A Just Solution

Please . . . It's important to keep in mind that what I am presenting here is a new and different way of organizing the economy. It would be a relatively simple economy, but, as anyone who has ever tried to hit a golf ball straight can attest, just because something's simple doesn't necessarily make it easy. The subject matter doesn't help. Even someone very good at explaining things would have a hard time making any economic model easily understood. I'm trying to suggest, as gently as possible, that it will be hard enough to get an accurate picture of this new kind of economy in one's mind without attempting, while reading about it, to convince oneself that it really isn't anything new (for example, "It's really just socialism") or trying to visualize how it would function while looking at it through the prism of the capitalistic economy that we all know. So, if you would, take a deep breath, let go of familiar ideas and experiences, and prepare to be exposed to something really new and truly wonderful.

The last great advance in the affairs of humankind, I'm saying, was the advent of political democracy. Political democracy represents the conscious organization of the process of effecting choices for a community according to the democratic principle. I submit that the time has come for the next great advance in the principled organization of human affairs, to apply democracy to the capitalistic economy. Both the spirit of that proposition and its timing have perhaps been made more viable since capitalism has vanquished Marxism and in the process more or less conquered the world.

Democratizing capitalism can in no way be equated with its destruction. Capitalism is an economy with private property and freedom of choice regarding how one wishes to participate in it, in which the economy is divided between public and private sectors, with the latter predominant, and there is no limit on how much income anyone may earn or how much property one may accumulate. Applying democracy to capitalism would require the establishment of a democratically distributed income. (Please note: That is not the same thing as democratically distributing incomes.) Doing so would in no way violate any of the above characteristics of capitalism. It would, however, create an economy with economic security for all, environmental sustainability, no involuntary unemployment, no poverty, and...get this...no taxes. It would retain private property. It would also increase personal liberty and enhance political democracy. (Also, all debts owed purely financial institutions, such as banks, would go away.)

It will be seen that the economic model being presented herein is not a 'managed' economy, much less micro-managed, much less 'commanded.' Rather, it is a rationally designed economy...as opposed to capitalism as we know it, undemocratic capitalism, which developed via random social evolution (though the rich and powerful have sought at every twist and turn along the way, with

more success than not, to shape it for their benefit). A democratically capitalistic economy would have in place a small number of rules that would define its structure and make the economy function appropriately, just as the constitutions of the U.S. and other nations lay out the basic features and rules of a democratic political process.

Structure and functioning are the two fundamental aspects of any economic system--or, indeed, any kind of system at all. The functioning of the demand economy is in some respects more speculative than is its structure, and at all events follows from its structure. So, I'll start with the structure of this economic system. In discussing its functioning I'll limit myself to those areas that are less speculative and therefore less debatable.

I first got to this economic model by asking myself how we could have an economy as just in its structure as political democracy is in its structure. The obvious answer is to consider that money is to the economic system as rights are to the political system:  No one can participate in the political system of one's community without the rights relevant to participation in it, and no one can participate in the economic system of one's community without money. At the same time, every member of a community will be affected by the choices made available through its political system...whether one wants to be affected by them or not...and no one has any choice but to participate in the economy. So, for the same reasons that justice requires an equitable distribution of political rights, justice also requires an equitably distributed income.

A just distribution is a democratic distribution. A democratic distribution is one in which whatever is being distributed is equally available to all, but for objective restrictions (not based on personal whim and independent of any creed, ideology, etc.), universally applied. Briefly put, the only valid restriction on earning the democratically distributed income would be that one have a job that pays it (or be retired or be genuinely too incapacitated to make a productive contribution), and the only valid restriction on being allowed to get a job earning that income would be age. Of course, particular jobs would still require specific skills, knowledge, training, etc., but there would be a job earning the democratically distributed income for everyone who wanted one (without its costing anyone anything). I want to stress that the existence of a democratically distributed income does not mean that anyone would be required to accept a job earning it; the only limit on devising other ways of earning an income would be people's imaginations. All this is getting us ahead of ourselves, though, and justice (and its relationship to democratic capitalism) is the subject of much of the remainder of this book. So, let's turn to the economic model itself, beginning with a brief overview. [Note: I present the model as much as possible in the present tense, but for no other reason than to keep the syntax as simple as possible.] 

Those who earn the democratically distributed income are "employees of capital," or "capital employees," retirees, and those who are too incapacitated to make a productive contribution, to perform any job in the economy. The total of their incomes is the supply of money for the economy. It is because all money enters the economy in the form of incomes to potential consumers that I refer to this economic system, this particular form of a democratically capitalistic economy, as the demand economy. The democratically distributed income is paid by a monetary agency. That agency has no discretionary power whatsoever; it is a purely administrative body, the 'paymaster' for those earning democratically distributed income. Beyond that, this economy works the way capitalism is supposed to work: All other outcomes get decided by the workings of free markets.