I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.
- Thomas Jefferson
People are under the misconception that because of our democratic political system, they have freedom. But this is only one kind of freedom, political freedom. The truth is that there is an organization that has much more control over your life than the government. This organization is your employer. Most people are wage slaves with no freedom over their own productive capacity. In other words, when you are at work, you must do as you are told, not as you feel is right.
Corporations are structured as oligarchies. The board of directors forms the oligarchy and chooses one tyrant, the CEO, to rule. The fact that the board of directors is elected by the shareholders does not make it democratic. The key to democracy is that the rulers are elected by the people over whom the rulers exercise authority. This is certainly not the case in a corporation.
Liberals love to complain about corporations, but what exactly do they suggest doing? More regulations and taxes hurts small business more than big business, and small business is one of the few options people have to escape wage slavery. The liberal solution to all problems is more government, which just creates more restrictions instead of freedom. The liberals offer no solution to the problem of wage slavery. So I would like to offer two very specific solutions.
I suggest a fixed national income tax of 66%. The federal government would pay for all its expenses from this tax and then distribute the remainder back to all the people equally. This is a negative income tax. It doesn't require a big federal bureaucracy to implement.
I would require the government to publish a yearly accounting statement saying how much each goverment program costs each person. Since the income tax would be fixed, the cost of each goverment program comes out of the money that is redistributed back to the people. So the cost of a program to each person is simply the total cost of the program divided by the population. When people see all the stupid ways that the goverment wastes our money, they will vote to kill these programs.
It's amazing that no one talks about redistributing wealth. The liberals have all these complex ideas about helping the poor. I say, let's just give them money.
The conservatives complain that redistribution of wealth reduces the incentive to work. But by work, they mean work as wage slaves or as capitalists. But people work for other reasons, like the work programmers do on open source software during their free time. In fact the best work is done by people who are not focussed on making money. By reducing the amount of time people waste trying to make a living, we would greatly improve productivity because people could spend more time doing what they know is worth doing. In fact, this would increase entrepreneurialism because people would have the resources to start their own business without needing outside funding to cover their cost of living.
Most libertarians feel that taxation conflicts with freedom because the government is taking this money by coercion. This is a purist view that is in fact nonsense. Everything the government does is by coersion. No goverment coercion means anarchy, where every individual is free to coerce everyone else, hardly optimal for freedom. To take an extreme example, when a thief steals something, the government takes the stolen item back from the thief by coercion. The libertarians don't complain about this coercion because it is clearly necessary. But I feel that redistribution of wealth is also necessary for similar reasons, because the people who tend to accumulate wealth tend to be the scum of the earth who accumulate their wealth by immoral means. They are smarter than the thief in that they generally avoid violating the law, but they are no less immoral.
There is no question that this kind of redistribution of wealth would greatly alleviate wage slavery. People would have the option of simply not working and living on the redistributed income. As a result, employers would be forced to create tolerable working conditions. But there is another alternative to empoyment that I find even more attractive.
Worker cooperatives is simply the application of democracy to the idea of a company or corporation. This approach to economic freedom has been almost completely forgotten after if failed to take hold in the 1800's. Here is an excellent article on the history of worker cooperatives. Another interesting page describes the founding of Stanford University by a proponent of worker cooperatives.
So why did worker cooperatives fail? My view is that they failed because they did not adapt to modern capital markets. They have no way to attract investment, which means that they don't have access to capital in order to compete with regular corporations.
I believe that worker cooperatives can be successful if they are structured in such a way as to allow investment without giving power to investors. Modern corporations do provide a means for doing this, with non-voting stock. The wonderful thing about corporate law is that one can structure a corporation almost any way one wants to. The bi-laws of a corporation are analogous to the constitution of a country. So a corporation can be structured to be a worker cooperative. The board of directors would be elected by the workers and all stock would be non-voting stock.
So why would anyone invest in such a corporation? Because it would give them good returns. The fundamental law of capitalism is that money always flows to wherever it gets the highest returns. This is true even if that means money is invested in a way that gives the investor no power. This is the secret to eliminating the power of the capitalists.
Historically, stock had value because it payed dividends. But as the stock market matured and people found that they could make money by the increase in value of stocks, dividends became less important. Even a stock that never pays dividends has a certain intrinsic value which is the buyout value of the company. The buyout value of a company is determined by how much profit people believe they can squeeze out of a company. If they believe that the market value of a corporation is lower then its buyout value, they can buy the corporations back from the market. Even without the cash to do this, they can do a leveraged buyout which means that they can borrow the money to buy the company and then pay this loan back out of corporate profits.
But a buyout is not possible with a worker cooperative because even owning all the shares does not give the investor control over the profits. So a different mechanism is needed to give the stock of a worker cooperative value. My suggestion is to put in the bi-laws a requirement that the corporation uses its profits to buy back stock which it would put in an employee option pool. Employees would be paid market rate salaries and would get stock options much as they do in corporations today. But the more profitable this kind of corporation is, the more stock it can buy back for the employee option pool, giving the employees even more incentive to make the company successful. Employees could exercise their options at any time and sell their stock. If the corporation needs investment, it would sell shares to investors based on the expectation of future profit. Investors who believe that the company will be profitable would be feel secure because they know that the corp! or! ation will be forced to spend this profit to buy back shares which the investors can then sell back.
Note that this discussion of worker cooperatives did not involve the government or politics. I believe that the government can greatly help increase economic freedom by redistributing income. But to be completely free, workers must take the initiative and find a way to make worker cooperatives competitive.