Around the turn
of the twentieth century, Latter-day Saints formally abandoned not just
polygamy and theocracy but also their last attempts at communitarian economics.
Admittedly, many of these communitarian efforts had limited success at
establishing economic equality,1 but they at least represented an
official attempt to implement principles the Lord had given in revelations to
Joseph Smith. With the abandonment of the various United Orders, however, the
Saints also came to discard the ideals that drove the communitarian effort.
Perhaps, however,
the day has come for Latter-day Saints to look to their collective past for
solutions to the economy’s present predicament. There are many reasons to do so—among
them the Lord’s stated desires for economic equality, the ever-advancing
inequality in the United States today, the negative consequences of this
inequality, and the need to prepare ourselves for the anticipated and eventual
Second Coming of Jesus Christ, which we believe will usher in a thousand-year
epoch that will undoubtedly feature a different sort of economy than our
current arrangement. The deteriorating state of the U.S. economy is a reminder
that Mormons need to begin questioning their support of the corporate system of
concentrated, limitless ownership and seek instead paths to greater economic
equality.
Redistribution
Some Latter-day Saints have argued that since a
key principle of the law of consecration is that it is voluntary, it would be
inappropriate for government to take and redistribute capital. This would be
stealing. This reasoning is easy to dismantle on several levels. It is obvious
to even conservatives, for instance, that without taxes and government, our
society would rapidly dissolve into chaos and violence. If we want any sort of
civilized society, we need a government to provide some sort of order. The only
question is what level of order and social well-being we desire. Interestingly,
the argument against redistribution also ignores both Alma’s command to his people to redistribute
their property and the fact that even in Zion there will be a government, a
government that will require economic
equality of all those who desire the benefits of living within the system.
Justification for creating a more equitable economic order in the United States
can follow a similar line of reasoning, particularly if our national well-being
is dependent on leveling the economic playing field. But for those who still
insist this is stealing, we might well ask who is really stealing from whom and
what we must do to rectify this injustice. As Michael Ventura puts it:
As a worker, I am not an “operating
cost.” I am how the job gets done. I am
the job. I am the company. . . . I’m willing to take my lumps in a world in
which little is certain, but I deserve a say. Not just some cosmetic “input,”
but significant power in good times or bad. A place at the table where the
decisions are made. Nothing less is fair. So nothing less is moral. . . . It
takes more than investment and management to make a company live. It takes the
labor, skill, and talent of the people who do the company’s work. Isn’t that an investment? Doesn’t it deserve a
fair return, a voice, a share of the power? . . . If the people who do the work
don’t own some part of the product, and don’t have any power over what happens
to their enterprise—they are being
robbed. You are being robbed. And
don’t think for a minute that those who are robbing you don’t know they are
robbing you. They know how much they get from you and how little they give
back. They are thieves. They are stealing your life.2
The corporate
system of ownership is a strange thing indeed and is a remnant from our
aristocratic past. We speak of stock market transactions as investing, but Marjorie Kelly reminds us
that “there is only the smallest bit of direct investment in companies going
on. What is at work is speculation,
the trading of shares from one speculator to another. Another word for it is gambling.”3 In reality, most
companies have not sold any new common stock for decades, and new stock
offerings in the market are generally exceeded by the amount of stock
corporations buy back and retire. In this sense, as Ralph Estes observes, the
stock market works very much like the used car market.4 When you buy
a used Ford Taurus, none of the money goes to Ford. Similarly, when you buy
Ford stock on the New York Stock Exchange, that money does not change Ford’s
balance sheet by so much as a penny.
But the stock
market is very different from the used car market in a crucial way. Because a
company’s workers are both ingenious and productive, the value of the company
generally increases over time, whereas the value of a used car decreases. The effect this produces is that a company’s
initial stock offering usually represents a very small fraction of a company’s current
worth. But that enormous increase in value was not created either by those who
purchased the stock initially or by those who acquired it later on the stock
exchange. It was created by the productivity of the workers. And yet the corporation’s
number one priority is to maximize shareholder wealth, not employee wealth. Thus,
people who have nothing to do with the day-to-day operations of the business,
and who didn’t even provide capital directly to the business, are the ultimate
insiders, while the workers, who are there every day creating the wealth, are
not even corporate citizens (citizens have a vote); they are subjects or even
commodities, a cost to be minimized. They are treated as outsiders. This
doesn’t make any sense, but it’s the way we have traditionally done things in
the corporate world. In fact, if workers in a corporation increase their wealth
(their pay), this is viewed by the corporation not as a success but as a
failure. Success occurs only when shareholder wealth increases.5
Conventional reasoning about capital distribution ignores the fact that corporations are not only
chartered by government, but also that
they were originally established
to serve public purposes. They
were originally tightly regulated for the same reason. Businesses exist
at the pleasure of the people. Even a sole proprietorship must file for a
business license with government before it can legally engage in commerce. It
is certainly within the rights of the people and their representatives in
government to regulate business, including, I would argue, more carefully
defining ownership requirements and reversing faulty legislation and judicial
blunders.
Even though the
debate over who ought to own
corporate assets and products is both contentious and legally labyrinthine, capital redistribution doesn’t need
to involve what William Greider calls “the expropriation of anyone’s existing
wealth.” He points out a fundamental paradox of capitalism: “People do not
usually get rich by saving money but by borrowing it. . . . The problem, in
other words, is not debt per se, as people are led to suppose. After all, the
capitalist process relies on debt, continuous lending and borrowing for its
creativity and progress. The problem is that most people cannot get into
debt—not the kind of debt that will enable them to become capital owners.”6
While consumer debt is a drag on the economy, debt that facilitates capital
ownership has the opposite effect. Greider proposes the solution that investment
banker Louis O. Kelso conceived more than fifty years ago: the employee stock
ownership plan, or ESOP. Kelso’s financial innovation enabled ordinary workers
to borrow money to buy stock shares in the companies where they worked, using the
companies’ productive assets as collateral. As stock owners, they received dividends
and could use their share of the profits to pay off the loans. This arrangement
may sound vaguely familiar because it is the same principle corporate raiders employ
to orchestrate leveraged buyouts (LBOs), a financial strategy used and often
abused during the 1980s—and one very familiar to Mitt Romney.
The Transition to Three-Tiered Economic Equality
Moving from our
current system of ownership to a more equitable system ought not to happen
abruptly barring some drastic crisis, but government at both the state and
federal level can do much to begin the necessary transformation. For instance,
by increasing taxes on traditional corporations and other businesses owned by
one person or a closed group, and by simultaneously offering tax breaks to
worker-owned businesses, government can create attractive incentives for
businesses to begin this shift willingly and immediately. Government should
also move toward reinstating a top marginal tax rate of at least 70 percent, to
prevent the continued accumulation of wealth in a small minority of hands and
to help pay down the immense national debt we have accumulated over the years.
Increasing the capital gains tax should also occur.
Latter-day Saints
can promote such changes by first rethinking their political ideology. But perhaps
the most important step Mormons could take would be for those among us who own
or manage corporations and other businesses to lead out in the transition to a
new sort of economy by sharing ownership with their employees, which might
include using profits to buy back stock from absentee owners (another topic
altogether) and offer it through compensation programs to workers within the
business.
A detailed
description of how worker-owned businesses should be structured is beyond the
scope of this post, but I will offer a few general guidelines.7 Some
economic thinkers, including Indian philosopher Prabhat Ranjan Sarkar, have
proposed a three-tiered economy.8 Following is a simplified outline
of such a system.
•
The first level would consist of small
enterprises that produce mainly nonessential goods and services and perhaps a
few essentials. These enterprises would generally have a single founder or a
few partners, who would welcome on board new associates and offer them a share
of ownership. These organizations could operate as small democracies.
•
The second level of economic activity would
consist of larger enterprises owned collectively by the workers. No shares of
ownership would be held by absentee stockholders. This level would encompass
the bulk of what we now call corporate America. Whereas level-one businesses
could operate quite easily as true democracies, level-two enterprises would
generally be too large for this. These organizations would have a republican
form of leadership, patterned after our political system in which workers would
be able to elect the leaders.
•
The third level would consist of basic
industries that benefit everyone in the community, such as transportation,
communication, education, defense, health care, sanitation, and utilities.
These industries are too large to be managed effectively as cooperatives and
too important to be driven by the profit motive. Of necessity, many of them must
be monopolies. They must therefore exist in the public realm. Public boards or
local governments would be the logical bodies to manage most of these entities,
and they would be supported by taxation.
•
Equality in most worker-owned businesses would
need to be carefully defined. Since it would not be just to give an
eighteen-year-old high-school graduate an ownership share equal to that of a founder
with a PhD in mechanical engineering and thirty years’ experience, the ownership
equation would need to incorporate such factors as age, experience, education,
seniority, and financial investment. But the differential between the workers
with the largest and smallest portion of ownership would be dictated by a
factor of, say, five to ten, rather than what we see in today’s corporate
world, where owners and professional executives earn hundreds of times as much
as some of their employees.
•
Economic enterprises should be free to hire some
workers part time (because some people do not desire or cannot manage full-time
work) or to create an apprenticeship program in which new workers can be
trained and carefully evaluated before being given full ownership rights and
responsibilities.
These and other
parameters for an economy based on worker ownership would have to be thoroughly
weighed and discussed in public forums before being implemented. But regardless
of how change begins, common sense suggests it should occur gradually—unless,
of course, the current system collapses and we are forced to deal with a
different set of realities.
_______________________
1. See, for instance, “The United Orders of Brigham
City and Orderville: Opposite Ends of the Spectrum,” Elkym’s Weblog, http://elkym.wordpress.com/2009/04/22/the-united-orders-of-brigham-city-and-orderville-opposite-ends-of-the-spectrum.
2. Michael Ventura, “Someone Is Stealing Your Life,”
Utne Reader, July/August 1991, 78,
80, reprinted from L.A. Weekly.
3. Marjorie
Kelly, The Divine Right of Capital:
Dethroning the Corporate Aristocracy (San Francisco: Berrett-Koehler,
2001), 33.
4. Ralph Estes, Tyranny of the Bottom Line: Why Corporations
Make Good People Do Bad Things (San Francisco: Berrett-Koehler, 1996), 50.
5. Kelly, The Divine Right of Capital, 3.
6. William
Greider, One World, Ready or Not: The
Manic Logic of Global Capitalism (New York: Simon & Schuster, 1997), 418.
7. For a more detailed discussion of how we might
transition from corporate capitalism to a system based on worker ownership, see
my book Economic Insanity: How
Growth-Driven Capitalism Is Devouring the American Dream (San Francisco:
Berrett-Koehler, 1995).
8. For a more detailed discussion of Sarkar’s ideas,
see Michael Towsey, “The Three-Tier Enterprise System,” in Understanding Prout—Essays on Sustainability and Transformation, Volume
1 (Australia: Proutist Universal Publications, 2009), http://www.pia.org.au/UnderstandingProut/Volume1/UP_v1_Essays.htm.
