Capitalism – no big surprise – is as flawed as we are. Fraught with Moral Hazard, Economic ‘Rent’, and Regulatory Capture, it inflicts Tragedy upon our Commons and our ‘commoners’. It is predatory, manipulating, and monopolizing, and cannot even offer simple supply and demand without creating an inflationary wage-price spiral. Tax and transfer schemes – applied as a form of reparative justice, after the economic assault and battery has already been perpetrated – cannot erase the psychosocial damage done. Capitalists use the excuse that there is simply no better alternative. This is no longer true. The Third Option is a superior operating system. We challenge economists to either come up with something better, or join us in order to offer a Third Option to the American people.
Please understand, we are not looking for another union of concerned scientists; we are looking for social science engineers to be the architects of an upgraded economic infrastructure, as well as economists willing to be the political face of this ‘third way’ forward.
Take a page from the capitalist playbook, and think only of yourselves for a moment. It is a waste of your higher education to continue being the salespeople for an inferior product. Economics is clearly worthless as a tool for predicting its own future, but it can be an excellent tool for creating our future. If all the social science testimony (historical, ethical, political, philosophical, sociological, anthropological et al) was allowed into evidence, the verdict would be unanimous, and capitalism would be put away for life. Continuing to remain in the narrow fundamentalist lane of your sub-discipline, reciting mathematical scripture, only serves to emasculate your political potency; why allow yourselves to be the ‘invisible hand’ puppets of this Capitalist Crusade, when you can join the people’s side of the equation, and become the superheroes of a new Economic Democracy?
Economists – more than any single group right now – have the social science knowledge, political clout, and name recognition to think outside this mathematical box of tax and transfer rhetoric, and create a third way forward, based on a more interdisciplinary way of thinking. ’Reactive’ economic conjecture is less efficient and effective than proactive social science engineering. We are hoping economists will welcome this chance to get off the sidelines and back into the real game, in order to fashion a working Unified Theory of Economic Democracy from which cleaner economic infrastructure can be built.
Forget climate change. Forget the hopelessness that fuels addiction, violence, and incarceration, or the environmental racism and eminent domain that undermine neighborhoods, only to cycle back around to gentrification, and the further displacement of those on the bottom of this capitalist paradigm. Look instead at the irreparable harm capitalism is doing to us as a species.
Consumerism clearly creates a vacuum devoid of any true human value, then fills the hole with all manner of substance abuse and escapism, until each of us, unable to procure the one, resign ourselves to the other. Witness how both children and adults are left to peddle their self-worth on social media because capitalism is barren of any true belongingness. Meanwhile, parents – per some supposed claim to familial property rights – treat their progeny as a kind of ‘reproductive resource’ in order to garner the largest possible “return on investment’.
In this virtual world of social Darwinism we have created, the tenets of evolution demand the natural selection of those traits most necessary for our survival. Rather than culling and perpetuating the basest parts of ourselves, imagine if you could help fashion our world to select for the ‘better angels of our nature’.
This is not meant to be an exercise in futility; The Third Option knows that the only way to implement a third way forward is to create a Third Option Party, and offer up ‘Economic Democracy’ for the American people to either choose or fail to choose. Until this process begins, no significant change will ever occur. All other political options currently offered are simply different versions of the same option, and thus will never fundamentally alter our current human condition or trajectory. Until we unite around proactively doing something positive, rather than always reactively dodging something negative, change will creep along just slowly enough for extinction to catch up. We need to build a vehicle that can keep us at least one step ahead of that; the current vehicle is just a big party bus that drives us around in ever-widening circles.
Economics desperately needs to be a real science, and therefore must consent to the same scientific ‘method’ of self-scrutiny as other intellectual studies, meant to advance more and more complete theories about the relationship between people and planet. The Earth long-ago managed to create a highly sustainable form of eco-nomics, because it is naturally a closed system; this creates a hard boundary which forces all the life upon it into a circular – and thus recyclable – pattern. The aptly named ‘free’ market has no such natural boundary restricting it. The mechanisms for controlling the market (e.g., banks and government), have people with their hands on the levers, leaving it vulnerable to the kinds of manipulation we currently witness. Marxism, Liberalism, Socialism – these are all just reactions to the failure of capitalism to control the evil that men do to each other. History can draw a clear line from the oppression of the past straight through to our current economic arrangement. Until we sever this connection and create an unbreachable backstop beyond the reach of political manipulation, the free market will never be free, and the boundary of accountability will continue to be breeched again and again.
Ninety-nine percent of us currently tread water because there is no room on the Capitalist Yacht; the bottom billion are left drowning in its wake. We’re going to need a bigger boat. The Third Option is a vessel waiting for a crew, and is big enough to fit the whole world. If economists join this crew, they could help plot a course toward a more certain, inclusive, fair, and sustainable future for everyone on board. We hope you will not miss this boat. Capitalism is extremely top-heavy; one little push, and the whole thing could topple; if it does, economists will wind up as the historical scapegoats; not because of your actions, but as a result of your inactions – and because you, of all people, should have known better.
Next are some of the tenets of The Third Option, for consideration when forming your own Unified Theory:
First Things First: factoring people into the economic equation
From an anthropological point of view, there are three important conditions people require to function properly in a societal setting: Certainty, Fairness, and Inclusivity (Belongingness). When Certainty is in doubt, the fight / flight response is triggered (actualized as either violence or escapism / addiction, respectively). The ‘better angels of our nature’ have determined this to be a more ‘brutish’ kind of existence, thus more Certainty was procured through people organizing themselves into groups, in order to calm these biological defense mechanisms. Capitalism, on the other hand, leaves people to form their own groups in order to survive, which gives rise to all manner of individual gangs, bent on securing Certainty in any way their circumstances allow. Per the arbitrary rules of capitalism, some gangs are deemed legal, and others are not; regardless, the most successful groups on either side of the ‘law’ extract Certainty from others in order to gain more Certainty for themselves. If capitalism’s apparent ignorance of this biological reality were properly addressed, many of the crippling effects associated with un-Certainty would surely dissipate. Capitalism pushes society to fragment into smaller groups, and only networks them back together in order that they may ‘exploit’ each other for financial gain; there is no overall attempt to connect society as a whole, toward some mutual benefit.
The cornerstone or heart of humanity is Belongingness (Inclusivity). Everything that defines our ‘humaneness’ emanates from it; we became ‘human’ the day we formed ourselves into groups. ‘Democratic Equality’ is a natural byproduct of communication within smaller groups, but so far has yet to successfully extend beyond this space, mostly because people cannot be Certain about anything outside their own sensory range. Oppressive ‘self-interest’, however, appears to have an unlimited range. Even as America attempted to establish nation-wide Democratic Equality, oppression was there to thwart it. Currently, egalitarian types, twisted by the illogic of the capitalist paradigm, see Democratic Equality as involving financial reparations, though in reality, people only desire a ‘relational’ kind of equality: to be respected, and above all, to matter in terms of contributing to the group; the rewards of belonging carry a high intrinsic value money cannot measure. This fact makes ‘Equality of opportunity’ yet another capitalist construct; when people fall in line to work for pennies on the dollar, it is not ‘self-interest’ or opportunity that drives them, it is simply that they want to contribute to something larger than themselves (or perhaps the fact that they would starve otherwise). Cooperation, the antithesis of self-interest, is ironically the only thing keeping anti-social ‘self-interest’ alive. That is how strong – and how forgiving – Belongingness is.
Economic Rent is a phenomenon within capitalism where ‘self-interest’ is allowed to further prey upon this Belongingness, by raising prices based solely on the agglomeration of people, or their natural tendency to seek connection – not competition – through the acquisition of similar goods. This becomes the true reason to tax the rich, not as a form of penalty or even to create a misplaced egalitarian form of financial equality, but because the people who choose to belong deserve a ‘cut’ of whatever wealth is produced by the very fact of their Belongingness. Simply put – reward Belongingness. Capitalism would be a nonstarter without it. Otherwise, how can we view our relationship to capitalism as anything more than parasitic? If the Earth and its other inhabitants were allowed to vote, we believe they would wholeheartedly concur with this assessment.
Once in groups, people require Fairness to be exercised. In general terms, it is feelings of un-Certainty that sabotage Fairness. How we are nurtured determines our level of emotional Certainty, and within this process, even unintended negligence may leave emotional ‘holes’ in our psyche that many of us spend our entire lives trying to fill. It is from this phenomenon that the linchpin of capitalism – ‘self-interest’ – arises. Self-interest, ironically, comes from feelings of not-Belonging, an emotional ‘dis-connect’ from the group. Newborns will appear to exhibit plenty of self-interest prior to socialization, which implies that for purely selfish types, this circuit has somehow been jammed at birth, or during the nurturing process, so that full socialization fails to occur. Self-interest is not really in anyone’s best interest, but if people do not feel part of the whole, they will naturally default to only thinking of themselves – another survival ‘defense mechanism’. For this reason, as we attempt to address the unfairness inherent in rewarding ‘self-interest’, we can be more empathetic to those who cannot help but take more than their share – who suffer from lower self-esteem, or a narcissistic / sociopathic inability to feel a connection to others, because of how they were nurtured initially. Unfortunately, as people create un-Fairness, through neurotic self-interest, it triggers un-Certainty in the group, which ultimately tears at the entire fabric of societal structure.
An important fourth pillar of The Third Option is Sustainability. While not directly related to human psychology, Sustainability is necessary for the proper management of the planet. Properly managing the planet’s resources is the true role of economics, in order to create long-term Certainty for people; The Third Option hopes to persuade capitalism to give economics its job back.
The Bottom Line: Capitalism is built on the paradigm of oppression; oppression (now euphemistically referred to as ‘rational self-interest’), is a neurosis caused by feelings of not-Belonging. Those who seek control of others believe that ‘self-interest’ is perfectly ‘natural’, and thus have naturally formed a society rewarding this behavior. In the name of ‘self-interest’, people at the top have adopted the duplicitous nature of saying one thing and doing another – of inciting feelings of hope for some measure of Certainty and Belonging and Fairness meant to keep the supply chain gangs producing – but in truth, these emotional human needs have never been built into the capitalist paradigm. Where self-interest has strained society, it has forced ripples of further self-interest that puts us all on a slow simmer of un-Certainty. The Third Option believes that the following economic ‘adjustments will add more Certainty, Inclusivity, Fairness and Sustainability to the capitalist paradigm, not only without ‘cramping the style’ of those driven by ‘self-interest’, but finally utilizing this self-interest for the good of society, as has often been claimed, but never substantiated.
- Take a cue from planet Earth, and create a closed loop system. By filtering all money (and money creation) through a single source – a National Public Bank – all our fates would then be tied together. In this way, when capitalism raises the ceiling, it cannot help but lift up the floor along with it. The Bank, as a financial representation of the United States and its people, would sit above all citizens, all property, and both the public and private sectors. It is a simple vessel (separated from both the tyranny of the majority and the minority) that loans out money at four percent interest, and collects it again, so that We the People may constantly implement ‘improvements’ upon our human condition. We believe that if all ‘communities’ of people have the means to improve their condition, Belongingness would dictate that they not only contribute effort toward this goal, but would see it as their duty, because all improvements would wind up creating wealth for the entire nation. No offense to a handful of billionaires who want to raise the roof for themselves, but unleashing the potential of 330 million people seems more likely to raise the entire house.
- Turn payroll taxes into a redistribution and investment mechanism (and eliminate income tax): All income taxation would go straight into the National Bank, turning it into an investment in whatever future we chose to build. All loans would be structured in order to receive a ‘return on investment’, although self-liquidating loans are also possible. A 10% income ‘investment’ on gross revenue from every source, would create up to $2 Trillion in loans each year for all communities to build green and clean ‘essential needs’ infrastructure. When those loans get paid back – plus interest – it would make a sizable* (and equal) retirement dividend for each citizen, making retirement security more sustainable, and more Fair (through equal distribution, and based upon each generation’s effort in advancing the human condition). This strategy would ensure that we all get a ‘share’ of whatever gains each of us is able to achieve along the way (which goes to Fairness, Inclusivity, and Certainty) and would effectively eliminate most government spending (government would instead take on a department store-like managerial role). It would replace social security, lower the overall tax burden, and encourage growth and effort in all geographic areas. (*Because the money within the National Public Bank was invested, and not ‘created’, it would not be ‘destroyed’ when the loan is repaid but allowed to accumulate – along with the interest – thus making the sum large enough to create this sizable dividend stream. Between periods of rebuilding, the National Debt could be dumped into the Bank and paid back as well. Even after loans are paid back, payments for these essential needs will continue to stream into the Bank, providing larger and larger dividends for all).
- The true ‘enigma’ of money is that it stingily measures the effort and resources necessary to deliver a product, because this product only realizes actual value through its ‘exchange’ in the marketplace. This inherent ‘risk’ is what entitles those who gamble and win (the ‘capitalists’) to use ‘demand’ as an excuse for exorbitant price increases (profit-seeking and ‘rent’) that are rarely shared with all those who labored on the front end of the sale. Per the rules of capitalism, the only way to curb prices is through healthy ‘competition’, apparently with other capitalists, as smaller businesses would either be crushed or assimilated. Rather than try to solve the enigmas of capital, The Third Option posits that We the People, through our government, should simply declare Eminent Domain over the money supply, the value of which is only made legitimate through the powers vested in government by none other than We the People. The National Public Bank could then serve as that competition, by further declaring Eminent Domain over our most essential needs – through our government mandate to preserve life, liberty, and happiness – in order to deliver the Certainty to people that capitalism cannot provide.
- All Economic Rent (previously seen as ‘Capital Gains’) would also be taxed as ‘income investment’, not to discourage inflation (which it would do) but to reward our Belongingness, as mentioned prior. If ‘demand’ goes up for a product, a firm or business would do well to hire more people, in order to produce and deliver the product more effectively. The extra sales would pay for these extra people, and workers would not need a wage increase, because no single laborer would be taking on more work. The cost of goods would not have to be raised – thus inflation would not be a naturally occurring phenomenon. Employment would be maximized, and all consumers could afford the goods that were being produced. If materials became scarce, this would inform all of us of the un-sustainability of this resource (or product), whereupon ‘innovation’ would occur to enable sustainability. Trying to get rich quicker only causes inflation, resource depletion, and negative externalities, while doing nothing to contribute to the community in terms of jobs or even a ‘living wage’. Note: the 10% ‘income investment’ collected from each business’s gross revenue would only allow a couple of ‘deductions’, the main one being ‘overall payroll’ (the upside: businesses would no longer need to contribute to a ‘payroll tax’ or provide any other benefits – only pay their 10% off the top after payroll deductions).
- All Negative Externalities would be taxed individually, in order to cover the financial cost usually incurred by the whole of society. Each person must be accountable for the negative externalities they create through the exercise of their ‘liberty’. In the area of Universal Healthcare, for example, this would take the form of ‘insurance’, in order to cover the cost of products or activities that statistically have negative side effects associated with them. Small targeted fees would be charged when people purchase certain goods and services like guns, cars, gasoline, cigarettes, alcohol, beef, processed foods, etc., that ultimately raise the overall price of health care. By spreading out the cost of gunshot wounds and car crashes, heart and lung disease, diabetes and accidents (like choosing to go to the hospital), we can pay for universal coverage without anyone being forced to pay more than they deserve.
- ‘Reciprocal Obligations’ – Paul Collier’s upgrade for difficult-to-secure ‘unalienable rights’ – would be implemented in our public schools, along with teaching the concept that ‘Nothing is Free’. Through ‘payback tracks’, our children would pay for their education on a daily basis, as custodians of the community and the planet. Meanwhile, they would learn valuable ways to serve their community, through skills like regenerative and vertical farming, infinitely recyclable plastic businesses, and many other essential needs services that would earn them an associate degree (in an ‘essential needs’ field of their choosing) before their time at high school is finished.
- A true ‘Living Wage’ can never be achieved in capitalism, as a raise in payroll costs would only drive up the cost of goods, in the built-in wage-price spiral of inflation. The Third Option solution is to instead lower the cost of essential needs, which is achieved by building ‘essential needs’ infrastructure through the National Public Bank. Once a need is considered a ‘reciprocal obligation’ we are duty-bound to confer on everyone, the elimination of profit-seeking off the top would reduce the unit price considerably (‘economies of scale’ and cheaper ‘resource’ costs would also contribute). Lowered costs for health care, housing, energy, communication, agriculture, transportation, education, water / sewer, et al would make all these bills more affordable, while still paying back the National Public Bank loans that are generating our Universal Retirement Dividends. Meanwhile, per our duty to make economics Sustainable, we would be obligated to make all our energy, transportation, and agriculture infrastructure ‘green’.
- ‘Democratic Equality’ – Elizabeth Anderson’s attempt to de-commodify the value of people per our self-imposed ‘virtual free market’ world, and attach it instead to our need to belong in the real world – cannot be achieved in the paradigm of ‘self-interest’ driving the capitalist model of economics. By tying our fates together with the National Public Bank, we would all fight for each other, and similar to a ‘wartime economy’, produce more passionately, meanwhile ensuring financial security from the fruits of that labor. In the current economics, capitalists are certainly financially motivated; just imagine if we tapped into the entire potential of American ingenuity and effort.
- In a nod to the politics on the ‘right’, hold fast to Accountability and Viability. Everyone, regardless of their circumstances, must ante up their best effort in order to be rewarded in this system. There is no welfare, although the 10% income investment does break down to about $6,000 / year for every citizen, and gets deposited annually into individual National Public Bank accounts. This money could only be withdrawn as a ‘basic income’ under certain specific circumstances (then automatically deducted from future retirement dividends). In all cases, the money would never be directly handed over to individuals, but applied toward essential needs programs, in order to assure their survival. Homelessness and Incarceration are two of these ‘specific circumstances’. Nearly all Incarceration would be changed to mandatory two-year sentences, where people would receive health care treatment (for substance abuse and mental illness) while earning an associate degree and a job – in this way, we stick with the new mandate to get everyone contributing if at all possible. The homeless would be given this same opportunity to rejoin society, but would no longer be allowed to live out on the streets of a community where they are not contributing in some way. Immigration would follow a similar paradigm. Finally, Wall Street would still be allowed to gamble, but per this new ‘Accountability’, Wall Street investors – like any gambler – would only be able to claim losses equal to winnings in a given year, and only for the year in which they occur. This should help deter extremely reckless behavior, but if banks still managed to fail, they would simply be absorbed by the National Bank, where their debt could either be erased, or used to potentially create more retirement dividends for everyone else.