Libertarianism And Socialism Are Both Failed Systems
We Need Another, Better Way — A Troika Of Dictators
David Grace (DavidGraceAuthor.com — DavidGraceAuthor@gmail.com)
When you boil political and economic theory down to absolute basics you’re really talking about only two societal questions, and they are both different sides of the same coin:
(A) How to allocate wealth, and
(B) How to control the exercise/abuse of power.
At the extremes, the theories of how to answer these questions also boil down to two basic ideas:
(A) How to allocate wealth (1) Divide everything up on a per-capita basis (communism) and (2) To-the-victor-belong-the-spoils (anarchism)
(B) How to control the exercise/abuse of power (1) All power resides in the government (totalitarianism), and (2) Every man for himself (anarchism).
People favor one system or the other according to what they think is fair, not what works. Neither system is designed to work well but rather to reflect its proponents’ idea of what is fair.
“Everybody should have the same amount of wealth” is fair to a communist and unfair to an anarchist.
“Everybody should be able to keep whatever they can acquire” is fair to an anarchist and unfair to a communist.
There are infinite points on the philosophical continuum between these two extremes.
Neither System Works Well
Neither of these alternatives yields an efficient, prosperous society. They were never designed to yield a prosperous, efficient society. In their purest iterations both produce societies that are neither efficient, prosperous nor free.
To function well, socialism/communism requires that most people be basically altruistic and be willing to work hard so that someone else can benefit from their labor. Most people don’t think that way. Never have. Never will. Never gonna work.
Libertarianism/anarchism is built on the idea that competing interests will form power blocks that will cancel out abuses and that therefore the individual will end up being free and prosperous. Not true. Never was true. Never will be true. Ninety-nine percent of the people living in an anarchist society have as little real freedom as those living in a totalitarian one. They just have different oppressors.
A Hybrid Approach
To a greater or lesser extent contemporary Western countries have tried a hybrid system, namely:
(1) You can keep most of the wealth you acquire but you’ll have to give up some of it to be redistributed by the government to pay some of the basic costs of living for those vastly less successful than you; and (2) You can do mostly what you want except for those areas where legislation limits your ability to abuse your power.
The Problem With The Current Hybrid System
The basic problem with this hybrid system is that it’s only effective if the rules are simple to understand and simple to enforce. Life in an industrialized society is complex and simple rules are blunt instruments. The more complicated the rules and tax structures become, the more complex is the process, first, of their creation, second, their compliance and, third, their enforcement.
While people generally like rules, they hate bureaucracy and the more complicated are the situations you try to control with rules and tax codes the more complicated, expensive and time-consuming is the bureaucracy required to create, amend and enforce those rules and the more time and effort the citizens have to expend to comply with the rules.
This leads to a vicious cycle. Society becomes more complicated. That complication gives individuals and groups more power and more ways that they can inflict harm. More laws are enacted to limit their power to inflict harm. With each new law comes one or more new loopholes. Each loophole spawns even more complicated rules.
With each new rule comes more bureaucracy to make, enforce and pay for these rules. The system drifts into a negative feedback loop.
At some point it becomes like a complicated piece of software where every new line of code added to fix one problem creates two new problems.
Principles Underlying The Search For A Better System
If we want to invent another way, a better, more effective and efficient way, we need to do two things at the very beginning:
(1) abandon all considerations of “fair” and “unfair” and, instead, strive to create a system that results in a society that is efficient and prosperous.
(2) create separate systems to deal with each of the two basic issues — (A) controlling the abuse of power and (B) dealing with the allocation of wealth.
Let’s leave the discussion of an alternative system for the allocation of wealth for another day.
A Proposal For A System To Lessen An Organization’s Abuse Of Power
A self-regulating system is always more efficient and effective than a centrally controlled one. What sort of self-regulating system might keep organizations from abusing their power?
Contrary to the fantasies of the anarchists, it’s not The Market. The Market’s economic incentives often encourage bad products and abusive behavior. That’s why we’re awash in rules and regulations in the first place. Legislation is society’s response to profit-driven bad behavior.
I wrote a post: (https://medium.com/@davidgraceauth/a-new-form-of-business-organization-c6a1257bac5a) proposing a new kind of business entity, a Customer Controlled Company (a CCC) where the entity’s CEO would be elected by its current customers, each customer having one vote per dollar of products purchased.
The idea was to give the company’s executives an incentive to keep the customers happy with better products and services rather than keeping the day traders happy with short term stock price increases. The more an entity is incentivized to make better products and provide better services the less government regulation that company will require with regard to those products and services.
It would be an interesting experiment to make a wide range of consumer protection regulations applicable only to non-CCC entities as an incentive for the creation of CCCs, the theory being that the consumers of products or services produced by CCCs don’t need the a high level of consumer protection via government’s regulations because they will have the power to protect themselves by replacing CEOs who allow the company to make shoddy products.
I’m not saying it would certainly work, just that it would be an interesting experiment.
A Weakness In A Customer Controlled System
But let’s go a step farther. While I think the CCC idea has merit I’m concerned that it alone will not be enough to solve the problem of curbing bad (anti-customer) commercial behavior.
Why?
Think about your city’s government. Your city is essentially a company whose executives (mayor, supervisors, city council members) are elected by its customers, the citizens (that is that minority of the citizens who bother to vote).
Has the democratic system where the customers (citizens) elect the executives (the mayor) resulted in an entity (a city) that works effectively and efficiently for the citizens? I think the answer is an overwhelming “No.”
Why?
Insulation Of Actions From Control
My answer is that the diffusion of and the limitations on the elected executives’ power because of multiple layers of bureaucracy and civil service restrictions on firing results in a situation where no one person is responsible for anything nor is punishable for anything and thus no one in the middle or lower levels of the organization faces any consequences for doing a bad job.
Suppose that the building department in your city is a nightmare to deal with. There are so many layers of bureaucracy between the Mayor and the bureaucrat running the building department that no single elected official can do anything to fundamentally change its practices or culture and because of the civil service laws it’s practically impossible to fire any building department employee who’s doing a bad job.
As an aside, that’s one of the main reasons government agencies are so in love with the idea of bonuses. You can’t fire Bob for doing a bad job but the hope is that he’ll do a good job if you offer him a bonus for meeting a certain, specified target. Of course, in the real world the bureaucrats just set phony targets and then they cook the books to make it look like they met them and then everyone gets a bonus, which is exactly what happened in the Veterans Administration.
Another Way
But what if the organization’s leader, the Mayor, CEO, whatever, could fire anyone he/she wanted? Suppose the customers/voters said: “You’re the boss. Make the company/city run well. If the organization screws up, you’re out”?
I’m suggesting creating an organization that is run by a short-term dictator elected by the consumers of the entity’s products or services.
A Troika Of Dictators
Of course, any single leader can go nuts so maybe we should put three elected, short-term dictators in charge. Any one of the three could bring any issue or policy up for a vote. The votes of two of the three would control.
Mechanics Of Operation
The holders of five percent of the eligible votes could electronically ask their fellow voters to forward an issue to the Dictators for a vote. The agreement of fifteen percent of the outstanding votes would put the issue on the Dictators agenda where it would have to be voted up or down.
In the alternative the affirmative votes of a majority of the votes cast, with at least 60% of the eligible votes being required for a quorum, would decide the issue.
The electronic approval of 20% of the outstanding votes could force a vote on the termination on one, two or all three of the Dictators. The majority vote of a quorum of at least 60% of the outstanding votes would be sufficient to remove a Dictator from office.
Forget boards of directors. Forget city councils. Elect a troika of dictators to run the entity and let the consumers of the entities’ products fire one or more of them any time a majority of a 60% quorum is unhappy with their performance.
Give the Dictators the power to do anything other than a few very limited things such as: (1) raising their own salaries or giving themselves bonuses; (2) selling any major assets; (3) closing or merging the entity, etc. Doing any of those things would require a majority of a 60% quorum. All voting would be over the Internet with fingerprint or iris scanning ID verification.
Incentives For The Customers To Vote
You would probably need to pay people to vote. The payment could be in the form of a tax credit or a rebate on the utility bill or on some other city service. If you were paid $10 to vote in a municipal election I think you’d be more likely to do it. Or, you could go the other way and ADD $10 to a citizen’s tax bill or water bill for every vote he/she failed to cast.
For a private company the incentive to vote could be discounts, rebates or credits toward the purchase of the company’s products.
The number of issues submitted to the voters at any one time and the number of times customers would be requested to vote in any one month would be limited, of course, and once an issue was voted on it could not be voted on again until the passage of some minimum period of time.
Would This Be Worth The Effort?
Would we need all those consumer protection laws if the consumers of a product elected the producer’s CEO and could fire him/her if they were unhappy with the quality of the products, the customer support, etc.?
Would the people running Comcast today still be running Comcast if a majority of the Comcast customers could directly fire the Comcast CEO any time they wanted?
How well would your city or county government work if we carved out an exception to the civil service laws to allow any two of the three Dictators to fire any city employees they wanted? Anarchism doesn’t work. Communist-style central planning doesn’t work. Multi-layered democracy works but not very efficiently.
Maybe we should test the idea of running an organizations with a troika of Dictators elected by the consumers of the organization’s products and services.
Some Companies Where The CEOs Have Been Given An Almost Free Hand
Before you instantly condemn the dictator idea out-of-hand, think about how much power Steve Jobs had at Apple, Jeff Bezos has at Amazon, Page and Brin have at Google and Zuckerberg has at Facebook and how well those companies are run with an as close as you can get to a Dictator System in today’s corporate structure.
How Would You Finance A CCC Start-Up?
How would you finance a CCC if it had no stockholders, no cash investors?
I suggested a way to finance a private-company CCC without investors or shareholders in this post:
https://medium.com/money-banking/4a8f606384db
In Closing
I think it would be worth the effort to set up and run two or three CCCs and maybe govern a small town or two under the Three Elected Dictators model just to test the idea out, just to see how it works and where its flaws are.
Could the resulting organization work more poorly than Comcast or the Veterans Administration or your local school board?
What’s your idea for a more effective system — not a system you think is more ethical or more fair? Fairness is subjective and thus, inevitably, in many persons’ eyes will yield very bad results. Fairness, like beauty, is in the eye of the beholder and that’s where it should stay.
For my part, give me “prosperous and efficient” and leave “fairness” to the priests and the philosophers.
David Grace (www.DavidGraceAuthor.com
