Economic Democracy - Alternative Models

Alternative Models

With regard to closing the gap between production and purchasing power, Dr. Martin Luther King Jr. maintains:

The problem indicates that our emphasis must be two-fold. We must create full employment or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available.

Schweickart argued that both full employment and guaranteed basic income are impossible under the restrictions of the U.S. economic system for two primary reasons: a)unemployment is an essential feature of capitalism, not an indication of systemic failure; while capitalism thrives under polyarchy, it is not compatible with genuine democracy. Suggesting that these "democratic deficits" significantly impact the management of both workplace and new investment, he favors the creation and implementation of a new economic model over reform of the existing one.

According to Schweickart a serious critique of any problem cannot be content to merely note the negative features of the existing model. Instead, we must specify precisely the structural features of an alternative. "But if we want to do more than simply denounce the evils of capitalism, we must confront the claim that 'there is no alternative'—by proposing one."

Hungarian historian Karl Polanyi suggested that market economies should subordinate themselves to larger societal needs. He states that human-beings, the source of labor, do not reproduce for the sole purpose of providing the market with workers. In The Great Transformation Polanyi says that, while modern states and market economies tend to grow under capitalism, both are mutually interdependent for functional development. In order for market economies to be truly prosperous, he claims social constructs must play an essential role. With the term "fictitious commodities", Polanyi claimed that land, labor, and money are all commodified under capitalism, though the inherent purpose of these items was never intended "for sale". He says natural resources are "God-given", money is a bookkeeping entry validated by law, and labor is a human prerogative, not a personal obligation to market economies.

Dr. Martin Luther King Jr. claimed "Communism forgets that life is individual. Capitalism forgets that life is social, and the Kingdom of Brotherhood is found neither in the thesis of Communism nor the antithesis of Capitalism but in a higher synthesis. It is found in a higher synthesis that combines the truths of both".Trade unionist and social activist Allan Engler argued further that economic democracy was the working-class alternative to capitalism. In his book, "Economic Democracy", Engler stated:

"When economic democracy – a world of human equality, democracy and cooperation – is the alternative, capitalism will no longer be seen as a lesser evil. When the working class, not a revolutionary party, is the agency of social transformation, change will be based on workplace organization, community mobilizations and democratic political action. The goal will be to transform capitalism into economic democracy through gains and reforms that improve living conditions while methodically replacing wealth-holders' entitlement with human entitlement, capitalist ownership with community ownership and master-servant relations with workplace democracy."

Assuming that "democracy is not just a political value, but one with profound economic implications", Schweickart suggested "the problem is not to choose between plan and market, but to integrate these institutions into a democratic framework". According to Schweickart, economic democracy, like capitalism, can be defined in terms of three basic features:

• Worker Self-Management: Each productive enterprise is controlled democratically by its workers.
• Social Control of Investment: Funds for new investment are generated by a capital assets tax and are returned to the economy through a network of public investment banks."
• The Market: These enterprises interact with one another and with consumers in an environment largely free of governmental price controls. Raw materials, instruments of production and consumer goods are all bought and sold at prices largely determined by the forces of supply and demand.

In real-world practice, Schweickart concedes economic democracy will be more complicated and less "pure" than this model. However, to grasp the nature of the system and to understand its essential dynamic, it is important to have a clear picture of the basic structure. Capitalism is characterized by private ownership of productive resources, the market, and wage labor. The Soviet economic model abolished private ownership of productive resources (by collectivizing all farms and factories) and the market (by instituting central planning), but retained wage labor.

Proposed models for economic democracy generally begin with abolishing wage labor. Schweickart's model goes further to abolish private ownership of productive resources. Other proposals recommend abolishing the market, as well.