees to do the dishes for them right now. That this doesn't happen is not the fault of trade itself, but of the power plays that warp trade. However, no such proof is needed when the trading partner is your co-worker whom you see working every day. You know him, you know he is productive via an alternative means: direct knowledge. Therefore you do not need to trade with this person from moment to moment.
The circle of people whom you can know to this detail is limited, and that is the natural limit of a planned economy without trade. Hence, a planned economy can only work for small groups, perhaps stretching it up to several tens of thousands. When dealing with hundreds of millions of people, not everyone knows each other even in the slightest. Trade is simply useful to make sure you are dealing with someone productive, as you see immediate proof. To remove trade means to assume everyone is basically a holy saint. It will likely grind human beings to a pulp between the vast bureaucratic machineries that control production. When you are part of a continent wide planned bread system, you are nothing. Your choices don't matter, 10.000 others for you. When you work in a local independent company, steering itself through the market of consumer favoritism, your choices decide everything. The issues that work on what decides your life are immediately visible, exist on human scale. The quality of your work is immediately reflected in your success. You have the freedom to organize your work as a sovereign team of people, can do new things and renew what the consumers can get. If you do something bad, it will bite you immediately; when you do something good, it will reward you immediately. Isn't that the nature of living.
The people who want to plan everything may be people who should be working in the `monopoly sector' where consumer competition is understood to be detrimental or impossible. It are usually sectors that don't need much renewal of products, it is more about reliability (tap water, public transport, ...). Meeting a number of quality standards, and keeping it that way. Since planning is in its right place here, and the infrastructure is "one single unit" of which everyone should hold its part to produce the whole, individuals carry individual responsibility again. Tap water needs to be the same everyday, decade after decade. The organization can become highly experienced and efficient. The same can not be said about clothing, consumer products, food, movies, etc etc. Everyday the exact same bread, and it will soon taste like nothing. Since individual groups can perform the tasks of making bread locally (and often better), it breads discontent that the orders of a vast bureaucracy have to be obeyed for no good reason. This may result in mutiny and even more substandard production. It doesn't take the people serious, has no faith in them.
This problem: why what to nationalize and why what to leave to the markets seems to have created the greatest rift between progressive people. On the one hand the people who want to nationalize everything, on the other people who refuse to acknowledge the detrimental effects of private capitalism or that there could be invented an alternative besides "limited direct action and slow progress", which too often is an excuse to do little and pave the way for private capitalists. I hope both sides will see the limitations of their own extremist points of view, and acknowledge that a combination can stand up to criticism better then either. This solution is both utterly anti-capitalist, yet is pro free markets. It can be called more liberal then the liberals, more communist then the communist. It is not a compromise or "search for a third way", although the solution does seem to have points that make it in hindsight fit the description "third way". Private capitalism is to be gutted though, no compromise with capitalism is possible.
The above solutions may not be enough to strangle private capitalism, or they may be overkill. Trying is knowing. More can be created, some can be removed, others can be strengthened, or weakened to fit the current situation temporarily.
The tactic by which to reach the goal of ending capitalism is another problem. It seems that as long as the goal is detailed, clear and widely supported, it does not matter whether it is effectuated through parliament, mass strike, revolution, or combinations. Agreeing on a clear goal means the pressure can mount sufficiently high until something gives.
I think we live in Western Europe in a "bribed zone", an area with excessive wealth sucked from the rest of the world. This excess wealth is a kind of buffer zone for the capitalists, it buys local support and supports the luxury economy they want to live in. While the poor used to live at the edge of town, they now live on the edge of the world. Removing the capitalists, removes this effect. It is possible that defeating private capitalism means living conditions to go down in the bribe zones, and for bribed classes of workers in particular (especially university people, and other groups with a little more power then your everyday wage earner). Eventually technical advances make all living conditions go upwards again, though. Don't come to me when you end up with even fewer buying power. The mismanagement of capitalism has done much damage already, the cost of this damage is yet to be taken out on society. This cost should not be confused with mistakes of a post capitalist system, even though the post capitalist system may have to deal with them. The longer capitalism goes on, the higher this cost could become.
Capitalism has its own direction of evolution. The essence of capitalism is not trade or free markets, the essence of capitalism is racketeering and greed (as differentiated from company management). It is ultimately a system of wild animals, I think it will therefore eventually return to systems employed by wildlife. That is: brutal oppression, war, tribalism, dictatorship, class society. Just as capitalism emerged from feudalism, so can feudalism emerge from capitalism. The old feudal lords would have defeated democracy at long last. Theories involving nationalization of everything could then even play into their hands.