California Free Press

How Capitalist Utopia Became Everyone Else’s Dystopia

by Umair Hague, Eudaimonia & Co., July 30, 2018

How American Elites Ruined Their Society in a Way the World Hasn’t Seen Since Weimar Germany

Take a good, hard look at the chart above. I don’t usually write essays about charts— but this one’s different. It’s American collapse in four lines. It says that American elites mismanaged their economy so badly, so fatally, so totally, the rich world hasn’t seen the like since Weimar Germany. They created a capitalist utopia — but the problem is that that’s everyone else’s dystopia.

To understand the story of this gargantuan, historic failure — not managing a society in any way resembling “well”, or even “sanely” — it’s probably best to understand what Europe did right — and then come back to what America did wrong. Which, in short, is that it embarked on one of history’s greatest fools’ quests since alchemy, a utopian mission to turn the lead of capitalism into the gold of prosperity for everyone. But lead doesn’t turn into gold.

Why didn’t Europe’s “labour share of income” — that is, how much regular people receive— decline, like in the States? The simple answer, of course, is “more social democracy, and less capitalism.” But what does that mean? It means that European structures and institutions are radically different from American ones — so different, that many Americans have little idea such things even exist.

The first way that Europe differed was in how economics institutions “interact” — deal with one another. In Europe, unions weren’t destroyed — they thrived. Deals between unions and companies are brokered formally or informally by governments. But that’s just the beginning. In Germany, for example, worker’s representatives sit on company boards. In France, collective bargaining is a right, negotiated by sectors, for example, among all waiters and restauranteurs — not individual companies and employers. In Scandinavia, companies have to account for their social costs and benefits. There’s much more — but this is just an essay. The point is that Europe developed better mechanisms for economic interaction —fuller ones, if you like, which ensured more stable, opportune, and empowered societies. Average people had genuine power to demand a fairer more of an economy’s gains — as they should, not just for moral reasons, but also socio-political ones, which we’ll come to.

But Europe’s story isn’t just about interactions — it’s also about investment. Europe also invested in great public goods. Public healthcare, education, finance, media, safety nets, and so on. Think of Britain’s NHS and BBC, or the French pension system. American economists came to call these great institutions the “welfare state”, derisively — and so they missed their economic point completely. It wasn’t just that they gave people “handouts”, as American pundits might have said — it was that they did something crucial in a modern economy: they employed vast numbers of people, at stable, rising, and decent incomes, doing meaningful work, not just at useless jobs.

So those great public institutions set a soft floor that the private sector had to compete with in terms of wages. America’s biggest employers, instead, became Walmart and McDonald’s — but one of Britain’s biggest is the NHS. The result is that European incomes stayed higher and more stable than American incomes, because people had alternatives to mega-capitalism preying on them a little more viciously every year.

Hence, social-scale public goods also meant that Europeans could enjoy the basics of life at reasonable prices, precisely because many of them were employed at better incomes, in the production of those very public goods — whereas in America, capitalism had to produce such things as healthcare, education, finance, and media. But it had no incentive to produce these things well, affordably, at high quality, or even completely. So Americans got squeezed savagely — they had to pay skyrocketing prices for the basics of life, which capitalism only offered them partially.

Hence, America became a place full of strange, weird, absurd capitalist paradoxes: fresh food costing three times as much as frozen food, whole cities without working utilities or supermarkets, basic medicines like insulin costing thousands, childbirth priced at half an average person’s yearly income. And some things just weren’t available to many at all. No “health insurance”? Sorry — you die. Bad “credit”? Sorry — no housing. Want that cutting edge cancer drug? It’ll cost you $500K — but for Europeans, it’s free. Americans lived perched right at the edge of ruin, trying desperately to afford the things that Europeans took for granted — but those things were the very ones which life depends on most — food, water, healthcare, education, finance, media, pensions.

What does all that remind you of? Shortages. Rationing. A system unable to provide for people’s fundamental needs. A cratering quality of life. The basics of life simply unavailable or unaffordable to most. It should remind you of the Soviet Union. That’s not just an analogy — it’s a repetition of history. Let me explain. America didn’t not just follow Europe’s lead. It did precisely the opposite. Remember Europe’s two great innovation? Better economic interactions, and better public goods? America did the reverse.

Let’s start with economic interactions — in America there was only one kind allowed, according to capitalist utopia: markets. Hence, America destroyed its unions, quite obviously. But more interesting is the fact that all these novel mechanisms Europe had pioneered — the German idea of workers’ representatives sitting on boards, the French idea of collective bargaining as deals between sectors of workers and employers, brokered formally or informally by governments, or even the idea that anyone but now powerless average people had any “responsibility” at all — were off the table. They were seen as outlandish science fiction, and still are. No one in the elite considered, proposed, or advocated them. Don’t you think that’s strange? Not on the right — and not on the left, either.

Both sides of American economics had devolved into something like alchemy. They were on a quest to turn lead into gold — that is, to turn capitalism into prosperity. The right advocated something like totalitarian capitalism, capitalism as the only force in society — and the left, something like slightly less totalitarian capitalism. Hence, not a single American economist of renown, left or right, said something like: “Hey everyone! We should have an NHS! A French-style sectoral bargaining for everyone! And also a BBC! They’d employ people, raise incomes, and reverse the big problem in the economy.” Don’t you think that’s strange?

Look at the chart above again. What date does it begin? 1980. The trend was there, in other words, for decades, to see. Yet no one chose to see it.No one of renown rang an alarm bell — except maybe Joe Stiglitz. Mostly, American elites thought everything was going swimmingly well. Isn’t that a little stunning?

Alchemists were looking to turn lead into gold. American elites were looking to turn capitalism — and only capitalism — into prosperity. Alchemists never looked elsewhere, questioning their question. American elites never looked at Europe, questioning their question. If they had — even once — they would have seen the trend above, wouldn’t they? American economics, in other words, became the study of capitalism, and capitalism alone. But that way, it became a kind of self-fulfilling, and self-defeating, prophecy. There were many times alchemists thought they’d turned lead into gold. But it turned out to be fools’ gold, or a patina, or a veneer. In the same way, American elites, only ever looking at America, only ever studying, researching, thinking about America, never looked at Europe — and so what could they learn? They couldn’t.

All that American elites could do was to keep trying more and more extreme forms of capitalism — because they’d already assumed that the answer to the question of prosperity was capitalist utopia. Hence, capitalism went extreme, and became dystopian. Having assumed they knew the answer to the wrong question, they set about imagining, theorizing, endorsing, and proposing was capitalism, taken to new heights of gruesome absurdity, every year, in a weird and fatal escalation of folly.

Let me give you one of my favourite examples. In the 1980s, it became legal to raid pensions funds. Why? Well, the idea was that collective investment were bad. Everyone should have their own “retirement account.” Let them eat stocks. But the problem was pretty obvious. If you’re working 10 hours a day, what time do you have to manage a pension? What if you’re not interested? And doesn’t it set long-term incentives for a company to hold such balances, too — to manage more wisely, instead of running something like a chop shop? Europe would have reeled in horror, laughing at such an obviously foolish idea. And yet American economists, obsessed with the idea of capitalist utopia, quickly launched “reform” after “reform”, of just the same manner. Privatization, deregulation, stripping away bargaining rights, rolling back basic protections, from minimum wages, to vacation time, to overtime, to unionization, to benefits.

All these eroded whatever norms, values, shared social contract employers might have once felt they had. Now anything was fair game. Companies had nothing invested in their workers beyond their daily wages, really — so why treat them as anything more than disposable commodities? And so soon enough, Americans were working “jobs” that weren’t really “jobs” in the old sense — they carried few benefits, offered little stability, security, mobility, and therefore, held out a shrinking chance at a decent life. America had handed total control of the economy over to capitalists. But the problem was that capitalists were a tiny number of people — 10% of people owned 80% of stocks, and even less owned companies, in any real sense. The effect was that industry after industry came to be dominated by mega-monopolies — Walmart, Amazon, Google, because there was simply nothing to restrain capital’s natural tendency to accumulate wealth, power, and fortune.

America had gone Soviet. It had become a land where gigantic institutions used artificial scarcity, controlled shortages, and rigid price controls (only upwards, not downwards) as a mechanism to exploit and prey on people — the system was unable to provide for people anymore, even in basic ways. And funnier and more tragically, it was precisely America’s elites who thought all this was exactly the right thing to do — not just economically, but morally, too. If you’re poor — you’re weak, and therefore, you deserve to be punished. Capitalist utopia is for the strong! The only kind of justice that was allowed in the promised land was the ideological whip. Because underlying this strange and foolish quest American thought had become, lay the same old myths which had always haunted, and maybe even cursed America: self-reliance, cruelty, greed, domination, might makes right.

Yet America’s elites never questioned themselves once. They never looked at the world. They were too busy mesmerized by the alchemists who were telling them fantastic tales of turning lead into gold. Of capitalism becoming a promised land of prosperity. It did — for a tiny handful of people, whom, today, are richer and more powerful than kings of old. But for everyone else, America became a gruesome, bizarre dystopia. A land where children are sold bulletproof backpacks because no one can rein in the gun lobby. Where people choose between chemotherapy and bankruptcy. Where billionaires plan to flee to Mars — but a single rocket could pay for a thousand teachers, or the drinkable water, healthcare, and income that millions don’t have.

Like all utopian dreams, America’s failed catastrophically. Not because it didn’t try hard enough at turning lead into gold. But because it did. Lead doesn’t turn into gold. Capitalism, alone, doesn’t turn into prosperity. It was a fools’ quest from the beginning. But there they still are, the wise men, wearing their suits, nodding their heads, stroking their chins, wagging their fingers— have they learned anything yet?

Umair
 July 2018

As Computers Become More Sophisticated, Humans Are Put Out of Work and Ownership of Assets is Placed in Fewer Hands

by John Lawrence

Two research laboratories are developing computers to new levels of sophistication that are making human work (and jobs) increasingly irrelevant. There are two fields, one called Artificial Intelligence (AI) and the other called Intelligence Augmentation (IA) that are revolutionizing technology and transforming the world.

The New York Times reported the following:

Watson is an effort by I.B.M. researchers to advance a set of techniques used to process human language. It provides striking evidence that computing systems will no longer be limited to responding to simple commands. Machines will increasingly be able to pick apart jargon, nuance and even riddles. In attacking the problem of the ambiguity of human language, computer science is now closing in on what researchers refer to as the “Paris Hilton problem” — the ability, for example, to determine whether a query is being made by someone who is trying to reserve a hotel in France, or simply to pass time surfing the Internet. ... Traditionally, economists have argued that while new forms of automation may displace jobs in the short run, over longer periods of time economic growth and job creation have continued to outpace any job-killing technologies. For example, over the past century and a half the shift from being a largely agrarian society to one in which less than 1 percent of the United States labor force is in agriculture is frequently cited as evidence of the economy’s ability to reinvent itself. That, however, was before machines began to “understand” human language. Rapid progress in natural language processing is beginning to lead to a new wave of automation that promises to transform areas of the economy that have until now been untouched by technological change. “As designers of tools and products and technologies we should think more about these issues,” said Pattie Maes, a computer scientist at the M.I.T. Media Lab. Not only do designers face ethical issues, she argues, but increasingly as skills that were once exclusively human are simulated by machines, their designers are faced with the challenge of rethinking what it means to be human. I.B.M.’s executives have said they intend to commercialize Watson to provide a new class of question-answering systems in business, education and medicine. The repercussions of such technology are unknown, but it is possible, for example, to envision systems that replace not only human experts, but hundreds of thousands of well-paying jobs throughout the economy and around the globe. Virtually any job that now involves answering questions and conducting commercial transactions by telephone will soon be at risk. It is only necessary to consider how quickly A.T.M.’s displaced human bank tellers to have an idea of what could happen.

That is the underside of technological advancement - replacing human labor and well paying jobs with machines. That would be OK if the benefits of the reduction in the labor force were widely shared, but they aren't. The benefits accrue mainly to the large corporations that can deploy these machines while the people who are displaced find themselves mainly out of a job and out of the ability to support themselves and their families. Labor saving machines do not mean that the average person will not have to work as hard. They mean that the average person will be out of his or her job. Corporations on the other hand will continue to merge and acquire other companies as they march forward in their quest for dominion over the economy. Ownership of assets will become concentrated in fewer and fewer hands. Those whose main economic asset is their job skills will be marginalized while those whose main asset is the ownership of wealth will continue to get wealthier.

That is why the reliance on increased education as a way out of this dilemma is a chimera. There will be increasing competition for the few remaining highly skilled jobs. There will be an ever intensifying global rat race as Tiger Moms ride herd on their kids to work harder and harder in the global competition for the diminishing number of good paying jobs. Economies will have to reinvent themselves at a faster and faster pace.

That in a nutshell is what is going on today as more and more workers find themselves jobless. If those workers are also owners of economic assets, they can make their living from the return on their investments, but too often their ownership status is meager. They may own their own home, but for most middle class Americans, that is about it; home ownership is their main economic asset. But without a job, equity in a home rapidly disappears until the home is underwater, that is, the home owner owes more than the home is worth. The utopia in which labor saving machines replace the need for human labor with the result that everyone has more free time to enjoy life and the workweek is reduced to just a few short hours is replaced by the dystopia in which out of work former job holders struggle to survive after their unemployment benefits run out. In a society which is becoming increasingly austere, those unfortunate enough to have been replaced by machines, instead of enjoying their increased leisure time, wonder where their next meal is coming from as they face the prospect of living in a cardboard box on the street.

In order for technological advancement to be truly benign, the benefits of the reduction in the need for human labor would have to be widely shared either by spreading ownership of assets more equitably or by redistributing the benefits from owners to non-owners by means of the tax code in the form of welfare. The only way to spread ownership is for the people collectively to engage in wealth producing activities either via their government or by means of cooperatives like Mondragon. If just a few people own economic assets which generate the necessary goods and services, the rest of the population who have had their jobs made redundant and who are "at liberty" will not be able to purchase those goods and services and the economy will grind to a halt especially, ironically enough, in the more developed and advanced parts of the world. The economically developing nations will not fall prey to this phenomenon as badly since their cheap labor, that labor which machines cannot do, will distribute jobs and paychecks to a relatively large number of human hands. But even in these societies ownership of assets will largely come to reside in fewer and fewer hands as job holders will continue to derive economic sustenance mainly from their jobs and not from the return on assets they own.

Societies in which the return from wealth producing assets is widely shared by redistributing wealth from the successful to the unsuccessful will continue to function at a high level because not only will most people have the wherewithal to provide the necessities of life for themselves, but this economic activity will keep the wheels of industry turning albeit they will be turning with fewer and fewer human hands and more and more by machines operating at the behest of sophisticated computers. These "welfare states" will recirculate the wealth that is being created in such a way that more wealth is created. Their governments will be prosperous because of a healthy tax base, and they will continue to provide a large range of public services and infrastructure development. Those societies that don't recirculate wealth will become moribund as their economies grind to a halt. As fewer humans and more machines possess jobs, the tax base will be diminished to the point that even essential human services, services that only human beings can provide such as police, firemen and teachers will be reduced or eliminated to be replaced to some extent by private security guards, private fire districts and private schools.

Some societies may well become utopias. Those are the societies in which the winners in developing new products and services essentially support those unfortunates whose productive efforts went substantially by the wayside. These are societies which conform to the ethic of "we are all in this together." Winners will support losers in the quest for development of new products and services. Other societies will become dystopias as wealth is not widely shared, the benefits of labor reduction are concentrated in fewer hands, government tax bases are eroded and public services dry up. These are the so-called "me societies" in which the ethic is "every person for him or herself." The benefits of labor reduction will accrue to those who are the owners of economic assets and can use machines to replace the need for human labor in their economic operations. Their profits will soar since one of their major expenses is human labor. A machine can crank 24 hours a day; a human can't. Eventually though, their profits will diminish as a diminished consumer base can no longer afford to buy much of anything. Money and assets will be concentrated at the top and stop circulating as the society spirals downward and becomes non-functional. 

Walking Plants and Non-Predatory Evolution

by John Lawrence

In the ongoing debate over whether human life came about by design or by evolution, one commenter said that it must have been by evolution because no God could have designed a nature that was so violent and barbaric. Such a God would have been a sadist. I replied that perhaps it was something specific to the particular conditions on earth that caused evolution to proceed in such a way as to evolve predators, and these conditions might be different on other planets in the universe which would cause evolution to proceed along completely different lines. There seems to be three major categories of life on earth: plants, herbivores and carnivores. Since life started in the oceans with plants supposedly, plant eaters must have evolved later followed by meat eaters.

But what if plant eaters and meat eaters never evolved. Instead, it's not too hard to imagine that plants might have evolved in such a way that some of them might have started walking instead of being rooted in one spot. The advantage of plants is that they synthsize energy directly from sunlight much like a solar panel. So we could imagine a walking plant with a little solar panel on the top of its head. After all the only advantgage of being rooted is that plants have a direct pipeline for obtaining water, but water's not too hard to come by if one walks. Other nutrients could be obtained by a walking plant by eating dirt. So there would never be a need to either eat other plants (a mild form of predation) or to eat other animals (a major form of predation).

So now the questions are 1) what would be the conditions necessary for evolution to produce walking plants and 2) would a planet on which life consisted of walking plants be a peaceful planet lacking in violence and barbarity?

We can speculate about the answer to (1) as follows. What if the ratio of water to land mass were different on some planet other than earth so that life might have evolved first on land instead of in the oceans. Life evolving on land might have produced a different evolutionary line in which each living being got its energy source directly from the sun instead of by eating plants or animals. On other planets in the universe (and there are probably billions of them) the differing ratios of water to land mass might have produced diffrent forms of evolution. Or other parameters peculiar to that planet might have produced different evolutionary avenues.

As for (2) violence and barbarity over natural resources would be diminished but not totally eliminated. Certainly on earth in climates and conditions where food is plentiful and available just for the taking - the proverbial low hanging fruit - violence over the possession of food seems to be diminished. However, other forms of energy for transportation etc might be competed for leading to resource wars. And then there still might be the violence found in nature over the competition over mates.

One can certainly imagine a planet on which food and other resources are so plentiful that it makes no sense to fight over them. One could also imagine situations in which mates were so plentiful that it would make no sense to fight over them. In such situations sharing and cooperation would seem to prevail. In other situations where resources are scarce compared to the population, competition and war would seem to prevail.

But then there is violence and barbarity over religion, over whose religion is the true and correct religion. No matter how plentiful resources are on the perfect planet, this source of violence wouldn't be eliminated.

The Future Commonwealth Part II

by John Lawrence

We have previously blogged about Albert Chavannes' writing on utopia called The Future Commonwealth, and how his ideas about the funding of government have been implemented by many societies today particularly in their establishment of Sovereign Wealth Funds. On the other hand, the US only funds itself by taxes and the issuance of debt. On this topic Chavannes, writing in the nineteenth century, was prescient.

Chavannes' other main idea was the widespread use of apprenticeships erstablished not by private enterprise but by the government. However, Chavannes was not a complete socialist maintaining that there is a proper balance between public and private enterprise:

"By making our Commonwealth a cooperative business concern, we have made it rich and placed its citizens above want. Yet we have retained sufficient fields of activity for private enterprises. By our system of public apprenticeship we are training our youths to useful occupations. It brings all classes together, and is the measure that will have the most far-reaching effects."

Now this idea of publicly sponsored apprenticeships is worth considering especially in light of the present day high unemployment rate and job downsizing and offshoring. The government reponse to high unemployment is extended unemployment insurance benefits. In other words, rather than requiring any actual work from the unemployed, the government basically pays them to search for non-existent jobs. It wasn't always so. In the Great Depression FDR established the Civilian Conservation Corps and the Works Progress Administration. These programs provided immediate work for numerous people and resulted in considerable improvements to US infrastructure including the environment.

Contrast this with today's response to high unemployment which results in no on the job training or useful public works being constructed. On the one hand you pay people to search for nonexistent jobs in the private sector. On the other you provide jobs with what amounts to apprenticeships (another name for on the job training), put the same amount of money into the economy which will have a multiplier effect, and get useful constructive results manifested in return. It is all well and good to encourage people to go to college, but there is a large segment of the population such as ex-felons and homeless people who are virtually unemployable, and government programs to employ these people are needed. The unemployment rate today among male African-Americans is about 20%. Unless a societal effort is made to employ these people directly and immediately with on the job training and without raising the bar by requiring a college education, many will either wind up homeless or in jail.

Chavannes is acutely aware of the criticism that public enterprise is less efficient than private enterprise. He compares the US to his version of utopia:

"Well, my dear Sir," Mr. Wilton replied, "probably there is a foundation for the opinion you express, although it may be fostered by those who have a direct interest in preventing the government from extending its operations.

"But there is a fundamental difference between your government and ours. Yours is a Republic, established to maintain civil and political rights. Ours is a Commonwealth, organized to secure those rights, and besides, to manage public business for public benefit. Our welfare is intimately connected with the pecuniary success of the Commonwealth, and we are all interested in its proper management. On that account the people never surrender the law-making power to their delegates, but exercise a constant supervision over all their actions. and if they fail to properly conduct the business committed to their case, they are quickly called to account for their mismanagement."

This contrast between a Republic and a Commonwealth is worth noting for its resemblance to the state of world affairs today. Conservatives in the US argue that the US is a Republic not a Commonwealth or a Democracy and as such should not be concerned with the welfare of its people except to maintain civil order and to fight wars. Progressives, on the other hand, maintain that social programs such as education and health care should be rights not privileges as they are in much of the rest of the developed world. Most other advanced societies such as Europe, Brazil, China and India are in fact Commonwealths not Republics because they not only provide for the economic welfare of their people but they act as state capitalists raising money by various means and depositing it in their Sovereign Wealth Funds. Monies are then used for various social welfare programs. The crucial points here are that in these modern day Commonwealths money is raised by means other than taxation and money is expended for the purposes of public welfare. This has been called state capitalism.

The problem with the US is that it lowers taxes, has no other means to raise money since it gives away its natural resources to private corporations, and, therefore, goes increasingly into debt. A recent piece on NBC described how billions of dollars of gold are mined from public lands by private corporations while not one penny goes into the public treasury.

This land is owned by the taxpayers of America, but the profit is totally in the hands of private interests. Contrast this with Norway where 50% of the monies realized from their natural resource of oil goes into the public Treasury while the other 50% goes to private interests. There is a 50-50 split between public and private.

Chavannes talks about government having a Business department similar to Japan's Ministry of International Trade and Industry (MITI). I have blogged about the need for the US to establish such a cabinet level Department, but the US seems committed to running huge trade deficits with the rest of the world only adding to its immense national debt, and it takes a hands off policy to the establishment of any enterprise which might in any way compete with private enterprise. As a result and particularly because the US will not enforce the Sherman Antitrust Act, corporations in the US, as is the case with the health insurance corporations, are virtual monopolies which can raise prices with impunity.

Chavanees goes on:

"We have added to out government a Business department, independent of the Political and the Judiciary, which has entire charge of the business of the commonwealth, and is responsible to the people alone for the result of their labor. Through this department we co-ordinate the productive power of the whole people, and constitute ourselves into a cooperative association.

"We, the people, thus become a business firm, and hire a certain number of men to manage the work for us. We recognize that there must be stability, and on that account the Managers and Advisers are elected for indefinite terms, and are retained in place so long as the people are satisfied with their services. [much like in China!] But should dissatisfaction arise, specific charges must be laid before the Advisers, and if they are sustained, a new election is ordered which is the final verdict pronounced by the people. [unlike in China!]"

Chavannes goes on to say that there are oversight and supervisory Boards whose duties are to provide checks and balances over the whole public business enterprise. He also states that these business functions can occur at the local government level as well as the national level.

Finally, Chavannes deals with some of the inevitable criticism that his utopia will evoke:

"'I am surprised,' I said to him, 'that some of your energetic men do not crowd to the wall their less ambitious neighbors.'

"'I believe,' he answered, 'that if you were to remain here some time, you would understand it better. It is naturaL that in your country [the US] you should strive for wealth, for wealth is not only comfort, it is power. Under your system everything is for sale. Suppose I should bestir myself to accumulate a fortune, what should I do with it? All our most valuable property is in the hands of the Commonwealth. We have little inducement to increase our wealth beyond what will secure us a comfortable existence.'"

This is as opposed to the US where immense wealth translates into control of the political process through lobbying, TV advertising and campaign contributions.

Chavannes continues:

"I expressed my fear that this stifling of private ambition might result unfavorably to the general prosperity.

"'We have found out here that there are other things worth living for besides the acquisition of money. Our men have as much brain, and are just as enterprising as yours, but, unable to concoct schemes by which they can exploit their weaker neighbors for their own benefit, they have to place their intelligence and their activity at the disposal of the Commonwealth to be used for the people's benefit. Yours is the freebooter system, ours is the organized army of labor.'

"Still it seemed to me that all this government control could not be maintained without a serious loss of personal freedom. I asked him whether he was not compelled to order his goods from certain stores, and give them a price arbitrarily fixed by the Government.

"'Not at all,' he answered. 'Our wholesale trade is perfectly free, and the prices are regulated by the law of supply and demand as in all countries. It is true that we have some regulations here that do not exist in other countries, but they are for the protection of the whole people. ...'"

Chavannes goes on to say that while profits have not been abolished, speculation has. But he says, "All that we ask is that [public laws] should tend to accomplish the desired end with the least infringement of individual freedom."

Chavannes is clearly proposing a mixed society, not purely socialistic or capitalistic. He is proposing that the Government or Commonwealth be concerned about regulating private enterprise as it does in many parts of the world today. Arguably deregulation and non-enforcement of existing laws has led to the Great Recession of 2008 in the US and the egregious excesses of some US corporations especially banks. While other countries regulate  and seek to optimize trade and industry in their own self interest, the US continues to pursue its free trade policies which benefit transnational corporations to the detriment of the public Treasury and the accumulation of national debt. While other countries enrich their Sovereign Wealth Funds, the US continues to lower taxes, give away its natural resources to private corporations and not pursue other means to accumulate public wealth. This leads to increased national debt. Before Ronald Reagan entered office in 1980, the US was the world's largest creditor nation, imported raw materials and exported manufactured goods. Now after 30 years of Reagan initiated policies of lowered taxes and free trade, the US is the world's largest debtor nation with the bulk of its debt owed to foreign countries, exports raw materials and imports manufactured goods. Increasingly, it is becoming a Third World nation with its top 1% owning 95% of the wealth and the middle class fast becoming the redundant poor.

The Future Commonwealth

by John Lawrence

I stumbled on a book a long time ago at a used book store with the title, "The Quest for Utopia," by Glen Negley and J. Max Patrick, copyright 1952. The subtitle was "An Anthology of Imaginary Societies." It is basically a collection of wrtings by nineteenth century utopists describing societies which they believe might exist some time in the future. A lot of these descriptions are fanciful and based on notions which, in my opinion, are pretty far-fetched like the notion that all human beings are basically good people and that they will all behave properly given the right conditions. I don't believe that any society predicated on the fact that good behavior will somehow be universally achieved is realistic.

Other utopias, however, are not only realistic but contain germs of ideas which could be manifested in reality. Some of these ideas have in fact already been implemented. Such a one is "The Future Commonwealth" by Albert Chavannes (1836-1903), a Swiss immigrant to the US. Chavannes became a successful businessman and devoted his last years to writing. In 1894 he established a lumber company in Knoxville, Tennessee of which his grandson became owner. The grandson, Edward Chavannes, also became Mayor of Knoxville. Albert wrote "The Future Commonwealth" in 1892. What is interesting about this tract is not that it is an all encompassing description of a society which could be implemented in toto, but that it contains many good ideas which could be implemented in any society and some that have already been implemented in certain societies.

Chavannes was in the tradition of the English utilitarians and believed that whatever promoted the general welfare would also promote personal happiness. Contrast this with the current prevailing notion in the US today that whatever promotes individual freedom promotes the general welfare - just the opposite. Chavannes writes, "We consider the distribution of products the most important question, and that its correct solution offers the best prospect of increasing human happiness. The rich have more than they can enjoy, while the poor have less. We made our new Commonwealth the great Capitalist, and thus prevented the undue accumulation of wealth in private hands.

"There is the whole secret of it. Cooperation on a large scale, not practised by a few, for the advantage of a few, as it exists among you, but carried by the Commonwealth, for the advantage of the whole population, for the rich as well as for the poor, for the women as well as for the men."

Chavannes goes on to say that his utopia is not "simply a Socialistic settlement, where the state controls everything" and is not antithetical to the "free and independent citizens " of the US. He reassures the reader that his utopia has not abridged personal freedom.

"We ... have entrusted the Commonwealth with the accumulation and use of a portion of our capital for the benefit of the people, while you only entrust your government with the spending of such capital as you raise by unequal taxation, or by borrowing from the wealthy class, thus increasing the burdens of the producers by compelling them to pay interest on the money your government spends."

Here Chavannes has put his finger on the difference between the US model and the models of many other countries of the world. The US government is run on debt or taxation instead of on the principle of capital generation and accumulation. Other countries such as Norway, for example, have Sovereign Wealth Funds which generate capital which is then distributed to the people in the form of old age pensions. Norway's government takes 50% of the monies derived from its natural resources, oil, for example, and uses it on behalf of its citizens to offset taxes and to supply social benefits such as social security. The US gives away its natural resources to private corporations which then accrue all the profits for themselves. The US then has to borrow money from other nations' Sovereign Wealth Funds and has become the world's largest debtor nation. The only way the US can pay its own way is to raise taxes which it has an aversion to doing. So while other countries accumulate wealth which not only provides for social programs but is also used to offset taxes, the US neither accumulates wealth as a nation nor raises taxes thereby going increasingly into debt.

Tom Friedman on Meet the Press, Sunday March 14 contrasted the efficiency of the Chinese government with the American:

Tom Friedman thinks Democracy is becoming a hindrance.

The media is wringing it’s hands over the political climate. It’s always sunny when Democrats get their way. The forecast is for stormy weather. All this opposition and people in the street, it’s not a good thing.

Tom Friedman was on Meet the Press today with Tom Brokaw and David Brooks. He thinks we’d be better off if we were more like the Chinese government.

Brokaw: Tom, are we at a kind of turning point in America in terms of being able to make this a functioning country again or are we dysfunctional?

Friedman: This is what worries me that I’ve been saying for a while there is only one thing worse than one party autocracy, the Chinese form of government, and that’s one party democracy. In china if the leadership can get around to an enlightened decision, it can order it from the top down. Here, when you have one party democracy, one party ruling, basically and the other party basically saying “no”, every solution is suboptimal. When your chief competitor can produce optimal and you can only produce suboptimal! Because what happens whether it’s health care or the energy bill, votes 1 through 50 cost a lot; votes 50 to 59 cost you a fortune and 60, his name is Ben Nelson. By the time you made those compromises you wind up with the description out of the health care bill, which is this Rube Goldberg contraption, I hope it passes but I can’t tell you I think it’s optimal.

It’s so much easier to get things done when there’s no opposition, no one to say “no”. Of course to achieve that you have to round up and imprison or kill dissidents and impose censorship. As long as something optimal comes out of it once in awhile, say universal health care, it’s well worth it or so the thinking goes in some circles. History is well acquainted with optimal solutions from unopposed governments.

So even Tom Friedman, the arch proponent of globalism, thinks the Chinese model is winning out over the American model, and he didn't even mention the fact that China has a Sovereign Wealth Fund that is accumulating monies as the American government pays interest on its debt owed largely to China.

Chavannes had the difference between the "socialist" economies of western Europe and the laissez-faire capitalism of the US pegged. On the one hand the socialist governments are in the business of accumulating monies which can then offset both taxes and social programs. On the other the US government is in the business of beggaring itself because it gives away profitable revenue sources to private interests.

Chavannes goes on:

"Whatever costs money to maintain, as the streets and the parks, the police and the fire departmen, etc., is placed in the hands of the government, and the people are taxed for its support, while those enterprises which offer oppoprtunities to make money, as the supply of light and water, the life and fire insurance companies, are allowed to fall into the hands of corporations and individuals. We are so far Socialists as to keep in the possession of the people many valuable privileges which you give away to men who use them for private benefit."

Chavannes goes on to outline the various profitable enterprises that the government controls , but makes clear that there is still plenty of room for private enterprise to flourish. The point here is that not only is the government well funded in order to provide the things that private enterprise won't like maintaining and improving infrastructure, but does so without taxing the people so low taxes,  improved infrastructure and social benefits go hand in hand.

Chavannes also makes a major point about apprenticeship programs in his utopia which is a subject we will go into on a future post.