Towards a Green Social Democratic Economy
Background/Context
Capitalism
is an economic
system based on the private
ownership of the means
of production and their operation for profit.[1][2][3][4]
Characteristics central to capitalism include private
property, capital
accumulation, wage
labor, voluntary
exchange, a price
system and competitive
markets.[5][6]
In a capitalist market
economy, decision-making and investments are determined by every
owner of wealth, property or production ability in financial
and capital
markets, whereas prices and the distribution of goods and
services are mainly determined by competition in goods and services
markets.[7][8]
Social
democracy is a political,
social
and economic
philosophy that supports economic
and social
interventions to promote social
justice within the framework of a liberal
democratic polity
and a capitalist mixed
economy. The protocols and norms used to accomplish this involve
a commitment to representative
and participatory
democracy, measures for income
redistribution, regulation
of the economy in the general
interest and social
welfare provisions.[1][2][3]
In this way, social democracy aims to create the conditions for
capitalism to lead to greater democratic,
egalitarian
and solidaristic
outcomes.[4]
The
Green
New Deal is an ambitious
plan for how we can eliminate poverty and create millions of jobs
while tackling the biggest threat of our time: climate change. It
involves massive public investment in clean energy, transit and
climate adaptation work. But the vision is bigger than that: it’s
about transforming our entire economy to be safer and more fair, and
give everyone a better life. First proposed in the U.S., the Green
New Deal is now spreading around the world. In 2015, we joined with
dozens of movement leaders to draft the The
Leap Manifesto, a 15-point
plan for how Canada can decarbonize its economy based on principles
of justice. We’re excited about the Green New Deal because it’s
even more ambitious than the Manifesto, and it’s being backed by
both grassroots movements and politicians.
The Failure of
Capitalism
If
you are part of the 1%, or perhaps even the top 10%, of wealthy
people that call themselves capitalists you are probably wondering
what the nonsense of the heading above is. Capitalism is working just
fine for you.
But
if you are not one of the owners of the means of production, but are
the means of production, part of the masses that actually produce the
wealth and services that our society depends on you see it completely
differently. Indeed even the capitalists themselves are recognizing
the market system as it currently works does not serve society and
are rethinking the idea that corporations only duty is to
shareholders profits and are suggesting corporations also have a
responsibility to workers, customers and society. Or at least they
want the public to think they have such concerns as a means of
placating the masses to prevent the complete abolition of capitalism.
Capitalism
unfortunately is based on a lot of assumptions and mythology which
simply is not true. Shall we look at some of them.
If
everyone acts in their own self interest the interests of the society
will be served is one of the basic tents of capitalism. Unfortunately
it is just a poorly presented justification for greed.
The
market will ensure fair prices and wages and an effective
distribution of resources to where they are most needed. Clearly not
working.
What's
good for General Motors is good for America, or more generically,
what is good for the mega corporations is good for the country and
the society. Has the laughter died down yet.
Competition
will ensure the survival of the best ideas and most efficient
implementation of them and the failure of the poorest. UNLESS you are
too big to fail, then state socialism will bail the capitalists out
with the workers money.
No
one is too rich and there is no need for income or wealth
redistribution because the earth has infinite energy and resources
and infinite capacity for development and the environmental impacts
that go along with that and there are no limits to growth. Everybody
can become a billionaire if they just make the effort. The poor are
just lazy. No comment necessary.
Need
I go on.
Fortunately
social democracy does not require, nor seek, the elimination of
private ownership. It only seeks to build a fair society where
everyone can contribute with a fair distribution of wealth.
Inequality
We
have all read the statistics on wealth and income inequality. It
seems unnecessary to repeat them here. But here are a few citations
anyway.
The world’s richest 1 percent, those with more than $1 million, own
45 percent of the world’s wealth. (Global
Inequality - Inequality.org)
Last year 26 people owned the same as the 3.8 billion people who make
up the poorest half of humanity. (5
shocking facts about extreme global inequality and how to even it up
| Oxfam International)
Billionaires in Canada have increased their wealth by $20 billion
over the last year, says a new Oxfam report on global inequality. In
the same time, the 4.5 per cent of the country's wealth held by the
poorest half of Canadians remained static. (Obscene
gap between rich and poor, says Oxfam | National Observer)
Since 1990, the richest group of Canadians has increased its share of
total national income, while the poorest and middle-income groups has
lost share. (Income
inequality - Canada and world results)
Income inequality in America is the highest it’s been since Census
Bureau started tracking it, data shows (The
Washington Post)
I wrote this about
excessive wealth in an earlier blog post, THE
FIFTH COLUMN: On Inequality, Democracy and Taxing the Rich – A
Modest Proposal.
So
what is excessive income and wealth. There are many ways to measure
that, many statistical, but I propose a simpler definition – the
amount of wealth and income where increases have no discernible
effect on ones way of life or standard of living, where the increase
is simply not noticeable in one's day to day life. Let's be generous
to the wealthy in determining such levels. I propose an annual income
of $1 million dollars and total assets of $100 million as the level
that triggers “excessive income and wealth”. Above that no one
notices without reading their financial statements.
The
thing about excessive wealth is that it makes minuscule difference to
the recipients but could make all the world of difference to the poor
and underprivileged and to society as a whole if used for the common
good. I will not even attempt to list what all that excessive wealth
could do if devoted to the common good of society .
But
there is another side to excessive income and wealth – it is highly
undemocratic. The rich do not cling to their excessive wealth because
it makes a difference to their daily lives. They cling to it because
it gives them economic and political power. It is not just a matter
of economic inequality, is a matter of political inequality.
Democracy
is based on equality, one person one vote. Economic power is
political power. Excessive wealth skews political power so that the
wealthy have more of it. Excessive wealth is inherently undemocratic.
The argument that the
rich are simply smarter or work harder simply does not hold water (to
use an expression). The extremely wealthy are in that position
because of privilege or in a few exceptional cases just plain dumb
luck. But there is no moral justification for such extreme levels of
wealth and inequality, particularity when you take into account the
amount of economic and political power that provides which negates
any sense of democracy we think may exist in our societies.
Climate Change
This
inequality is taking place in a time of environmental crisis. No need
to go on and on about the scientific consensus here. Just a few
citations for the record.
Some people suggest the
solution to climate change lies in the hands of a few big
corporations. Others think it only involves moving away from fossil
fuels. But in reality avoiding future environmental disaster requires
a major remaking of our economy from one based on the concept of
unlimited consumption, waste and growth to one based on sustainable
living and sustainable
development (remember
that). We need to refocus our society away from the concept of
increasing our standard
of living, where standard of living is defined by how much stuff
(energy and resources) we consume to one based on increasing our
quality of
life, where quality of life is defined by how satisfied we are
with our life experiences, in effect by how “happy” we are.
Tackling Climate
Change and Inequality: An Opportunity to Build a New Society
Too big crises at once. How do we prioritize our response.
Fortunately we do not. This is indeed an opportunity to use our
responses to both these crises to build a better society.
So let us first look at
the so-called “elephant in the room”, the idea that actually
doing something significant about inequality is an extreme radical
idea that involves stealing the wealth of the mega rich.
Let us assume that we
are in an economy where the richest people earn up to a million
dollars annually, making more than 10-20 times the income of average
workers and that the richest people could acquire wealth of up to
$100 million dollars, 100 times what the average worker can save up
in a lifetime. Then let us assume someone suggests that is not enough
incentive for people to work hard and invest and we should change the
system so the wealthy can earn unlimited incomes and acquire
unlimited wealth gaining them the economic and political power that
that brings with it. Those people would be called extreme radicals
with crazy ideas. Rationally that kind of uncontrolled excessive
inequality is the crazy radical idea that would undermine society,
not establishing reasonable limits to inequality.
Tackling
inequality will provide the political opportunity and funds to
change our society to deal with climate change. We need to
change the economic and political power distribution to do this and
there will be economic disruptions and major economic change, which
will be for the better in the long term.
How Do We Tackle
Inequality
Let
us look first at how we tackle the problem of excessive wealth (as
defined earlier) and inequality.
Preferably
we deal with this outside the tax system and only use the tax system
to correct egregious behaviours that continue.
We
must start with protections for ordinary working people. We need to
start with a minimum guaranteed income for everyone, and not a
poverty/subsistence level income but a decent middle class income
that allows people to have a satisfactory quality of life.
When
it comes to excess income we should set a societal standard that the
gap between the lowest income and the highest income should not
exceed twenty times within the society and ten times within any one
organization. That leaves lots of room to reward hard work, education
or risk taking.
On
excessive wealth we hope corporations and organization revise their
profit structure so it does not lead to excessive wealth, by reducing
exorbitant executive salaries and increasing wages for the people
that make the goods and provide the services that create the profits,
spending more on making products and services better quality and
reducing prices. The days when maximizing profits was the only
corporate goal need to end.
There
will, of course, be situations of such excessive wealth where drastic
measures will need to be taken. They should include, where
appropriate, simply transferring corporate ownership to workers
co-operatives where the profits can be shared more evenly. They may
also include the society, through government, taking ownership of
enterprises and devoting the profits earned to the common good. In
some cases corporate operations and practices will need to be
realigned to better serve the needs of the society as a whole.
Where
excessive income and wealth remains we will need to use the tax
system to tax away any income over $1 million annually and any wealth
in the form of assets over $100 million.
At
levels below those that are extremely excessive we need to reform the
income tax system reversing decades of tax reductions for high income
earners and making it more progressive. We start with eliminating
income tax on the minimum guaranteed annual income. Tax rates above
that should increase progressively with new higher tax brackets at
the upper end.
Corporate
tax rates need to be brought back to historical levels before the
massive cuts began.
What Type of Economy
Do We Need
As
we respond to the climate change crisis we must realize that the
answer is not simply avoiding a catastrophe at this time by reducing
our fossil fuel use and carbon footprint but avoiding future
environmental disasters with an economy based, not on
consumerism with it's inherent excessive consumption and waste, but
on sustainability.
The 4 R's:
One guideline to this
is the traditional 4
Rs .
1. Refuse: To refuse waste is often seen as a "radical" choice. As a consumer, the impact of refusing waste is a clear statement to the producer. This choice is a powerful one in that you refuse to take on the responsibility of waste and only wish to receive the wanted or needed product.2. Reduce: As you gain a better understanding of what waste is and the impacts it has on our natural, economic and social environments, reducing becomes a choice of consciousness. Reducing waste allows you to participate at any level.3. Reuse: Using conventional waste to divert it from the waste stream offers a broad spectrum of savings. From plastic containers to shipping containers, the reuse of a product introduces a second life cycle.4. Recycle: Though recycling is the last "R" in this though process, it has become the most commonly used element. Recycling is absolutely important in eliminating waste and will always be part of the ongoing process. Separating out recyclables from other waste is a responsibility that often lies with the end consumer. The problems that arise with recycling are usually the lack of knowledge and accessibility.
I
would like to emphasize here that these are listed in priority order
with the most important principle being saying no to environmentally
unsustainable products and practices.
And
“Reduce” has to be meaningful as we move from an economy based on
consuming to one based on living.
For
example, at a time when families are smaller why are houses bigger. A
family of two adults and two children does not need a three or four
thousand square foot house. A family with two parents and two
teenagers does not need four automobiles. What happened to the family
car. Appliances should be built to last twenty or more years. Even
computers, tablets, smartphones, etc,. are at a state of maturity now
that they do not need to be replaced every two years. When it comes
to smaller items it is often the excessive packaging that is the
biggest environmental problem. Why do we allow that when it harms the
planet and adds unnecessary costs to both the producer and consumer.
We simply cannot continue such a wasteful and unsustainable
lifestyle. Clothing can be worn until it is actually worn out. These
are just simple examples of how we can change our habits with little
real impact on our quality of life.
Localism
I
would add an additional, and perhaps most important, principle here –
localism. A search of the Internet will find many different
definitions of localism
and environmental
localism and political
localism. Most of them relate to a certain degree to what I see
as localism in this context.
One
of the biggest users of energy and resources and contributors to
climate change is transportation, and in particular the
transportation of goods over long distances.
People
make a great deal of noise over personal air travel. However there is
a lot of good that comes with people visiting other countries,
experiencing other cultures and getting to know other people. There
is a also a lot of good to come from international conferences where
people get together to try to solve the world's problems that can
only be done face to face.
Certainly
a lot of business travel, where people are simply travelling to
airports and then to meeting rooms and only meeting like-minded
people and only discussing internal corporate matters could probably
be replaced with electronic communications.
But
the big transportation waste of energy and resources (and carbon
footprint) has to be the needless global transportation of goods that
could easily be produced locally by local workers. There was a time
when every town had a sawmill, a textile mill and a factory or two
producing consumer goods and providing good paying union jobs.
Now
most of our consumer goods are made in the same massive factories in
China and most of our clothing comes from the third world. Capitalism
is supposed to promote efficiency but when you add the amount of
resources and labour to the cost of transportation to market,
importing most of our goods from offshore is not efficient. The only
measure by which this is profitable is the extremely low value we
attach to workers in developing countries and on flags of convenience
shipping lines. When you look at
what wages used to paid for goods consumed in North America compared
to wages are now paid for most goods consumed in North America it is
pennies, or less, on the dollar.
But
the environmental costs, particularly in terms of carbon footprint,
are excessively greater than producing goods close to where they will
be used.
Much
the same can be said about food. There is a lot of energy and
resources expended because we think we should be able to get anything
we want from anywhere anytime. That was not even the case 50 years
ago when many products were just considered seasonal. We don't need
to just eat what we grow in our own backyards but we can adopt a more
balanced approach to importing food. And we can certainly encourage
more local growing of Canadian produced foods to reduce
transportation costs and the related environmental impacts.
We
need more than individual tokenism here but an economy built on these
principles.
Community
Infrastructure Building and A Green New Deal
Capitalism
and the so-called free market may do a good job of maximizing short
term profits but it needs tempering to serve longer term corporate
needs and is a complete failure at serving social needs, often
diverting funds to frivolous but profitable expenditures.
Regulations
(including labour, environmental, and health and safety standards)
can restrain some of the worst aspects of capitalism but only
taxation can provide the funds necessary to fulfill our society's
needs. This is why, as pointed out earlier in this post, we need a
strong progressive tax system especially at the highest levels of
income and for corporations.
As
well as funding a social safety net in the form of a guaranteed
annual income and universal health care and public education, not to
mention police and fires services, defence and foreign policy, and on
and on, taxation funds necessary public infrastructure.
This
is where the proposed Green
New Deal comes in. By building sustainable public infrastructure
the public sector can set an example for the private sector on how to
do development that is not harmful to the environment.
The most obvious
example is transportation which has a huge carbon footprint. Locally
improved public transit and cycling infrastructure can reduce the use
of individual motor vehicles considerably, even eliminating it's need
for short trips. Development of electric transport vehicles,
particularly rail, can make a huge reduction in the economic and
environmental cost of delivering goods, especially when coupled with
production facilities (factories) closer to the final consumers.
The improvement of
water, sewage and waste disposal facilities has an obvious
environmental benefit.
As well, moving to a
more people focused society, as discussed in the next section of this
post, will see the need for more educational, arts and community
facilities.
And we must not neglect
to include publicly funded housing projects to address the chronic
need for affordable housing. Public housing projects will provide an
opportunity to develop and implement more sustainable building
techniques and build housing that has much lower ongoing
environmental impacts.
Side
Notes: Leadership
in Energy and Environmental Design - Wikipedia and Canada
Green Building Council - LEED Homes
We now know the best
way to provide affordable housing is through co-operative or mixed
income housing that does not ghettoize low income earners, Hopefully
a guaranteed income at a decent
middle class income level will make this less of an issue.
All of this will, of
course, provide an employment benefit, increasing the traditional
Gross Domestic Product (GDP) standard of living measurement and more
importantly increasing the quality of life of the population.
What Type of Society
Do We Want
This is the big
question. Do we want a society based on people not stuff, living not
consuming. But first this.
The Robots Are
Taking Over and Taking Our Jobs
Since
the first stages of industrialization to the assembly line and beyond
to modern robotics there have been two scenarios for this trend. One
dystopian. One utopian.
The
current capitalist economy tends to be leading us to the dystopian
model. As automation leads workers to be more productive, producing
more per hour of labour, wages per hour are going down. Workers are
earning less for producing more. This is because, unlike early
predictions, increased productivity has not led to reduced working
hours but to increased unemployment. At some point very few people
will be producing a large number goods for a very small number of
people and the whole system will collapse.
A New Society For A
New Economy
“Whoever
has the most stuff when he dies wins” is a reflection of our
current capitalist society based on competition where the goal is to
prove yourself better than other people by acquiring more stuff,
which may include fame and status.
There
is a another, more utopian model. The expression "from
each according to his ability, to each according to his needs”
reflects a society where everyone contributes according to their
ability and has their basic needs met, a social democratic society.
Such a society will
produce our basic needs in the most efficient way possible, taking
advantage of automation and robotics to free people from the
drudgery of producing excessive stuff. We will produce less stuff
because our lives will not be based on the status conferred by owning
things.
People will still work,
but hours of drudgery will be limited and everyone will be guaranteed
a decent middle class income. Education will be at the forefront of
society with most people serving as both teachers and students.
Education, the arts and culture (including writing, music, theatre,
movie, TV and video production, etc.) and recreation will provide
meaningful employment. There is a huge opportunity for localism here
with hopefully a better balance of funding and earnings for local
productions compared to international corporate financed productions
and so-called superstars earnings.
Connections with the
natural world will be emphasized with resource extraction of the
wilderness being replaced by sustainable recreation and forms of
eco-education and eco-tourism. Sustainable energy sources will
replace those based on resource extraction.
A society based on
living a more meaningful life will reduce alienation
(Side Note: Karl
Marx’s Conception of Alienation) and build a sense of community
and reduce crime and conflict. While the first stages of new society
will allow for some inequality, people realizing they do not want to
measure themselves by how much more they own than everyone else will
lead to the gradual end of inequality. The lack of desire for the
consumption of excessive stuff will put less stress on the planet's
resources and environment and avoid future environmental disasters.
And finally Karl Marx
and Jesus Christ will rest easily in their graves.
Postscript:
For
those asking what about our democratic institutions. That is a
completely different blog post. See: THE
FIFTH COLUMN: On Democracy
