Socioeconomic Democracy
by Robley E. George

 
 

Center for the Study of Democratic Societies
USBIG Congress
New York City
March 4-6, 2005

Abstract

Socioeconomic Democracy is a model socioeconomic system wherein there exist some forms of Universal Guaranteed Income and Maximum Allowable 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.

This paper briefly describes the essential elements of Socioeconomic Democracy, including quantitative democracy and economic incentive, and then outlines some of its properties, such as societal variations, justifications, relationship with Islam, practical political approximations, realizability, and the significant reduction of a large number of acknowledged serious societal problems.

We conclude by reviewing how a number of contemporary dilemmas impeding the realization of some form of needed universal guaranteed income are trivially (and democratically!) resolved with Socioeconomic Democracy. These include questions such as How much?; Who decides?; Where necessary funds come from?; Where does democracy fit in?; and How soon can all this start to happen?

 

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Introduction
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It seems there have always and everywhere been two major thrusts of progressive political activity. Determined or hesitant, but always present, they can be found throughout the Ages, in the United States of America, and throughout the "globalizing" world. These two thrusts are the ubiquitous demand for more and more meaningful democracy and the equally ubiquitous search for a more sustainable and just socioeconomic system that resolves rather than creates and perpetuates serious, unnecessary, and costly societal problems.

Combining these two active thrusts produces, or certainly suggests, what has come to be called Socioeconomic Democracy. It is respectfully submitted that the present state of the nation and the world, intimately interconnected and interrelated, make the realization of some form of Socioeconomic Democracy absolutely essential, not only for human progress but for human survival.

Socioeconomic Democracy is a theoretical model socioeconomic system wherein there exist both some form of Universally Guaranteed Personal Income (UGI) and some form of Maximum Allowable Personal Wealth limit (MAW), 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. Many of the details, implications, and ramifications of Socioeconomic Democracy have been discussed in the book Socioeconomic Democracy: An Advanced Socioeconomic System published by Praeger (2002).

The essence of Socioeconomic Democracy may be traced back at least to many of the thinkers of ancient Greece, such as Thales, Plato and Aristotle, to all the great religions of the world, as well as Tom Paine (who gave the United States of America its name and the inspiration to perform the new experiment) and Tom Jefferson (who made the experiment official), and on down to include the many progressive thinkers of the nineteenth and twentieth centuries. All have pleaded for humanity to think about ideas similar to these. It appears it is now time for humanity to act. As Bucky put it, "Utopia or Oblivion."


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Basic Elements of Socioeconomic Democracy
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UGI. 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 Universally Guaranteed Personal Income (UGI) would always be available. Put another way, society would 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.

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, society might democratically decide to set the guaranteed amount at only a partial subsistence level, for a variety of legitimate reasons. There are as many different forms of UGI (ranging at least from Basic Income (BI) to Negative Income Tax (NIT)) as there are reasons to establish some form of UGI.

It is noteworthy that the state of Alaska is at present the only governmental entity in the world that has a form of UGI, namely the Alaska Permanent Fund, which provides each and every resident an annual sum determined by revenues from the state-owned oil fields and recently ranging somewhat under $2,000 per year per resident.

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 and insatiable (as the neoclassical saying goes) extremely wealthy, law-abiding 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 actively increase the well-being of at least some of the less materially wealthy members of society. Only in this manner can these (still-wealthiest) participants persuade (at least a majority of) the rationally self-interested less wealthy participants of the democratic society to vote to raise the legal upper limit on allowable personal wealth -- thus allowing those wealthiest participants of the democratic society to legally acquire and retain the increased allowable amount of personal net wealth they so crave, as well as allowing many of those presently far below the MAW limit to continue their dreams and fantasies toward unlimited personal wealth some day.

There is, in fact, strong economic incentive for those who are pegged at or are 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 and indeed probability 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 and welfare of society in general.

Democracy. There is a simple procedure by which each individual participant in a democratic society (or each member of a democratic legislative body) can directly vote his or her particular preference for an amount, magnitude, or quantity of something in question, with the democratically determined, societally or legislatively desired amount unequivocally resulting. As if to emphasize the significance of the discovery, Duncan Black and Economics Nobelist Kenneth Arrow independently and more or less simultaneously established the important mathematical result and procedure a half century ago.

Their now-classic social choice contributions have provided the theory which shows that the median value of the monotonically arranged 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.

It is by this simple, mathematically correct process and procedure that the society-wide lowest tolerable level of personal material poverty and the highest allowable level of personal material wealth can be established and adjusted over time as democratically desired in the democratic society.


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Variations of Socioeconomic Democracy
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First, observe that if a particular participant in this democratic socioeconomic system were opposed to a societally guaranteed minimum income for all, for any reason, 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 whatsoever, could and should 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. There could be democratically desired and established societies wherein there exist nontrivial bounds on both UGI and MAW (ie, UGI not equal to zero and MAW not equal to infinity) or where either one of the bounds is nontrivial while the other one is, or where there are no bounds on either fundamental socioeconomic parameter -- just as currently exists, though in this case at least societal approval of the extreme disparity would have been consciously, thoughtfully and democratically given.

Beyond these four fundamental variations is the wide range of possible variations in the magnitudes and the degree of "tightness" of the UGI and MAW bounds. Different societies may all want to institute some form of Socioeconomic Democracy but differ in the amount they democratically decide is appropriate for them at that time and under their current circumstances.


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Approximations to Socioeconomic Democracy
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Then there are all the practical political approximations to Socioeconomic Democracy. For example, there are the numerous alternative systems for guaranteeing some minimum amount of general or restricted purchasing power or guaranteeing some minimum amount of goods and services that would more or less approximate the ideal theoretical concept of UGI. One particular long-established principle of any civilized society is universal public education, at least for a certain age range. Universally 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 qualifications or requirements. Thus all so-called means tested and/or targeted welfare programs are approximations to UGI. So are all so-called obligation- or service-requiring programs.

Seemingly the closest thing to a limit on personal wealth is a tax on personal wealth. Depending upon the parameter settings (eg, the tax rate on wealth and the level above which a wealth tax applies), both of which could be decided democratically, the effect of such a tax could slowly approximate what a MAW limit, set democratically, could accomplish much more rapidly. Another familiar form of an approximation to a tax on personal wealth (which in itself is an approximation to a limit on personal wealth) is the Inheritance tax or Estate tax or, as some would have it, "Death tax." Of course, here also the particular parameter settings for such systems could and perhaps should, in a democratic society, be set democratically.

Approximations to democracy, as approximations to anything else, can be fairly close or fairly distant. An approximation to all members 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 (or desire to change) 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 (approximately) for the democratic society as a whole. Certainly a democratic legislative body could use the democratic procedure and establish UGI and MAW levels that could be said to be a close approximation to the democratic desire of the whole society.


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Socioeconomic Democracy and Islam
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Perhaps the most familiar aspect of Islamic economics is "no interest" loans - a suggestion in fact insisted upon by prophets of all the monotheistic religions. Basically, with Islamic loans, the investor shares both the risk and the reward of the use of the loan, with negotiations about the terms of the loan agreement.

However, it is not "no interest loans" but Zakat (essentially a moral tax on wealth to help all - both the giver and the receiver - to live thankful and productive lives) that is one of the Five Pillars of Islam. The original detailed schedules of types and amounts of wealth to be taxed and the specific eight different categories of appropriate uses of the tax resources provide charming reading. With Ijtihad (systematic reasoning, one of the elements of Islamic economics, which is sometimes honored and sometimes ignored, not unlike everywhere else), Zakat could be but mostly hasn't (yet) been modernized (to truly reflect modern categories and situations).

The prophet Muhammad conceived (or was given) the rather reasonable and commonsensical idea of allowing (through taxes) those of society with the most wealth to financially and otherwise help those of society presently in need so as to produce a peaceful and balanced society wherein everyone has the opportunity to grow strong, thankful, cooperative and happy and able to contribute to their humanity and its further balanced development. Zakat can be viewed as a religious requirement to "promote the General Welfare," to use a secular phrase made popular by the Preamble of the U.S. Constitution, written over a millennium later.

If the Qur'an specified a tax on wealth, as opposed to a limit on wealth as with Socioeconomic Democracy, perhaps it was that even Muhammad himself (or God Herself?) could not at the time conceive of, let alone predict, way back then, that eventually there would be personal-profit-pursuing megamultiibillionaires and hungry people. In any case, it seems clear enough that Zakat is, if not identical with, certainly an approximation to the ideal theoretical model of Socioeconomic Democracy (or, perhaps, vice versa), with the appropriate parameters set through societal consultation, the need of which was frequently emphasized by Muhammad.

In this regard, Islamic economics can take pride in the fact that at its root, the prophet Muhammad knew which was the important variable to tax, ie, wealth, not income, a millennium prior to the creation of capitalism, communism and socialism and now three more centuries into their continuing confusions. Muhammad further appreciated the desirability of democracy, expressed in his frequent urging of thoughtful consultation with all those concerned about and affected by a matter before that matter was to be resolved.


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Feasibility and implementation of Socioeconomic Democracy
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The serious study and objective comparison of alternative future possibilities provide the opportunity to make a contribution toward desirable societal development. Complementing this opportunity is the necessity of establishing that the alternatives considered are in fact physically realizable and implementable. Suffice to say here that the major areas of voting procedures, administrative and legal technicalities, parametric economic analysis as well as political considerations of instituting some form of Socioeconomic Democracy have all been considered. Socioeconomic Democracy is quite feasible - requiring only an informed, functioning democracy.

For example, consider the political aspects of implementing some form of Socioeconomic Democracy. Bounds on guaranteed personal income and allowable personal wealth, democratically set, can not be realized until at least a majority of the voting citizens in a contemporary politicoeconomic 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. This would be especially the case if a Constitutional Amendment is required.

It is difficult if not impossible to recall any historical economic system change of such magnitude that was subjected to such informed public scrutiny prior to peaceful, voluntary and democratic societal acceptance and adoption, as by definition must be the case with Socioeconomic Democracy. Such necessary public discussion of the matter would eventually democratically resolve not only whether some form of Socioeconomic Democracy should be established but as importantly would go a long way in shedding light on and determining where the bounds should be set under the prevailing circumstances.

In any case, coalitions of political parties, committed to passage of the necessary legislation, are one possible adoption procedure open in some societies. On the other hand, being an alternative to all existing economic systems, Socioeconomic Democracy 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 be considered a quite reasonable approximation to the ideal theoretical model.

It should also be clear that the possibility of a just and democratic socioeconomic system, which would actually and maximally benefit all citizens of society, provides strong economic (and other) incentive for all rational, 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 sometimes a majority, since, under present circumstances, the questions to be decided, democratically or otherwise, are not seen to be relevant to their lives.


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Ramifications and Benefits of Socioeconomic Democracy
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As described in the book Socioeconomic Democracy: An Advanced Socioeconomic System, it can be shown that numerous serious and acknowledged (not to mention some of the many presently unacknowledged) societal problems would be reduced or more or less eliminated with Socioeconomic Democracy - simultaneously. These problems include (but are by no means limited to) automation, computerization and robotization; budget deficits and national debts; bureaucracy; maltreatment of children; crime and punishment; development; ecology, environment and pollution; education; the elderly; feminine majority; inflation; international conflict; intranational conflict; involuntary employment; involuntary unemployment; labor strife and strikes; sick medical and health care; military metamorphosis; natural disasters; planned obsolescence; political participation; poverty; racism; sexism; untamed technology; and the general welfare.

One example must suffice. Consider international conflict, that is to say, war, a perennially popular and productive form of planetary depletion and pollution. The enhancement of societal well being made possible with Socioeconomic Democracy (ie, the synergetic effect of simultaneously reducing a wide variety of current society's other stupid problems), ipso facto provides an effective and positive deterrent to international warfare, here assumed undesirable and to be eliminated. The simultaneous resolution of a large number of serious societal problems eliminates at once many causes of -- and perhaps more important, many excuses for -- war.

Beyond this, many other specific beneficial effects can be anticipated. For example, those participants in the democratic socioeconomic system who are personally at or near the societally, ie, democratically, set upper bound on allowable personal wealth would no longer have personal economic incentive to promote war or military intimidation, whether involving their own country or other nations, for private profit as is frequently the case now. They could no longer gain personal wealth by such action and could well lose it, especially if their society democratically decided to further reduce the allowable personal wealth bound to help finance involvement in the hostilities.

Democratically set, governmentally guaranteed personal income for everyone also provides many direct deterrents to warfare. Among other strong effects, it would eliminate any economically "handicapped" class, which, of course, has historically provided warring nations with a convenient pool of combatants. Such guaranteed income also solves the very real and almost always neglected problem of necessary income for all those who presently derive their personal income and personal wealth from warfare, its design, threat, preparation, or promotion, either directly or indirectly, here in the USA or anywhere/everywhere else.

Yet if some war is absolutely "necessary," both democratically set MAW and UGI bounds, and the economic incentives they create, would go a long way to insure that all military personnel are provided adequate care (financial, medical, psychological, educational and otherwise) to meet the requirements for salvaging a deservedly respected, dignified and healthy life, both during and after military service - as opposed to frequent present-day neglect and lack of necessary attention to veterans' needs by the hypocrites who's actions and inactions helped create all the dead and wounded veterans.


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Socioeconomic Democracy and Resolution of BIG's Major Dilemmas
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We conclude by briefly mentioning and noting how a number of the major contemporary dilemmas impeding the realization of some form of universal guaranteed income can be and indeed are democratically resolved with Socioeconomic Democracy.

How much? It has been observed that there are at least as many different opinionated answers to the question of how much BI is best/possible/desirable/necessary/affordable/ justifiable/whatever as there are different reasons justifying some form of universally guaranteed personal income (the latter being a very large number, we all agree). The basic question of "How much?" nevertheless appears not to have been seriously, or at least sufficiently, considered from the perspective of a democratic society. Socioeconomic Democracy addresses and answers the question democratically.

That "How much?" is really more than just one question is clear from the observation that what is a reasonable level of BI depends upon, among other things, its source(s) of finance and any other economic incentives in place working for or against the need for some form of BI.

Who decides? Never before in the history of humanity has it been simultaneously physically possible and near trivial for all impacted participants of a society to democratically decide such fundamental questions as that society's minimum acceptable material poverty level and that society's maximum allowable personal wealth level. Socioeconomic Democracy facilitates the realization of this potential by peaceful, thoughtful, productive and legal means.

Where should necessary funds come from? It is observed that, of all the "classes" of society - democratic or otherwise - including, say, the presently desperately poor, the presently unemployed poor, the presently underemployed poor, the presently working poor, the presently shrinking "lower," "middle" and "upper" middle classes, the presently wealthy, the presently rich, the presently super rich and the presently ultra rich, the class that would be "hurt" the least by providing some of any necessary funds to finance a BIG is clearly the class of the ultra rich. On the basis of compassion alone, the policy has merit and should be welcomed by all "compassionate conservatives."

Furthermore, and far more important, consider the societally beneficial economic incentive created by Socioeconomic Democracy, and the many societal problems significantly and simultaneously reduced as a result of that economic incentive. All this also argues for the "compassionate" solution.

How soon can all this start to happen? Whatever else, it can be agreed that the wider public discussion and acceptance of the ideas of a universal BIG, resulting from the understanding that the stubborn dilemmas heretofore impeding the realization of some meaningful form of basic income can be made to evaporate democratically, will unquestionably hasten the day of realization.


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Robley E. George is the founder and Director of the Center for the Study of Democratic Societies, a research and educational institution dedicated to the examination and explanation of the properties and possibilities of democratic societies and democratic socioeconomic systems. His latest book is Socioeconomic Democracy: An Advanced Socioeconomic System published by Praeger/Greenwood in 2002.

Center for the Study of Democratic Societies
http://www.CenterSDS.com
georgeCSDS@aol.com

CSDS
Box 475
Manhattan Beach, CA
90266, USA

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