March 20th, 2009 by Senator Gravel Introduction We live in the best of times and the worst of times. In the last century we have seen progress that has matched all the progress made since the beginning of civilization. Science has opened vistas of unimagined possibilities. The human life span has doubled, and researchers now know more about the causes and treatments of many diseases than ever before. Expanding knowledge of the brain promises enhanced productivity during our senior years. Advances in agriculture now guarantee the planet’s ability to adequately feed its inhabitants. Transportation and communications surpass the speed of sound. What took years of dangerous travel is now accomplished safely in hours and in seconds by holograms. We stand on the brink of addressing the age-old problem of human beings communicating with others through the conquest of time and language. Man travels in space and explores the galaxies. Our future is unlimited. Yet, we face the worst of times. Science has now opened up to man the secrets of his own self destruction. The last century ushered in the atomic era, equipping the elements of society with the ability to destroy life on our planet in a single burst of insanity. Science and the economic growth it engenders have set the earth on a trajectory of its own destructive pollution. Any reversal will take greater governance skills than society has thus far demonstrated
A Brief History Civil society advanced somewhat with the structure of nation-states in Europe at the end of the Thirty Years War. The next great advance in political governance occurred at the end of the Age of Enlightenment when the power of government was deemed to emanate from the sovereignty of the people and not the divine right of kings. This new wisdom pushed nation-states to establish representative governments. The structure of representative government transfers the sovereign legislative, executive and judicial powers of the people to representatives and government officials who exercise these powers on a day to day basis. Conveniently elites designed representative government to perpetuate their control of the economy and the polity. Representative governments––what we call democracies––have become the typical form of governance the world over, except where left-over tyrannies still exist. Representative government has had success when nation-states have been lucky enough to have visionary leaders. But society cannot afford to rely on luck. The insanity of two world wars begs the question and the obvious need for global governance. The naïve intellectual concessions to a global government in creating the League of Nations at the end of the First World War was no match for the selfish realpolitik of the nation-state democracies who controlled world affairs between the world wars. After all, representative government as we experience it seems only to perpetuate the power and interests of elites––the rule of the many by the few. The selfish greed of the leaders of the representative democracies vying to gain control the colonies of the vanquished and enrich themselves with reparations set the stage for the Second World War. A refurbished League, the United Nations, established primarily at the behest of President Roosevelt, the principle of national self-determination for colonial populations thereby greatly multiplying the number of nation-state members in the United Nations without advancing one iota the democratic design of these countries. Again the work of the elites.
Our Economic System Our political and economic systems are inextricably intertwined; a discussion of the one necessitates discussing the other. Science gave birth to the industrial revolution and saw its growth in the watershed political awakening of the West. The economic systems of modern times, mercantilism and capitalism, were born of the industrial revolution that paralleled the growth of representative government. Adam Smith’s Wealth of Nations in 1776 condemned the excesses of mercantilism, the use of government power to advance private interests. This is essentially, what capitalism does today when it uses campaign contributions––a form of legal bribery––to influence elections that in turn cause government decisions to benefit special interests. Socialism and communism were the theoretical response to the cruelty of unbridled capitalism. The tyranny of these two systems, far more oppressive than the original problem, guaranteed their failure. Additionally they lacked the built-in force for efficiency incited by competition and greed. Free market capitalism, the last economic system left standing, is compromised by mercantile influences on representative government to guarantee that the ownership of capital stays where it belongs in capitalism––with the elites. The construct of capitalism requires that the profits of capital pay for the cost capital. If that construct is not realized, capital is not created. The societal question that then arises is: who owns the capital after it is paid for by its profits? The answer to that question determines the socioeconomic order of society or who is enriched by the ownership of capital. Who owns the capital goods after its profits have paid for them has always been a determination made by the government forces that controlled the polity. The elites and their minions be they monarchs, popes or tyrants exercised control throughout history. With the advent of representative government, it became the mercantile and capitalist barons of industry, who in funding the careers of those who occupied the elected offices of government, thereafter determined who would own the capital (the means of production) after it was paid for by its profits. The government design of corporate industrial, financial and banking institutions established rules to guarantee that the initial owners of capital and its continued ownership would be dictated by and remain with the elites. These rules under our system of capitalism are what guarantee the rich getting richer and the poor poorer. Even with the success of an advancing society and the gains that have benefited all in the last century, still the disparity between the rich and poor continues to grow as does the injustice and the violence it breeds.
An Illustrative Example Permit me to present an example of an alternative approach in determining the ownership of capital to clarify the discussion above. Remember the construct: the profits of capital must pay for the cost of capital. This example is applicable almost anywhere on earth and under any government. Its effects would reverse the trend of the existing capitalist economic system. In South Korea and in America like most areas of the world wind is found in abundance. Rather than continue foreign oil dependency or continue bailing out banks and corporations that have abused their responsibilities, the government could set up a wind turbine loan program. The program would permit government to loan seven billion won or five million dollars interest-free to individuals to permit them to purchase and install wind turbines. These loans could be channeled through banks, who could only charge a service fee, to land owners who brings into an ownership arrangement of the wind turbine four landless individuals with modest net worths. A law accompanying the wind turbine loan program would require that the local utility buy the electricity generated by the turbines at avoided costs. Two thirds of the income from the sale of electricity to the utility would be used to repay the government loan, thereby immediately mitigating any inflationary effects of the program. The other third of the income would be equally distributed to the owners of the wind turbine. The owners would not be able to sell or in any way encumber their interest in the turbine until the government loan is paid off, after which time it is their capital free and clear, and they can do with it as they please. The turbine’s electricity can also be used to produce hydrogen and stimulate a new fuel for Korea’s renowned automotive industry. This example demonstrates how the power of government can be used to advantage the interest of the many rather than just the few as we customarily see under the present monopoly of representative government. Imagine how citizens acting as lawmakers could legislate such programs with the empowerment of the National Initiative I suggest below.
Labor A treatment of capitalism would not be complete without understanding the role of organized labor in the construct of capital, the historic role the labor movement has played in societal governance and how labor’s leadership continues to stifle true empowerment of the laboring class. Labor, resources and profits are the three elements of capital. When labor’s cost, whether operating on or organizing resources, is rewarded by the ownership of capital, we call it entrepreneurship. When labor is not included in ownership and is paid for like the cost of resources we consider it wages. The history of labor, rather than pressing for the ownership of capital, has concentrated on increasing the amount paid for wages as a percentage of the total cost of capital, placing labor in competition with resources and profits. This competition has been violent and generated great social conflict. The force of government laws was used to organize resources into cartels easily controlled by corporate elites. Labor organized into associations of crafts and unions with the goal of increasing wages and improving working conditions. Labor leaders sought political power through the organization of their voting majorities in elections. With electoral successes, labor refined its goals to include pensions and healthcare plans. Never, did labor leaders ever mount a serious campaign to secure capital ownership for working people. I know first hand since I tried while I was in government to convince the labor leaders that the only secure future for the laboring man was in capital ownership. Labor leaders are focused on power: the power of dues paying members and the power in controlling the investments of pension and healthcare funds. Corporate elites accommodated the growth of these funds since it abetted labor strife, and more importantly denied the laboring class the leadership to assault the capital ownership monopoly managed by Wall Street. Tying people’s economic wellbeing to wages has been a socioeconomic tragedy. In times of economic down turns wages became non existent. Of course, government programs, effectively lobbied for by the labor movement and liberals, provide a modest temporary safety net for the unemployed. The cost of this safety net is funded by taxes essentially paid for by wage earners. The above is a simple analysis of a slice of the ever more complex global meltdown brought to us by the ruling elites and managed by their acolytes in government’s officialdom. To expect a viable solution from these same agents “of the people” in a representative government is less than naïve.
Civic Maturation The structure of representative government maintains citizens in civic adolescence by denying them the opportunity to take responsibility for their actions. Citizens are unable to take responsibility for the results of their actions by being denied the right to vote directly on public policy issues. Civic adolescence can be overcome the same way we overcome adolescence in our children by carefully giving them more and more responsibility as they grow and gain experience thereby preparing them to become mature adults. Because policy decisions in government are only made by our representatives, the present structure of representative government denies citizens the opportunity to take responsibility for public policies that affect their lives, gain experience and mature to civic adulthood. Over time civic adolescence erodes the faith people must have in their own sovereignty if democracy is to remain vibrant and strong. The greatest damage to the polity by representative government is the civic adolescence it engenders in its constituents. The greatest good that can come