Alternatives to overcome the economic violence

Alternatives to overcome the economic violence - [field_topic-terms]

The diagnosis
It is already a recurrent topic that of the regressive distribution of the wealth in the world as the main source of economic violence. A monstrous inequity generated by the increasing appropriation of the income by the capital, by the exploitation of the wage-earners, and mainly for the progressive exclusion of thousands of millions of people from the labour market.

But not because the topic is recurrent and very well known we will obviate to mention some figures that allow us to give forcefulness to the diagnosis, and at the same time to derive in the true causes and to discard false solutions.

According to the last study of the UN-WIDER (Word Institute for Development Economics of the United Nations University), we can see some significant data.

  • 2% of the richest adults in the world own more than half of the global homes’ wealth, while 10% owns the 85%.

  • 90% of the wealth concentrates in North America, Europe and countries of high revenues of Asia-Pacific. North America owns 34% of the wealth, having just 6% of the adult population. Europe owns 30%, Japan, Korea, Taiwan and Australia 24%, Latin America 4%, China 3%, the rest of Asia-Pacific 3%, Africa 1% and India 1%.

  • Where does the richer 10 % live? 24,9% in USA, 20,5% in Japan, 7,6% in Germany, 6,6% in Italy, 5,9% in United Kingdom, 4,2% in France, 3,9% in Spain, followed by Canada, Australia, Taiwan, Korea, and Netherlands, before the Latin Americans appear, with Brazil, Mexico and Argentina hardly exceeding 1% in each case.

  • When coming to know where the planet’s richer 1 % lives, the number of countries with such members reduces, since 75% is among USA, Japan, United Kingdom and France.

And although this gives a measure of the wealth’s distribution by countries, it is to be noted that in turn within the countries, and mainly in the poorest ones, the distribution of the income among its inhabitants is even worse. For example, the proportion between the 10% of the population with more income, with the 10% with less income, is 1 to 5 in Japan, 1 to 9 in France, 1 to 16 in USA, 1 to 21 in Venezuela, 1 to 35 in Argentina, 1 to 40 in Chile and 1 to 58 in Brazil.

But this is not all, because when speaking of the 10% with more income among the population, it could be imagined as referring to very wealthy people; however, in several Latin American countries, you can "enter the club" of the 10% with higher income, with less than 1.000 US dollars per month. Because as it was quite well illustrated by "Pen’s dwarves curve", the high revenues just appear amongst the population's last 2%, so the statistics disaggregated by deciles is usually deceiving. And all this is very important when studying the way of redistributing the income.

In short, a devastating panorama, with half of the world population forced to subsist with 2 US dollars per day, and many with less.

The causes
Exactly 10 years ago, when publishing the first edition of the book "Beyond capitalism, Mixed Economy", we spoke about the causes intrinsic to the mechanics that characterise the liberal capitalism which lead to the wealth’s accumulation and concentration. And we mentioned in the chapter dedicated to the liberal economy, how the imbalance of forces in the market generates a vicious circle where nothing tends to balance, but rather to the accumulation and concentration, since those who accumulate the wealth not only enjoy it, but furthermore it gives them the necessary power to impose the conditions that favour the acceleration of that accumulation. Certainly when we speak of economic power, we not only refer to the capacity to establish the rules of the game in the market, but also in politics, thus sterilizing any possibility of the State to compensate the loads in order to produce a balance. We also pointed out how that disproportionate accumulation of revenue is not reinvested in the real economy to generate new sources of employment, but on the contrary it is diverted toward the financial speculation and the usury.

Ten years ago, when we were saying all this, the world was still living in the neoliberal feast of the unique thought that began with the fall of communism. Shortly after that it started to become evident in our Latin America that such party had ended in disaster, and little by little the people started voting for more progressive governments. But this has not been sufficient at all. In the first place because the neoliberal governments left a heavy inheritance, with the weakening of the State, the privatisations, the juridical ties to the tribunals of CIADI, and the superlative foreign debt. In second place, because the rest of the world still continued in that neoliberal feast and it would put pressure against any intent of deep changes in our countries. And in third place because the progressive intents, beyond the rhetoric, never went further the social-democrat reformism and neo-keynesian politics which certainly brought some relief, compared with the previous disaster, but were insufficient to revert the poverty and exclusion indexes.

Today it seems that the whole world is reconsidering the foundations of the liberal capitalism. According to words of the economy Nobel prize Joseph Stiglitz, "the fall of Wall Street is for the market fundamentalism what the fall of the Berlin Wall was for communism". He was referring to the financial crisis produced by the monstrous speculation of the subprime mortgages which contaminated Europe, up to the point of shaking today all the European Union.

And today the world reconsiders parts of the economic system and in particular the financial system’s operation. But this happens because the speculative bubble blew in the middle class’ face and for that reason all the media speak about the crisis. But the thousands of millions of excluded people of this world were this way already before this crisis, and their sufferings did not occupy the front pages of the media. So perhaps it is time for reconsidering the whole system, because although today we could affirm that the financial speculation is the demon, this is this way because the liberal capitalist system gave it life and fed it, and because several millions of respectable citizens were indifferent while their brothers died from hunger during the last decades.

So amongst the causes of the economic violence generated by the increasing marginalisation and poverty of the majorities, there are not only economic variables, but mainly a materialistic consumer culture and a deep contradiction among the human beings.

The objectives and the path towards them
Same as we said that it was almost unnecessary to abound in explanations about the situation of injustice and economic inequity which are lived in this world, because the daily reality is quite overwhelming, we could suppose that the objectives of a humanist economy, would also be rather obvious. A society with equality of opportunities for all, with a fair distribution of the wealth that ensures food, housing, health and education for all, by means of a sustainable development which does not destroy the planet, surely all that coincides with the majority’s aspiration. But same as we found necessary to comment some data referred to the diagnosis, because it would be good as well for us to look for the solutions discarding false options, we can also now say that even when an "ideal economic system" can appear as obvious in many aspects, some other aspects might not be so evident. Because for example, when we speak of a better distribution of the wealth, we are not suggesting the idea of an exponential growth of consumerism, reaching all the inhabitants, so that the 90% of the population catches up with the other 10% in its frantic consuming race. It is not about all the human beings becoming consuming machines as they are nowadays those of medium and high revenue. Firstly because that would not be sustainable in many aspects, at least with only one planet available, and secondly because it would be interesting for human stupidity to decrease a bit, to give another meaning to life. So we aspire to a society with an important change in the spiritual and cultural field, where rationality, sobriety and reciprocity channel the productive forces of the economy towards the satisfaction of the necessities of the majority, rather than calming the insatiable consumption thirst of a few ones. Therefore, something will have to yield, some concessions will have to be done, somebody will have to share, many will have to understand.

We said before that the classification of the level of revenue by deciles was deceiving, because in the highest deciles, in some countries’ cases, the employees were included with monthly revenues of less than 1.000 dollars. That is to say that just in the 2% of higher revenue we start to find the most privileged ones. And the question which arises here is: at which rate would it be necessary to tax the income of that 2% provided it was desirable to redistribute the revenue by way of taxes? Surely to such a high rate that it would be confiscatory. That’s the reason of the increasing limitation of the social democrat and neo-Keynesian policies insofar the wealth concentrates more and more. And let us also think that in the world, the 2% of adults with higher revenue and larger wealth are not just 4 lonely evils, but rather they are near 80 million people; and among that people there are many managers, politicians, judges, bankers, opinion makers, media owners, military, artists, etc. A lot of people with a lot of power, with media power, with resources to be able to impose the rules. Thus it is not so simple the political decision of redistributing the revenue, because although a government were backed by the majority who wants to improve their situation, the destabilisation power of that 2% is huge, because it could also easily convince the following 10% in the pyramid, that it is better to leave everything as is regarding the economy.

These limitations are present or co-present in the rulers’ minds and even in the people, they are internalised, and many times they operate as self-censorship when it comes to imagining deep transformations, always leaving us in the insufficiency of reformism.

It is necessary to jump over this self-censorship and to dare to imagine the deep and structural changes to the system as the only way to revert the economic violence. And the tremendous force that opposes to the changes has to be faced with strategic intelligence and not with the resignation of surrendering to what is possible. The strategy should be similar to the one of who climbs a mountain and advances step by step towards a clear goal, laboriously but firmly and without turning back. A way of advancing which is not the delusional advance of the one who walks on an escalator which descends at a quicker rate, as it happens with the reformisms. Neither is it the untimely jump of the one who tries to change everything in an instant, just to halt 70 years later and to return to the starting point. It is the ascent toward the change in a way planned and sustainable in time. We will not extend in the description of this strategy which will surely be part of a next paper, but we can use it as a reference to comment on some measures that should be necessary taken to direct the economy towards the objectives mentioned.

  • Firstly it is necessary to advance toward the definitive and total disappearance of the financial speculation and the usury, leaving the power of the financial managing solely to the State. Alternatives as the Tobin rate, or the taxes over capital gain, assets and banking transactions proposed among others by Stiglitz, Sachs and Caldera; the different regulations intended to be imposed to the capitals market, could be useful if they are not seen as definitive measures, but as the first steps to begin the besiege of the financial power. But then it would be necessary to advance toward bigger restrictions of mobility and bigger obligations, until the state banking could take charge of covering all the financial necessities of the development of the real economy. The concept that the monetary circulation is a public right and cannot be subjected to the outrage of the private property should be incorporated.

  • The credit should be oriented toward the productive investment, but within the frame of a mixed economy, where the State is in charge of generating conditions for the viability of the investments clarifying the commercial circuit. Production and consumption should be financed, as a way of simultaneously ensuring the virtuous circle of growth and employment, but also as a way of leading the production and consumption towards the necessities of the more disadvantaged strata, instead of encouraging the consumerism of those which have surpluses (which is what today the private banking does). But this should be carried out in a progressive way, so that the productive structure doesn't explode with the consequent move back.

  • A deep tax reform which progressively taxes the rent, with very high rates for the earnings that are not reinvested in new sources of employment. This way it can be corrected the tendency towards the speculative and usury stream. The rates could increase staggered year after year, thus neutralizing the destabilising strength of the economic power in account of the changes.

  • The workers' participation in the earnings, the management and the property of the companies. It can also be applied in a progressive, although irreversible way, not just to attenuate the opposition impact, but also to progressively consolidate the viability of a new model which will surely have it’s implementation difficulties in the first stages.

  • Creation of Committees of Local Development, so that in a national frame of Mixed Economy, interactúen the local governments, the companies, workers and educational institutions, to launch multiplying productive entrepreneurship. There are very interesting the development alternatives outlined by authors like Vázquez Barquero, Manfred Max-Neff, Arocena and others, from the concept of Local Development and Development at Human Scale, but always incorporating the national public policies in the strategic levels and the tactical participation of the local governments, coordinating, facilitating and supporting. And it will surely be from these committees where people are inspired to develop in form practice a new economy to human scale.

In synthesis, this planet has enough resources to assure the well-being of all the human kind, and there is a way of organising to make it happen. But it is a necessary condition to move forward dissolving and disarticulating the power of the financial speculation, decentralising the capital and channelling it towards the production. The world will begin to understand that the speculative monster's and usury's existence are incompatible with the existence of human life. There is no room for both in this world and we already know which one has to disappear.

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