The Libertarian argument looks to lower taxes on the generous presumption that it is in society’s best interests to let powerful people be greedy – that way they will expand their businesses more and create the most jobs.
Is this trickle-down theory a wise way to look at things? Has its ideological experiment withstood the test of history? Since the implementation of this Neo-Liberal agenda beginning in 1980 the inequalities of wealth in developed nations have escalated dramatically. Privatize, deregulate, cut social spending, limit the power of the government or make it ‘friendly’ to big business.
British progressive economist John Maynard Keynes, who influenced the New Deal era policies of the U.S. (which created millions of jobs and enabled a healthy middle class via wealth redistribution) said, “Capitalism is the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”
Old critics of socialism are quick to point out the corruption in government, arguing any overtaking of the private sector by public bureaucracy powers invariably leads to inefficiency (Or totalitarianism, as Hayek would argue). Despite the meteoric economic rise of Nazi Germany and the Soviet Union in the short term, these critiques, coupled with the hubris of aggressively militant leaders, proved to be correct in their grim predictions for centralized planning of the economy by the federal government.
Yet since the end of WWII, a new kind of socialism has evolved, one more compatible with the free markets idealized by capitalists. (Though “Free Market” ideology is often espoused, heavy government subsidization is preferred among capitalists for their own companies, as well as tariffs to limit foreign competitors). This new system, Economic Democracy, still relies on the natural self-interest of people, but it does not take the “Greed is Good” mantra to the pharaoh-like extremes individualist America has.
Under Economic Democracy, where the employees legally own and control corporations instead of private capitalists or the government, the business self-interest of the workers dictates when expansion should occur. The incentive to monopolize or expand into mass production/consumption industries are considerably less than in capitalist companies, because by increasing jobs within the company workers dilute their own percentage share of company profits, as well as the influence of their vote (used to elect managers, executives and decide salaries).
This system is better for both the workers, their local community and the environment. Proportional wages are paid in this model, tying worker paychecks more directly to the amount of local sales they can produce and ideally removing private capitalist landlords from the equation. Democracy in the workplace limits the excess bonuses of those at the top of the pyramid and keeps average wages higher than global averages in comparable industries. Workers in this system have better pay, better benefits and more job security.
The most fundamental difference lies in the investment infrastructure. Unlike Wall Street, which is oriented by private aristocrats investing for personal financial gain in ways unaccountable to the public, an Economic Democracy gives the People a voice in directing capital flows toward developing areas of social benefit economically.