Ideas related to post-capitalism, start socialism

The idea is to remove private investment from the system, the next problem is how. When private investment is removed, there might be a hole in the system, what should fill this void. It should be agreed first why we need to be fundamentally rid of private investment. Otherwise there is not enough will to deal with (initial) problems, failure might be blamed on the principle, rather then on details of a solution.

- A "deny liquidity" solution. When investors invest, their money can come from different sources, for instance savings, or company profits. Banks use another method: other people's money that they have stored for safe keeping. They use this money to invest in companies, and make consumer loans. From the often absurd profits they make, considering the effort put in, people offering their money for safe keeping get a yearly percentage. This percentage is usually around the inflation level, though, so it really doesn't amount to anything. If someone is offered 3% on a savings-account, it may well be that it is paying 1%, if inflation is 4% (real inflation, not what government figures claim, governments lie too much). Because banks invest in companies, and reap a share of profits therefore denied to companies, working against fair business practices because they are eventually less profitable, it is in the end payed for by the working people in reduced wages and fair business practices. What is 3% worth, if it costs you 4% on your salary, or 40% ? The money has to come from somewhere, doesn't it. Wealth isn't created out of nothing, it has to be build.

By nature, when a company is making profits, there is a strong incentive to spend this either on personal consumption or invest it in the future of the company. Personal savings are scattered and individually don't amount to much, and they are often owned by working people. When a retail bank opens business, there can be hundreds of thousands of people, millions, that put their money in that particular bank. Now this bank controls a lot of money. Because the bank has no other way of making money, it is going to be an investor out for profits. Unlike for any other business, this is bad.

A solution can be to make sure there is no such concentration of consumer funds in private hands. One way to perhaps do that, is to have the government create a bank-account for every person. On this account the government has the power to offer an inflation correcting percentage, to make it attractive.

This government accounting system can act as a true bank, where a person can have the usual banking services. For people who like to pay for better services, business can be set up which interface to the government accounting system for the costumer. But such a bank can take funds entrusted to it from a costumer, and put it on its own account. This way that bank will be able to re-invest that money, and create the problem of private investing again. This may not be a bad solution, because it offers people a choice: use the government (politically administered) system directly and prevent all re-investment, or entrust funds to a front-end business. Such a setup allows for banks to go bankrupt without much trouble, this will not necessarily affect a lot of real people. It also allows for banks to offer the promise of social investment, it gives people a recourse besides whatever the government is doing. A front-end retail banking business can also hide individual transactions from a government, offering a privacy service.

Because in the system the government has unlimited capability to invest money, this political economic power can and should be used as part of the democracy. It is possible for the government to combat the effects of private investment, and even to combat the survival rate of certain types of banks. In the economy there are fragile commercial banks floating on top of a government accounting service, and the super powerful government bank (with unlimited spending power, enough to destroy or fix the economy).

This government investment capability has its own problems with corruption, it should therefore have a certain structure, limiting high end corruption and malpractice.

- A "political capitalism" solution. The problem with professional private investment is that it always has to seek profit, that it attempts to make capital from capital, which is an anti-social influence on raw consumer competition between companies, and unproductive in its own right.

A financier needs to be found which does not rely on profits to exist, which acts in the common interest: the people themselves, through (real) democracy. If a psychopathic government is elected, lying and cheating their way through the polls, they get their hands on infinite creation of legal money. If they are in power for 4 years, they can do some serious economic damage.

One solution might be to create enough sub organizations, they can be assigned to regions and/or types of business. It can be a political issue how much money is going to be given to each sub organization for investment (crediting its account). Where the investments are to be exactly made is then a matter of (local) democracy. The top decisions control the total amount, and therefore the level of inflation, which is offset and supported by taxes. This would prevent local malpractice to the cost of the currency.

Taxes are just a means of creating deflation, which the government can then leverage as inflation.

- Lending: what to do with consumer lending: mortgages, consumption credit. These services make sure that someone buying an expensive product can pay down the supplier immediately, so that suppliers get payed immediately and can move on with their business. It is in theory possible to do this fractionally over time without any lending, but this is probably not practical. The problem is who can provide lending services without too much corruption. If a government agency with unlimited capability to create money offers mortgages, no doubt certain government bank employees will be tempted, as well as high level officials and politicians. A government does not easily go bankrupt, general inflation pays the price. Some politicians are known for their short sighted vision aren't they, they'll be tempted to hand out money in return for popularity. This produces inflation and should reflect on the politician, but by then the politician has moved on or found some scapegoat. It may be difficult for government employees to turn apparently bad applications down, costumers are likely to accuse the government of unequal treatment.

In a scheme with government bank-accounts and front-end private banks (above), front-end private banks exist that can offer such lending. This invites back in the problem of private investment, and it remains to be seen if such companies come to exist in this system. The government accounting system could in theory offer personal loans. This would then need to be regulated in great detail, essentially be a judicial system rather then a political system. In this large investments and personal loans would be different things. Therefore they should probably be handled by different organizations. (I am unsure about whether this will work properly, but it probably could.)

These solutions all seem to have one thing in common: they are soft solutions. A heavy handed way to end capitalism would be to nationalize all banks. Is that `prudent', or is that `crude' ? Nationalizing banks is basically what the above amounts to. If levels of detrimental capitalism persist there are two tools to combat it: the super government bank wielding unlimited funds (minor power), and the creation/termination of laws (major power).

The overall difference between this `democratic capitalism' and `private capitalism', is that private capitalism assumes that people always behave out of pure greed, where this `democratic capitalism' makes room for other ways to express freedom in a stable manner, although it doesn't force it on anyone.


A government model as proposed in constitution proposal:

Example `as if capitalism were already defeated'

A cleaning company `IIS' is forcing cleaners to work ever quicker and quicker, for less and less. Things aren't getting clean anymore, workers drop out everywhere to be replaced with new cheap throw away workers, but profits of IIS are booming.

To solve this, an investor war is declared on `IIS': the state has to be forced to take this in hand. There are now a wide range of ways to defeat IIS.

- It can invest (the State is the only strong investor) in a new business. Strikes by IIS workers can cripple the trust of someone that is making use of an IIS cleaner, makes him/her look for another option. This option is available in the form of the new business. A new worker is installed, the new cleaner is getting a higher percentage of the profits of the business. The worker fired can apply for a new job with the new business. This could be a coordinated action.

- It can buy IIS, accepting a level of inflationary losses to the state, and restructure IIS from the top down using its new ownership right. After the business has been altered, it can be sold, perhaps to a workers council of IIS workers who deploy a democratic procedure to keep management under control.

- It can invest in all other businesses except IIS, temporarily reducing cost on costumers until IIS has been bankrupted. All consumers get a tax break for their cleaning costs, except when they use IIS.

- It can declare IIS forfeit, take it over by force of law, and don't spend another penny defeating IIS economically.

- It can levy an additional "social" tax on any business using IIS services, until IIS changes its policies or goes bankrupt.

- It can launch a public awareness campaign, letting consumers know when IIS services have been used in the production of a product or service, asking them to defeat IIS by conscious economic choice.

Since there isn't much of a counter-strike by private capitalists (who currently wage this same war in the opposite direction), the new better behaving business isn't likewise financially and then competitively attacked. If consumers come to understand that it is in their own interest to support businesses with fair wages and conditions because they and their children will work in these businesses, they can use their consumer influence out of self-interest. A `self cleaning' economic mechanism. It does not rely on idealism (alone), but on well understood long term self interest. In any case, with finance under democratic control, any kind of workers' struggle will be much more effective. The state doesn't necessarily have to wage this war itself. No effective professional private finance means one influential enemy less.

Disclaimer: You implement these things on your own risk. Don't do it unless you are willing to accept responsibility for it yourself.

Do you notice that in the above proposal there is at least one apparent contradiction: how can you not support contracts of investment in the judiciary, yet have Public Finance make investments and grant loans. Are these investments gifts ? Or did you assume the government has a special privilege to demand being payed back ? Something else ? How do you want to solve this contradiction in principle, and why. How do you want to implement your principle, and why. Is your solution workable ? Can it deal with corruption from the top as well as the bottom, or does it need a group of saints or demand a certain type of behavior from the public to-be-educated ? What does it likely mean for one individual act of investment, and what is the overall effect of over the long term ?

My idea is: the government has a special privilege, because there has to be a break on how much money is being put into the economy, and recipients of investment must not profit just from receiving an investment. This does not solve pressure on an individual employee that deals with granting loans, so that the employee will make too many `sympathy loans', which are not being payed back (racketeering costumers). The government can hardly go bankrupt over this, but it is an invitation to fraud and weak practices (just as the stock markets are now). If the employee can point to another source where someone can go for money, the employee is less likely to fall for this, because costumers still have other options to try (lower volume is more attention, crime can go elsewhere, more diagnoses by different organizations some of which can go bankrupt). To facilitate this, the government can grant a permit to select private enterprises, to also be able to make loans enforcible by law, an extension of its own right. The government can engage in all kinds of contracts with such businesses, in order to keep them in line. This way costumers have all kinds of options, and do not have to rely on one source for consumer credit. Loan businesses can not effectively operate outside the government granted permit system, because if they do, all their loans are gifts. This does not prevent violent loan crime, but it diversifies the economy of credit, and creates independence and privacy from government. A likely source of credit businesses are banks because they have liquidity (control much money), if they will emerge in this system. If the Public likes to, the bank can be granted an enforcible loan permit. Then they can utilize their capital to make capital from capital, which is dangerous. The terms of the permit may therefore need to deal with this danger. The amount that can be loaned may be limited, the purpose of lending may be limited, etc. Loans for consumption can probably be supported against collateral, it is just a deal between two partners, who cares. Loans for business upstart or business growth are different, they have potential to affect more people, especially future employees. It may be efficient to have one permit for simple consumer credit that makes the economy run more smoothly (mortgages), and have a different set of rules for business upstart/growth. Granting the latter with more political attention, and the former with more economic attention. Loans repayable in time against collateral are always less dangerous then control/power instruments such as shares and endless claims on future profit. Such instruments of perpetuating drain should not be supported in law or by permit (the government can still do it of course). If these limitations don't prove effective, permits can be altered, or be recalled (etc), and the government bank can take all kinds of economic action.

... all kinds of details which can probably make or break the system ...

One solution may work for this group, another group may need another solution; one solution way work for a while, but then need change. It does not depend on the internal logic of the system what the people should be doing, but what the people do can determine the system. The system is therefore alive, always adapting. If the people aren't willing and able to successfully tinker with the system, it is probably no use to even begin. If the people don't control the government, it is neither any use. If a government currently not under control is going to implement these changes, it is most likely to build in any number of back-doors to defeat it. Allowing corrupt people to build and staff a system aimed at reducing corruption is probably not a good idea. It all hangs on one ultimate principle: political investment. Are the people able to force political investment for the common good, or will the state behave the same way as private investors.