During the last quarter millennium, the democracies of the West and the Far East have experimented with three basic economic ideologies: conservative capitalism, centralized state socialism, and progressive capitalism. The verdict of history is clear.
Conservative capitalism has been strong in the United States for most of its history, with the exception of the New Deal and its sequels. Conservative capital, in theory, posits a utopia, wherein total market anarchy perfectly determines all human activity, and government plays no economic role. In practice, its results have been dismal. Wealth has been sucked upward. Working people have been driven downward. We have seen predation, monopolization, exploitation, and stratification. Working people, searching for answers, find themselves attracted to those who want to blame cultural groups, such as Mexicans. No conservative offers any proposal to elevate the poor or to expand the horizons of the working middle class.
Centralized state socialism, classically defined as government ownership of all economic enterprises, has always stifled entrepreneurship, creativity, and innovation. In the words of Pete Seeger, who was a heroic lefty of the old school, no government committee could have invented Federal Express. The economic failures of Soviet Russia, Maoist China, and Castroite Cuba remain examples of an idea that will neither die nor work.
Progressive capitalism, a.k.a. modern American liberalism, New Dealism, social democracy, democratic socialism, or “Bernie socialism”, had done the greatest good for the greatest number until its advance was halted in the Reagan years. Progressive capitalism means truly free markets, governed by the rule of law, supported by public investment in infrastructure, education, and research, and protected by a comprehensive working class safety net. When working people have had a safety net, along with a voice in deciding their economic destiny, all have prospered.
What items should the Democratic Party, united behind Joe Biden, include in a progressive capitalist/social democratic agenda at this point in history?
1. A minimum wage that is a living wage. Fifteen dollars per hour is a good number, enough to guarantee a single person $30,000 per year and a couple $60,000. This will ensure that no one with a full-time job is below the poverty line.
2. Universal investment accounts for all persons, started at birth by the taxpayers, contributed to by all employers, managed by employees themselves, and used by the employees as they wish. This will make every working person into an investor and a person of wealth. It will back up Social Security in retirement, lessening the impact of the decline of traditional pensions.
3. Layoff disincentives. Successful corporations, with positive income statements, should be required to provide two years of severance pay to surplussed workers, along with cross-training, perhaps in the form of junior college scholarships, in new technological skills.
4. Seats on corporate boards, equal in number to shareholder seats, elected by employees on the basis of one person, one vote, to raise a voice against negative corporate actions, and for respect for employees. Businessmen must treat workers neither as adversaries to be bargained with, nor as costs to be borne, nor as resources to be exploited, but as partners in the enterprise.
5. Expanded education. Every elementary school should provide one year of kindergarten and one year of pre-kindergarten. Higher education should be supported as fully as is public school education. We can begin by reviving President Obama’s plan for free community colleges and technical schools. Later, we can expand to four-year colleges and even graduate schools.
6. Tax justice. We need a deduction swap, greatly enlarging the standard deduction, while reducing the specialized itemizations that favor the millionaire class. We need to increase rates for the upper brackets, and cut rates for the lower brackets. To finance Social Security, we need to replace the retrogressive high-rate payroll tax on wages and salaries with a low-rate progressive secondary income tax on all income from all sources, with no ceiling.
7. Healthcare coverage. Democrats must unite behind three basic health insurance principles -- cost control first, coverage for all, and no new taxes on working people – and then decide on a specific plan.
Democrats must reclaim the allegiance of working people. It is our root. We fall apart at our peril.