Thursday, March 21, 2013

Mazurek Dąbrowskiego, V: The Ownership Advantage


Question: When poor workers compete with rich owners for financing out of existing savings, who comes out on top?  Answer: Who cares?  Worker ownership can be financed better out of future savings than past savings.  In any event, worker-owned companies (well, those with Justice-Based Management features) tend to be more profitable than other companies.

Thus, in the long run, the problem solves itself.  Studies collected by the (U.S.) National Center for Employee Ownership in Oakland, California, show that worker-owned enterprises that combine profit sharing and participatory management (e.g., “Justice-Based Management”) are usually significantly more efficient and competitive than those that are not worker-owned.

Consequently, enterprises that are not worker-owned will tend either to become worker-owned for their own advantage, or go out of business because they cannot compete.  Thus, we can avoid the issues of how privatization was unfairly handled, the dilution of existing ownership rights, or forcing existing owners to sell when they don’t want to sell.  This is where a Capital Homesteading program can have the most beneficial effect.

Replacement capital deals with existing shares, that is, existing assets.  When a company expands, or a new company starts up, however, new shares can be issued.  These can be sold by extending access to capital credit to every child, woman, and man in Poland regardless of their pre-existing savings, all repayable from the future earnings of capital (i.e., “future savings”).

Capital can be accumulated through a tax-sheltered “Capital Homestead Account (CHA)” (i.e., a personal equity shares accumulator) established in the name of each citizen at a local commercial bank. The government would allocate each citizen a voucher entitling him or her to purchase new “qualified” shares on credit without risking any savings or other assets or reducing their consumption income from other sources.

Dividends and paid-for shares when distributed from their shelter in the CHA to the CHA account holder to increase his or her consumption income would be taxable at the same rate as other earnings.  Viewed from the system level of a market economy, by enabling each citizen to become a capital owner without reducing his or her consumption from other sources of income, growth in the system’s productive capacity would therefore be balanced through market forces with growth in consumptive capacity, with reduced need for redistribution through government taxation or charity.

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