Professor Richard Wolff: Better than Redistributing Income

[marmar]

Better than Redistributing Income

Saturday, 17 May 2014 09:42
By Richard D Wolff, Truthout | Op-Ed


Widening gaps between rich and poor, the top 1% and the rest, are heating up debates, struggles and recriminations over redistributing income. Should governments' taxing, spending, and regulatory powers redistribute income from the wealthy to others, and if so, how exactly? As opinions and feelings polarize, political conflicts sharpen.

Yet should redistribution be our focus? Thomas Piketty's recent Capital in the Twenty-first Century believes it should. He caps his analysis of how and why capitalism generates deepening economic inequality by advocating progressive income and wealth taxation. He wants to offset or reverse that inequality by redistributing income from the rich to the middle and the poor. Discussions of Piketty's work show considerable support for redistribution

Yet history has shown both its friends and foes that redistribution has at least three negative aspects. First, redistribution mechanisms rarely last. Once established, progressive tax rates, social securities, safety nets, minimum wages, welfare states, and all the other mechanisms of redistribution can be and usually are undermined. The last 40 years, and especially the aftermath of the global crisis in 2008, starkly illustrate the undoing of redistribution.

.....(snip).....

A rather obvious solution is available if we put aside the presumption that redistribution is the only way to counter deepening inequality. To avoid redistribution's insecurity, social divisiveness and wasted resources, we could instead distribute income much less unequally in the first place. Then redistribution would be unnecessary and society could avoid all its negative aspects.

The question then becomes: how might we secure a significantly less unequal original distribution of income? The answer is a transition from the current hierarchical internal organization of enterprises to an alternative cooperative organization. Key drivers of unequal distributions of income are (1) the major shareholders and (2) the boards of directors they select to run the capitalist corporations at the top of the economic pyramid. Those two groups together basically decide how to distribute their enterprises' profits. When large shares of those profits go to shareholders as dividends and to top executives as pay packages, they widen income inequality. When these two groups reduce the demand for workers (for example, by relocating production abroad or via automation), they usually slow or stop wage growth and thereby widen income inequalities. The last several decades exhibit many of just such decisions. ...........................(more)

The complete piece is at: http://www.truth-out.org/opinion/item/23725-better-than-redistributing-income

[KittyWampus]

1. Worker Coops are a great idea. If I understand properly what is proposed herein:

Workers have their roles as both laborer AND corporate board decision makers….

But what about shareholders?

If those same workers don't collectively own at least 50% of stock, it wouldn't work.

Furthermore, even if those workers did collectively own 50% of stock, any individual who owned shares and had the means to bribe the coop workers would still be able to dictate policy.

Or am I wrong?

[Jackpine Radical]

2. Here's something I wrote on the topic some years ago (before Obamacare):

The workplace has proved itself incapable of providing adequate health care and retirement plans for its workers. This is particularly the case with small and start-up companies, who lack the advantage of large employee pools. The result is a damping of creativity in the marketplace. People are less likely to engage in risk-taking and innovation when they must sacrifice access to adequate health care and retirement financing in order to do so.

Thus universal health care and a fully funded government retirement system would result in the creation of many new small businesses in new areas such as green technology, precisely where they will answer the emerging needs of society. I believe this system has the potential to stimulate what is best about the profit motive while eliminating some of the worst problems of the current system.

A model for a company in the coming age:

The company will be worker-owned. You will earn increasing shares in the company as a function of the number of years you are employed in that company. If you leave the company for any reason, you may hold your shares until your death. However, when you die, the company will give your estate a fair cash settlement for your share and the remaining workers will retain ownership of the company. This is necessary in order to keep ownership from spreading out among people who have no vital interest in the company.

Not all workers will have an equal share in the company. For example, it would be expected that the entrepreneur who starts the company will retain a larger share of ownership than the other employees. Also, shares in the company may be differentially assigned on the basis of the type of work done. Each worker will receive wages or salary commensurate with their job responsibilities, and in addition each will receive a share of the profits commensurate with the number of shares they hold. Thus every worker will have a stake in making the company more profitable in the long run.

[cheyanne]

5. I'd like to ask some more questions about the workings of worker owned.

How is the company governed? Does it have a board of directors?

Though workers would be less likely to leave such an environment, what happens when there are layoffs?

thanks.

[Jackpine Radical]

7. I think governance would be democratic in most instances, but

I suppose there would be a lot of possible variation in that realm. Maybe different models for different circumstances.

I'm particularly intrigued by the idea of leaderless, networked organizations. Think of the aid stations & other social support entities that sprang up during the Occupy movement.

Maybe there wouldn't be layoffs. Maybe everyone would move to reduced hours as needed.

Overall, I think I'd like to see lots of social experimentation and evolution here. The trick would always to be in avoiding counterproductive, perverse & antisocial incentives.

[socialist_n_TN]

8. Workers ARE the board of directors.....

I would prefer on a rotating basis with immediate recall for any board member when they don't keep the needs of the majority in mind. If it were a big organization with national implications for basic necessities, the board would also consist of representatives of affected citizens, i.e., the people.

As to layoffs, hopefully the planning phase would diminish the need for layoffs and the first step would be job-sharing rather than layoffs.

Just some ideas from one commie. Of course, I don't really think this would work in the long term without the conquest by the working class of political power also. Just as soon as these types of co-ops started to really cut into the profit margins of traditional companies, they would be hamstrung with "regulations" that would limit their effectiveness. Or just banned outright. Capitalism won't allow an effective alternative system to what's in place now. At least not for the long term.

[pscot]

3. He's suggesting a complete restructuring

of the Capitalist model. Revolution? Anyone?

[socialist_n_TN]

6. To answer your question.......

Yes. Some of us.

[Jackpine Radical]

9. Ummm…yes.

[xchrom]

4. Du rec.

[Jackpine Radical]

10. Shit.

Why didn't I think of that?

K&R

[bluestateboomer]

11. It can be done.

http://www.mondragon-corporation.com/eng/

"MONDRAGON is a co-operative business organisation integrated by autonomous and independent cooperatives that competes on international markets using democratic methods in terms of its company organisation, job creation, both the human and professional development of its workers and a commitment to the development of its social environment. This mission was defined at the Co-operative Congress, which means it has the approval of all the co-operatives that make up MONDRAGON."

[valerief]

12. Go one step further and get rid of money. nt

[woo me with science]

13. K&R