It seems the ideal world, as Barro, the coiner of the term "Ricardian Equivalence" would have it, is one in which ultimately returns to capital stay the same or increase to totality.
Such a world, which does ultimately increase capital to totality by strong tendency, is the Ricardian Prison, a slave ship, in which everyone born with no wealth (or reborn after bankruptcy) is a slave to pre-existing wealth. Instead, the proportionate returns to labor, in place of capital, should increase over time so ultimately all return, as such, is to labor. (There is also implied return to all, the meeting of their maximum needs possible to be as physically and socially fufilled as possible. But such is by rights, not by privileges. What I have been describing is the privileges of being socially productive.)
What needs to happen over time is that returns to wealth decrease over time, and ultimately collapse to zero, so fhat everyone is a free person, and fully equipped to their maximum possible extent by the infinity wealthy (or impoverished by capitalism) commonwealth.
In the meantime, the first chip to fall must be that wealth has no power, because if wealth has power, it will use it to continue to improve the returns to wealth in spite of total destruction of the commonwealth.
So all investment must be non-voting shares in the commonwealth. There can be no other capital ownership. Such shares pay a democratically determined dividend to the advantage of the recipient's living, but not to influence the quality of other's living disproportionately. All power should be exerted through direct democratic means, as people talking with one another. Democracy (perhaps Participatory Economics) should be our way of making decisions fairly and collectively about the common wealth.
Another chip to fall should be private inheiritance.
Logical Fallacy Department responds (typed at their request).
ReplyDeleteYou have indeed shown something remarkable. In the infinite horizon, financial wealth must be minimized for the benefit of all.
However, that is not the same as showing that it must be reduced to zero.
Increasing puff department says:
ReplyDeleteWell at first I figured what you were saying was certainly true of debt and debt-like things. We'd like for those to be minimized. Does that really mean savings need to be reduced also?
But I see that could be true of equities as well, say, if the valuations of the equities were far out of proportion to their worth to society (and therefore, burden or benefit to some new person with zero wealth).
If investment is "perfect", and therefore all returns are to the investor, with no benefit, on balance, to society, then their social value is zero.
Which, to be fair to a new person, total equity values would have to approach also.
Depending on their net social benefit, which could be well less than zero. The effect of their lobbying, controlling government, etc., also has to be considered in the social benefit calculations. Whatever individual corporate merits might be (some one or two person corporation somewhere may be doing social good), the net of all corporations, including effects of stranglehold on democracy and global destruction, is very negative.
It follows that the only fair collective enterprise is debt financed and public owned, and therefore that the only socially valid saving is purchase of public bonds. The aim of such instruments is the maximize social welfare at minimum financial cost, exactly the desired profile.
As previously stated.
Now it may be true that such instruments should never go to zero, as I have shown is true for private investments, but that there should always be public debt to the same degree as the desire for savings.