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Civilized Capitalism ---- Finally!

by John K. Harms

Civilized Capitalism ---- Finally!

Updated: March 2003

Abstract: This text proposes a second wave of improvements to the capitalist system (which the author largely embraces) to increase its fairness across the board. These improvements would be legislated Worldwide in order to level the playing field in which the present system operates. Thus, whatever country a business operates in would make little difference. This text proposes a ratio of 1 to 15 between the highest paid employee and the lowest in any business. So, the huge income disparities that now exist would be somewhat (perhaps substantially) reduced. The author deems this the "Rule Of 15" which can be a somewhat flexible figure based also upon a given companies success. Hence, this would be an actual "trickle down" theory of economics. The problems with the present capitalist system as well as the methodologies to remedy these difficulties are also given within the text. This manuscript represents proposals to improve what the author views as wasted resources with the present system; scarce resources that could be put to better use to serve humans and their basic needs. Ideally, this proposal should be implemented simultaneously with the other political, religious (or spiritual) and energy proposals given by the links either above or at the end of this paper. The launch date for the implementation these changes might be about 2012.

Key Words: Capitalism, Trusts, Monopolies, The Second Wave, Non-Profit Organizations, Rule Of 15, Unionization

Introduction

One of the outgrowths in the U. S. A. of the early capitalistic system around the turn of the 19th century (particularly prior to and during the Theodore Roosevelt administration) was monopolistic practices in steel, oil, railroads and other major industries. These were at the time called "monopolies"; known also as "trusts". One of the most famous example of which was "The Standard Oil Company", which was eventually broken up into many smaller companies to diminish its very considerable control over the oil marketplace. T. Roosevelt was the man who first dealt with these early growing pains in the pure capitalist system. Roosevelt became known as the "trust-buster".

Among the abuses of these monopolies was far too much power over pricing (price fixing), as well as the ruthless destruction (by any means necessary) of any competitors. The U. S. governments answer to these widespread practices at that time was the systematic breaking up of these large companies to reduce their considerable power, accompanied by the rather powerful legislation of the Sherman and Clayton acts.

These new laws outlawed price fixing and any strong cohesion among the competitors. This was called in the terminology of the legislation the "restraint of trade", the cooperative influences of large companies with each other, as well as other monopolistic practices. So, any act by a powerful company to interfere with trading in the marketplace was deemed unlawful. In short, the Sherman and Clayton acts were attempts to civilize the (at the time) very ruthless and uncivilized capitalistic system.

The author deems this the "first wave" of system-wide improvements, the taming for a while at least the wild beast known as capitalism. What is proposed in this text are yet further improvements to what the author views as still blatant injustices (and inequities) with the present system. The author is convinced that considering its lasting worldwide success, the capitalist system is fundamentally here to stay. But, left completely unchecked, however, the out-of-control beast will gobble up tremendous resources (which it is presently doing) and leave in its wake unnecessary waste across the globe. That also is now taking place. So, how is it possible to further civilize and improve the capitalist system even more for the future? Let us rethink this problem for a moment.

What's Wrong With The Present Capitalistic System?

1) Huge Income Disparities --- Inherent in the capitalistic system is the tendency for wealth to flow directly to the owners of industry, if that business in question happens to be successful or its stock rises to a high level. Very often, this wealth is never shared with the workers or reinvested in the company, but flows into the hands of the people who often need it the least. Profits, hence, usually are siphoned off to the investors and very often into wasteful luxury spending, instead of being reinvested in the company. Often (but not always), the initial investment money was inherited from family, thusly, wealth can often perpetuate further wealth. So, in some sense, one must have money to make money. While the author firmly believes that these investors should be paid appropriately for the significant risks involved for the success of any business venture, the significant quantity of resources accumulated in the hands of so very few individuals under the present system is (in the author's opinion) far too excessive! The author, therefore, proposes the Worldwide "Rule Of 15" legislation as will be discussed in the sections to follow. The author believes this to be a fair and equitable solution for all of the parties concerned which will utilize the scarce resources of this small planet far more efficiently. Perhaps, the reader will concur with the author's conclusions here.

2) Unequal Pay For Roughly Equal Work -- The past reactions of the labor force to low pay and terrible working conditions has been (often very violent) unionization. This has led to an unfair disparity in pay among some workers (or economic sectors) in favor of others. This disparity has been the result of the unionization of certain industries at the exclusion of many other non-unionized sectors. Heavy industry pay usually exceeds drastically that of non-union labor and usually with little (if any) justification. Indeed, some of the most difficult labor jobs often are non-unionized (migrant farm workers immediately comes to mind), hence, pay can often be minimal compared to that of unionized labor. In this author's view, this is absolute unfairness and should over time be corrected. Unions, therefore, utilized except as partners in increasing a companies productivity, are essentially banned under this new system! There is no longer any need for unions. In the author's opinion, the Japanese have a far superior model for unionization than does the U.S. A. or Europe. Unions in the West to a large degree tend to be self-serving parasitic (and usually ruthless and corrupt) organizations which are oftentimes operated behind the scenes by organized crime or other shady underworld types. The system mentioned within this text makes unionization in essence obsolete and no longer necessary to increase worker wages both industry-wide and Worldwide. It simply is not necessary to unionize every industry one by one (which is utterly impossible anyway!), since with one World-governmental stroke of the pen, this same goal could be easily accomplished. Shortly, we will see how.

3) Lack Of Industry-Wide Product Standardization --- Capitalism also leads to a wide variety of companies who all manufacture different products whose parts are all completely incompatible with each other. This is complete and utter waste! Lots of wasted resources end up in landfills as a result of product incompatibility problems. Often, the manufacturers' themselves desire this, so the customers must pay an exorbitant cost to repair or replace a commonly reused item. --printer cartridges for any brand of computer printer is a common modern example. The incompatibility of electrical connectors for various devices is yet another. Visit any electronics store some time and see all the various connectors from each manufacturer -- ridiculous! The standardization of proven reliable products by the various manufacturers should be shared throughout the World to minimize the waste of the Earth's precious resources. These standardization agreements should be forced upon manufacturers throughout the World.

4) Capitalists Economies Must Grow Or Die Out --- The criticism was noted by Marx that capitalism must constantly expand and use greater and greater quantities of resources or face an inward collapse into recession. The answer to this is to constantly increase the efficiency of the resources utilized i.e., through greater product standardizations, the hydrogen economy, and to do more with less, etc. In the past, capitalism has been very successful at increasing the efficiencies of production, but still more could be accomplished on a Worldwide basis to the reduce the increasing waste of resources. World economic growth need not come at the expense of the environment, if only these scarce resources were used much more wisely! Human beings are unnecessarily raping the planet --- and absolutely needlessly! The U. S. A. is often criticized (and rightfully so in the author's opinion) by other nations for the huge quantity of resources it requires to feed its powerful capitalistic machine. Our country desperately needs to do more with less, and we have (and have had for some time) the technology available to do it--so why indeed not! Changing how we think is the first bold step. Concerning this, the author has written on the subject of "Energy", see the link below-- The hydrogen economy. Hydrogen is by far the most abundant element in the Universe, locked up (on our planet at least) in every molecule of water. So, let us begin to solve our energy problems with the hydrogen economy. So, see the "Energy" text at the link below for further details.

These persistent drawbacks to the capitalist system make many people in other nations throughout the World dislike (even hate) the capitalist system and (sometimes) even refusing to participate in it. Indeed, the persistence of Marxist beliefs throughout the world (despite the relatively recent economic collapse of the Soviet Union) suggest that a second wave of improvements may be needed to further tame and humanize capitalism and the capitalists of the future. The author believes that this second wave of systematic improvements will be far better for the World and its many inhabitants (animal, vegetable and mineral) in the long haul.

The Second Wave

Despite these drawbacks, the author is convinced that capitalism is still the best economic system ever devised, largely because of the market-based pricing system that assigns value to the goods and services throughout the World economy. Thus, governments are not involved in assigning prices to goods and services as in socialist economies, but prices are left to the "invisible hand" of the marketplace. It has been this assigning of value (which is what prices essentially are) that the author believes has led to the significant success of capitalism over the various socialistic economies throughout the World. The socialists simply cannot keep up with or adapt as fast to market changes as a capitalist economy does.

In general terms, the closer any national economy has been to a pure capitalist model, the greater has been the overall economic success of the nation! One can hardly argue with the economic power and might of the U. S. A., the most purely capitalistic nation on Earth. The rest of the World would simply love to have our economic problems! So, it is not the author's intention here to destroy the positive aspects of capitalism (such as pricing and rapid economic adaptation and growth), but simply to point out and offer suggestions for the long-needed systematic improvements i.e., to eliminate the negative features of capitalism. The author deems this the "second wave" of reformation to the purely capitalist model.

A reasonable launch date for the second wave of reform to the capitalist system could be about 2012; after the old World ends (the author predicts) and the new one might begin. Surprisingly (and very strangely), this date appears to be the end of many religious calendars throughout the World. The author proposes perhaps 12 / 12 / 12, or December 12th, 2012. This would be the author's best guess for an ideal time for Worldwide reform.

Furthermore, the author believes that there is indeed some deeper connections here between the many religions throughout the World and the major economic overhaul we are discussing here. From the author's vantage point, this would be the preferable direction for the World to head into the future, beyond the year 2012. So, if indeed there actually could be a "second wave" of improvements to the capitalist system, what might these reforms be?

The author sees these system-wide improvements essentially as four-fold:

1) All Businesses In The Future Would Be Non-Profit: That is, any and all profits that remain after all expenses are paid (including payroll to all employees, investors and any taxes) would be funneled back into the organization for its future growth. The pay scale ceiling for investors and the CEO would be set by the "Rule Of 15" below which would in essence be the law of the land i.e., the World. Any money left over after everyone is paid should be funneled right back into the company! The author suggests that this policy be instituted Worldwide set in accordance with the political boundaries of the "One-World" text seen at the link below. Indeed, the ideas contained in these two texts must all go hand in hand, implemented simultaneously and systematically after (perhaps) 2012. See these other texts for the author's views concerning the political and spiritual restructuring of the World during this juncture.

2) The Move To A Cashless World: After 2012, there should be a bold move toward a universal Worldwide currency (which is discussed in somewhat more detail in the "One-World" text). This would be an increasing move to a cashless World society. That is, cash as we know it will slowly (or rapidly) fade from the scene, replaced (perhaps) by debit and credit cards (or other newer technology not as yet developed) which will essentially add or subtract currency directly from a person's bank account. This will slowly (or rapidly) put an end to the increasingly widespread underground economy which operates strictly on cash -- no money trail. Hence, drug dealers, drug lords and other shady underworld types will have a harder time avoiding Worldwide taxation under the "Rule Of 15" legislation below. Indeed, how could they efficiently operate?? Thusly, it will be possible to strictly enforce the new law (or any other taxes for that matter) if cash is no longer accepted as payment for any monetary transactions (or accepted by any bank as legitimate currency). So, no bank in the World will accept cash any longer.

3) Unionization Is Banned: Unions are disbanded or replaced with less militant organizations that are more cooperative with host companies encouraging production and efficiency. The Japanese model for unionization is a good one. Unions, however, in essence will be made obsolete by the "Rule Of 15" labor rates that would be (in this scenario) strictly enforced by all local governments throughout the World. This proposal is further elaborated upon in the next section. Since unions are fundamentally selective with regard to the industry in question, this kind of system can never lead to a labor movement that has any kind of fairness across the board. So, unionization is rejected as a suitable methodology for increasing worker wages and working conditions over the long term. Unions are simply an outdated idea! Their usefulness no longer applies. The proposed legislated "Rule Of 15" will (if implemented Worldwide) fill this gap across the board and provide an increased amount of fairness over unions, whilst providing an increase in pay to all workers.

3) The "Rule Of 15" : The "Rule Of 15" after 2012 will be the pay scale ceiling that could be set by the World government for all World citizens. It is notable that this ceiling is rather flexible in the sense that it may fluctuate up or down depending upon the success or failure of the company. This adjusts the wage rates of a companies lowest wage earners to be in alignment with its highest paid executives. More about this (as this proposal is somewhat more detailed and will require its own section) to follow.

Why Pay The Rich More Than They Will Work For?

It was Maslow and his "Hierarchy Of Needs" who showed us that the people who are the most motivated to succeed in the World are not usually those that are motivated by money. Often, money is far down the list of motivating factors for the driving forces for success. Most successful people tend to be "self-actualizers", motivated internally by forces that have nothing whatsoever to do with monetary gain. Money simply measures the quantity of success for these people, but is otherwise irrelevant. This being the case, why are we paying those who are most successful in the capitalist World such great sums of money and completely needlessly? Thus, tremendous quantities of resources are now being wasted on people who would actually perform the same tasks for a fraction of the price. Why? Wouldn't the rich do the same for the rest of us? Indeed, aren't they already?!

So, the question is how to keep the self-actualizers in the system motivated enough to do what they do best i.e., run or invest in companies, without wasting such tremendous sums on such few individuals? Wouldn't some of this money would be better spent elsewhere? Therefore, why pay the rich more than they are willing work for?! Please don't take this statement wrong here; our system desperately needs the considerable expertise of the "captains of industry" to keep our World economy running smoothly, but why overpay these people to do a job that they fundamentally love to do?! Isn't the sheer power of these positions alone (and the significant monetary gain as given by the "Rule Of 15") enough compensation for this kind of work?

Indeed, this is not meant at all as a statement of class warfare here, but one of simple practicality! An overpayment to any group in World society for any services they provide is simply a waste of the Earth's scarce resources! If the rich would do the job for less (and they likely would in the author's opinion), let us pay them precisely that amount. Again, the rich wouldn't pay us any more than we would settle for, so why should we pay them more than that same quantity? Why should there be no limit to what the rich may earn? Who thought up this bad idea??

The author believes that he has found a suitable solution here, that would keep "Atlas from shrugging", whilst still spreading around the resources of the globe in a more equitable manner to those who might put the money to better uses (like feeding, housing, educating and clothing their families etc., etc.). Indeed, why do many people commonly work 40 hours or more per week and yet still cannot make a living wage? Why do we still have "poor" sections of town composed largely of the under-classes who often do go to work everyday, yet still cannot feed their families? It's little wonder why the fabric of our family structures has been torn apart!

The primary problem is this: the working poor make too little and the rich make too much. The "Rule Of 15" might solve this dilemma. Let us have a closer look.

The "Rule Of 15" -- The Real "Trickle-Down" Theory Of Economics

While we have readily accepted salary caps when it comes to professional athletes (football, baseball and basketball players are such examples) here in the U.S.-- we do seem to find making too much money selectively appalling in this situation!, so why is it such a stretch (using this same reasoning) to put a kind of "cap" on the salaries of other individuals? Indeed, how could this be accomplished without taking away the motivation of such successful people.

In this situation, the author proposes the "Rule Of 15" which the author believes will make the whole Worldwide system more equitable, yet leaves intact the essential elements that have made capitalism so economically viable. Let us not ruin the system here.

The "Rule Of 15" is basically the idea that the highest paid members of any organization should not make more than 15 times as much as its lowest paid members. Note that this has been stated as a ratio and not in absolute terms. This is to say that the highest paid members can set their salary "cap" at any value they like so long as the lowest paid members receive at least 1 / 15 as much as they do as an increase in wages. So, the author is saying here that the "Rule Of 15" determines the maximum pay ratio of executive pay verses the lowest paid worker(s) in any company.

For example, if a worker earns $1,000 per month (or $12,000 per year), then the highest paid executive can earn a maximum of $15,000 per month (or $180,000 per year). While this may or may not might seem like a significant amount of money for the executive, the fact is that most CEO's earn upwards (as of this writing) into the millions per year when stock options are included. In this case, the lowest paid workers can earn no less than 1 / 15th of that amount--seem fair? It does to this author!

So, if the company is very successful, the executive officers may increase their own pay as much as they wish, but ONLY if the lowest paid workers in the company make at least 1 / 15th as much. Hence, if an executive officer gets an increase in pay, so do the lowest paid workers by 1 / 15th. Moreover, any increase in executive pay above this 1 to 15 ratio amount would receive an automatic 100% taxation rate by the government. So, the more successful companies may have higher paid executive officers and workers as they make more money than do less successful businesses.

Thus, profits in a real sense will trickle down to the average worker, so every worker will work harder to increase the profitability and efficiency of their employers. Note here that the government is not stepping in and taking funds from the rich (which governments just love to do), but this takes place internally within each firm. So, the transfer of funds from "haves" to "have-nots" is smooth, direct and absolutely efficient.

The "Rule Of 15" will apply to any monetary compensation to the executive (such as stock options etc. -- anything that is a direct monetary payment to an executive) and not always to many of the perks (plane flights, hotel rooms or free meals etc.) that often accompany such jobs --- if there is significant work done. However, free vacation compensation by companies to an executive should be included in the "Rule Of 15" law even if the vacation does involve some work. The burden of proof will be on the executive to show that significant company work was performed during any trip. This will be strictly enforced by governmental officials (as the tax laws are now) with severe monetary taxation penalties for companies and individuals found to be in violation.

The "Rule Of 15" law applies not only to big businesses, but also to small ones. Any self-employed business person cannot make more than 15 times the minimum wage. If so, either he or she must reinvest this money into the business OR the local (or World) government will take it at a 100% taxation rate. This being the case, the self employed business person should desire (and be in support of) higher minimum wage laws, hence, they will be allowed to make more money. If a small business has a fewer employees, then the same rule still applies. It should be the case across the board that all business instead of complaining about minimum wage laws as being "too high" (as they largely do at present), will be involved in raising the minimum wage, so the high wage earners can make a greater amount (by 15 times).

The same "Rule Of 15" law would apply to governmental officials, so they would be involved in raising the minimum wage as well. No government official (except perhaps the president of the World --- see the "One World" text at the link below) should earn more than 15 times the minimum wage as set by the World government. Perhaps, the president could earn "20 times" the minimum -- this being the ONLY exception to the rule! However, even this person (the president) would be involved in raising the minimum wage, so he or she could earn more.

So, in this scenario the rich earn less and the working person more. If the rich get a raise, so does the average worker. In a successful enterprise, everybody will benefit. This is a flexible system which allows for a companies growth as well as its failure. If a company falls on hard times, everyone's pay may be cut across the board to allow for a smooth recovery. The low wage earners pay, however, can only be cut if the executives is as well. The ratio must always be a 1 to 15 maximum.

In the case of investors, no investor can make more than the CEO of the invested company in one year, unless the lowest wage employees also get a raise. This also applies to a non-stock market investor as well. So, no investor can make more than 15 times the lowest paid employee of the companies they invest in. So, investors would be attracted to businesses that are doing well.

The 2012 Overhaul---It's About Time Indeed!

This text represents the author's views on the second wave of economic improvements that might take place about 2012. Thusly, this text lays out the new capitalist rules when the new World begins. The author believes that no money should be taken away from anyone during the transitional phase of this new law. Rich people will simply keep their money! But, any future earnings will be governed by the "Rule Of 15", so the rich had better watch their future spending if they wish to remain rich.

The author believes 2012 to be an ideal launching date for complete political globalization, Worldwide economic reform (as suggested by this text), a needed spiritual awakening as well as an energy-related technological update that necessarily involves hydrogen fuel cell powered cars. This total overhaul has been long-needed and, furthermore, the author believes that these future improvements must all take place roughly simultaneously. The links to these related texts are given below.

Relevant Links

The One-World Political System: http://www.johnkharms.com/oneworld.htm

On Improving Elections: http://www.johnkharms.com/politics.htm

On The Hydrogen Powered Economy: http://www.johnkharms.com/energy.htm

On Religion: http://www.johnkharms.com/holy-spirit.htm

Reader's Note: Proper References And/Or Acknowledgments To This Text Are Appreciated.

X-Copyright: J. K. Harms, 2002 Freely Reproducable

 
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