We would rather be ruined than changed.
W. H. Auden
Keeping the zombie system from expiring and covering up the corruption with propaganda is what’s actually destroying the world as we know it.
Heinz Blasnik
The diagnosis of the West’s ailments is now complete. Economic numbers may say that our average real income has never been higher, but the lived experience of most remains one of stagnant living standards and an uncertain future. The shocking prospect of our children being poorer than us over their lifetime, many of them unable to buy a home or start a family as they search for security in a market of precarious employment prospects undermined by globalisation and automation, has set off a ticking political time bomb.
America, the arch promoter of free-market economics, likes to think of itself as the land of opportunity. The reality today is that social mobility is lower in America than in Europe. The probability of escaping from the bottom quintile of earnings is lower than in Britain, France, Italy and Sweden.1 The American dream has become a mirage. US unemployment may be at historic lows, but the proportion of decently paid and secure jobs, not only in manufacturing, is down, with digitisation eating into white-collar jobs, not just repetitive manual tasks. Deregulation and the transfer of jobs to China, India, Mexico and other cheap-labour locations has contributed to weak income growth.
At an absolute level, global equality remains obscenely skewed. As we saw in Chapter 4, an Oxfam report suggests that the world’s twenty-six wealthiest people own as much ($426 billion) as the entire bottom half of the world population – 3.8 billion people.2 More Americans and Europeans are having trouble making ends meet, while governments’ austerity policies impose cuts on programmes that help the less affluent. In contrast, those who have accumulated some capital or control companies that have become near-monopolies have seen their fortunes soar since the Great Financial Crisis. No wonder people are angry and beginning to express their rage not only through the ballot box, but also in the street, with rising levels of violence.
At the same time, the GFC caused national debt loads and deficits to soar as governments rescued the banks from collapse. This has meant years of spending cuts in public services and neglect of core infrastructure. For decades the mania for deregulation and privatisation championed by the free marketeers from the time of Thatcher in the UK and Reagan in the US has worked its corrosive effect on the very fabric of society. This decay has become so advanced it is now clearly visible; hence the collective disillusionment with our political and economic systems, shaking the very foundations of democracy.
Indiscriminate deregulation of business, globalisation based on fraudulent economic premises and the march of technology and automation have not resulted in better lives for Western workers; the beneficiaries have been the captains of industry, monopoly technology entrepreneurs and workers in some emerging markets, principally China. So greater global equality has been achieved at the expense of Western workers. But with democratic institutions organised at the nation-state level, electorates vote for what they consider to be in their best interests, not for the global good, whatever that is. Such decisions would require a global government voted in by a global electorate. An unlikely scenario.
There is a clear disconnect between political units built for a bygone age and the twenty-first-century globalised digital world. National political institutions were efficient at offering political choices to citizens when nations had some control. In a globalised world dominated by monopolistic technology rentiers and international corporate titans, the quaint historic ritual of national elections seems pathetically anachronistic.
The US constitution, devised two centuries ago, was admirably suited to managing and balancing the competing and collective interests of a population totalling that of a present-day medium-sized town with limited means of communication. The UK, lacking a written constitution, has demonstrated during its tortured processing of the Brexit vote that its quaint rituals and conventions, originating centuries ago, are as decrepit as the physical fabric of the Palace of Westminster, and no longer fit for purpose.
When a large slice of a company’s profits is earned abroad, and production or even its headquarters can be moved across borders with ease, it is clear how little power national governments have when it comes to controlling business and protecting the common good. Perhaps that’s why politicians prefer to devote more and more of their time to policy areas where they can still exercise power, like health-and-safety regulations or tinkering with highway speed limits. It gives them something to do.
In France the gilets jaunes (yellow vests) movement has emerged as an anti-political party protest movement with no leaders. It is a rejection of the conventional channelling of political discourse through a hierarchy of professional politicians and institutions. Its prominence is all the more remarkable given its appearance just eighteen months after the election of a president affiliated to no pre-existing political party. The election of Emmanuel Macron, a political outsider and novice, was the last hope of those in France who wanted to reform the system to preserve it, but it did not take long for those left behind to realise that his reforms were simply those of a free-market ideologue.
Similar trends are evident in other large Western countries. The dwindling support for Germany’s main parties of the centre left and centre right, and the rise of the Alternative für Deutschland (AfD) signal a breakdown of the post-war consensus. Italy’s coalition government comprising the Five Star Movement and the League was a partnership of anti-establishment parties. Ukraine’s election to the presidency of an actor who played a fictional president in a TV series demonstrates how far people will go in their quest for genuine change. Last but not least, the election of Donald Trump in the US in 2016 is testimony to the level of desperation in America and the disillusionment of many with conventional politics.
The realisation of many in the West that they have been sold a chimera by their leaders, disenfranchised and betrayed by their institutions, has triggered a backlash. This backlash threatens the survival of a political model that had prevailed against its only alternative, communism, since the collapse of the Soviet Union. We have reached the crossroads between Marxian determinism – a certain sense of the inevitable decline and fall of all empires and civilisations – and a more hopeful belief that the very act of understanding our predicament empowers us to formulate and implement an escape.
The central purpose of this book has been to set out an explanation of why and how we arrived at our current predicament. It does not constitute proof, as history, economics and politics are not susceptible to proof; its logic will always be open to attack and counter-argument, especially by those in favour of the status quo either out of ideological conviction or financial interest. But my interpretation should resonate with those of good faith who love the freedom, creativity and respect for the individual that comes with democracy, and know how good society can be when democracy functions as it should. There is no guarantee that my diagnosis can be successfully applied to implement a cure. It may already be too late. However, that does not relieve us of the duty to try to change the way the game is played and bring democracy back from the brink.
This is not the first time that democratic societies and capitalism have faced an existential crisis. The revolts of the mid-eighteenth century; the Great Depression of the 1930s; the two world wars; the Cuban Missile Crisis; the inflation of the 1970s: these all came close to ending Western society as we know it. Yet, even if only just, we succeeded each time in saving capitalism and democracy. It can be done.
This time, however, is different; the challenges are more serious than in the past. This is not only because our political institutions were designed for an altogether smaller and more cohesive body politic in a simpler economy, but also because technological change has brought us to a tipping point. Previously, technological advances were symbiotic with human labour – jobs destroyed were replaced by more productive and enriching jobs as labour worked with machines. That is no longer true except for a dwindling band of highly educated workers at the top end of the skills pyramid. As we have seen, we cannot transform laid-off factory workers or checkout counter assistants into lawyers or surgeons or software writers or successful entrepreneurs.
In the past, crises brought about their own solutions: Keynesian injections of demand into faltering economies, such as the New Deal in the USA, deregulation and a more rigorous control of central bank money in the early 1980s. But the solutions we’ve used in the past seem to have outstayed their welcome. As they became entrenched in the political establishment and acquired the power of quasi-religious orthodoxies, inertia set in. No one seems able to call time or adapt the system even when the signs are that it’s going off the rails.
Unfortunately, the lesson of history is that political systems only rise to the challenge after a crisis has occurred. Today, it is clear that our institutions only doused the flames of the GFC by borrowing vast sums of money from the public and flooring interest rates to nothing to bail out private commercial interests. But this was a short-term fix and no solution to the underlying problems of the crisis. In fact, if anything, the fix exacerbated the core problems of inequality, debt, sky-high house prices, prolonged weak income growth, intergenerational regression, crumbling infrastructure and declining public services.
The political class has simply papered over the cracks with our own money. But these cracks are reappearing in the more serious form of political disaffection and disillusionment. People are switching off and no longer listening to the old mantras. Those reactionary forces who have been the winners are either in denial or too greedy to accept the need for change and force our politicians towards ditching the pre-crisis orthodoxy of market fundamentalism.
So what are the solutions? Logically, these should be mirror images of the multiple factors that have hurt our societies. In some cases the clock cannot and should not be wound back – for example, the advance of technology cannot be reversed. But we can propose measures to mitigate the negative effects of the growing redundancy of human labour. We can re-apply the rules of fair competition, dissolve monopolies and protect the political machine from the corrupting influence of money.
In the economic sphere, we have yet to find the right balance between distrust of markets and belief in state intervention (1930s–70s) and the subsequent reverence for unencumbered markets as the wisest allocator of resources and rewards. It is clear, though, that the current worship of the free market is excessive, and that there must be some readjustment towards a more interventionist state. This will be hard for those who cannot remember a time before free market ideology held sway and accept it as the norm, although perhaps easier for the generation that have come of age since the GFC. They are not impressed by the ideology of their parents; they have the energy and, with poor prospects, much less to lose.
Although economic and political solutions must be applied together, and economic changes will need to be implemented by politicians, we can look at these areas separately. Some of the nine measures outlined below are emergency first steps. Deep changes to the political system, such as more direct democracy, will take time to gain acceptance, and time is in short supply. Measures to transfer income and employment from the strong to the weak must be implemented soon, and cannot wait for the outcome of debates on institutions.
In post-industrial, post-service economies we should face the facts and update for the modern world our notions of work and reward. Keynes’s insight that there is no God-given law guaranteeing jobs for all at rates determined by the market now needs to be interpreted for the long term, not just cyclically.
In the past, jobs disappeared when the economy received a shock and demand fell. The economy would then turn over at a slower pace and could stay stuck there for a considerable length of time if there was nothing to break the vicious circle of no job and income growth, so no investment and demand growth, hence no job growth and so on. Governments could act as economic defibrillators, restarting the virtuous circle of rising demand, rising jobs and incomes and rising investment. The problem was that governments couldn’t resist juicing the system for political gain even after the slump had passed.
Surrendering to the temptation to cut taxes or boost spending to fulfil election promises or pay for wars risks running the economic engine too hot. It also weakens public finances through rising debt from accumulated deficits. The pressure is then on the central bank to print enough money to accommodate the government’s profligacy. This raises inflation to a level which becomes socially divisive and economically damaging, as happened in the 1970s. If left to spiral out of control, hyper-inflation ensues, as in 1920s Germany, or more recently, Argentina, Venezuela and Zimbabwe. So, while we need governments to play a bigger role in economic policy, we also need to avoid uncontrolled government spending. We need a more stable system.
However, the quest for a solution to cyclical swings in the economic consensus has been complicated by a new structural and permanent damper on the demand for human labour – technology and automation. For the first time in human history, human workers risk becoming redundant en masse. Keynes also foresaw this but envisaged it not as a problem but rather as sunny uplands where humans would be liberated from the chore of full-time work to concentrate on leisure and pursuing creative activities.
Of course, many people would be happy to be relieved of the tedious obligation to work. If machines can build and drive cars, provide furniture, electrical appliances, legal advice, banking services, medical diagnostics, security services, laundry, warehouse management and deliveries while we sit at home or visit theme parks to be entertained or exercise our creative talents, what’s not to like?
Two things. First, humans crave respect, including a sense of self-worth and purpose. People need to be part of society, not burdens that subsist on charity from those whom society still values highly enough to pay. Second, how will society finance decent incomes for the growing mass of redundant people? In fact, solutions combining both needs are not that complicated – with a little imagination.
The market is not good at pricing and delivering infrastructure and public goods such as safety, health and education in a society that has been trained to value personal consumption and profits highly. This is because it is difficult to market and commercialise certain things even though they have value. At the most basic, most of us would derive some satisfaction from seeing bridges, walls or shop shutters cleaned of graffiti, but can we and would we pay much to have it removed? Enough for this to be commercially viable? The answer in both cases is probably not. The same goes for weeds overrunning old sports facilities in public areas or parks, or even along highways. Therefore …
• Public goods, such as a safe, clean, adequate and modern infrastructure, could do with a metaphorical coat of paint, as well as expansion. Our public spaces in many cases have become run-down, dirty and outdated. Our roads are crumbling and potholed and our bridges are often safety hazards. In short, we could usefully employ an army of people to reverse the decline, clean up, upgrade and expand our vast network of transport facilities, public roads and buildings, leisure facilities, parks, schools and hospitals.
• Crime and violence are symptoms of stress and decline and a measure of how much the social fabric is tearing. Expanding policing resources to help staunch a rising crime wave that could tip out of control, while necessary, is not sufficient. We need to provide facilities to train young disenfranchised citizens to (re-)integrate them into society and provide them with a sense of hope, self-respect and belonging. This needs another small army of people. At the same time, cultural and sporting facilities should be built in problem areas to provide pleasurable and creative outlets for restless young energy.
• The effective delivery of public health services has declined over the decades because spending and investment has not kept up with rising needs. In some countries, the dramatic rise in demand from large net immigration and an ageing population has led to scenes of people being parked for hours on trolleys in the corridors of hospital A & E departments. This was unthinkable in rich countries twenty years ago. Waiting times in the UK’s National Health Service for diagnostics and serious interventions routinely run into months, placing patient health at risk. Meanwhile, doctors’ surgeries are so overwhelmed that it can take well over a week to obtain an appointment.
• No doubt the UK’s unique system of free access to medical treatment does act as a magnet for health tourists from all over the world, since none can be refused. Introducing a modest charge that can be recouped by citizens below a certain income would put an end to rationing by queuing. If the system is being overwhelmed by numbers and the state is unable to expand capacity, then there is no other solution than to restrict demand by tightening the rules governing access by citizens of other countries.
• The soaring healthcare and care-home demands of ageing baby boomers also present challenges. Few governments have invested enough to meet this, and, rather like global warming, waiting for the crisis to strike is not a tenable policy. A response is needed now. In short, billions of pounds, dollars, yen and euros need to be spent on new hospitals, care homes and all the hardware. A small army of professionals needs to be trained. This is at least a ten-year programme, perhaps beyond the political horizon of our current crop of careerist politicians. Not all of the jobs created, especially carers’, can be automated, and there will be many vacancies in socially valuable occupations that can absorb those whose commercial skills have been automated.
• Even reactionaries agree on the need to improve education in order to equip workers with the skills necessary to compete globally and be sufficiently productive to earn a good and secure wage. The trouble is that few governments – with notable exceptions – are willing to put up the necessary money. Standard class sizes of thirty or more cannot provide adequate, let alone targeted and tailored, teaching catering to the needs of a wide range of pupils. Those who struggle, often from underprivileged backgrounds, are at risk of getting left behind, becoming demotivated and dropping out.
• What is wrong with building more schools, training and hiring more teachers and paying them a wage that recognises their huge social value? This is the purest investment in the future of a country, as the Chinese well know. A teacher’s contribution to society is undoubtedly considerable, which is probably not the case for the average financier paid multiples of a teacher’s salary. Society allows the market to richly reward the latter because the related profit is quickly quantifiable, whereas there is no easily quantifiable measure of a teacher’s contribution to society. We must adjust our methodology for justifying rewards. To paraphrase the immortal remark of Paul Volcker, it is hard to point to any really useful innovation by the financial industry over recent decades other than the cash machine.
• If the market continues to reward activities of dubious social value but pays those making visible and often life-changing contributions a fraction of the former, then the market is misallocating resources at a societal level. The state, as the representative of society, must either regulate or tax the first so as to redistribute rewards adequately to the second.
• Infrastructure and public service needs should provide plenty of work in roles that cannot easily be automated because they require the human touch at its most personal. This should absorb a substantial proportion of those workers who have become commercially obsolete. The only difficulty with all this, and it is not a negligible problem, is that such a regime implies higher taxation of commerce, bringing with it the familiar risk of the more heavily taxed skipping to lower-taxed jurisdictions. The question is: would a country be worse off in the long term with more teachers, doctors and nurses, but fewer, say, bankers?
If private enterprise will not supply good infrastructure and associated services at affordable prices, then the state must step up to the plate. But how to finance this? Again, the logical answer is as simple as the politics may be difficult.
Those still not working in our brave new world, perhaps due to disability or by choice, should still earn a state-sponsored income that covers life’s necessities. Unemployment benefit should be scrapped and replaced by a living wage paid to all below a certain level of income. This should be calibrated to enable everyone to live with dignity. Anyone with a job that pays less would have their income topped up to the living wage level by the state because some work is better than none, both for individuals and society, even if its commercial value is below the subsistence level. This recognises the imperfections of the labour market.
Citizens not employed in the commercial private sector would have a choice between the public/social sector, undergoing further education and training, or engaging in other activities. As people could risk leaving paid employment, it is likely we would discover certain talents that would otherwise not have revealed themselves. This in itself is valuable to society.
There is growing interest in this idea, to the point where such a scheme has entered political debate. In Italy the government has instituted a monthly €780 so-called Citizen’s Income for those who qualify, at an estimated cost of about €7 billion in the first year. But because it ceases after eighteen months and has various strings attached, this is in fact closer to unemployment benefit.
The key hurdle to overcome is the antiquated belief that people have to earn a living. Work would become voluntary for people with those skills that have been automated. Financing such a system would be taken care of by the next two measures.
It is indisputable that technology, in the form of robots, machines and software, is replacing an increasing range of human occupations. One 2018 estimate concluded that 14 per cent of jobs are highly automatable, and another 32 per cent are highly likely to change in character due to automation. Clearly these percentages are only going to rise.3
This is another example of the generalisation principle. Automation works to the extent that the owners of businesses calculate that replacing humans increases their profits. Their reckoning may be correct at the individual business level – same revenue, lower cost of production. But, as we have seen, companies taking decisions in their self-interest at the micro level end up hurting themselves and society at the aggregate macro level if they deprive their future customers of jobs. How can that be a sustainable business model? Yet private markets do not appear able to deal with this dilemma constructively, so the state must intervene. Therefore …
• As has been suggested by many, the logical solution is to either slow the replacement of humans by machines or to compensate them and thereby create a level playing field by taxing the robots. Why should only human work be taxed, thereby penalising it? The exact methodology need not be complicated. For example, the tax on the introduction of a machine or software application that results in the redundancy of X number of workers could be equal to the tax that would have been paid by the company and the workers when they were employed, thus providing the state with revenue to employ those same workers in socially productive but ‘unprofitable’ jobs such as those identified above. That robots are not taxed is in effect a tax loophole and an anomaly in the system, as well as being socially pernicious.
• The same goes for those who live off income derived from their privileged and protected position in the market – originally land but now also capital in the form of intellectual property. Today, this definition is applicable to major shareholders in monopoly or near-monopoly businesses. In the West, huge technology-driven companies such as Google, Facebook, Amazon and Microsoft have all but cornered their markets in blatant contradiction to the pure theory of the unrivalled beneficial effects of relying on free-market competition. Furthermore, they have proved expert at circumventing an antiquated tax system designed for physical goods and services. This needs to be rectified. Tired of waiting for a European consensus, France has unilaterally announced a ‘tech tax’ based on revenue rather than profit, but it remains to be seen how this would work in practice.
• Alternatively, the state could break up monopolies, and reintroduce competition via antitrust measures. It is ironic that the only authority that has battled to preserve free-market competition against the uncompetitive practices of giant companies has been the European Commission, that much-derided bastion of European bureaucracy.
It is immaterial which solution is employed to bring down excess profits to levels consistent with competitive industries, as the end result will be similar. Cap abnormal profits and you will take away the incentive to create monopolies in the first place. Whatever works.
Society needs to reduce the importance of finance within the economy. Finance should revert to being a utility, keeping deposited money safe in banks and lending it out for investment for very low fees.
There is very little evidence that bankers and most investment advisers or managers generate activity that is useful socially. Mergers and acquisitions often end in disaster with bankers earning fees to break up conglomerates that their predecessors put together. Most investment managers underperform the market over time. If these companies insist on paying their employees Hollywood star salaries, governments should tax them to bring their net incomes in line with other occupations that society considers at least as valuable – teachers perhaps. Irrespective of considerations of social value, eliminating outsized incentives to pump up credit would by itself cut out a major source of economic instability and inequality.
Congresswoman Ocasio-Cortez’s 70 per cent tax proposal for annual incomes over $10 million is hardly radically new and would simply reset the top US tax rate to around where it was in 1981.
The political machine has become paralysed in its ability to implement laws and regulations in the best interests of the majority by the corrupting influence of private money. This is at its most extreme in the US, but Europe is also plagued. Emmanuel Macron, a rank outsider with no political party backing, managed to amass the biggest campaign fund of all candidates in the 2017 French presidential election in part thanks to substantial sums channelled his way by the rich and powerful. In the US, Trump’s election campaign enjoyed the luxury of being largely self-funded. Therefore …
• If political parties need to raise funds from third parties to maintain their structures between elections, these should be limited by law. Election campaigns should be state funded, since democratic elections are a public good and candidates should be free from influence by unrepresentative special interests. For presidential elections, all candidates that have won through their party primaries to be present on the final ballot should receive the same amount of public money. For Congressional and parliamentary elections, all parties should receive from the public purse a fixed sum per candidate, plus a variable bonus commensurate with their share of the vote at the last election, to be spent equally by each candidate.
• Trying to influence the legislative agenda towards the interests of businesses or foreign governments through private contacts with elected representatives has no justification and should be outlawed. Lobbying is distorting the democratic machine throughout the Western world and is the cause of countless harmful decisions. This is shameful and scandalous. If companies want to draw the attention of legislators to unintended potential consequences for business and employment of proposed laws and regulations, this should take place in an open public forum or by written submissions to civil servants.
We need to roll back the capture of companies by senior managers for their own enrichment, often at the expense of shareholders, the company’s long-term interests, customers and society. Managers are not unique talents and are easily replaceable, while successful founding entrepreneurs do not need to game the company pay scheme to get rich.
• Senior managers’ compensation should revert to consisting mainly of a fixed salary, with a bonus related to annual performance worth no more than 100 per cent of salary. Long-term incentive plans that grant share participation to managers should be in the form of loans for the purchase of the company’s shares after a sufficiently long delay, for example, five years. This would end short-term gaming of the system and the granting of share options as riskless lottery tickets, which is the ultimate example of (legal) insider trading since the beneficiaries can manipulate the value of shares to their own advantage. Executive compensation committees should include a substantial number of delegates from the workforce and unions. Consultants should be banned.
• Compensation packages for top executives should be subject to legally binding approval or rejection by shareholders. It is not enough for companies to pay lip service to reconciling shareholder and executive interests by holding advisory votes on top pay, which can be disregarded or lead to only marginal tweaked outcomes.
• All public companies should be legally required to publish annually the ratio of the CEO’s compensation to that of the average full-time employee in the company.
This is probably the trickiest reform of the global economic system to try to enact. The logic is simple. Ricardo’s theory of the benefits from free trade could work in practice if participant countries stuck to the rules rather than trying to gain market share at each other’s expense. Countries would be limited to selling goods according to their comparative advantage, not absolute advantage. This could be monitored and policed by a global body such as a redesigned World Trade Organization with teeth.
In practice, however, this is almost bound to fail. Such a body would not have the necessary clout to compel any country to desist from cheating, as has been demonstrated over decades, and anyway sanctions take too long to implement. But most damningly, unless the members of such a body are directly elected by the people, they will have no direct incentive to work in the interests of the people. If appointed or nominated by national governments, they will depend on the goodwill of politicians whose interests may not coincide with those of the people they represent.
• Nation states possess institutions, laws, courts and police to resolve and enforce disputes and conflicts within their jurisdictions. In a globalised world, an equivalent global super-state should carry out the equivalent responsibilities but could only have legitimacy and sufficient power to act if duly elected by the world’s citizens. Just as the United States and Germany are composed of states with their own political powers at the local level, so a world government would maintain national governments to run education, health, infrastructure and internal security. A directly elected world government would only have powers over matters which need to be resolved at the global level: trade, pollution, territorial disputes. This is a long-term goal.
• Any plan to export production to another country should be reviewed by the authorities of the country that stands to lose, with a view to demanding an exit tax equal to the loss of tax revenue from redundant workers and lost output for up to, say, ten years. In cases where a nation’s comparative advantage in an industry is involved, the movement of its production against this law should be banned. A nationally elected government exists to protect the interests of its citizens, not of corporations or other countries.
• To guard against imports made artificially cheap by state subsidies, all imports should be subject to full transparency on the entire financial chain implicated in their production.
• To level the playing field, no foreign goods or services should be allowed into a country unless there is complete reciprocity of export to the source country of the same goods and services.
It is clear that the current geopolitical and economic system is unable to cope with a variety of environmental problems. Quite apart from the harmful long-term consequences of carbon emissions and the use of plastics, the employment of pesticides in farming and the use of chemical additives in the production of foods to enhance taste or colour and for preservation is increasingly recognised as a public health danger. Inadequate regulatory standards and oversight are tolerated as a result of pressure from the food and farm industries on governments. Nor are governments innocent, happy to reap the electoral rewards of short-term attempts to protect the purchasing power of consumers by turning a blind eye to the hazards of cheap industrial food.
This would be less explosive politically were real wages rising at a healthy pace. Tackling this problem implies a profound change in our model of economic production and growth. We cannot continue to account for wealth only by adding up the goods and services produced, without subtracting the pollution, disease and other negative side-effects of current means of production. The rising incidence of some serious diseases, such as diabetes and cancer, may be linked to the presence of chemical additives in processed food. Clearly it is unfair that only the wealthy are able to avoid the risk of being slowly poisoned because they can afford to buy better-quality ‘organic’ food. At the very least, we require …
• An effective tax on carbon emissions at a rate that finances investments to neutralise the effects of carbon emissions over and above a sustainable rate (defined as a rate expected not to increase planet temperatures by more than 2° Celsius in the long run). Pending a binding treaty at the global level that can be effectively policed, individual states, countries and the EU should proceed unilaterally. In order to deter companies from moving operations to lower-taxed regions, appropriate exit taxes should be imposed, as well as naming and shaming to encourage consumers to avoid brands that pursue environmentally damaging policies and procedures.
• Laws banning the use of plastic for retail purposes and the dumping of plastic waste in the sea.
• Laws requiring pesticides and other artificial compounds used in agriculture to pass rigorous tests proving they have no adverse effects on the environment and those directly exposed to them, as well as causing no long-term damage through their ingestion into the food chain and leakage into the water supply. The onus of proof for safety should be inverted: chemicals in the food chain should be considered guilty unless proved innocent.
• The phasing out of hormones and routine use of antibiotics on animals, and a return to organic farming. The consequent rise in the cost of food would be met by a corresponding rise in the minimum wage, guaranteed incomes and allowances to enable the poorest sections of society to afford healthy natural food.
The underlying political problems threatening to destroy our democracies stem from three sources.
a) Political institutions have been perverted by the power and influence of money. Instead of one citizen, one vote, we have been sliding towards one dollar/pound/euro, one effective vote.
b) Communications technology and the speed of information transfer have transformed social and economic relations. Our political institutions and constitutional arrangements need updating to catch up with the modern world.
c) The fundamental paradox of political economy remains. There is no political system or collective decision-making logic that consistently and demonstrably provides the best social outcomes (Kenneth Arrow’s voter paradox proves how voting can be inconclusive; see Chapter 7). Even if we could measure each person’s happiness in different outcomes (which we cannot), this would not guarantee fairness since it could be used to justify the tyranny of the majority.
So what to do?
By definition, there is no foolproof solution because of c. This does not mean we cannot improve the system in ways that would be generally recognised along the following lines …
• Curtail the influence of private money over the political system (see 5 above). This at least reduces the risk of oligarchy.
Trust in the people; after all, it is their interests that matter. Modern communications have, in theory, liberated us from the need for assemblies like Congress, the Houses of Parliament, l’Assemblée nationale or the Bundestag, to which we send our elected professional politicians to represent us and debate and decide the law. Technology can empower us and eliminate the conflicts of interest inherent in delegating the political side of government to intermediaries pursuing their own agendas. We could simply all vote on key issues using our TV remotes or smartphones; we certainly don’t need to go through the antiquated process of visiting a polling station to cast a paper ballot. All that would be required is for civil servants at each level – local, regional, national, federal – to order and present questions to be put to the vote. Citizens wishing to put a question to a national vote would need to gather a threshold number of signatures. Professional politicians could be replaced by expert moderators for the issue in question, who would guide the presentation of key information and trade-offs to the people, arrange public debates face to face and over the Internet and media, and phrase the question for the popular vote.
In order to lessen the problem of decisions being taken by uninformed, busy citizens, time would be carved out of the working week for the study of information relating to upcoming votes. Furthermore, the state would train and employ teams of educators to meet members of the public on a regular basis to listen to their grievances and suggestions and debate the issues of the day. This is analogous to the time some states require from their citizens in the form of military service. This would be political service, taken out of the working week with no financial penalty for those in paid work. While the measured output of goods and services might reduce in the short term, the greater chances of socially harmonious decision-making in the long term would enhance and prolong the stability of the system.
All this necessitates a radical updating of Western constitutions. The greatest objection is not that it is technically impossible or too costly; it is that we are asking the current system to euthanise itself. The probability of elected politicians advocating constitutional reforms that abolish their own functions is akin to the chance of turkeys voting for Christmas. History shows us that institutions resist change until pushed to breaking point, so it will only come from a growing swell of popular opinion as a consensus forms that we need to move from the political equivalent of gold and silver coins to digital money. It will be a grass-roots movement, perhaps, to start with, grafting itself onto existing political formations. Today, we can identify potentially friendly groups within the Democratic Party in the US, certain centre and left-leaning elements within the UK, and strands such as the yellow vests in France, as well as elements of the governmental alliance in Italy, and Podemos in Spain. By cutting out the middle-man, technology can act as midwife for the re-birth of direct democracy.
This leaves us with the last and most intractable problem: the quest for the best political system has no hope of any theoretical solution. The dismal truth is that the finest political, philosophical and economic minds have pored over this enigma across the millennia without success. Anyone who claims to have solved this riddle is a charlatan. The right approach must therefore be to abandon theory and trust in the people in practice, under certain conditions. Their assent, their collective judgement, will be the ultimate test.
Given a situation where everyone lives in material security and basic comfort, where inequalities are not outrageously divisive and patently unfair, and where citizens are well educated, engaged and informed about the political issues and involved with their fellow citizens, feeling a sense of community and collective responsibility and respect, then direct democracy has a good shot at working. It will likely generate decisions on questions of principle that we generally see as socially good and fair, correctly balancing various interests for the common good in the long term. It should restore one person, one vote, untainted by the power of money.
Of all the solutions proposed in this chapter, this will probably take the most time to implement. Not only must the consensus build to a point where it becomes compelling, but the details of its implementation need to be agreed and put in place. Judging by our current febrile state of political discourse, this will be a long and challenging process.
At the same time, given our current predicament, no partial implementation will do. Simply restoring income tax rates to a more progressive pattern will not raise enough money to deal with the effects on labour of technology and globalisation. Nor will outlawing private cash in politics remove all conflicts of interest between voters and elected. Such individual measures will help, but if we are serious about giving our twin economic and democratic engines an overdue full service that will keep us safe for the long term and confound Marxian fatalists, then all of these measures are probably needed. What is heartening is that these issues are now being talked about more widely and are sure to figure prominently in upcoming national elections across Western countries.
It will require huge efforts to break with deeply ingrained bad habits. We must relinquish instant gratification and extreme individualism and relearn the discipline of making short-term term sacrifices for long-term gains. It is achievable, should we so decide. Our fate is in our own hands.