After Capitalism (New Critical Theory)

1. Economic Democracy: A Viable Alternative to Capitalism

"Economic Democracy, like capitalism, can be defined in terms of three basic features, the second of which it shares with capitalism: Worker self-management, The market, Social control of investment."

Core principles. Economic Democracy is proposed as a successor system to capitalism, addressing its fundamental flaws while retaining its efficient market mechanisms. This model aims to create a more equitable, sustainable, and democratic economic system by restructuring ownership and decision-making processes.

Key features:

• Worker-owned and managed enterprises
• Market-based allocation of goods and services
• Socially controlled investment through public banks

Economic Democracy seeks to balance the benefits of market competition with democratic principles, potentially offering a solution to issues like inequality, unemployment, and environmental degradation that plague capitalist systems.

2. Worker Self-Management: Democratizing the Workplace

"To be sure, it is theoretically possible for a majority of workers to vote to lay off some of their colleagues or to replace a minority of higher-paid workers with lower-paid ones, but the natural solidarity engendered by democracy sharply mitigates against such behavior."

Workplace dynamics. In worker-managed firms, employees collectively make decisions about production, organization, and profit distribution. This structure fosters a sense of ownership and responsibility among workers, potentially leading to increased productivity and job satisfaction.

Benefits of worker self-management:

• Increased job security and worker solidarity
• More equitable distribution of profits
• Enhanced workplace efficiency and innovation
• Reduced income inequality within firms

Evidence from existing cooperative enterprises, such as the Mondragon Corporation in Spain, suggests that worker-managed firms can be highly competitive and resilient, even in challenging economic conditions.

3. Social Control of Investment: Rethinking Capital Allocation

"Since investment funds are publicly, not privately, generated, their allocation back into the economy is a public, not a private, matter."

Public investment. Under Economic Democracy, investment capital is generated through a capital assets tax rather than private savings. This approach allows for more democratic control over economic development and addresses issues of capital flight and regional inequality.

Key aspects of social investment:

• Capital assets tax on enterprises
• Public banks allocate funds based on profitability and social benefit
• Regional and community-level investment decisions
• Emphasis on job creation and sustainable development

This system aims to create a more stable and equitable economy by ensuring that investment serves the public interest rather than solely private profit motives.

4. Market Mechanisms in a Socialist Economy

"Economic Democracy is a market economy, at least insofar as the allocation of consumer and capital goods is concerned."

Market socialism. Unlike previous socialist models that relied on central planning, Economic Democracy retains market mechanisms for allocating goods and services. This approach aims to combine the efficiency of markets with the equity goals of socialism.

Characteristics of markets in Economic Democracy:

• Competition between worker-owned firms
• Price signals guide production decisions
• Consumer choice drives demand
• Regulated to prevent monopolies and promote social goals

By maintaining market competition while changing ownership structures, Economic Democracy seeks to preserve economic dynamism while addressing the inequalities and instabilities of capitalism.

5. Addressing Inequality and Unemployment

"Economic Democracy greatly reduces the economic anxieties that so many people face today."

Economic security. The model of Economic Democracy aims to tackle two major issues of capitalism: extreme inequality and structural unemployment. By changing ownership structures and investment patterns, it offers potential solutions to these persistent problems.

Strategies for reducing inequality and unemployment:

• More equitable distribution of profits within firms
• Full employment policies, including government as employer of last resort
• Investment priorities focused on job creation
• Reduced income disparities between firms and industries

These measures could lead to a more stable and prosperous society by ensuring that economic gains are more widely shared and that meaningful work is available to all who seek it.

6. Environmental Sustainability and Economic Growth

"Economic Democracy does not have the same underlying growth imperative as does capitalism, but ecological sustainability would seem to call for more than that at least on the part of rich countries."

Sustainable development. Economic Democracy offers a framework for addressing environmental concerns without sacrificing economic well-being. By removing the capitalist imperative for constant growth, it allows for a more balanced approach to development.

Environmental considerations in Economic Democracy:

• Ability to prioritize sustainability in investment decisions
• Potential for reduced consumerism through increased leisure time
• Democratic control over resource allocation
• Emphasis on long-term planning over short-term profit

This model suggests that by changing economic incentives and decision-making processes, we can create an economy that respects ecological limits while meeting human needs.

7. Transitioning from Capitalism to Economic Democracy

"Economic Democracy will have to face the career-risk problem squarely, if it is to draw good people into politics."

Gradual transformation. The transition from capitalism to Economic Democracy is envisioned as a process of reform and restructuring, rather than sudden revolution. This approach allows for experimentation and adjustment as new economic structures are implemented.

Key steps in the transition:

• Expanding worker ownership and profit-sharing in existing firms
• Developing public banking and investment institutions
• Implementing fair trade policies
• Reforming political campaign financing and career structures

The goal is to create a pathway to Economic Democracy that is both politically feasible and economically viable, addressing potential challenges and resistance along the way.

8. Global Implications of Economic Democracy

"Economic Democracy is committed to providing decent work for all who want to work—which means the government will provide jobs for people who cannot find work elsewhere."

International cooperation. Economic Democracy has significant implications for global economic relations, potentially offering a more equitable framework for international trade and development.

Global aspects of Economic Democracy:

• Fair trade policies replace free trade agreements
• Reduced capital flight and economic instability
• Potential for more equitable global development
• Emphasis on local and regional economic self-sufficiency

By changing the rules of international economic engagement, Economic Democracy could lead to a more stable and just global economy, reducing conflicts and promoting sustainable development worldwide.

9. Lessons from Historical Economic Experiments

"If we look at these experiments through the lens of Economic Democracy, we see something rather different."

Historical perspective. The concept of Economic Democracy allows us to reinterpret various 20th-century economic experiments, from Soviet-style central planning to Japanese export-led growth, offering insights into their successes and failures.

Key lessons from past experiments:

• Limitations of centralized economic planning
• Potential of market mechanisms in socialist economies
• Importance of democratic control in economic decision-making
• Need for flexibility and adaptation in economic systems

By learning from these historical experiences, proponents of Economic Democracy aim to create a more robust and adaptable economic model that can avoid the pitfalls of both unfettered capitalism and rigid state socialism.

Last updated: August 27, 2024