Challenging capitalism: a 12-step program

Over a year ago, I posted “What are the Game Changers?“, an attempt at sparking some strategic thinking for the broader left. Now that we’ve had a month of Occupation, building on the original Occupy Wall Street action, I’ve been wanting to put these ideas back on the table, so below I recycle much of that post and update it, plus adding some links for further reading.

Occupy has served notice to our elites (the top 1%) that people are not happy with an economic system that underpins enormous inequality of wealth and income, and is anchored in environmental destruction that is literally undermining the prospects for human civilization. But the movement is still one based on opposition rather than putting forward a common platform. So how do we move ahead to create a movement for change that will excite people about the world that could be, and put our ruling class on the defensive?

Another thing that has changed with the Occupy movement is that it names and challenges capitalism as an economic system, the manifestations of which are the root of most activist causes. Given the Spirit Level evidence on the health and social problems associated with inequality, a full-frontal assault on the causes of inequality is badly needed. And radical changes are also required that stop our economy from trashing the planet (or the planet will soon find its own ways of stopping us).

The idea behind “game changers” is that they fundamentally alter the balance of power between corporations (and compliant governments) and ordinary people – that is, between the top 1% and the rest of us. Game changers, almost by definition, need to be bold, and ordinary people need to see that such moves will improve their day-to-day lives. And for activists, it is about having a vision of the world we want, and a long game, like the Regina Manifesto, that leads us there (see Armine Yalnizyan’s recap of the large number of gains made).

Here’s a list of (and a short rationale for) a number of ideas that would fundamentally change the nature of the “game” rather than seeking modest improvements at the margins. They are rooted in challenging both the grotesque inequality of our society as well as a notion of achieving true sustainability:

Guaranteed income – The creation of a basic or guaranteed income at a sufficient level would greatly enhance the bargaining power of workers by removing the fear of destitution that forces people to take crappy jobs (or worse) in order to survive. It therefore puts upwards pressure on wages at the lower end of ladder. It might lead to a lower employment rate and reduced average hours of work, not necessarily a bad thing, but could also be a means by which society supports artists and other professions that are more marginal economically. A guaranteed income would have to be federal due to mobility issues, and probably would be best modeled on the OAS or CCTB with a long phase-out period, rather than a universal demogrant. This would also eliminate provincial welfare bureaucracies and the federal EI system, but importantly would consolidate all income support programs federally. This transfer would also be adjusted upwards to compensate for price changes arising from carbon taxes, higher energy prices and higher food prices, all of which are likely consequences of aggressive climate action plans. A good overview of the debate around a guaranteed income can be found here.

Sectoral bargaining – Unions have made some headway in the low-wage service sector, but small shops and high turnover confound organizing. Sectoral bargaining is an approach to unionizing the service sector that would give broad sectors (retail, restaurants, security, etc) a vote on whether to demand collective bargaining and if approved, different unions could then make their pitches on ability to represent those workers. This would quickly increase union density across the economy and lead to wage compression. For employers, it puts all work on a level playing field, so that there are no competitiveness issues, and wage increases would generally be passed on to consumers in the form of higher prices. Another related model to study is the German model of regional wage-setting institutions, which goes even deeper to include works councils (shop-level management practices that include workers in decision making) and co-determined boards (that give workers in large companies half the seats on the board).

Reigning in corporations – As documented by the Aurora Institute and the film, The Corporation, reforms to the way corporations are chartered are necessary. Currently, shareholders and executives benefit from limited liability (e.g. in the case BP oil spill, shareholders’ losses are limited to the price they paid for their shares), free speech (in advertising and politics), and deductions for entertainment and meals (boxes at hockey games, for example) – all of which should be eliminated or modified. A maximum level of executive compensation (related to the pay at the bottom of the company) could be established. Corporations also benefit from an expensive legal system that allows them to sue individuals (or intimidate by threat of lawsuit) for all manner of things. Corporations can be a useful organization form but they should have to prove their benefit to society, with sunsets on their corporate charters and a process for renewal. And to the extent that their useful economic activities could be performed by public enterprises, worker-owned enterprises or cooperatives, so much the better (it may be that coops resonate more with the Occupy movement than public enerprise).

Abolish intellectual property – Copyright and patents create monopolies that raise prices for consumers. Historically, laws have tried to strike a balance between the right of creators to benefit economically from their work and the rights of society to benefit from that work (which is inevitably the product of a whole society). It is not obvious at all that artists and inventors only create in the presence of strong IP laws. And in a world of large entertainment and pharmaceutical corporations with massive advertising budgets and huge upfront costs of production, this logic gets put on its head anyway. The result is that IP as we know it is a huge contributor the rising share of income going to the very top of the income distribution. Economist David Levine argues for going the opposite way: make Canada an IP haven where people from around the world can come specifically to innovate on the work of others, meaning this could create a lot of interesting tech jobs in Canada. [Note: I’ve had some pushback from low-income writers, who get a decent chunk of income from royalty payments; I’m willing to reconsider some provisions for small artists but let’s keep the big picture in mind.]

Reclaim the new “Commanding Heights” – Key sectors of the economy should be brought into the public sector through aggressive regulation, nationalization or creation of public competitors. In telecommunications, for example, Canada has the most expensive prices in the advanced countries due to the oligopolistic practices of a handful of large telecom companies. This could be remediedby regulating prices, nationalizing the “pipes” or using the CBC to create a low-cost public competitor that would force companies to reduce their massive profit margins. Similar cases could be made for banking, oil and gas, pharmaceutical drugs, forestry, mining – although the specific form and strategy would differ depending on the specifics of the industry. But we could also start small with a populist case for nationalizing the much-hated Ticketmaster.

Localize food – New arrangements that promote enhanced local food supplies, with sustainable agricultural practices would help in both mitigation of greenhouse gas emissions and adaptation to peak oil and climate change. This should build on farmers’ markets, buyers’ coops and community shared agriculture projects to include broad-based procurement of local food by public sector (schools, universities, hospitals, prisons, social housing units, BC Ferries, etc) combined with the extension of supply management to fruits, vegetables and perhaps other areas. This would be a benefit to farmers in terms of higher incomes, and, if well-designed, would end hunger and improve nutrition if in combination with an attack on fast food and convenience store junk (i.e. make unhealthy processed food the new tobacco).

Expand the scope of the existing public sector – This is similar to reclaiming the commanding heights but builds on areas where the public sector already has a strong presence. This would include developing an integrated system of early learning and care with the K-12 system, community centres and libraries (“hubs” of local public services with hours that extend well beyond the standard business day). It would expand the umbrella of public health care to dental care, vision care, physiotherapy and other preventative health services. It would bring natural gas distribution back into the public realm to re-create (in the case of BC) an integrated public utility for managing energy and demand-side management programs. It would create a consolidated Crown corporation to manage recycling in BC to close the loop on waste. A public development corporation, perhaps in combination with beefed up non-profits, could create and operate new affordable housing stock, and do so in a way that builds “complete communities”, where walking, biking and public transit cover most trips people need to make.

Radical democracy – 19th century democratic institutions are not adequately meeting the needs of 21st century citizens. Redefining democracy could include deliberative processes, referenda, participatory budgeting, lower the voting age to 16, campaign finance reform, etc (Judy Rebick’s book, Imagine Democracy, is a good starting point). Like the New Politics Initiative of 2001, this is about asserting a new way of doing politics, rather than just a suite of policies. The new democratic regime must also create new powers for municipal governments to act in the interests of local citizens.

Public money creation – There is no reason why money creation (i.e. the expansion of credit) should be the sole domain of the chartered banks. The status quo means money is created to support enterprises that will be profitable (but not necessarily socially or environmentally beneficial), upon which taxes must be levied in order to support public services. Delinking public services from capitalism would mean creation of money would follow democratic priorities. The potential for inflation would be a concern, so implementation would require a phase-in period. But it is worth noting that at the height of the boom in 2007, new money created through chartered banks was about $200 billion (an expansion of 10%, and equivalent to 12% of aggregate demand that year, but consistent with low inflation), an amount about the size of the total federal budget. The 2008-09 financial crisis revived the idea of money creation (rather than bond sales) to finance public sector deficits, and while the crisis has died down, looming deleveraging could make make public money creation a necessity.

Tax bads – Public money creation need not preclude good tax measures that alleviate other social and environmental ills. These include higher top marginal income tax rates to reduce inequality, Robin Hood taxes to reduce financial speculation, carbon taxes to reduce greenhouse gases, inheritance taxes to deter dynasties, and taxes on junk food, alcohol and tobacco. On the environmental side these taxes are instrumental to achieving prices that reflect the true costs of extraction, processing, distribution and consumption, and a shift towards closed-loop manufacturing systems.

Legalize pot and most other drugs – Perhaps this is not a substantive game-changer but this issue would allow the left to reclaim some space on the civil liberties side of the fence (and have some fun, too). It makes little sense to continue with prohibition, a system that fosters organized crime (which causes more harm than any health-related impacts of drugs), and criminalizes millions of consumers who are not doing any harm to others. Prohibition is a crusade that does not work in spite of massive public resources dedicated to it. Indeed, legalization would shine daylight on underground activities, create new work in Amsterdam-style “coffee shops”, and provide another source of tax revenue.

Carbon quotas – This is an alternative approach to carbon pricing (carbon taxes) that would allocate to households (or individuals within a household) a share of the annual (and shrinking each year) carbon budget. Because high-income families lead much more carbon intensive lifestyles than low income families, they would have to buy quota from households that had an excess – that is, the system is inherently redistributive, while providing greater certainty about GHG reductions than a carbon tax.

That’s my 12-step program, for now anyway. I’ve been more persuaded by arguments for greater cooperative institutions over the past year as a means of carving out economic space away from capitalist enterprise. But overall, these seem to form a good basis for challenging capitalism. Ultimately, I’m not arguing for eradicating capitalism, just shrinking it back to a more managable size. We like many of the consumption goods and services produced by private enterprise, like laptops and smart phones, and I see no reason to prevent access to these things as long as they meet stringent health, labour and environmental standards, and do not perversely concentrate income at the top. But for most of the core goods and services that meet basic needs, we need to Occupy the Economy.