Category: Enterprise

True capitalism requires social security

True capitalism actually requires a proper system of social support to avoid the unhelpful intervention of governments in the form of corporate welfare.

The trouble with capitalism as a political philosophy, is that it isn’t one. Capitalism is an economic principle and mechanism, but it is not politic. That is that it does not concern itself with the many, nor does it have any interest in the well being of people. In capitalism people are resources, in politics people are people.

One of the lessons of the recent financial turmoil is the recurring reminder that, in the end, governments, on behalf of the people, bear the final responsibility for the welfare of people, and thus must act as the ‘backer of last resort’ for the economy. Without social support this inevitably leads to corporate welfare. There is no other choice: if one believes that the welfare of the people is dependent on the merchants of capitalism, it follows that maintaining the welfare of the people requires the support of the merchants.

The trouble with this is that the merchants are not innately directed by the welfare of the people, and they make very ineffective distributors of social security. It is not in their DNA, and nor should it be. Give a bank a billion and they will use it to make money, what else would you expect from a bank?

If you really want to let capitalism have free reign then you have to make sure that social security is there first. That way corporations can rise and fall according to the laws of the market without having to be rescued by the tax payer, this is the ideal that market fundamentalists espouse. The mechanism of capitalism is dependant for its long term health on the death of unsuccessful ventures, and so society must isolate itself from such deaths, as much as it can.

By providing the social infrastructure detailed in the Standards of LIFE, one can let the market go. When the fates of corporations are not a threat to the basic fabric of the society they thrive in, then they are liberated to pursue their raison d’etre. Furthermore, the micro economic enablement at the core of the Standards of LIFE further isolates the welfare of the public from the failure of any particular enterprise and from the natural cycles of specific industries.

True capitalism, it turns out, actually requires that there is a proper system of social support in place, in order to avoid the unhelpful intervention of governments in the form of corporate welfare.

Congo’s fate is not its destiny

The ongoing war in the east of the Congo has its roots in the corrupt neglect of the “exploiting world” and the failure to adopt realistic social structures, which is not limited to the Congo but is prevalent across the “emerging world”.

The corrupt neglect of peoples, and their governments, in the parts of the world that industrialized first allows and encourages that chaos, because that gives them competitive advantage in access to the resources they need to feed their industrialized production systems. The failure of consuming countries to regulate the abroad activities of commercial concerns based in their territories is an abrogation of their own standards and principles. As laid out in the External Relations section of the Standards of LIFE, societies should adopt standards to govern their trade with other people, using the same principles they apply to themselves. In the Congo situation, this would mean that European companies would be required by their own domestic law to deal only with sanctioned representatives of the people of the Congo that also adhere to the Standards of LIFE.

The emerging world, sometimes called the developing world, is a group of all those people who are emerging from colonial pasts, and yet still subject to the structures of government and international relations that are cast in the old colonial mold. These structures are beneficial to the exploiting world because they provide a single point of corruption through which to access the resources they want. All this is exacerbated by the emerging world attempting to operate within geographies and boundaries that were defined to reflect colonial divisions of authority, not the natural human landscape on the ground.

If the people of the Congo, and its neighbors, were able to adopt the more natural and flexible structures of the Standards of LIFE they would create a more firmly grounded society that, in turn, would be better able to establish the rule of law, which would contain the poisonous leftovers of the Rwandan massacres of yesterday. The twin objectives of protecting people and nourishing their prosperity can be achieved through the adoption of properly representative and principled government in both the exploiting and the emerging worlds.

The Congo’s destiny is to be a propserous and peaceful region, but until the exploiting world takes responsibility for its own actions and the emerging world adopts new political structures that serve them more naturally, the Congo’s fate is the stuff of nightmares.

Labor unions fighting the wrong battles

Since the dawn of the industrial age, the organizations representing the workers have been locked in two battles with the enterprise owners: one for a safe working environment and the other for a share of the wealth created.

The first battle is the one that unions can fight and need to win. The people who know the hazards of their workplace are the workers who work in them and, quite rightly, they have the full support of their fellow citizens in demanding the remediation of any deficiencies. The hollowing out of regulatory agencies that support the workers’ right to a safe workplace has resulted in the aggregious exploitation of unorganized and organized labor alike.

The second battle is unnecessary, and the result of a misunderstanding about the power of democracy. To the extent that there is widespread support for a “living wage”, it reflects a natural inclination in all of us that the contribution of one’s labor should, at least, deliver the bare necessities of a peaceful life. Beyond the satisfaction of basic needs, the support for a principle of sharing the wealth created by some becomes distinctly frayed and disfused. This is also a natural impulse and reflects our personal experiences of achievement and the pursuit of our interests.

When unions demand a share of the wealth created by the organizations they work for they are treading the narrow path between natural fairness and natural enterprise. They have the support of the populace for the former and are fighting against common instincts when they stray into the latter. The answer to this conundrum is to be found in the politics of their society, it is in the hands of the very people they represent. A taxation system that assures everyone of the basic essentials of life is there for the asking when the majority of people are workers living in a democracy.

As proposed in the Standards of LIFE, a simple tax system that dedicates income tax revenues to meeting the basic needs of all, satisfies the fair demand for a fair share of the combined wealth of the society. The battle should be to help the workers see that the ballot box, not the picket line, is the way to achieve their aspirations for a livable life. It is completely unnecessary to fight, against the grain, trying to force enterprise owners to meet the need for basic services.  The owners are focussed on competing and innovating and that means keeping costs as low as possible and their focus on their markets, not the social needs of their workers. Successful enterprises are those that make the most of the knowledge, ingenuity and insights of their workers, but this is not the same as ownership, risk taking and entrepreneurship.

Legislation, that supports safe workplaces, and a taxation system, that meets society’s basic needs, are both the domain of government; and governments are elected by the people. So stop asking corporations for what they are disinclined to provide and start asking yourself why you’re not giving yourself what you need. Unions should mobilize their members, to mobilize the majority, to elect a government, that will deliver the standards of life to all.

Unions might find themselves allied with the owners in an endeavor that delivers fairness while freeing corporations from responsibility for the fabric of their society. Adoption of the principles and policies of the Standards of LIFE has the potential to create just such an alliance, around a common purpose that satisfies different interests, because the Standards of LIFE delivers social justice without blunting the driving force of enterpise.

What’s more, if the workers have their basic needs met then the employers have to work harder to attract employees and that means better and safer workplaces.

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