The recent riots and looting in
A just economy will not emerge from the tired debate between left and right, or endless arguments over whether free markets or state control of the economy deliver the best outcome. Justice requires that we transcend these stale and failed dialectics. Neither the contemporary vision of a free-market economy, nor a state-socialist or Keynes-inspired social democratic model can deliver a just economy; each is too riven by conflicts and compromises to get anywhere close.
Nothing short of fundamental reforms to the three pivotal institutions of the modern economy will do. Without substantial changes to the tax system; the financial system and the monetary system, a just economy will remain beyond reach.
Foundations of a New Social Contract
While a smaller, less expensive, state is perfectly achievable once everyone is permitted a viable stake in the economy, the state will still have an important function for which it will need to raise revenue through taxation. But it should tax the use of land and natural resources, things that are limited supply, rather than wages and profits. Taxing the output of economic activity discourages entrepreneurship and penalises hard work.
Financial markets must be reformed so that their sole purpose becomes the channelling of investment capital to the real, productive economy; activities that create the goods, services and experiences that people need to live decent lives, and the extras that promise the possibility of fulfilment and happiness.
Alongside these changes we need a new system of money creation; one that ensures stability in the money supply and that sufficient credit is available to fund every viable new business start up, or sustainable plan for expansion. Money should no longer be created as debt, as this places an unnecessary and counterproductive burden on both business and the economy as a whole.
Economic Renaissance for the Majority
These measures would curtail the minority enjoyment of unearned wealth and bring the benefits of a dynamic, opportunity-rich economy within reach of many more people. It’s perhaps not easy to imagine such a future economy, and it’s probably impossible to model the precise impact of these changes in terms that conventional economics demands, but such modelling is not necessary. These reforms would have to be implemented gradually so they can be fine-tuned as their impact becomes evident. And a great deal more research is required, especially into the impact that changes in each of these spheres will have on the other two: the mechanisms of the tax, financial and monetary systems are complex and interdependent.
If such changes are to be successfully implemented, they will have to be coordinated internationally. This may seem an impossible goal, but it’s not so very different in scale or complexity to the changes unleashed by the process of economic globalisation over the last thirty or so years; it’s just better motivated.
Over to You…
But none of this can happen without the commitment of a critical mass of people. Where that tipping point lies is impossible to know but it is out there. What we need now is the most successful marketing campaign in history. Central to that campaign should be the message that transformative change to economic structures and institutions is possible, and if such change were achieved, the life experience of the vast majority of human beings would be dramatically improved.
Next week, in the final article in this series, I shall look at the prospects for this campaign, and at the importance of established democratic structures in the process of revolutionary economic change.