Die Neue Zeit
5th January 2014, 02:41
Last month, Matt Bruenig had a blog on "market socialism for intermediate students." (http://www.demos.org/blog/12/3/13/market-socialism-intermediate-students) Traditional "market-socialist" models are either cooperative-based or Yugoslav-inspired (that is, state ownership with "socialist self-management," market prices, liberalized foreign trade, encouragement of emigration for purposes of population control and consumption growth through remittances from foreign workers). Meanwhile, David Schweickart's "Economic Democracy" model started off radical, then got shot in the foot when the author accommodated petty capitalists and "grand capitalists" and also failed to pose any state assistance solution for difficulties with co-op startups. (http://www.revleft.com/vb/david-schweickart-shoots-t148623/index.html)
In the blog itself, a new dimension was introduced. Before going further, I do think that any "market-socialist" state-capitalist transition can't last for an extended period of time in the face of advanced computerized planning technology and techniques, so that's why I put the term in quotes and preceding "state-capitalist" to describe its true nature.
The blog proposed the introduction of sovereign wealth funds (SWFs). These are, simply put, state-owned investment funds that invest in everything from real estate and precious metals to the whole gamut of securities.
The government would buy up passive financial assets on the open market (stocks, bonds, etc.) and soak up the returns. With those returns it could pay out a social dividend, which Alaska does with its socialist sovereign wealth fund, or it could use them for other socially beneficial projects.
This sovereign wealth fund style of market socialism would not suffer the same risk diversification problems that cooperative market socialism does. Also, it makes more sense in light of the normative objections to capital income that motivate much of the pro-socialist arguments. If you think that capital income is a surplus that flows to people purely because of relations of ownership and not actual work, and you think this is unfair, then it does not seem like cooperatives actually solve that fairness problem.
A cooperative firm still directs unearned income to owners, just those owners are also the employees at the firm where the capital is employed. But if that income (the increment owing to the firm's capital as opposed to its labor) is truly unearned and ethically suspicious, surely it should not go to the new owners who also happen to be the employees, but to everyone in society. And that is exactly who a sovereign wealth fund gives it to.
Now, there are two types of SWFs: one is for budget stabilization, and the other is for long-term growth. The first type is short-term and speculative, while the other is not unlike today's pension funds, and is the type under scrutiny. (http://www.revleft.com/vb/national-democratization-health-t144742/index.html).
Elsewhere, Angela Cummine observed the growth of SWFs (http://www.opendemocracy.net/ourkingdom/angela-cummine/sovereign-wealth-funds-can-they-be-community-funds):
They now number over 60 worldwide, the majority of which have come into existence since the year 2000. This rapid increase in number has been matched by explosive growth in their total asset holdings, recently estimated at just over US$6 trillion. As a result, governments are now holders and investors of wealth in a way that for certain philosophers and economists has long been the preserve of utopian speculation.
And pointed out some issues:
No citizenry elects the management of their SWF, nor directly determines the investment policy and objectives of their fund through referenda or consultative mechanisms. Instead, these tasks are undertaken by governments or external investment professionals to whom the management of SWF assets is delegated.
[...]
The GPFG is widely considered one of the most transparent and accountable funds in the world. But while it regularly tops international rankings on these metrics, it has not been free from domestic controversy regarding the extent to which it reflects Norwegians’ preferences when investing its underlying assets.
[...]
But with these exceptions, most funds simply allow investment returns to accrue back to the fund principal.
Then concluded:
Yet, as more states move towards establishing these funds with forecasts predicting the establishment of a further 20 SWFs in the next five years, there is real potential to reform these institutions so they not only better resemble the original community fund vision, but also help to more generally democratize the ownership and control of assets within domestic economies. As discussion of SWFs starts to emerge in various UK contexts, it is important to put these issues of democratic, community-led management, investment and distribution at the centre of the debate.
Yet while both authors' envision merely the existence and growth of sovereign wealth funds, I'm thinking more about the possibility of simply a public monopoly on investment funds as one vehicle for social transformation.
In the blog itself, a new dimension was introduced. Before going further, I do think that any "market-socialist" state-capitalist transition can't last for an extended period of time in the face of advanced computerized planning technology and techniques, so that's why I put the term in quotes and preceding "state-capitalist" to describe its true nature.
The blog proposed the introduction of sovereign wealth funds (SWFs). These are, simply put, state-owned investment funds that invest in everything from real estate and precious metals to the whole gamut of securities.
The government would buy up passive financial assets on the open market (stocks, bonds, etc.) and soak up the returns. With those returns it could pay out a social dividend, which Alaska does with its socialist sovereign wealth fund, or it could use them for other socially beneficial projects.
This sovereign wealth fund style of market socialism would not suffer the same risk diversification problems that cooperative market socialism does. Also, it makes more sense in light of the normative objections to capital income that motivate much of the pro-socialist arguments. If you think that capital income is a surplus that flows to people purely because of relations of ownership and not actual work, and you think this is unfair, then it does not seem like cooperatives actually solve that fairness problem.
A cooperative firm still directs unearned income to owners, just those owners are also the employees at the firm where the capital is employed. But if that income (the increment owing to the firm's capital as opposed to its labor) is truly unearned and ethically suspicious, surely it should not go to the new owners who also happen to be the employees, but to everyone in society. And that is exactly who a sovereign wealth fund gives it to.
Now, there are two types of SWFs: one is for budget stabilization, and the other is for long-term growth. The first type is short-term and speculative, while the other is not unlike today's pension funds, and is the type under scrutiny. (http://www.revleft.com/vb/national-democratization-health-t144742/index.html).
Elsewhere, Angela Cummine observed the growth of SWFs (http://www.opendemocracy.net/ourkingdom/angela-cummine/sovereign-wealth-funds-can-they-be-community-funds):
They now number over 60 worldwide, the majority of which have come into existence since the year 2000. This rapid increase in number has been matched by explosive growth in their total asset holdings, recently estimated at just over US$6 trillion. As a result, governments are now holders and investors of wealth in a way that for certain philosophers and economists has long been the preserve of utopian speculation.
And pointed out some issues:
No citizenry elects the management of their SWF, nor directly determines the investment policy and objectives of their fund through referenda or consultative mechanisms. Instead, these tasks are undertaken by governments or external investment professionals to whom the management of SWF assets is delegated.
[...]
The GPFG is widely considered one of the most transparent and accountable funds in the world. But while it regularly tops international rankings on these metrics, it has not been free from domestic controversy regarding the extent to which it reflects Norwegians’ preferences when investing its underlying assets.
[...]
But with these exceptions, most funds simply allow investment returns to accrue back to the fund principal.
Then concluded:
Yet, as more states move towards establishing these funds with forecasts predicting the establishment of a further 20 SWFs in the next five years, there is real potential to reform these institutions so they not only better resemble the original community fund vision, but also help to more generally democratize the ownership and control of assets within domestic economies. As discussion of SWFs starts to emerge in various UK contexts, it is important to put these issues of democratic, community-led management, investment and distribution at the centre of the debate.
Yet while both authors' envision merely the existence and growth of sovereign wealth funds, I'm thinking more about the possibility of simply a public monopoly on investment funds as one vehicle for social transformation.