issue 188 - October 1988
2. The corner shop
and capital's castle
Bound to no ideology or party, our courageous Don Quixote and
Sancho Panza (liberated of course from the master-servant relationship)
continue their journey into the depths of a fairer but still feasible economy.
OH no, not economics. This is where my eyes start to glaze over. I know I ought to be interested. But somehow it seems like enemy territory.
I know what you mean. But let's start with a part of economics you know well. Does your corner grocery shop seem like enemy territory?
Well maybe 'enemy' is going a bit far. I think they charge a bit much for their baked beans.
But you can nip out and get a can any time instead of having to get in a car and drive miles to the hypermarket. Some socialists maintain that the State should take over everything, right down to the grocery shop on the corner. But the whole point of that grocery shop is that it fills a gap in the economy very neatly.
If the State ran all food shops it could make sure there was a decent one in every locality. But it seems likely that there would still be gaps that needed filling. Besides, there are some things the State is not very good at running. Imagine the menus that a Restaurant Ministry would come up with.
I'd rather not, thank you. But would these local shopkeepers and restaurateurs be allowed to run a business for profit?
Yes, and not just retailers - anyone who set up on their own to provide a particular service. These people often tend to end up as part of the underground economy. Take untrained psychological counsellors, or perhaps astrologers. No planner in their right mind is going to make provision of astrological services by the State an economic priority. Yet there is clearly a demand for them. Society needs the flexibility to embrace new ideas.
I don't know - I rather like the idea of a Ministry of Astrology. But you're evading the hard questions. Are these small businesspeople allowed to employ others?
I'm not sure.
Aha! I ask one difficult question and you're stumped.
I never claimed to be a Moses or a Marx. It would be up to people to decide democratically whether it was a good thing for one person to employ others and so have power over them - the power to pay them a pittance and sack them, perhaps.
But I'm asking you to do the deciding.
Well, if you pushed me I think I'd try and avoid it. Two or three people working together could make up a profit-sharing partnership. And if the business expanded further it would legally have to become a workers' co-operative.
Hold up, we haven't finished with the difficult questions. If these people are allowed to make and keep a profit surely the same old inequalities are going to emerge as are there now?
People wouldn't earn absolutely equal amounts, no, but the inequalities would be much less significant than they are now. In a workers' co-operative it is the workers themselves who control the company. It would be up to them whether they had an equal pay policy (like the NI).
Less of the boasting.
.or paid some people more. But it's unlikely they'd be keen on wages or profit shares being too unequal.
But the single entrepreneurs keep everything for themselves?
Yes, but most of them won't be able to acquire huge sums of money without involving other people in the business and so becoming co-operatives.
Okay then, but if they're competing in the marketplace some co-operatives are going to succeed and some fall. Some workers will be struggling while others will be part of a booming business offering windfall shares of profit to its workforce.
In constructing this society we have to assume we've won the argument that greater equality is a good thing. That means windfall profit shares could be taxed heavily - as they are in some Western countries even now.
And what about bigger companies?
Even quite large companies could remain independent of the State provided they were socially responsible and responsive to their own workers. The bigger they became, the more difficult they would be to run on a normal co-operative basis. But even then the new structure would have to be decided democratically by the workforce. They might well feel that there should be people designated as managers and even that those managers should be paid more for their extra responsibility. But they would be appointed by and accountable to the work-force below rather than to a Board of Directors above.
It sounds very pretty. But in practice it would be much more cumbersome than a hierarchy.
Maybe so. But it would be much more human. People would gain so much through feeling involved in and committed to their company's affairs that their whole working lives would make more sense. And they'd have much more of an interest in their company prospering.
But even that wouldn't make a company more socially responsible. Look at the nuclear power industry, where workers are as keen as management to reject all the environmental arguments.
That's only because they're surrounded by unemployment. If they felt more secure in general they'd be more open to persuasion. But you're right that there are some things that industrial democracy doesn't address. That's where the State comes in.
And so we are. There's no question that local authorities could take on many more of the responsibilities of government than they currently do, and be much more accessible to local people's opinions and frustrations than a national or federal government could ever be. States in Australia and the US and provinces in Canada already have an amount of control undreamed-of in Britain and Aotearoa. And we should head much further in that direction. The best way to protect ordinary people's interests is to give them the power to do so themselves, not to hand it over to someone in a distant capital who is supposed to know what's best.
So why have a centralized government at all?
Because there's no way round it at the moment. We're back to utopianism again if we talk about abolishing the State immediately. Look at environmental issues. Greens are keener than anyone to dispense with a centralized government. But many things they oppose, from acid rain to leaded fuel, depend on there being a State to pass laws which ban them on the grounds that they are harmful to the wider community.
And worker-controlled companies still need regulating. Even if workers had a veto over new projects they would have a vested interest in pursuing profit at the expense of the environment.
So the State would act as an environmental police force ...
Yes. The only way to make Green issues a priority is for the whole community to accept them and elect representatives to make sure individual companies and groups of workers knuckle under. And it gets even more essential when you start accepting more profound Green ideas about abandoning industrial growth and cutting out wasteful products that needlessly consume the world's resources. Eventually we might have a population that was sufficiently educated about the ecological realities that they wouldn't want electric toothbrushes. But until then you'd have to have a central government that was prepared to ban products harmful to our ecological health.
What else would the State be doing?
Certain large industries would be under State control. It's such an expensive business producing steel, for instance, that it doesn't make much sense to split up production between competing plants. Mao encouraged the Chinese to produce steel in their backyards but in this case big probably is better, if not beautiful. And the same goes for energy - gas and electricity, oil and coal. These are all simple undertakings in the sense that they're supplying one basic commodity and so don't need to be as flexible to changing tastes and demands.
But what's to stop these huge industries being just as alienating and unresponsive to workers and consumers as they are now?
Nothing. We would of course be developing alternative non-polluting sources of energy, tapping the sun, the wind and the sea - and those would be much more conducive to small-scale, local control. But for the moment we might have to accept that some big industries are naturally 'top-down' and centralized. In an electricity grid there has to be a centre which directs power from one part of the system to another. It's difficult to imagine meaningful workers' control. But recruitments (and sackings) of management could still be made by representatives of the workforce, who would be the first to know whether someone was a good manager or not.
This seems a pretty weak link in your chain.
Perhaps it is. But on the other hand there would probably still be people who'd be very content to have a steady job in a secure industry without taking on the responsibility of industrial democracy or the risks of the private sector.
And what about the real 'commanding heights' of the economy: the banks and money markets. What would happen to them?
Well, here we move into traditional socialist territory: the banks and finance houses would have to be taken over by the State. If a government is going to have realistic control of an economy it can't allow its financial heart to be a roulette wheel.
Here come all the socialist clichés.
Just because something has been said for a very longtime, often in an extremely boring way, it doesn't make it any less true.
No need to get shirty - I'm just your humble reader representative.
Accepting that the market can have some role in a fairer society doesn't mean that we have to accept a stock-exchange mentality. The greediest people of all in this heyday of the Politics of Greed are simply making money out of money. When you visit the floor of a Stock Exchange you are about as far distant as it is possible to get from notions of social usefulness and ethical practice. Yet you are standing amid one of the greatest sources of power on our planet.
So what do you do?
You take control of the financial levers of the economy so that you can invest money in the most vital areas. Things like free education and a free health service which either don't exist or are under threat (depending on where you live) would have to be accepted as absolute social priorities - as more important than any notion of economic growth or efficiency. And on a more basic level, if people need insurance why shouldn't they be offered it by a state insurance company (or three competing state insurance companies) that wouldn't be looking to take such a big rake-off? While if companies wanted to borrow.
Wait a second. I want to know how you're going to gain control of the cash in a world where funds can be whisked from Melbourne to Mombasa or hidden in secret accounts in the Cayman Islands at the blip of a computer screen.
Good point. But you're going to have to wait just a little longer before I try and answer it - at least until Page 24. In the meantime we should look at what difference an economy like this might make to your life.
2. KEY POINTS
Local democracy should be strengthened and extended, to give people more say over their own lives. But a central government would still be essential to regulate private enterprise.
The State should take control of all banks and finance houses and ensure that free health, education and social services become absolute priorities rather than spin-offs from economic growth.
Small services like corner shops and restaurants are not suitable for State control.
Smaller businesses should be organized as partnerships or co-operatives; bigger enterprises would be democratically controlled by the workforce or owned by the State.
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