Utopias
Forum
Socioeconomic Democracy:
The Theoretical Model
by Robley E. George
Socioeconomic Democracy is a theoretical model socioeconomic system wherein there exist
both some form of Universal Guaranteed Personal Income and some form of Maximum Allowable
Personal Wealth, with both the lower bound on personal material poverty and the upper
bound on personal material wealth set and adjusted democratically by all participants of
society.
Following a brief introduction, this paper first more carefully examines each of the
three major aspects of Socioeconomic Democracy, namely, universal guaranteed income,
maximum allowable wealth, and democracy. It then reviews some possible societal variations
and practical political approximations to Socioeconomic Democracy. Next it necessarily
briefly considers matters such as justifications, relationship to Islamic Economics,
incentive and self-interest, financial benefits and costs, feasibility and implementation.
The paper concludes with a brief indication of the many positive ramifications of SeD such
as the simultaneous reduction of numerous serious societal problems.
Socioeconomic Democracy may or may not be considered another Utopia. If so, it is a
democratic Utopia. If not, it nevertheless sure beats what we've got now.
The purpose of this paper is to present to serious students of Utopia and activists for
a better world a brief introduction to the theory, practice, properties, and realization
of Socioeconomic Democracy, an advanced and fundamentally democratic socioeconomic system.
Much of the material presented here is adapted from this writer's recently published book
SocJr.
In and out of the "science of
economics" and the dreams of perennial Utopians, two extremely important concerns are
the distributions of wealth and income in any society -- and among different societies.
The Socioeconomic Democracy model deals directly with the bounds or extreme limits of
these two distributions. Specifically:
Socioeconomic Democracy is a model socioeconomic system in which there is some form of
Universal Guaranteed Personal Income as well as some form of Maximum Allowable Personal
Wealth, with both the lower bound on personal material poverty and the upper bound on
personal material wealth set and adjusted democratically by all participants of society.
Thus, to the extent that Socioeconomic Democracy is Utopian, it is nevertheless a
realizable, reasonable, and democratic Utopia.
Universal Guaranteed Personal Income
In the idealized state of the model, each participant in this democratic socioeconomic
system would know that, regardless of what he or she did or did not do, a democratically
determined Universal Guaranteed Personal Income (UGI) would always be available. Put
another way, society would somehow guarantee each citizen some minimum amount of
purchasing power, with that amount determined democratically by all of society and with
citizenship the only requirement for eligibility to participate.
It is appropriate to note that the idea of UGI is by no means just theoretical. The
state of Alaska has for many years provided each and every resident an annual cash grant
-- just for being a resident of the great state of Alaska! Financed by the Alaska
Permanent Fund with revenues from the state-owned oil fields, public dividends started to
be paid in 1982 and now amount to around $2000 each year to each resident. We see that the
governmental jurisdiction involved in providing some form of UGI need not be just at the
federal level.
Depending upon the degree and direction of technological development, this
democratically set, societally guaranteed minimum income for all could be sufficient to
satisfy the typical individual's minimum subsistence needs. Alternatively, other societies
might democratically decide to set the guaranteed amount at only a partial subsistence
level, as a number of proposals in western Europe are presently suggesting. We note in
passing that some such universal income or purchasing power guarantee appears essential
before simultaneously fundamental, peaceful and minimum-pain transformations in present
economic systems can take place.
The general idea of UGI can be traced back to the ancient Greeks, and certainly to both
Thomas Paine and Thomas Jefferson, couched in the terminology of their times. A
not-so-small and certainly impressive list of promulgators of more or less serious
proposals for some form of UGI would include simply the many Nobelists in economics who
have at one time or another in their career suggested or concurred with the basic idea. In
the United States, Robert Theobald significantly developed and promoted the idea well over
a quarter century ago, in his pioneering Free Men and Free Markets, Guaranteed Income and
others. Then, of course, there was Daniel Moynihan and the ill-fated FAP fiasco, partially
documented in his Politics of a Guaranteed Income.
Another fundamental form of UGI is Universal Share Ownership (USO). The many Universal
Share Ownership Plans (USOPs) that have been proposed in effect provide some income for
all through dividends from universally owned shares of productively employed capital.
Louis Kelso, aided by an enthusiastic Mortimer Adler, originally conceived and
significantly developed the idea of "universal capitalism" through what was then
called a "Financed Capitalist Plan" in his first of many books, The Capitalist
Manifesto. Stuart Speiser, in a number of informative books as well as by sponsoring a
highly regarded series of Essay Contests devoted to the serious study of USOPs, has done
much to develop and promote the possibilities.
Throughout western Europe generally, there is considerable and increasing study of the
idea, in part initiated by Keith Roberts' classic Automation, Unemployment and the
Distribution of Income, as well as by the writings of the early economics Nobelists such
as Tinbergen, Myrdal, Meade and others. There is now the well established Basic Income
European Network (BIEN), which in fact enjoys world-wide membership, and the Citizen's
Income Trust in England, which publishes the Citizen's Income Newsletter. As a final
example, there is the pioneering work by Pieter Kooistra of the Netherlands, contained in
his The Ideal Self-Interest, which describes his proposal for a supplementary world
economy, initiated, managed and financed by the U.N., to provide an equivalent Basic
Income for all people of the world.
The many different versions of UGI share the same fundamental set of remaining
unresolved dilemmas impeding their otherwise almost immediate implementation. Important
unresolved issues include:
(1) How much should the UGI be? (2) Who should decide how much the UGI should be? (3)
Where and how should any necessary funds for UGI be obtained? (4) Just where does
democracy fit in all this? (5) How soon can all this start to happen?
It will be seen that Socioeconomic Democracy satisfactorily resolves all these issues.
Maximum Allowable Personal Wealth
Consider now Maximum Allowable Personal Wealth (MAW). In the ideal theoretical model, all
participants of the democratic socioeconomic system would understand that all personal
material wealth above the democratically determined allowable amount would, by due
process, be transferred out of their ownership and control in a manner specified by the
democratically designed and implemented laws of the land.
Hence, a rational, self-interested (as the neoclassical saying goes) extremely wealthy
participant in the democratic socioeconomic system, who is at or near the upper bound on
allowable personal wealth and who further desires increased personal wealth, would be
economically motivated, that is, have "economic incentive," to increase the
well-being of some less wealthy members of society. Only in this manner can these
(still-wealthiest) participants persuade (a majority of) the rationally self-interested
participants in the democratic society to vote to raise the legal upper limit on allowable
personal wealth -- thus allowing those wealthiest participants to legally acquire and
retain the increased allowable amount of personal net wealth.
There is, in fact, strong economic incentive for those who are pegged at or near the
upper limit on allowable personal wealth to be successful in improving the general
welfare. For if the current level of MAW is not producing sufficient improvement in the
general welfare, as democratically determined, there is the possibility that the
democratic society might democratically decide to reduce the MAW limit even more in order
to enlist even more still-wealthy participants and their extra wealth in the noble task of
improving the well-being of society in general.
It should perhaps be explicitly stated that the primary effect of a democratically set
upper bound on allowable personal wealth is definitely not the sudden availability of that
previously private wealth which society, acting peacefully and legally through its
democratic government, has decided to acquire for its general welfare. It is rather the
permanently altered economic incentive existing for those at or near the upper bound on
personal wealth, which aligns the still-wealthy individual's personal economic interest
with the economic interest of society in general. The synergy of the society is thus
significantly increased. On the other hand, the revenue raised directly and immediately by
this cap on personal wealth or net worth certainly will amount to something and certainly
could be used by practically every society on the planet for a variety of presently unmet
obligations.
It is evidently necessary to emphasize that we are considering here a maximum limit on
allowable personal wealth and not a limit on allowable personal income. The latter is also
a possibility, of course, and one which has been explored, advocated and in fact
implemented in a variety of situations -- though never democratically.
The idea of some form of limit to or upper bound on personal wealth, like the idea of a
societally guaranteed income, can also be traced back to Thomas Paine, the man who gave
the United States of America its name and the necessary encouragement to create the
experiment of a new country. Thomas Jefferson's familiar belief that "taxes should be
proportioned to what may annually be spared by the individual" is also certainly in
line with the general idea of a cap and/or significant tax on personal wealth. Regarding
Jefferson's progressive stance concerning taxation, consider the following.
According to former US President Ronald Reagan, the idea of a progressive income tax
came from Karl Marx, "who designed it as the prime essential for a socialist
state." But the shocking truth is that Thomas Jefferson had the idea first. In a
letter to James Madison dated October 28, 1785, Jefferson said that a way to lessen
inequality in wealth "is to exempt all from taxation below a certain point and to tax
the higher portions ... in geometrical progression as they rise." A question rises:
Was Jefferson a Marxist or Marx a Jeffersonian?
Possibilities. As the assets, capital, titles, resources, wealth, net worth, dollars,
acquired by a democratically established maximum allowable personal wealth limit are to
benefit all members of society, all members of society might be interested in how these
assets are to be deployed. One immediate question is whether these assets should go
directly to the government of, by and for all the participants of the democratic society
to be used in an appropriate manner, or should they be dispersed directly by the present
owners in societally acceptable ways preferred by the present owners.
If the government periodically received payment from individuals in amount equal to how
much the individual's personal fortune exceeded the universally applicable and
democratically established MAW limit, these funds could be used as follows:
(1) Considered and treated as general revenue, (2) Committed by law to reducing the
budget deficit or national debt, (3) Committed by law to finance the democratically chosen
UGI, (4) Combinations of the above and others.
On the other hand, there may well be societies so outraged at what they perceive or
plainly see to be present and past bungling governmental bureaucracies and personally
profiting politicians squandering precious public funds that they democratically adopt a
system whereby the extremely wealthy person being relieved of his or her excess personal
wealth has complete say (within no doubt legislatively specified options) as to how to
dispose of this personal excess wealth to best enhance the general welfare.
It is observed that if it were the democratic desire of a particular society to not
appropriate any presently held personal wealth through a democratically set MAW limit,
that society might still want to adopt an upper limit on personal wealth set at, say,
twice (or one dollar more than) the present net worth of the wealthiest citizen. This
would in effect be saying that society agrees to let everyone keep all they've got so far,
legally or otherwise, but that there is going to be a limit to just how much longer this
societally harmful and silly game will be played. Like the future itself, the
possibilities are endless.
Democracy
A successfully functioning democracy is far more than merely a societal decision-making
process. Inevitably, however, societal decisions have to be made. Perhaps needless to say,
in some instances making no decision is making a momentous decision. It can be and has
been argued that decisions affecting all society ought to be made by all society. One
reason democracy should play a role in the design of improved economic systems, under this
argument, is that economic systems impact everyone in a multitude of intimate ways. Ergo,
it would appear to follow that everyone should impact the design of their economic system.
We do so democratically.
Qualitative Democracy. The societal decision-making process employing the principle one
participant, one vote; majority rule or win (when used, say, to select between candidate A
or candidate B or, perhaps in desperation, even candidate C to some public office) can be
usefully viewed as an example of what might be called qualitative democracy. If a
democratic decision (arrived at by employing the above principle of majority rule) is in
fact obtained, there at least could be a qualitative difference in the performance of the
office, department or administration, depending on who, specifically, is elected to that
office. Likewise, when the matter being voted on is something like passage of
government-issued bonds, the possible outcomes can again be qualitatively different.
In all these voting situations, the majority-receiving winner of the voting "takes
all." At least in theory, the winner alone determines the quality, i.e., the nature
and characteristics, of the post-election situation.
Of course, a democratic decision (using the above-described majority rule) is not
necessarily guaranteed to be even possible. For example, if none of the three
above-mentioned candidates, A, B or C, receives a majority of the votes, the
"majority rule" does not help or even apply since there is no majority. Because
of this possible and not infrequent occurrence, societies have adopted rules for the
unequivocal resolution of the election when this happens or frequently to preclude it from
happening. Overt or covert prohibition of third party candidates, acceptance of
minority-rule plurality resolutions, and Instant Runoff procedures are three of many
devices to dissolve such conflicts.
Quantitative Democracy. In contrast with the extensive existence and employment of
qualitative democracy, there is at present no widely accepted procedure by which each
individual participant in a democratic society can directly vote his or her particular
preference for an amount, magnitude, or quantity of something in question, with the
democratically determined, societally desired amount unequivocally resulting. Accordingly,
whole classes of societal questions are not now asked and cannot now be answered
democratically.
But the fact is that such a procedure actually exists. As if to emphasize the
significance of the discovery, Duncan Black in his Theory of Committees and Elections and
Economics Nobelist Kenneth Arrow in his Social Choice and Individual Values independently
and more or less simultaneously established the important mathematical result and
procedure a half century ago. These informative mathematical economists, in their now
classic contributions, have provided the theory which shows that the median value of the
participants' (voters') preference distribution is the amount the democratic society as a
whole is "for" -- assuming the minimal operational one participant, one vote;
majority rule decision-making process. Only the median value can command a majority's
favor in pair-wise votings with all other amounts.
Roughly speaking, this means that the democratically determined amount is such that
half the voters want that much or more while the other half want that much or less.
Graphically, the result can be obtained by arranging the personal preferences of each
participant in, say, monotonically nondecreasing order. The democratically desired amount
is that amount preferred by the median or "middle" voting participant.
Hence,
There is a simple and mathematically correct procedure by which all participants of a
democratic society can democratically determine societally preferred amounts or magnitudes
of important societally impacting parameters.
The history of the development of the mathematical theory and understanding of
elections makes interesting, inspiring and sometimes amusing reading. Part II of Black's
Theory of Committees and Elections provides a convenient, concise, and fascinating summary
of the early development of this intellectual activity.
As Black reminds us, systematic theorizing on elections and committees was part of the
general updraft of thought during the Enlightenment. It was the general problem of what to
do when no clear majority exists that initially occupied Jean-Charles de Borda, Tom
Paine's "close friend" Marie Jean Antoine Nicolas Caritat, Marquis de Condorcet,
Pierre-Simon, Marquis de Laplace, sublime astronomer and mathematician, the Rev. Charles
Lutwidge Dodgson and, for our present purposes, Francis Galton.
Writing in Nature in 1907, Galton's "One Vote, One Value" points out that
"A certain class of problems does not as yet appear to be solved according to
scientific rules, though they are of much importance and of frequent recurrence. Two
examples will suffice. (1) A jury has to assess damages. (2) The council of a society has
to fix on a sum of money, suitable for some particular purpose. Each voter, whether of the
jury or of the council, has equal authority with each of his colleagues. How can the right
conclusion be reached, considering that there may be as many different estimates as there
are members? That conclusion is clearly not the average of all the estimates, which would
give a voting power to 'cranks' in proportion to their crankiness. One absurdly large or
small estimate would leave a greater impress on the results than one of reasonable amount,
and the more an estimate diverges from the bulk of the rest, the more influence would it
exert. I wish to point out that the estimate to which least objection can be raised is the
middlemost estimate, the number of votes that it is too high being exactly balanced by the
number of votes that it is too low. Every other estimate is condemned by a majority of
voters as being either too high or too low."
For the interested technician, it is certainly the case that this procedure (majority
rule; median value of distribution of personal preferences) requires the satisfied
assumption of "single-peakedness" for consistent, unambiguous solution. Arrow
has shown with his celebrated "Impossibility Theorem" that general personal
preference distributions (as opposed to, for example, single-peaked personal preference
distributions), combined with a few other seemingly innocuous requirements, can lead to
ambiguous results. A.K. Sen, in his Collective Choice and Social Welfare, delightfully
provides similar proofs for a variety of seemingly simple requirements, giving both formal
proofs and engaging heuristic discussions of the situations. The possible ambiguities of
general social choice situations are sometimes referred to as a "voters'
paradox," a problem of cyclical majorities, or a problem of transitivity.
Black discusses the shapes of reasonable preference curves. "While in practice a
member's preference curve may be of any shape whatever, there is reason to expect that, in
some important practical problems the valuations actually carried out will tend to take
the form of isolated points on single-peaked curves. This would be particularly likely to
happen if the committee were considering different possible sizes of a numerical quantity
and choosing one size in preference to the others. It might, for example, be reaching a
decision with regard to a price of a product to be marketed by a firm, or the output for a
future period, or the wage rate of labour, or the height of a particular tax, or the legal
school-leaving age, and so on."
Dennis Mueller's Public Choice and Dan Usher's Economic Prerequisite to Democracy,
among many others, further solidify the justification for the assumption of
single-peakedness and therefore the use of the median values of the participants'
preference distributions as the unambiguous results of majority-rule democratic decisions
regarding the societally desired upper wealth bound and the lower income bound of SeD.
Societal Variations and Practical Political Approximations
It should be clear that wide variations in societies (all of which would still be
democratic) are possible with Socioeconomic Democracy. We note first some of the possible
theoretical variations of the SeD model. Then we look at a set of possible socioeconomic
systems which, while not strictly satisfying all the requirements of the ideal theoretical
model, are nevertheless on a continuum that approaches and to varying degrees approximates
the theoretical model.
Observe that if a particular participant in this democratic socioeconomic system were
opposed to a societally guaranteed minimum income for all, that participant could vote to
place the lower limit on UGI at zero. If a majority of participants so voted, it would be
the democratically determined desire of that society to have no UGI. Similarly, any
participant who would be opposed to a maximum bound on allowable personal wealth, for any
reason, could vote to place that upper limit at, say, infinity. If a majority of
participants so voted, it would be the democratically determined desire of that society to
have no upper bound on net personal wealth. Four basically different possibilities are
therefore immediate.
Limits on Both MAW and UGI. Any democratic society that adopted a reasonable,
sustainable and effective upper bound on allowable personal wealth and lower bound on
tolerable personal poverty would clearly be demonstrating an understanding of, and a
dedication to, meaningful democracy -- and all that implies. Such a society would be
conscious of the many desirable possibilities stemming from the simultaneous universal
satisfaction of basic human needs. It would be attempting to make the most of humanity's
already sufficiently painful historical development and take advantage of the beneficial
potentiality.
It is here respectfully submitted that Socioeconomic Democracy could be viewed as,
among other things, a natural development of the Republic of the Golden Rule admirably and
enjoyably described by Edward Bellamy in his classics Looking Backward and Equality. It is
encouraging to note the recent resurgence of interest in the work of the serious Utopians
such as Henry George and H.G. Wells and in particular the eloquent logic of Bellamy. An
example is the delicious just published book by Toby Widdicombe and Herman Preiser,
Revisiting the Legacy of Edward Bellamy (1850-1898): Uncollected and Unpublished Writings.
Limit on MAW, No Limit on UGI. Some societies might think it best to have, and
therefore democratically vote to establish, a finite upper bound on MAW but reject any
UGI. Such societies might reason that it is the obligation of all those in the private
sector who have been fortunate enough to be materially "successful" to insure
the creation of a situation in which everyone in society who wants to live a satisfying,
productive life has the opportunity -- not fleeting but continuous -- to do so.
Nevertheless, such a society could democratically reject the idea of directly providing
governmentally guaranteed minimum purchasing power for everyone.
Limit on UGI, No Limit on MAW. Other societies might democratically decide to have a
nonzero lower bound on UGI but no finite upper bound on MAW. Such societies would in
general be saying they feel strongly that everyone should be guaranteed at least the
minimum human essentials, where those minimum essentials and opportunities are to be
democratically determined. But beyond this, when all minimum essentials are satisfied,
these societies basically believe that every participant in the democratic socioeconomic
system should be free to attempt to accumulate unlimited personal wealth, just as now, if
that is what they want to do or the only thing they know how to do with their lives and so
long as it is now done legally. Of course, depending upon the form and amount of the lower
bound actually established, as well as its method of finance, such economic systems may or
may not be sustainable in the long run.
No Limits on Either MAW or UGI. Finally, there is the possible society which has heard
about, discussed, thought about, understands and then democratically rejects both limits.
Such a society would nevertheless be very different from contemporary society which
likewise has no such limits. The crucial difference, of course, is that the society which
collectively voted for no limits on either MAW or UGI would have given conscious and
democratic consent to living in such a system with such extremes.
For the first three of the above four possible categories, quantitative differences in
the magnitudes of the bounds would provide considerable further variety and healthy
experimentation. For example, concerning MAW, different societies could differ as to the
degree of "tightness" of that limit. "Loose" control would be where
only a few percent of a society are actually pegged at the upper limit on allowable
personal wealth. A "tight" control could have, theoretically, up to (but no more
than, or it would not be democratic) something like 49 percent of the population pegged at
the democratically set MAW limit. Practical political approximations refer to real,
implementable politicosocioeconomic systems whose properties approximate, that is, come
close to in some sense, the ideal theoretical model of Socieoconomic Democracy. It is of
interest to note at least a few of these many practical and implementable approximations
to the ideal theoretical model. It is not unlikely that a variety of different
approximations to the ideal theoretical model can, should and will be considered and
implemented in different societies at different times under different circumstances. All
roads lead to Utopia.
Approximations to UGI. It is observed that there are numerous particular forms of UGI.
Recall that there are at least GAI, GMI, BI, BIG, MGI, BES, CI, ND, SD, NIT, FAP and many
more including P(artial)BI and T(ransitional)BI, as well as the various USOPs.. Other
systems of guaranteeing some minimum amount of general or restricted purchasing power or
guaranteeing some minimum amount of goods and services would more or less approximate the
ideal theoretical concept of UGI.
One particular long-established principle of any civilized society is universal public
education. Universal guaranteed public education is a very real form of Universal Partial
Basic Income, with the service in lieu of income being the governmentally funded and
provided public education for people of certain ages. Universal guaranteed medical care,
likewise available in almost all self-proclaimed civilized societies, is another
approximation to UGI.
Instead of unqualified UGI, various approximations could (and actually do) stipulate
satisfaction of particular requirements or qualifications. Thus all so-called means tested
and/or targeted welfare programs are approximations to UGI. Or in lieu of unqualified, the
democratically adopted approximation to UGI could require some form of community or
national service to be eligible. Of course, none of these approximations, as originally
proposed, suggested that the amount of the guaranteed income be set democratically.
We should again acknowledge the existence of Universal Partial Basic Income in the
state of Alaska, which has its annual grant to all residents of one year or more. It could
be argued that the one-year residency requirement for eligibility makes the Alaska grant
not completely universal or unqualified. Logically speaking, that is certainly so, which
then makes it an excellent approximation.
Approximations to MAW. Concerning popular approximations to Maximum Allowable Personal
Wealth, seemingly the closest thing to a limit on personal wealth is a tax on personal
wealth. But regardless of arguments for a tax on wealth, such a tax is at best only an
approximation to a limit on wealth. This is because the economic incentive created by a
democratically set tax on personal wealth is fundamentally different from the economic
incentive created by a democratically set limit on personal wealth. In the case of some
proposals by Vance Packard in his extremely informative The Ultra Rich: How Much Is Too
Much?, we see how well a steeply progressive tax on wealth might nevertheless ultimately
approximate the effects of a limit on wealth over a span of many years.
Another familiar form of a tax on wealth, the Inheritance Tax, is in fact a
time-delayed or time-deferred tax on wealth. As such, it is therefore also an
approximation to a limit on wealth. Another nuance yet, there have been proposals for a
limit on inheritance. A far more distant and poor approximation to a limit on wealth is a
progressive tax on income.
Approximations to Democracy. Approximations to democracy, like approximations to
anything else, can be fairly close or fairly distant. An approximation to all participants
of society democratically setting the UGI and MAW limits would be having only those
citizens at least 18 years of age, say, vote to decide the magnitudes of the two bounds.
Another kind of approximation to the democratic ideal is the situation characterized by
different political parties and candidates advocating different amounts for the two
bounds, depending upon their particular understanding of the general will of the society.
If democratic procedures were followed to determine ascendancy to political power, it
would seem the winning political party might, in some sense at least, be said to have
spoken for the democratic society as a whole.
Justifications
We can here only briefly note a few of the many different dimensions of
justification for some form of Socioeconomic Democracy. Anthropological justification may
be obtained from Ruth Benedict, as provided by Abraham Maslow and John Honigmann when they
made available some of Benedict's previously unpublished notes in the American
Anthropologist. Philosophical justification can be more or less obtained from John Rawls'
classic A Theory of Justice -- though the minor "Malibu Surfer" problem does
remain to be resolved. For psychological support one could consult Abraham Maslow's Toward
a Psychology of Being and one should consult Charles Hampden-Turner's Radical Man: The
Process of Psycho-Social Development and one must consult Erich Fromm's
"Psychological Aspects of the Guaranteed Income" and Paul Wachtel's The Poverty
of Affluence: A Psychological Portrait of the American Way of Life. Regarding religious
justification for something like SeD, where to start?! We limit reference here to Economic
Justice for All prepared by the US National Conference of Catholic Bishops, noting its
similarity to the work of numerous other denominations, nationalities and organizations.
Finally, there is the all-inspiring and unheeded United Nations Universal Declaration of
Human Rights.
Islamic Economics
It is noted that Islam started out with some ideas similar to those considered here. In
particular, we note the similarities between Socioeconomic Democracy and Zakat, one of the
five pillars of Islam. Zakat is a tax on wealth to be productively used basically to
eliminate poverty and realize a healthy and productive society for all.
Interest in Zakat has reawakened in the second half of the twentieth century.
Illustrative of this recent intellectual activity is Muhammad A. Mannan's classic Islamic
Economics: Theory and Practice and Muhammad A. Khan's valuable "The Future of Islamic
Economics" appearing in a recent Futures journal, both of which emphatically remind
us of the fundamental nature of Zakat. Zakat is a religious requirement to "promote
the General Welfare," to use a phrase made popular by the Preamble of the U.S.
Constitution, written over a millennium later. Zakat is essentially a form of, or at least
an approximation to, Socioeconomic Democracy, with the appropriate economic parameters set
through societal consultation. Both Zakat and consultation are proscribed in the Qur'an
Incentive and Self-interest
One of the stated, indeed heralded, goals of most past and present economic system designs
and redesigns has been "the creation of economic incentive" in an attempt to
accomplish this or that. In order to fully appreciate the implications and ramifications
of Socioeconomic Democracy, one must keep foremost in mind the altered economic incentives
for those at or near the democratically set lower bound on personal income and the
democratically set upper bound on personal wealth.
Incentive from UGI. Regarding the economic incentives created by a democratically set
and adjusted universal lower bound on personal income, the matter has been extensively
discussed by numerous other writers and we will not devote much time to it here. Suffice
it to say that as Theobald long ago unabashedly put it, the guaranteed income " ...
could, at last, make Jefferson's ideal a reality in modern society by providing
independent means, which would allow each individual to obtain minimum amounts of
clothing, food, and shelter. They would not keep the family in luxury but would provide
the necessities of life. The unemployed would be assured of a reasonable standard of
living. The student, the writer, the artist, the visionary, the dissenter could live on
this income if they considered their work sufficiently important." So too could the
environmentalist, the ecologist, the deep ecologist, the inventor, those courageous and
caring people who wish to serve, using their talents and blessings, in remote, poor or
ravaged areas, those training for a first or different job and those out of a job
basically because of inadequacies of contemporary economic theories, economic priests, and
economic policies.
Incentive from MAW. Consider now the incentives and self-interests associated with a
democratically set and adjusted maximum allowable personal wealth limit. At the high end
of the now-truncated personal wealth distribution, all the participants of the democratic
socioeconomic system who are pegged at or just below the MAW limit would know that only by
deploying their still-immense personal fortunes for the significant betterment of society
in general can they induce a rationally self-interested majority to vote to raise the
allowable upper limit on personal wealth. This is because some of the majority holding the
MAW limit down to where it presently is could then realistically anticipate the
possibility of their own personal fortunes growing to exceed the present MAW limit, thanks
to the now much more synergetic and positively productive, not to mention democratic,
societal arrangements. They would then be willing, indeed want, to vote for a higher MAW
level, being rationally self-interested participants in the democratic society.
Physical Realizability
The rational study and objective comparison of alternative future possibilities provide
the opportunity to make a contribution toward societally desirable societal evolution --
all the way to Utopia. However, in order to realize the beneficial potential of research
into the nature of the possible future, reasonable care must be exercised in defining the
alternatives. The serious student of the future, Utopian or otherwise, must, of course, be
willing to consider presently non-existing situations. Complementing this requirement is
the necessity of establishing that the alternatives considered are in fact physically
realizable and feasible.
As can only be briefly sketched here, physical realizability is easily established in
the case of SeD. This is done by simply indicating the important aspects of the
implementation process necessary to realize SeD.
Voting Procedure. The precise procedure by which the societally desired bounds on
minimum guaranteed personal income and maximum allowable personal wealth could be
determined depends, among other things, on the state of technological development of the
particular democratic society. An obvious and immediate possibility, applicable almost
anywhere, would be appropriately quantized multiple-choice arrays printed on voting
ballots. From this elementary though certainly satisfactory method, the gamut of more or
less sophisticated technological systems successively approximating "instant
democracy" and/or "direct democracy" could be considered.
Administrative Technicalities. The functions and modes of operation required to
effectively administer a just and democratic socioeconomic system would all have to be
specified, designed and implemented through appropriate legislation. Of course, there
would be considerable reduction in administrative bureaucracy and bureaucratic
intrusiveness, due in large measure to the universal, inclusive nature of the system.
Legal Technicalities. The legal technicalities of establishing and maintaining a
democratically determined upper bound on MAW and lower bound on UGI for all must, of
course, be fully satisfied. Legislation prescribing the new and quantified democratic
decision-making process would undoubtedly be necessary. The specific details of the laws
describing the particular forms of the democratically set upper wealth and lower income
limits remain to be delineated and made the law of the land. In all likelihood, various
approximations to one or more aspects of the ideal theoretical model would in fact be
realized and the particular legislation to so do would have to be conceived, written,
discussed, thought about, revised, thought about some more, passed and implemented.
In many contemporary political systems, a constitutional amendment might be required to
properly or explicitly ground all the essential elements of SeD in the constitutional
foundation of the society. Any such constitutional amendment would therefore have to be
drafted and adopted. While this might seem an impediment to some, to others it might be
viewed as the proper amount of work a society should have to perform before, it could be
said, that society had earned the right to enjoy the societal benefits of SeD.
Economic Analysis. Using reasonable estimates of the many beneficial effects resulting
from democratically established bounds on MAW and UGI, an estimation of the total economic
impact should and certainly could be determined before system realization. In areas where
current understanding cannot, with sufficient accuracy, predict the magnitudes of these
effects, parametric analysis would be appropriate. New and societally beneficial avenues
of relevant research would, at the same time, be identified. Simulation studies, long an
effective tool of economic (not to mention engineering) analysis, are easily conceived and
informatively conducted.
Public opinion polls concerning these and related questions would doubtless prove of
considerable value in supplying needed and missing information. Delphi and other
consensus-creating processes could perhaps also be effectively utilized. The results of
such necessarily multidisciplinary analysis, which nevertheless could be partially
performed by economists, lawyers and other monodisciplinarians, would suggest feasible,
reasonable and perhaps even optimal values for these bounds. These results, with their
supporting analysis, could be made public in a variety of ways with public opinion polls
being employed to supply citizen feedback for what would undoubtedly be an iterative
design process.
Political Considerations. Bounds on minimum guaranteed personal income and maximum
allowable personal wealth democratically set can not be realized until at least a majority
of the voting citizens in a contemporary economic system learn about, understand and favor
such a democratic wealth and income distribution boundary controller subsystem. Actually,
of course, it can be anticipated that something more than a majority of the citizens of a
society will have to favor a democratic resolution of the matter before a democratic
resolution of the matter can be realized. Especially if, as mentioned earlier, a
constitutional amendment is required. It is difficult to think of any historical economic
system change of such magnitude that was subjected to such informed public scrutiny prior
to voluntary and democratic societal acceptance and adoption as by definition must be the
case with SeD. Such necessary public discussion of the matter would eventually
democratically resolve not only whether some form of SeD should be established but more
importantly would go a long way in determining how much the bounds should be set at under
the present circumstances.
In any case, coalitions of political parties, committed to passage of the necessary
legislation, is one possible adoption procedure open in some societies. On the other hand,
being an alternative to all existing economic systems, SeD provides a well-defined,
humanistic, just and democratic focus about which a new or rejuvenated popular political
party could (re)organize and (re)capture political power. Prior to the legal establishment
of an actually democratic bound-setting procedure, these political parties could, as
earlier mentioned, propose specific magnitudes for the bounds, which would reflect their
understanding of the general will of that society. At least for the necessary transitional
phase, this last scheme might well be considered a not unreasonable approximation to the
ideal theoretical model.
It should also be clear that the possibility of a just and democratic socioeconomic
system, which would actually benefit all citizens of society, provides strong economic
incentive for all rationally, self-interested citizens to actively participate in the
political process -- something currently considered not worth the time and trouble, in the
minds of many and indeed a majority in the USA. Political participation would be
significantly increased.
Ramifications
As described in the book Socioeconomic Democracy: An Advanced Socioeconomic System, it can
be shown that numerous serious societal problems would be more or less eliminated by
democratic installation and operation of SeD. These problems include (but are by no means
limited to) automation, computerization and robotization; budget deficits and national
debts; bureaucracy; children; crime and punishment; development; ecology, environment and
pollution; education; elderly; feminine majority; inflation; international conflict;
intranational conflict; involuntary employment; involuntary unemployment; labor strife and
strikes; medical and health care; military metamorphosis; natural disasters; planned
obsolescence; political participation; poverty; racism; sexism; untamed technology; and
general welfare.
