A diverse culture is best served by an economy that can cater to diverse needs and interests. In our societies, perspectives differ widely when it comes to (among other things) the following five areas:
1. Competition and cooperation. Some people enjoy competition in pursuit of external rewards. Others prefer cooperation and feeling a part of something bigger than themselves. Most enjoy both competition and cooperation, just in varying degrees.
2. Personal motivation. Some people would largely lose interest in productive activity if it were not for the potential of private profit or a high salary. Others prefer to work in a not-for-profit environment and are more or less unmotivated by material gain.
3. Attitudes on inequality. Some people want to have more than others. Some would prefer not to. Some care if others have more than them. Some don’t as long as everyone has enough and the inequality is not so extreme as to undermine democracy.
4. Public and private sectors. Some goods and services are amenable to private-sector production. Others are best produced in the public sector. Some goods and services are most easily allocated on the basis of supply adjusting to demand. Others are more suited to collective provision, particularly infrastructure and key social services. But opinion differs widely on the appropriate public/private mix.
5. Industrial democracy. Some people want to be directly involved in management of enterprise. Others are happy to leave management to those so inclined and focus freely on their areas of specialization, provided management is democratically accountable. Some don’t care if management is autocratic.
Modern monetary systems can accommodate a diversity of life choices
Most of these areas of difference are catered for, to some degree, in all present-day economies. But they could be catered for much more comprehensively than is currently the case by making proper use of currency sovereignty. A modern money system – one in which government issues its own nonconvertible flex-rate currency – is especially suited to mixed economies in which there are strong elements of both public and private-sector activity embracing both competitive and cooperative modes of behavior.
Differences that cannot be fully catered for – most notably, opposing views of inequality as such and contrasting preferences for bigger or smaller government – could not be catered for any better under an alternative monetary system. These differences can only be resolved socially – primarily industrially and politically – and never to the complete satisfaction of everybody unless, at some future date, we happen all to be of one mind. Possibly we will all become increasingly of one mind on such questions as we continue to progress, but for now at least, this is not so.
In any case, our differences in perspective on many issues, particularly in motivation and preferred mode of behavior, could be catered for much more effectively than at present. The central benefit of currency sovereignty is the policy space it affords to government. This enables it to operate independently of profit considerations to the extent that this is deemed desirable through democratic processes. It cannot be prevented from taking this course by the actions of ‘bond vigilantes’. It can spend on terms of its own choosing. Private groups whose views are at odds with the political will are in no position to dictate government policy and the course of social and economic development. To the contrary, a currency-issuing government is in a position to define the limits within which profit imperatives will be allowed to operate. In contrast to a commodity standard or common currency arrangement, which leave government vulnerable to class-interested actions of the 0.1 percent, modern money puts government in charge.
It is important to spell out, however, that currency sovereignty in itself does not ensure better outcomes for all. In particular, it does not guarantee that government will act in the interests of the general population. This is obvious from current experience. Government may well act almost entirely in the interests of the 0.1 percent and actively seek the impoverishment of the rest of us. Currency sovereignty enhances the potential for progress, but this potential can only be fulfilled through concerted application by an informed citizenry of democratic pressure in the industrial and political spheres. Without the exertion of massive pressure from below, energized by a coherent set of social demands, it is not even clear that a well meaning government could get much done on our behalf. In the absence of an informed and motivated population, such a government would be effectively demonized by mainstream media in service of the 0.1 percent and soon be voted out by an uninformed and easily misled electorate.
With this in mind, the benefits of currency sovereignty need to be understood as potential benefits. They are benefits conditional on the general population holding up its end of the bargain, which is to agitate for meaningful, progressive changes capable of transforming society and its economy for the better. Members of the 0.1 percent take it upon themselves to agitate for policies and economic actions to their liking. They are seemingly tireless in their endeavors. The rest of us mostly choose to remain ignorant, gullible and hapless victims of developments that are ultimately the effects of our own passivity.
Broadening the scope for productive activity
My own view is that diversity of perspective and motivation within our cultures would be better catered for by guaranteeing both an income and a job to everybody who wanted one. In conjunction with existing modes of employment, this would broaden opportunities for productive activity in a range of contexts summarized as:
• Conventional employment in the public, private and not-for-profit sectors in which recruitment is on a competitive basis;
• Job-guarantee employment in which positions are created on demand and formulated by the job provider in consultation with the employee;
• Guaranteed income not conditional on participation in the labor force partly to enhance opportunities for productive activity that is self-formulated or cooperatively formulated, including but not confined to start-up business attempts.
Within this setup, the materialistically inclined would remain able to pursue personal wealth on a competitive basis. They could do so without the possibility of failure spelling extreme hardship and poverty, thanks to the assurance of a job-guarantee position and/or basic income, both of which could become more generous in time with continued technical progress. The latter programs could also be expected to foster the creation of jobs with more attractive pay and conditions in the broader economy due to the extra bargaining power they would give workers in their negotiations with employers.
To enhance integrity in competitive recruitment processes, there would remain a continuing need to legislate against discrimination and effectively enforce such legislation as well as take positive steps to enhance the prospects of members of disadvantaged groups. Minimization of opportunities for cronyism and corruption in all areas of society, especially in relation to the interface between public and private sectors and the revolving door through which politicians and bankers cycle and recycle, would also remain imperative. Without such measures, any decision by society to permit pursuit of personal fortunes would be a hollow one for the majority of citizens so inclined.
Diversity of ownership
Public sector production and provision enables some economic activity to be run independently of profit considerations and a portion of the social product to be consumed in collective form. In contrast to private-sector activity, any revenue generated in the provision of public services functions as a tax. Rather than accumulating in private hands, a portion of private income is extinguished, creating space for public spending. To the extent that public provision of goods and services is free, taxes can be applied elsewhere such as to ensure that public spending is at a level broadly appropriate to the levels of private and foreign spending and rates of saving. The levels and compositions of public spending and taxation should also be consistent with distributive considerations as expressed through democratic means.
Society might wish to permit a dominant, substantial or only minimal role for private, for-profit activity and pay differentials in employment. Doing so leaves the way open, in varying degrees, for individuals to attempt an acquisition of personal fortunes relative to the majority, modified only partially by taxes. The decision to allow considerable competition for income and wealth might be viewed as desirable for its own sake. For instance, it might be recognized that some people enjoy competing in pursuit of personal wealth and determined, socially, that this should be accommodated to the extent it causes no harm to others. Or it might be considered instrumental, perhaps as a spur to productive activity or as the most effective way to entice work effort from a segment of the population, whether large or small, that responds mostly to external rather than internal motivations.
While exploitation, in Marx’s technical sense, would remain in such a society, the dual existence of basic income and the job guarantee would alter the degree to which the wage labor relation was destructive of liberty. This dual existence would mean that nobody was compelled by circumstances to engage in the wage-labor relation, because of the feasibility of opting out of the labor force. At the same time, it would mean that everyone was furnished with greater say in the type of work with which they engaged and the conditions under which they worked. This would be due in significant degree to the effect of the job guarantee. Part of its effect would be direct, since in its intended design individuals in the program would participate in the defining of their roles. There would also be an indirect effect through the program’s positive impact on employment conditions in the broader economy.
Once both job and income guarantees were provided, individuals who nonetheless opted to work in the conventional-public, private or not-for-profit sectors would be doing so in preference to viable alternatives. Coercion, in this respect, would be significantly reduced. Of course, it would not be eliminated entirely. Those who desired a higher income than provided by the job or income guarantees would still feel a need to take more lucrative roles if available to them. And, as already mentioned, the programs would certainly not eliminate Marxian exploitation, which would continue for as long as private appropriation of monetary profit remained.
Ultimately, the extent to which exploitation continued to occur would, as now, reflect the political will, at least as actually expressed. It could be eliminated altogether by doing away with any role for private profit, which is one option among many in a modern money system. This could be done whether or not inequality was allowed to remain through varying pay levels, and so would not necessarily be inconsistent with an accommodation of the desire of some – perhaps a substantial cohort – to compete for personal fortunes relative to the majority. Needless to say, the political will might be completely in the other direction toward a predominance of private profit making. Either option, and any number of other options, are possible and could be sustained in a modern money system.
An intention to allow competition while preventing harm to others could only be met through robust regulation, moderation of extreme inequalities and strong democratic safeguards. To the extent that extreme inequality undermines democracy – due to the capacity of the wealthy to buy political favors – there needs to be policy in place to prevent such extremes. As already discussed, the degree to which such measures are deemed desirable is contestable and a political question that can only be resolved through industrial and political means.
Within the proposed institutional setting, with its wide-ranging options regarding work, the scope for productive activity would obviously be enhanced – as it is already today – by public provision of infrastructure and other resources. This would be true not only for those in the labor force but in the case of individuals opting for a basic income in preference to a wage or salary. Anyone deriving a private income or a profit through use of such infrastructure partially appropriates what is the result of collective activity but shoulders a state imposed obligation in accordance with their means through the tax system.
Diversity of management paradigms
The nature of work will vary with the degree to which workers win the right to self-manage rather than largely remain subject to management imposed from above. Since, even under self-management, it is likely that workers will choose, in many cases, to elect managers from among themselves to perform most managerial functions while the rest focus on their directly productive roles, in principle it might seem that there will often be little difference between self-management and management imposed from above. The likely difference, in practice, would come through the additional democratic accountability in the case of self-management.
Even so, in a system with a diverse pattern of ownership and a diversity of viable lifestyle choices for all (due to the coexistence of private, public and job-guarantee employment alongside basic income) there would also be plenty of room for diversity in management styles. Individuals who chose to work for enterprises operating under autocratic management regimes would not necessarily be undermining the ability of others to opt for more democratic forms of management. In a manner similar to the way a basic income would reduce the coercion entailed in wage labor, the alternative of self-management, helped along by an appropriately designed job guarantee program, would somewhat reduce the negative consequences of autocratic management since, to an extent, there could be self-selection of workers into the types of enterprises they preferred. The situation would not be perfect, just as a basic income would not remove all coercion in the wage labor relation, but it would be a significant step forward on what we have today.
Already in today’s economies there is some scope for people to contribute to society in a manner most in keeping with their personal motivations and interests – for some, a great deal of scope, for many others, not so much. However, we are only tapping a fraction of what is possible in a modern money system in terms of opening up an array of alternative approaches to production and distribution, in terms of catering to a diversity of lifestyle preferences, and in terms of the freedom for self-expression and personal development that could be fostered through more effective application of sovereign currencies. This is true whether we have in mind a predominantly capitalist, socialist, communist or some other form of society.