My Economic Platform

I've had an economic screed in me for some time, but lately it's been crystallizing into something usable. So, here we go, my economic platform for the United States of America. For what it's worth! Shoot what holes in it you can, but only after actually reading it. Real flaws, however stupid, are good. I am eager to learn and do better. Cheap shots, on the other hand, will be treated appropriately.

The Problem

Think of wealth as a reservoir system for the economy. Useful when of reasonable size matched to need, reasonably distributed, and reasonably mobile. Think of the "1%" and the concomitant alignment of wealth disproportionately upward away from labor as a situation in which the reservoir system has, over time, become an end in itself. It has consolidated into a few hands, and become basically immobile except that we let some out in order to accrue more in the long term. As far as the circulating economy is concerned, wealth like this is basically frozen assets. Useless.

So the question is whether there is enough circulating capital to match the value in the system. Stimulus works in this situation as long as it is short-term, acting as a bypass of the now-frozen reservoirs. The idea is to recognize that that money really is out of circulation, though only temporarily (since we can't destroy it, but we can't use it, either, and it could move back into the economy). Which is why the stimulus funds that were used properly were treated strictly as loans to be spent on operations and repaid on tight terms.

This is because money supply issues relate to value in the circulating economy. Wealth and government are opposite complements here. So the hoarding of wealth actually tends to reduce the money supply available to remaining parties, and the government is granted powers to be able to counter this. Stimulus is one, in the short term, but taxation is the other—the one that can actually drain those frozen assets back into the circulating economy. We're sitting at the wrong end of the Laffer curve now—too little taxation makes for just as little revenue as too much. The idea is to reach a minimax solution, now by raising rates rather than lowering them.

However, the advantage to industrial, mass-production capitalism, even in the reasonably enlightened form we have, is that, as a system, it produces surplus value. And generally we try to optimize our system to make it so that that surplus value doesn't simply collect in a few hands at the pure expense of the working and business classes, and also so that production capability can be more easily acquired by the masses. (Not that it always works, and right now it pretty much doesn't, but we try.) We're not Marx's England, in other words, and we try at our best to avoid monopolies, but it is still capitalism, and the goal of the capitalist is to produce net positive value and call it a profit.

The "American Dream," in such a system, is very much built on the idea that everyone can profit from their own labor. And it looks like it works, in a system that pushes the expectation of constant increasing profit. But Marx is still right on the very basic point that net value in the system increases most by simply refusing to pay labor the equivalent value of its productivity. It is obvious, and true, that not everyone can profit. While the capitalist economy isn't a perfect zero-sum game, it's also not an infinite-sum game. It remains a finite-sum game in which value has significant (but real) artificial components. There are still always losers, but their loss is not as simple as a 1:1 loss to the winners. And the gains of the winners in the system are also not that simple. The Forbes listing of the "super-rich" shows that the people at the very top can give away your family's lifetime earnings as charity—basically every year—and still not lose money. Which isn't because all of that money is coming directly from other people. Interest, capital gains, things like this produce money over time in ways that are still tied to value, but not directly to productivity/labor value.

And yet, if the finances of the wealthy are not a zero-sum game, the finances of everyone below them really do look that way. Our personal economies are bound to balance—and we generally maintain our liquidity, not with wealth, but with debt. A mortgage, for example. You may have savings, but it probably isn't wealth in any stable sense, especially if your long-term savings are reliant on market volatility. And this is because you are not a capitalist. You live in a system of exchange for approximate value. You can't give away money without losing it, and you can only really hope to get something of equivalent value in exchange.

Most people who own their own businesses do not actually make sizable profits, either, in the long term. There are advantages to being an employer, but also costs. And it's very easy to lose, very hard to break even in the long term, and even harder to turn a consistent profit. Wealth only really comes in when (and yes, this is an oversimplification) you have money over and above your balance, and get rewarded for not using it—generally with more money. Really, you get rewarded for letting other people use it at much higher economies of scale, which is what banking does, and also why the stock market has begun to look like a banking system. It's all just loans at interest, so that someone can profit and pay you for the privilege. The really short, way-too-simple explanation of the top-level phenomenon is that the economy itself is the source of value. It looks zero-sum at the bottom because profit is siphoned upwards so that the top looks more like an infinite-sum game.

If any of us fails to break even on our zero-sum personal economies, wealth still takes its profits out of the economy. We just lose. All the current political talk about expanding the middle class is about making it possible for more sheep to be sheared longer. And the attacks on the "social safety net" systems that are designed to mitigate the effects of economic loss on a personal level are about cutting the costs on unproductive expenses. Essentially, a longer plank to walk over deeper water.

The Larger Situation

So, if this is the problem, how do we fix it? I have a radical proposal, which is: pay the poor money. Not because they work for it, but because people need money to live, and they'll find it somehow anyways, and the other methods are really only ways of displacing Hobbes' "nasty, brutish and short" life from us onto other people. We have to do something about human predation, and we really do have the money—we're just letting it pool at the top indefinitely, and letting the top rise higher and higher while the bottom sinks lower and lower. The discussion will never truly be about "leveling the playing field" until we begin to talk about using surplus value to make it possible for us to pave over the abyss.

The problem I see that subsidizing poverty up to a livable standard would solve is the simple fact that so much of the real economy takes place below the plank, under the waterline. The black markets, the drug trade, the gangs—all the systems of, by, and for the poor who cannot make it in the legal economy because they are surplus labor. The war on drugs, the war on gangs and organized crime, and the war on immigration all rely on the fact that we don't think of these as parts of the real economy. We think of them as parasitic if we think of them at all. The people in them represent competition for the few legitimate jobs, and they represent where we could wind up if we can't compete for those jobs. We fear poverty, and we are willing to fight for our own survival against the people that embody it.

But who benefits from poverty being the alternative to legitimate jobs, and especially from limiting the number of jobs? Who benefits from a system in which most businesses cannot afford to hire large numbers of people, let alone pay them what they might be worth, and still break even? Who benefits from a system in which hiring people who are willing to work off the books and under the table can be an alternative to creating a legitimate paying job? The benefit of the desperation of poverty works locally and it works globally. Global outsourcing is just undocumented labor in a different context. It is a matter of wealth taking advantage of the existence of poverty to minimize the cost of compensating labor. The value of labor keeps going up, but the costs keep coming down, and the number of people who benefit from labor keeps getting smaller.

So, for example, we do live in a system in which raising the minimum wage for legitimate jobs reduces the number of such jobs. If we insist on disconnecting base pay from market forces for humane reasons, we still have not changed the system. If we unionize in order to capitalize on the leverage of a group of laborers, we still have not changed the system. And, in fact, the system has been getting progressively more immune to labor organization as more power is given to employers. You can be replaced. We can make cheaper teachers now. We're talking about how to make cheaper pastors. And we've been making cheaper factory workers for decades. The value of a laborer goes down even while productivity goes up, and poverty continues to expand. And where does the money go? Profit isn't getting smaller.

Fixing the Problem

If the problem is to be resolved, we cannot simply mandate a certain level of labor compensation, because that will only succeed in changing the shape of the situation, not its reality. We actually have to fund labor compensation. We cannot rely on businesses, subject to market forces that extract money upwards, to do so. Which means that, one way or another, we have to make sure that more money circulates lower in the system. We could do it by taxing wealth and redistributing the result as compensation. We could do it by reducing the upward flow of money toward wealth with regulation. But one way or another, we need to reduce the net amount of profit extracted from the system. Which sounds like suicide to basically everyone in the conversation, because we believe in constant increasing profitability, or death. But it's a simple fact that not everyone can profit, and the higher the standard of profitability, the fewer people can attain it. The real question is about permitting more people to break even for longer with less effort, in some closer relationship to their actual value.

And that, I don't think we can do from the top down. We can't do it that way because the leverage of the top is the existence of poverty toward death at the bottom, and the threat that anyone in the middle could wind up there if they find themselves on the wrong side of a "job creator." Such a system works when we permit monopoly power over labor—except that we've paid so much attention to "monopoly" as it pertains to product competition that we've lost sight of labor. We have a de facto belief, and increasingly a de iure belief, that the government has no right to interfere against the monopoly of industry over labor. That government exists to profit the winners, and in times of largesse, offer a certain measure of noblesse oblige to the losers—but that people have no basic right to live if they cannot live to the profit of those in power. And the only way I can see to fix that is to make government a legitimate competitor by defining and funding the value of people apart from their profitability for someone else.

Now, we do that, with unemployment benefits, welfare, food stamps, etc. And you may have noticed all the uproar we get into over the idea of giving benefits without some connection to work or attempted work. And the word "socialism" gets thrown about a lot in such contexts. But the real socialist systems that we fear divorced having a job from doing work, and so could create an indefinite number of jobs simply by fiat. (Our farm subsidies perform this disconnect to a lesser extent, and have done for some time, because that's a set of necessary jobs in which there is high variability in productivity—and in which overproduction also must be regulated to keep the commons stable.) In a capitalist system, we can only incentivize the creation of legitimate local jobs; we cannot actually create them with government. But we can actually incentivize job creation by businesses by taking the upward flow of profits and feeding it back into the system at lower levels, making it cheaper for businesses to employ people legally. This is one way of funding both minimum wage and job numbers expansion. And it isn't either new or radical.

But if we're really going to eradicate poverty, this won't do it. We can't eradicate poverty using jobs in a capitalist system, when the system relies on poverty as an incentive to work for market value at scales much lower than real value. Note that poverty isn't the incentive to work, period, even though that's what often gets said. Poverty is the incentive to work for less in order to get anything at all, and this is the threat that exerts a general downward force on labor compensation. Industry relies on holding people over the abyss of poverty in order to extract profit from them. And it only subsidizes people who can be used profitably. Which can be told by looking below the water, and realizing that poverty has nothing to do with work or non-work. Poverty is its own economy of people who work for other people. Poverty descends through the marginal economy of those who still cling to legitimate work and the compensation for being employable but unemployed, down by degrees "off the grid" in terms of compensation for labor. And there is an illegal economy that is every bit as interested in siphoning off profit from labor as the legal economy. But if you really stop and look at the gangs, what you're looking at is the labor unions of the unemployed. You're looking at the alternative to relying on the legal economy, which is why the gangs are also so heavily involved in the illegal economy.

This is one reason why legalizing and market-regulating illegal drugs could be a winning move in the "war on drugs"—because it would radically undermine the illegal economy in the same business. But it would also pull the rug out from under the infrastructure that supports a great many people in poverty. Legalizing the profitable elements of the illegal economy would drastically shrink its economic base, and instead pump that money into the legal economy, where it would again rise to the top. Deeper poverty and higher wealth in one and the same move, given the current system. From one exploitation to another. And we'd cheer, because we believe that those poor people deserve it. They are, after all, bad people. Not like the working poor, struggling along just to make a living, sacrificing for the sake of their children ... no, not like them at all. And definitely not like us.

The indolent poor, after all, do not deserve to live. Not at the expense of people who actually work for a living. And this is because we believe that labor is the value of human life, and that profitability is the value of labor. And so it is the wealthy who deserve to live at the expense of people who actually work for a living. And we come up with analogies that we actually believe, in order to explain how the wealthy actually work for a living and earn the profit of your labor. And then we define highly-paid skilled laborers as "wealthy" because they make a lot of money by comparison with those who make little in compensation for their labor, and we play both ends of labor against each other while the profits keep coming out of the system. Because we believe in profits. And we think of our compensation for labor as our profit, even though it never is, and the vast majority of us live by taking on debt in order to have any liquidity at all.

Bringing it Together

If the Christian does not stand up and say, "this is not the value or the purpose of human life," who will? But what are the alternatives? Obviously, if compensation for labor is to increase, it must increase as a percentage of the value of labor, which means profit from labor must decrease. Hear that again: pay for labor must increase, so that the laborer earns most of the value of their labor, and profit from labor must decrease, so that the value of that labor is not siphoned off and turned into someone else's wealth at the expense of the laborer. This isn't an option on the table in current debates, no matter how libertarian the right manages to sound, because they believe in reducing government's ability to interfere in the upward flow of profit. And so they manage to place popular political conservatives, who desire the ability to keep more of the value of their labor, in bed with exactly the people who want to take the most value out of their labor. This stupid alliance is then motivated to work against the ability of government to redistribute tax revenue to anyone but the wealthy. The people come to believe that the government has no right to tax you—but they believe this because that's the corporations' job now. And the corporate interests of wealth have no interest in redistributing their revenue downwards.

Meanwhile, business benefits generally from having a population of sheep it can shear. The more sheep, and the longer they can be sheared sustainably, the better. That's the role of the middle classes. Even when they "save" money, they do it by loaning that money to people farther up in the economy, who will use it one way or another to profit. But mostly, the middle classes spend money, just as the lower classes do. We all buy things. Decentralization would not reduce the amount of money in the system. Designing a system for maximizing the circulating capital lower in the economy just means that there are more varied interests to appeal to in order to constitute the value of something. But in any case, subsidizing people lower down in the economy—especially subsidizing poverty in no direct connection to its labor value—is a very different thing from subsidizing wealth. Wealth subsidies are "stable"—meanining that money given to the wealthy generally stays with the wealthy, or somewhere close by. Subsidizing poverty means distributing money with no expectation that it will stay where you put it. In fact, you can expect that money to flow uphill, because it will be paid for goods and services in the economy. There's nothing to look at, but the function of the economy is much improved.

But here's the kicker: you actually have to have the money to distribute, then. You actually have to take it from somewhere, it actually has to be real money, to give it to real people. Only genuine tax revenue can be spent in this way. And if it doesn't come from tax revenue, you really have started to print money, and if it does come from tax revenue, you have to take it from someone. You can't take money from the poor to give it to the poor. And most of our programs of social security and health insurance are in fact taken from the working and middle classes in order to give the money to others in the working and middle classes, on the notion that the same process can continue in the long term, and your children and grandcildren will pay for you. Giving this money to the poor really would be taking it away from people who rely on it, but giving it to the wealthy has done that just as surely, and we were willing to do that for reasons utterly incomprehensible.

No; if we want to eradicate poverty, we must do it on the back of wealth. And now we're firmly into terrifying country, because every proposal to give the money of the rich to feed the poor comes down to setting up an equitable system where work remains valuable and compensated at an appropriate level, so that money stays in the system rather than leaving it any number of ways. We cannot do it by destroying the golden goose, but we also cannot do it by handing her over to an oligarchy to monopolize the eggs; we must put the goose in harness, because she is the people's goose, and is in fact nothing other than the people themselves! In less colorful terms, we need the ability to increase value, to manufacture value in fact, that capitalism takes advantage of and turns toward the concentration of profits. We simply need to do other things with the surplus value of modern productivity than to permit it to be hoarded as capital. There can be no "worker's paradise," no utopian vision of life without work, if we actually want to feed the poor. As a society, we simply must decide to do it, and given the realities, to do it instead of working to feed the rich. And we must therefore use democratic republican government against the interests of the rich in order to put the money to other use.

It comes down to a choice: subsidize the rich, or subsidize the poor. The middle classes, revolving around business, are basically self-subsidizing, and tend (all else being equal) to be good at using government to secure their ongoing subsidy to level out the uncertainties of life. If we wish to subsidize the process of upward wealth creation, a very limited government will do, giving a free hand to business. The market will sort the matter its own way, and the powerful will benefit, and perhaps if they are wise, will use the government to maintain flocks of bourgeois sheep to be sheared. "A healthy middle class," totally reliant on the masters of the farm. But if the middle classes choose to subsidize the poor, and forcibly limit wealth, the money will keep circulating through their hands—provided they keep it circulating. Subsidizing the poor will keep the middle classes in all the money they could want to meet their own needs, because it is the cornerstone of maintaining a mercantile economy: making sure that the customer has enough custom to trade.

The problem is never going to be in giving money to the poor. That creates circulation. It is, in my opinion, stupid to argue about the poor not having "earned it," as the point is not about merit, but value, and there is an economic value gain to circulation through a system in which surplus value is created—as long as that value is kept circulating. The problem in the system is always going to be keeping a balance between permitting small usable profits that benefit the system as usable concentrations of circulating capital, and permitting real monopolization. Nobody can be trusted. There's no one kind of person who creates the problem. It happens over and over again. It's about power, whatever the form. And so such a system can stop working at any point, and revert to subsidizing wealth by default. All the middle classes have to do is stop giving money to people lower down. That's all—just cut the tether of social responsibility, lose the "dead weight" of charity, and rise, dog-eat-dog, back into the sitution we have today. And then sink, slowly, back toward increasing general poverty.