[This is Chapter 22 of Murphey’s book The Emerging Crisis of Economic Displacement.]

 

Chapter Twenty-Two

 

A "SHARED MARKET ECONOMY"

 

            In the coming age, for great masses of people work will be either marginalized or totally displaced.  A free society will survive only if it makes a distribution of economic product to all who count as members of the society.  At the same time, it can do more than survive: with social stability and the population's purchasing power secured, the economy can continue its upward progress through the vastly productive combination of a free market and what is now exponentially advancing technology.  The market and technology will be needed to create the goods and services that will make the distribution possible; and economic freedom will exist in the right of individuals to participate, as much as their abilities and contractual relationships allow them to, in the global market and to rise above what the general distribution provides.  At the same time, care will need to be taken that the accumulation of individual riches not be so great as to create a rigid or hereditary elite inconsistent with a free society.  Further care will be needed to limit and check the power of government so that the process of distribution has the effect of enabling and enhancing a free society rather than becoming the means to totalitarian power.

            What I have just done has been to restate some of the essential requisites that I discussed in the preceding chapter.  Now, the question is how these goals can be achieved.  There is one way in particular that seems to satisfy them all.  And that is a "shared market economy."

 

            But, first, we should revisit an issue of theory and morality.  Some readers will not have read the entire book up to this point.  They may even read this chapter first, or make it the only chapter they read.  If so, they will have missed my discussion in Chapter 18 of the moral rationale for earnings and property, in which we saw how essential it will be for classical liberalism, as the theory of an individualistic free society, to adopt and expand Henry George's rationale from a century ago.  If they missed that, they will be inclined to think, as a great many Americans do, that a system of broadbased distribution in which people receive a living without first earning it through "the sweat of their brow" amounts to an immoral taking of money from the successful to support slackers.

            That view will no longer be appropriate to a free society under conditions of a near-workerless economy.  Here's why (although if you have read the earlier discussions, you may want to skip this section):

            .  First, technology's increasing displacement of work will soon create a crisis of legitimacy for a market economy, since vast numbers of people won't be able to make a living through it, however much they want to work.  Unless this is overcome, it will produce social chaos and angry ideology that will destroy a society based on a market economy.  In addition, the old cry of "lack of purchasing power" will no longer be a carping socialist fantasy but will become a real inhibitor to the market's ability to innovate and produce.  A broadbased distribution of economic product – derived from the on-going market economy but not arising naturally out of it – will be essential to the market's very existence and sound functioning.

            .  Second, there will be a well-founded basis, precisely in the theory of property that classical liberals as far back as John Locke have advocated, for concluding that a sizeable part of the economy's product won't be the creation of the individuals working in or having contractual ties to the economy at any given time.  The bulk of its product will come from the work of countless predecessors who laid the foundation for the technology.  Henry George observed that an increase in the value of raw land is due not to anything the owner has done, but to the increase in population; and, accordingly, he believed, despite his fervent support for the free market and individual freedom, that this "unearned increment" could be taxed and the money used for everyone's benefit.  As we go into the future, the incredible technological machine will likewise have a major "unearned increment" aspect to it so far as anyone deriving income from it is concerned.  The next generation will inherit, but will not have created, what Bill Gates of Microsoft and others like him are creating today.  There should be no objection to abundant compensation in the future to those who "add value."  This doesn't rule out, though, considering that much of the product flowing from the technology is rightfully the property of everyone in the society.  This conclusion is especially welcome when reaching it is, as we just saw, an absolute necessity for a free society.   It is gratifying that what is necessary – the broadbased distribution – is also supported by the soundest rationale in the theory of property.

            .  Third, we can achieve the distribution without creating a socialist Leviathan that will crush individual liberty.  I talked about that in the preceding chapter and will address it more in the coming pages as we go into the practical details of a "shared market economy."

 

            There is a preliminary question, too, of whether the advanced economies can afford such a distribution.  To this, it must be answered that the distribution at any given time will have to be geared to what the society produces.  It will be less at first, but will build over time.  And the more the economy produces through competition, science and exponentially advancing technology, the more will be available for distribution.  In this chapter, we will see that large sources of money are already available for the purchase and distribution of mutual fund shares.

           

Ways to accomplish the distribution

 

            Before we explore the details of a "shared market economy," let us consider certain alternatives that for one reason or another are less desirable.

 

            ·  Taxation to provide transfer payments for consumption.  What I am thinking of here is a system that would tax the earnings of those who participate in the market economy as managers, workers, lenders or equity investors, and then use the tax revenues to pay a guaranteed annual wage to all members of the society or to expand the "commons" of public services. 

            The disadvantage with this as against a shared market economy is that all of those people who are taxed will believe – in keeping with the rationale that we hold to at the present time that a person is entitled to everything that voluntary contractual relations will pay him – that they are the true owners and rightful possessors of "what they have earned."  The taxation will seem heavy and unjustified, and they will feel victimized by the "army of slackers" who receive the distribution.  In other words, the ideological rationale underlying the present operation of the market will be left in place, perhaps reinforced, by such a system that has people earn money and then takes it away from them.  There will be nothing institutionalized that asserts the rightful claim of the society as a whole to a substantial part of the economic product.  The earn-and-tax system will lend itself to class conflict, perhaps with disastrous results to a free society.

            This doesn't rule out some taxation, as discussed later, to provide the funds to establish the sharing of ownership.  That will lead, overall, to a system of distribution through dividends, not through tax-and-transfer-payments.

 

            ·  Protectionism, with a competitive internal market.  A tariff wall to prevent the undercutting of producers by low-cost foreign labor, accompanied by a vigorously competitive internal market among the producers who are protected, is an arguable solution for displacement and falling wages caused by foreign competition.  This is the solution advocated by Ravi Batra in his 1993 book The Myth of Free Trade: The Pooring of America[1] and by Patrick Buchanan in The Great Betrayal.  It was the solution advocated by Friedrich List in the early nineteenth century and pursued by the United States throughout the late nineteenth and early twentieth centuries.  Recently, there have been calls for a "social tariff" that would tax goods coming into the United States to the extent that the workers in the producing country are paid less than American workers.

            A tariff wall, put in place for whatever reason, violates the now-prevailing Free Trade ideology, but could become essential from a given people's point of view (such as Americans') if dirt-cheap foreign labor, skilled as well as unskilled, forces domestic wages far down and results in a vast polarization of income. 

            The trouble with it is that it doesn't look far enough (even though its proponents are looking farther ahead than their detractors).  Even today, knowledgeable commentators say that the displacement is coming more from the new technologies than from foreign labor.  If this is true already, imagine how true it will be in the future.   Just as John Paul Jones said "we have barely begun to fight," the American economy has barely started implementing even the already-invented technologies.  (In 1998 an article in the Wichita Eagle told how a local McDonald's restaurant was about to be built in one day, using factory-built components brought to the job-site;[2] another report in 1999 told how a salt company in Lyons, Kansas, was installing new technology, increasing the number of tons of salt mined – and laying off workers.[3]    In the meantime, the carpenter my wife and I contracted with to replace the deck on our home did the job stick-by-stick.  It won't be long before factory-built construction, using robots and computer integrated technology, occupies the field, displacing the tens of thousands of people now working with traditional labor-intensive methods.)

            If technology is the key displacer, that will occur within the very same domestic economy that the tariff solution believes will be the source of jobs and wide participation.  The protectionism won't have blocked the main source of declining participation in work and earnings.  (Readers of earlier chapters know, however, that I would not have us "blame technology" and turn against it.  I am certainly not in favor of blocking the new technologies.)

            Nevertheless, protectionism may be of value, as will be discussed later in this chapter, for other purposes: as a transitional expedient to save jobs during the period a sharing of ownership is being established, since during that time most people will still be dependent upon employment; as a way for a society to implement certain choices about the type of life it wishes to see continue; and to retain competitive capacity for its industries in the world economy even though at a given point in time somebody else is the low-cost producer.  All of these purposes are consistent with the "enlightened nationalism" that Buchanan talks about.

 

            ·  Employee ownership.  This can't be the answer in an age when fewer and fewer employees will be needed for highly productive enterprises.  Who will be the employees who will do the owning?  Even if employee ownership could achieve a widespread ownership, the holding of shares in ones own company, as a person's principal reliance for future support, is precarious because it lacks diversification.  The whole system would have to be backed by governmental guarantees underwriting the failure of any given company.  Such underwriting of firms would stultify the competitive system, the vitality of which counts on firms' failing as well as succeeding.

 

 

A "shared market economy"

 

            Now it is time to examine the details of a "shared market economy."[4]  The definition provided earlier spoke of "a vigorous market economy that all people share in as part-owners."  As I give the details, realize that my image of it should be counted as perhaps not much more than a set of suggestions.  What a society develops by way of consensus about it will no doubt reflect many additional ideas or counter-suggestions, and certainly much debate.  There is a great deal of a technical nature that will have to be thought through by those whose backgrounds make them best suited for that.

 

            ·  An independent governmental agency will buy stocks in index mutual funds and either distribute the stocks in equal shares to each member of the society or, more practicably, simply maintain an account for each person.

            By an index mutual fund I mean one that holds securities in business firms broadly across the market, reflecting the economy as a whole.  (This is perhaps best thought of as the world economy rather than that of any particular nation, in light of the increasing internationalization of firms.)  If each person has an equity position in one or more index funds, the person will in effect own a part of the total economy and will derive income from dividends on equity securities and interest on those that represent debt.  The citizen's fortunes will go up and down with the economy, not with individual firms.  While the holding will be speculative in the same way that the fate of the world economy is speculative, each person will have the benefit of the greatest possible diversification.  His ownership position won't depend upon any one firm or industry, or even a few of them.  This gives much greater safety than employee ownership in a single firm.

            Why not have the independent governmental agency simply own business stocks and bonds itself, rather than shares in index funds?  That is, why shouldn't the agency itself be an index fund?  That is, of course, a possible way to structure it.  The drawback is that this would make the governmental agency a principal stockholder in and/or creditor of a great many firms.  This would inevitably prompt questions about "corporate governance."  "If the agency is the main stockholder, shouldn't it elect the directors, determine who shall be the officers, and in effect set the policies and business direction of the firm?"  This will seem a natural question.

            It is a question, however, that would lead to a socialist rather than a free enterprise economy.  If what we want is a sharply competitive, innovative market economy, government will have to be kept out of its direction.  The firms will have to be profit-driven, on behalf of their mutual fund stockholders and other investors, who will be able to include individuals and private consortia.  True, much of the capital eventually will come from the index mutual funds' stock purchases.  But a principle should be that the firms are under private direction.  If they are badly managed, that will show up in their performance, and investment in them can be avoided just as any index mutual fund today steps around the bad performers while investing broadly across the market.  The independent agency can then pick the index funds that do best at selecting successful securities.

            This is why I call it a "shared market economy."  I don't mean a socialist economy.  The world has recently come, very rightly, to a consensus (as much as the world can) that socialist economies lead to stagnation because they lack the driving motivation that spurs on profit-driven economies disciplined constantly by competition.  Perhaps technology can carry them forward, if they support science, but the progress tends to become lost in the bureaucratic sluggishness.    

            If the agency is, then, to buy a major portion of the economy through the intermediation of index mutual funds, an essential detail should be to have an on-going system of audits, similar to the functions performed by federal bank examiners.  It will be important to know that the mutual funds actually own the stocks they report they own.  It would be very damaging to what I am proposing if it were corrupt or even negligently conducted.

 

            ·  The money that will be used to purchase the shares will come from several sources.  Increased taxation is an option, but there are several others that can be resorted to first.

            New money is created more or less constantly in pursuit of monetary policy as the central banking system expands the money supply to match a growing economy.  In 1997, Chairman Alan Greenspan of the Federal Reserve Board told how "at its February meeting, the FOMC [Federal Open Market Committee] reaffirmed the provisional ranges set last July for money and debt growth this year: 1 to 5 percent for M2, 2 to 6 percent for M3, and 3 to 7 percent for the debt of domestic nonfinancial sectors."[5]  (The references to M2 and M3 are to different types of money as defined by economists.) 

            William R. Allen of UCLA explains that "most money is created by bank lending – commercial banks create the deposits they lend.  Banks are required to hold reserves equal to a minimum fraction of their deposit liabilities... An increase in reserves can come from bank borrowing from the Fed...The dominating thing is ‘open market operations.'  The Fed often enters the government securities market.  If the Fed buys securities from bond dealers, it thereby directly creates money dollar-for-dollar equal to the value of the purchase... There will be additional reserves, on the basis of which banks can create a multiple of new checking deposits.  There has long been an extremely large correlation between Fed purchases and sales of government securities, on the one hand, and the money supply, on the other."[6]  

            What if, instead of government securities purchases from bond dealers by the FOMC, the independent agency for a shared market economy were to buy index mutual fund shares, using newly-created money with which to do it?  This could be done in such a way as to put the same amount of new money into the business system, providing capital and having the same effect on the price level.  It would simply enter the system at different places.  The agency could be given the entire function of the Federal Open Market Committee, or else follow its direction about how much to buy.  The result would be that the economy would receive its billions of extra dollars to expand the money supply in the amount set by the Federal Reserve System, while at the same time the independent agency would come into ownership of billions of dollars per year worth of index mutual fund shares – all without a penny taken from anybody through taxation or otherwise.  It simply adapts a mechanism that is already in place and taken for granted as part of the normal operation of the market economy.  Purchases in the amounts mentioned by Greenspan – anywhere from 1 to 7 percent of the money supply – would come to billions of dollars per year.  The effect would be cumulative, with the shares purchased one year being added to those purchased previously.  We have all heard the old saw attributed to Senator Everett Dirksen that "a few billion dollars here, and a few billion dollars there, and pretty soon you're talking real money."  That would apply to setting up and continuing to add to the agency's holdings for public distribution.

            Much of the expansion of the money supply from open market operations does not come from the initial purchase of governmental securities, but from the multiplier effect within the banking system as new accounts are created.  This means that the agency purchase of fund shares will be in a dollar amount that is smaller than the total increase in the money supply.  If it were considered necessary to have that entire increase result in such purchases to create and enhance the distributional fund, it might be desirable to go to 100%-reserve banking, in which banks would create no new money themselves by a multiplier effect in establishing new deposits.  Then the entire money-supply increase would come from fund purchases by the independent agency.  That is precisely the sort of thing about which I hope to say very little here, since it is better to leave it to future determination and to the expertise of professional economists. 

            Subject to complex details of transition, all money going to Social Security for its various purposes that include old age and disability assistance, now and in the future, could go instead to share-purchases through the independent agency.  The distribution of shares would provide people with income for all periods of their lives, including but not limited to old age and times of disability.  There would be no need for both systems.  The shared ownership would be much more comprehensive.  This redirection of spending would provide many hundreds of billions of dollars for share purchases.

            The same would be true for the money now spent for welfare and the many forms of assistance to the poor at all levels of government.  A news report in 1997 said that "this year, welfare spending will hit $412 billion, or 5 percent of the total U.S. economy.  And by 2002, welfare spending will reach $532 billion.  In the next decade, the United States will spend $5 trillion on welfare, or roughly $50,000 for each taxpaying household."[7]  This couldn't all be pulled from on-going support immediately, but eventually it could as each citizen's fund holdings built up and provided an income, and it would serve as a vast source for fund purchases.

            People of differing ideologies vary in their expectation of how much a general system of income support will reduce crime, if at all.  To the extent it does, the expenditures for prosecutors, public defenders, courts, jails and jailers, probation officers, social workers, penitentiaries, etc., can be shifted to pay for fund purchases equal to the amount of the decrease.

            The money that firms and employees now put into pension savings, supplemental retirement annuities, and IRAs (individual retirement accounts) in anticipation of retirement can all go into the fund purchases or into extra forms of savings to supplement the general distribution.

            Much that people spend on life insurance to protect spouses and children from destitution will no longer be necessary.  Nor will people need to purchase, as more and more now are, "nursing home and home health care" insurance policies for their old age.  What will be needed will only be such supplemental savings or insurance as people find desirable.

            The same is true of much that is now spent by charities for those in need.  All the programs for the hungry and the homeless, say, can eventually be disbanded.  The problem of homelessness will disappear.

            The "unearned increment" on rising land and mineral values can be fully taxed and used for fund purchases (or other public needs).  The present market price of land and minerals reflects considerable value of this sort, but those who now own them have paid prior owners for them, and it is those predecessors in title who have received the unearned augmentation in value.  So it would only be just to the present owners to tax away the unearned increment occurring after the shared market economy system is introduced.  Care will need to be taken not to tax away increases in value attributable to the efforts of the owner or to inflation.  But, as Henry George argued, the rise in values attributable to increasing population (or to changing technological demand or other factors unrelated to the owner's efforts) are rightly an asset of the general community.  George envisioned this as a huge source of public funds.  Whatever it is judiciously concluded to amount to, it can be used for fund purchases, if that is where the society wants to put it at any given time.

            Finally, there is the vast unearned increment that will go to any person or firm who earns income in the future economy (the production of this increment will be much-expanded by the new technology).  That income, as I have explained, will partly be due to the value that is added by the individual or firm, but will significantly be due, also, to the enormous accretion of technology and scientific knowledge from the past.  The latter is rightfully an asset of the entire community.  How much of a given sum of earnings is due to the one, and how much to the other, has no conceptual answer, and will have to be determined by the society on an on-going basis.  The division should be one that balances the rightful claims of the community against the need to allow the participants in the market economy a fully ample incentive in light of their risk and contribution.  Whatever part is taken for the community can, if that is the choice, be put into fund purchases.  Contrary to the strongly held conviction of free market conservatives and libertarians up to now, there will be a valid rationale, precisely from a classical liberal point of view, for progressive taxation.

            I have already indicated that inheritance taxes will be important to prevent the rise of an hereditary caste.  Such a tax encourages the broad diffusion of wealth from one generation to the next.  The proceeds can go into fund purchases.

            What we see from all this is that finding the means to create the fund won't be a problem, except for difficulties of transition.  The means are there, and there is a valid moral basis for using them for the purpose.  One concern will be a possible flight of people and capital from a given country to avoid its taxation, however rightful.  International compacts may be necessary to prevent tax avoidance.

 

            ·  Decisions will have to be made about the eligible population.  From all of the sources just mentioned, and others I have not even thought of, there should be sufficient resources eventually to assure all members of the society an income that will maintain what we would today consider a "middle class" living standard.  If this is not true already, it will increasingly become so as the technology becomes more and more productive.

            But obviously a given society cannot itself do this for all six, or ten, or 14 billion people who exist, or are expected soon to exist, in the world.  It will have to determine who the recipient population is to be.  Certainly all citizens have a claim, if we value "equality before the law," which is a basic principle not only of civilization but of social peace.  But how many immigrants are there to be, to share in the fund?  Each additional person will dilute the fund for the others and make it more difficult to attain a fulfilling standard of living for all unless the newcomer makes an economic contribution equal to or greater than the share he will receive.  There is an imperative reason to limit immigration into Europe and America already if we value the cultural continuity of those societies; to this we can add an obvious economic reason, as well, if the shared market economy concept is adopted.  As discussed earlier, the distributive aspect of the economy will largely be a "zero sum game," contrary to the situation up to now.  [Note in 2006: This point is brought home with particular force by a passage in a recent book on "Latino rights."  An author there advocates a cash distribution system for millions of the Latino immigrants residing in the United States: "The federal government should provide grants to Latino persons living below the U.S. poverty threshold to purchase their own homes... The federal government should initiate a cash transfer payment program that will provide monthly cash assistance to all Latino persons and families living below the poverty threshold."  See Maria Vidal Haymes, Keith M. Kilty, Elizabeth A. Segal (ed.s), Latino Poverty in the New Century (New York: The Haworth Press, Inc., 2000), p. 53 (in a chapter written by Mario R. De La Rosa).  This illustrates quite well the sort of claims that can come to be made on a given society, such as that of the United States, by large masses of people who have just recently come into the society--and who are continuing to arrive in ever larger numbers.]

            All citizens will have a claim, but even this has subtleties.  What about children?  Should a couple with seven children have nine units of ownership in the fund compared to only three for a couple with one child?  Should four people living together have four shares, and a person living alone have one, even though the costs of living will differ greatly?  Those are the kinds of decisions that will have to be made, and the way they are resolved will almost certainly change over time.  Since they aren't subject to "market solution," they are fundamentally political decisions.  That is why a political mechanism that reflects the public's will and that operates through the Rule of Law will be important.

 

            ·  The fund shares will be for the purpose of providing income support, born out of the necessity created by a near-workerless economy.  It follows that they should be personal to the individual -- non-transferable, non-inheritable, not subject to creditors' claims and not usable as collateral.  Otherwise, the purposes of preventing misery and preserving social order will be defeated.     

            My grandfather once said that "if you took all the people in this town and gave us all the same amount of money, it would be just a couple of years before the ones who are successful now would be well-off again and those who are in poverty would be penniless."  That is almost certainly true.  And there was much justice in it in a society in which effort and prudence were central.  In a near-workerless economy, though, those virtues will no longer be pivotal, as much as we might regret it; and the need to assure the foundation for social order will be paramount. 

 

            ·  The independent agency should have certain characteristics, and be subject to certain limits, as best calculated to prevent an aggregation and abuse of governmental power.  The preceding chapter mentioned that such an agency or governmental function for distribution is not now provided for by the U.S. Constitution.  Since in my opinion we should care about Constitutionality, even though contemporary Americans care little about it, I favor a Constitutional amendment as the way to create the agency.

            Those who have opposed socialism have realized better than others the dangers in government's having power that could control who shall, and who shall not, eat.  If the function of creating the stock fund were vested in the general government, that would be a dangerous power.  (It may not seem so to Americans, who would see it as benign and who today tend to see all such concerns as conservatives' unrealistic imaginings.  For such powers to turn malignant, it is often necessary that a society be riven by strife and hatreds.  Classical liberals have always felt that the abuse of power should be prevented well in advance, treating the limitation of government as an important part of the normal theory of a free society.)  One of the requisites mentioned in the preceding chapter was to use the time-honored method of "checks and balances" to tame this power.  Foremost among these can be the principle of "separation of powers."  The federal government with its police, defense and regulatory functions can be one thing; the independent agency for the "shared market economy" another, totally separate.  To make this separation meaningful by the utmost balancing of the powers of the separate branches, it would make sense to vest the agency with the power of taxation and of money-creation (otherwise, there will be a large increase in the powers exercised by the regular government, and relatively few in the independent agency).  The exercise of these powers can be governed by the Rule of Law; i.e., by laws established in advance, clear in meaning, equal in application, prospective, and overseen by the judiciary. 

            There will be a question of how the head or heads of the independent agency should be selected.  Again, the separation of powers should be kept in mind in arriving at any particular answer.  Direct election by the people would be one way; selection by the state legislatures another.  It is not something I feel needs to be resolved in this book.  The main thing will be that the method of selection keep the choosing separate from the branches of the regular government, although even that isn't out of the question if adequate checks and balances are provided.

            It would be wise to provide in the Constitutional amendment that the agency will have no power to own or govern business enterprises (other than index funds) or otherwise to direct the economy.  This will consolidate the choice in favor of a free enterprise economy rather than a socialist one (for which pressures will exist).

 

Other aspects

 

            The system of distribution won't be the only feature of such a revamped society.  There is much else.

 

            ·  Operation of the economy.  Earlier in this chapter, I made the point that a protectionist system with an internal market shielded by tariff walls would fail to address the central problem of technological displacement.  But if the "shared market economy" is put into place to address that issue, is the economy to be one that proceeds in the competitive rigors of the world market without any shielding?  Free market ideology would certainly favor that, but we saw in an earlier chapter how Friedrich List had a more mature understanding of a market than the proponents of pure Free Trade theory do.  True, free trade has major strengths: severe low-cost competition demands competitive excellence, rewarding those who have it and causing those who don't to fail in what is often praised as "creative destruction" (a description made famous by Schumpeter).  The purchase of goods and services at lowest cost is a boon to the consumer, and consumers will have effective purchasing power in light of the distributional system.  These are pluses, although not unmitigated, as we will see.  It is also true, though, that if a country loses its technological and competitive capacity in a given area by virtue of its firms' being bested – perhaps only temporarily and only slightly – in the competitive struggle, it takes on what may well be an undue subordination.  If it retained its capacity in the area despite being second-best, it might well rise at any time to being the low-cost producer.  And its firms' striving to "become number one" would be a powerful spur not just to becoming better at existing methods, but toward over-leaping, bypassing-type innovation.  "Comparative advantage" should not be seen as a one-time thing, but as something dynamic, subject to change over time.  But for that, more than one nation needs to retain its competitive capacity. 

            This is increasingly complicated in the growing world market, of course, by the fact that many firms are coming to have no distinct national identity.  They have investors from many countries, produce and sell in a wide variety of places, and even have officers who feel no business loyalty to a particular nation.  Those who seek to "protect" and foster "domestic" industry will have to grapple with this, limiting their choices to firms that do retain a national focus, or enacting measures to legally ensure that some firms are locally centered, or deliberately choosing to sponsor some that are of mixed nationality.

            It isn't necessary for me to resolve questions about how the market economy will best be structured, other than to say that it will be important to look to its health and competitive vitality – and especially to its innovation.  Issues that we don't need to resolve here also include whether the regular government should follow an "industrial policy" sponsoring certain firms or industries, or whether it should direct public resources into research, either basic or applied.  The rationale for pure laissez-faire will be much weaker than it is thought to be today, however, for the reasons I explained in earlier chapters.  The "optimum allocation of resources" argument will be far less compelling, which will free up an acceptance of alternatives beyond those envisioned by the pure Free Trade school.

            A strong case will become possible for a public provision of the many amenities of advanced civilization, extending the "commons" or the "public square" and doing much that individuals aren't able to do on their own.  One such amenity may well be the funding of research and liberal arts centers as a way to maintain universities after they cease to be fundable mainly on the basis of student credit hour production.  (Since this will require an on-going decision by the body politic, the faculties may find it necessary to be more "mainstream" in their values than they have been during the age of intellectual alienation.)  The funding of such things will mean that not all public resources should be directed toward fund purchases, at least after the shared ownership of the economy is well in place.

 

            ·  The positive prospects.  Beyond the benefits that make such a program essential – i.e., the preservation of public order as a prerequisite to the continuation both of civilized society and of a free market economy –, there are additional benefits that I haven't had occasion to mention.

            The widespread diffusion of income will mean a vast improvement in the human condition for a great many people, especially for those of relatively low intelligence.  Many of the stresses of life that are taken for granted today will be relieved, if not removed altogether.  Fear and worry will become far less a factor in their lives.

            People will be free to strive for a higher standard of living than the fund shares will give them, and can do that by consuming less until they build up personal savings, or by participating in the competitive economy.  Many, however, may opt to maximize the benefit of their steady income by choosing a simplified life, with inexpensive pleasures.  Their days may become filled with convivial conversation, hiking, boating, playing musical instruments, gardening, fishing, collecting antiques, bouncing grandchildren on a knee – those and the countless other things people, given their innate vitality, find rewarding.  We could expect immense hobbyist activity, perhaps of a half-serious commercial nature.  (The reason to qualify this is that any economic endeavor that depends on profitability will run into the low-cost-producer pressure from intense competition using non-labor-intensive technology.)  Perhaps there will be millions of hobbyist farmers.  Jeremy Rifkin talks about a "Third Sector" of volunteer work in which people help others.  This is distinctly possible, limited only by the extent to which, under such conditions, there are others who need help. 

            Objection has long been voiced to the socialist use of the word "freedom" as referring to anything that is desirable.  It has been felt, rightly in my opinion, that the word should be reserved to the context of minimizing coercion and limiting the power of the State.  But the semantic argument need not obscure the fact that "freedom from fear" and "freedom from want" are fundamentally desirable objectives, whether the word "freedom" fits or not.  Supporters of an individualistic free society have sought those objectives, but have seen the market economy rather than State action as a much-preferred way to accomplish them.  Now the productivity of the free market, combined with the sharing of ownership, can make them possible.

            "Equality" in the best sense will have been attained.  All citizens will live on a level of self-sufficiency, so that such differences as exist in income and property won't be "in their faces" as a grinding reminder of deprivation.  At the same time, I stated a requisite in the preceding chapter that there should be no messianic insistence upon a total leveling.  Other than to prevent a caste system, there will be no need for such militant egalitarianism.  If there is a resolute consensus against a thorough leveling, the shared market economy concept can serve both a meaningful equality and the utmost in personal freedom.

            As to freedom, one of life's realities at all times in the past has been that no person really has it, in the personal sense that means so much to people in their lives, unless the person has means that enable him to be "free of" the whims of others.  Only the "independently wealthy" are truly "free."  (Again, this uses the word "free" in a broader sense than classical liberals have wanted it used.  It seems justifiable to employ that broader meaning in the context of the present discussion.)  Under the shared market economy, everyone will have that independent wealth.  This will greatly enhance individual autonomy where most people feel it will be particularly valuable.  The absence of dependency should spell a vast improvement in the quality of life and in human relationships.

            Much the same can be said for "security."  Individuals have striven for it, but too great a seeking of it, particularly through political means, has been seen as inconsistent with a free society.  Now, however, the two can be reconciled; there will no longer be a dichotomy separating security and freedom.  An important human value will be served without detracting from the needs of a dynamic, innovative society. 

            A personal income from the shared market economy may give rise to a profusion of independent intellect.  Right now, a great many of the people in any society who deal in ideas are beholden to others for their living, and it would be surprising if they don't mold their thinking to that of the think-tank, university discipline, journal, or the like, that they work for.  When people are "independently wealthy," many of them may feel substantially more inclined to formulate their own views.  It is difficult to predict what sort of intellectual effusion this may bring into being.

            Along a different line, as more and more countries come to have a shared market economy it becomes possible to foresee an end to the "population explosion" that threatens the quality of life by crowding out serenity and straining the environment.  It is often said that affluence lowers rather than raises the human propensity to reproduce.  It is too early to know what factors will interact to influence behavior along these lines, but a leveling-off of population is a possibility.  The rate of reproduction has already been level or falling in the advanced economies. 

 

            ·  The continuing dangers.  Since we are passing into a new age very different from the one we have known, there are a great many imponderables.  We simply don't know what life will be like.  There will be vast potential, but human beings have a way of taking a perfectly fine situation and making a neurotic mess out of it.  There is nothing about the past that can assure us that "sweetness and light" and undiluted "reasonableness" will prevail, any more than we can know whether two sparkling young people at the altar will actually make a success of their marriage.

            What will become of the human vices – greed, lust, desire for power, envy, lack of self-control, a desire to find escapes from reality, and the like?  It is not likely that they will they disappear.  If not, the struggle between civilization and the propensities that undermine it will never be over.  Future generations will have much to do in establishing their morality, religions and acculturations, and in raising their children.

            Up to now, strong character has been necessary, or at least highly serviceable, to someone's "survival."  And people have gained their self-esteem through work and careers.  Those incentives will be greatly diminished – and will need substitutes.  What will be the well-springs of dignity, worth and meaning?

            One can anticipate a major problem with those who, despite all that is around them, are spiritually inclined to boredom.  They can seek out infinite ways to "find excitement" (including, as we know from contemporary experience, even "killing for the fun of it").   Or they may just sink into ennui, perhaps into drug stupor.  I am one of those whose soul was seared by the New Left and the counterculture, with all the "students" lying around university hallways, "zonked out" and without shirts and shoes.  The depths to which human beings can sink are unbelievable.  Where will the center of gravity lie?  Will it be with decent, creative life – or with depravity?  We don't know whether need and dependency are necessary social cements.  A Hobbesian[8] would say so.  We have reason to be uncertain.  What assistance will religion bring to bear on this vital dimension?

            Among the dangers, I should list the possibility that our contemporaries won't care about some of the things I have introduced in the preceding chapter as important requisites.  Will they have the wisdom to limit the resulting governmental power?  Will they grasp this opportunity to reaffirm Western civilization, blocking the process that is rapidly leading to its being swamped out?  Will they understand how necessary it will be – for their own self-interest as well as for humanitarian reasons – to help other peoples gain the technology and capital to overcome the crisis of displacement within their own societies?  None of this is assured.

 

 

Making the transition

 

            The primary need for transition will be intellectual – for policy makers and the public to become aware of the impending crisis and of what will be required to solve it.  Like a huge ocean liner, a great many perspectives will need to begin to turn slowly in the water.  Then political parties will need to change their platforms and programs, or to be replaced by political movements that reflect the new realities.  

            As displacement causes hardship before the shared market economy can be put into place, specific measures will be needed to address it.  Expenditures for assistance to individuals or families can (at least in part) address current needs, and may prove necessary for the good they do and to prevent social disruption.  These can include such things as "assistance to impacted workers," extensions in the period for which unemployment compensation is paid, tax incentives to employers to retrain workers or to provide them jobs, tax cuts for parts of the population hit hardest, "making government an employer of last resort" by hiring people who can't find jobs elsewhere, and large job-providing public works projects.  But it should be kept in mind that such measures won't serve long-term purposes, since they will take resources and won't help establish the solution of shared ownership.  As much as possible, and as soon as possible after a consensus develops that the problem of displacement is a real one that needs to be addressed, steps should be taken to implement the move to a shared market economy.        

            It is especially hard to imagine measures that can much alleviate the distress of laid-off middle class individuals and their families.  But some things can be done: as careers become more transient and lifetime employment at a given company becomes a thing of the past, the portability of fringe benefits will be increasingly important to the people involved.  And health insurance may become divorced from employment.

            Since the world is now organized around work, with that being the great source of incomes, it may become advisable to lower the work week in stages as the need becomes apparent, first to 30 and then maybe to as low as 20 hours a week.  Perhaps the use of overtime should be abolished.  (We saw earlier that many companies work their existing employees long hours, doing so in tandem with laying off a sizeable part of what had been their workforce.)  Spreading the work will allow more people to gain incomes from employment.

            A panacea for worker displacement that most commentators fall back on is "more training."  This can't be the long-term solution as technology comes to need fewer and fewer people and as the skills needed outstrip the intelligence of a large part of the population.  But "more training along realistic lines," correctly anticipating where workers will in fact be needed in the foreseeable future, can be a solution for at least a good many people for several years.  "We are," as I've said many times, "only a small part of the way into implementing the new technologies and into the displacement."  This means that the present world of work will continue as the nexus within which most people will live for some time to come.

            Ironically, just as downsizings serve as the harbinger of the fact that work is passing from the scene, a political consensus has developed in the United States that "the solution to the welfare problem" is to integrate the welfare recipient into the workforce.  To the extent this is feasible now (and studies aren't optimistic about it), it will become ever less feasible in the future. Probably nothing better illustrates how much our thinking is going to have to change.  (As you know, I say this as someone who has always believed in the "work ethic" and in judging people by it.)

            Much can be done to "get government off the backs of business" and make it more feasible to hire employees, which has become prohibitively expensive for a number of reasons such as the constant threat of lawsuits by those who are "protected" by social legislation.  This would help bolster and maintain employment, offsetting to that extent the displacement of jobs.  Since the intent is to maintain a competitive market economy after the fund-sharing is put into place, anything justifiable that can assist business in operating profitably will be of long-term benefit.      

            So long as work is relied upon as the main income distributor, it will be advisable to erect some barriers to the inward flow of low-wage foreign imports, and to stop extending the realm of Free Trade through agreements such as GATT and NAFTA.[9]  That can "save jobs" locally.  A problem with this is that it almost certainly won't be understood as a merely transitional measure.  Except to the extent a society decides trade protection is needed to keep its own industry and technology in existence and on the verge of competitiveness, or to preserve a chosen way of life, or as a transitional policy, it will be valuable to continue the growth of the world market and of world skills.  We all rely upon the continued growth of world science and technology.  At the same time, it is important to begin to alter the current laissez-faire ethos of world trade, moving toward accepting the fact that nations must do what they find necessary for their own peoples' well-being.  This will certainly demand a considerable change in the type of international trading agreements that have been (and are being) negotiated.

            One expedient has been to put pressure on other countries to "open their markets" to exports from our own country, thereby increasing employment in the export industries.  Certainly it is odd to allow vast numbers of imports from a country that hardly allows our own goods into it.  Whatever is done along the lines of trade policy, a radical new realization will be needed, however: that "jobs" will not be important, except in the short- or near-term.  The larger picture must ultimately be kept in mind.

            The same can be said about placing restrictions on companies' shifting of production, with the jobs that go with it, to other countries.  What will eventually be important is income from capital. 

            Some of the suggestions in the literature have been to slow down the adoption of the new technologies, or to adopt types that would use more rather than fewer workers.  Sir James Goldsmith, for example, opposed "an efficient agriculture that produces the maximum amount of food for the minimum cost," because he saw the need to keep the world's people employed in farming.[10]  This can, however, be very destructive; it invokes a Luddite-like resistance to technology.  The future well-being of peoples depends upon the continued exponential growth of science and technology, not its blockage.  Among all the expedients to address the needs created by displacement, anything that stalls technology should be the last resort.  (You will notice that I am not expressing a categorical opposition.  Without the preservation of social order, technological progress will be impossible.  So even the worst expedients may become necessary.  The way to avoid them is to adopt more constructive solutions before they do.)

 

 

                                                                             

The need for fresh thinking – profound, radical, conservative and quick

 

            This book hardly needs a "suitable conclusion."  It has been a shared discussion between you as the reader and me all the way, and now that the main things have been said, it is time to quit.  I can only hope that this effort will cause people of all political and ideological persuasions to do some fresh thinking.  In light of the forces that are at work to produce displacement, marginalization and polarization, there isn't much time.  Constructive thinking done early will be worth a thousand times more than the thinking done for remediation after social disruption sets in.  Let us think deeply and outside the regular channels, and yet act conservatively to preserve all that is best about our present lives.

            Above all, let us look ahead compassionately to future generations, and outwardly with compassion to the peoples of all other societies.

 

 

ENDNOTES