Is Market Socialism better
equipped to solve the problems
of Capitalism, specifically
Inequality and Ecological
Sustainability?
Alternatives to Capitalism: Models of Future Society
Master’s Thesis Political Science, Specialization International Relations Supervisor: Paul Raekstad
Second Reader: Michael Eze Name: Jonathan Taylor Smith Student Number: 12160032 Date: June 21, 2019
Table of Contents
Acknowledgements
3
Introduction
4
Chapter 1: The Problems of Capitalism
7
Introduction
7
What is Capitalism?
8
Inequality
9
Ecological Sustainability
13
What Proponents of Capitalism might say
15
Chapter 2: Market Socialism
17
Introduction
17
What is Market Socialism?
17
Criticisms of Market Socialism
26
Chapter 3: Equality
28
Introduction
28
Elimination of the Ownership Class
28
When Workers Have Democratic Control, They Make Decisions that Make Them more
Equal
32
Regional Equality via Social Control of Investment
33
International Equality via Socialist Protectionism
34
Conclusion
37
Chapter 4: Ecological Sustainability
38
Introduction
38
Elimination of the Ownership Class
38
Socialist Protectionism as a counterbalance to incentives to lower environmental
regulations
42
Co-Ops may be less driven to maximize profits
43
Utilizing Social Control of Investment to Improve Ecological Sustainability
44
Conclusion
45
Conclusion
47
Acknowledgements
I would like to express my deepest gratitude to my professor, Paul Raekstad, whose help has been invaluable not only in the writing of this thesis, but in other classes as well. I was privileged enough to have him for multiple courses, and in every course he pushed me to think critically and to write creatively, and his impact on my educational development will last a lifetime.
Introduction
In this thesis, I intend to contribute to existing literature on Market Socialism. In particular, I make the case that Market Socialism outperforms Capitalism in two areas: equality of opportunity and ecological sustainability. While this will be my main focus, I will also work to give readers a better understanding of what the transitionary phase between Capitalism and Socialism might look like. By introducing a socialist model that maintains the same market that proponents of Capitalism are so beholden to, Market Socialism can be presented as a more palatable intermediate model, and might just prove that the road to Socialism is through Market Socialism, not around it.
It is not unusual for people to talk past one another when discussing political theory, as different definitions are used to understand the same terms. When discussing Capitalism, proponents may often think of free markets, while critics might zero in on private property. This can lead to misunderstandings among one another, so in order to prevent this from happening, allow me to introduce some definitions. I define equality of opportunity as guaranteeing that all citizens within a state have a fair chance to attain a position, whether it be political office, entrance to a school or university, a position of employment, or something else, and I also co-opt John Rawls’ understanding of ‘fair chance’ — that “those who have the same level of talent and ability and the same willingness to use these gifts should have the same prospect of success regardless of their social class or origin.” Such a definition still allows for different 1
outcomes among citizens, but limits the source of these differences to individual talents and ambition. I will also discuss how Market Socialism is better equipped to create an ecologically sustainable society than Capitalism is, where ecological sustainability is defined as production “that meets the need of the present without compromising the ability of future generations to meet their own needs.” 2
In the first chapter, I will work to identify and define the main components of Capitalism, which include the private ownership of the means of production, the market, private control of investment, and contractual wage labor, and then make the case that this economic system is at the core of unequal opportunities and ecological denigration. In this chapter, I will also introduce the basis of my arguments in chapters three and four. I will argue that Capitalism is a mode of production that divides populations into two groups: the ownership class, and the
Rawls, Justice as Fairness: p. 44
1
Vos, “Defining sustainability: a conceptual orientation” p. 335
working class, and that this is a result of the right to private property. I will explore Mikhail Bakunin’s critique of Capitalism to help illustrate the idea that Capitalism is unequal, and I will point out how wealth inequality leads to an inequality of opportunity. I will also introduce the other issue area that I will argue Market Socialism is better equipped to handle, ecological sustainability, and go over the current state of our environmental crisis, connecting Capitalism’s search for profits to the climate crisis.
In the second chapter, I will work to define what exactly Market Socialism is. To do this, I have co-opted David Schweickart’s model of Economic Democracy, with some slight modifications. This model of Market Socialism is comprised of societal ownership of the means of production; the market; and social control of investment. I also discuss the organization and structure of the public sector under Market Socialism, as well as how international trade will be different in Market Socialism relative to Capitalism. I introduce the Capital Assets Tax, the Depreciation Fund, and go into detail on how investment funds will be generated and distributed in Market Socialism. Additionally, I explore some critiques of Market Socialism, including assumptions that Market Socialism will face the same problems Capitalism does, regarding its maintaining of the market.
In the third chapter, I’ll contend that Market Socialism is better at providing equal opportunities to citizens than Capitalism is, using several arguments. I will argue that the abolition of private property in Market Socialism targets the heart of inequality, by preventing the accumulation of massive amounts of wealth that opens the door to unequal opportunities elsewhere in life, such as politics or education. I assert that those in charge of the decision making process tend to make decisions that benefit themselves, and contend that placing workers in control of the decision making process will result in them making decisions that make them more equal. I also argue that social control of investment in Market Socialism is better at providing equal opportunities to citizens in regions across the country. By publicly generating investment revenue and distributing it on a fair share basis, Market Socialism outperforms Capitalism, where its controlled privately and investment capital tends to go to places that are already heavily invested in, widening the gap between urban cities and rural areas. Lastly, I argued that Market Socialism is better at extending equal opportunities to other states than Capitalism, by helping poorer states develop their domestic industries through fair trade policies, rather than kicking away the ladder for poor countries via free trade policies. In the fourth and final chapter, I make the case that Market Socialism outperforms Capitalism in the creation of an ecologically sustainable society as well. I will hold that the
elimination of the private ownership of property prevents wealthy elites from extremely over consuming resources, as well as preventing them from using their wealth to influence public policy to reduce, eliminate, or outlaw future environmental regulations. I will also argue that the rebates generated under fair trade policies will increase the funds available for sustainable development in poorer countries. In addition, I will contend that worker self-management may result in firms being less driven to maximize profits, and, in combination with the increasing awareness of climate change among the average citizen, cooperatives may have more room to invest in sustainable development practices. I hold that this, combined with my modification to Schweickart’s model that prioritizes businesses that are sustainable or in the process of transitioning to sustainable practices will be more successful in creating a sustainable society.
Chapter 1: The Problems of Capitalism
INTRODUCTIONHumans are distinguishable from other creatures on Earth because, rather than simply looking in nature and hoping to find what sustains us: food, shelter, and so on, we make it. We use our brains and muscles to shape and control our environment. We transform the things we find in nature into things that please us, or are useful to us. We see a tree, and make a chair; we see a cotton plant, and make a shirt; we see a field, and make a farm; to make a long story short, we work. Work, in this sense, has been a defining characteristic of the human race for as long as it has existed. However, what has not been a constant is the way that we organize this work. Different ways of organizing work has resulted in different problems, specifically problems with distribution and production. Distribution has been solved through communal efforts, such as seasonal harvests or elders deciding how the fruits of production are divvied up, but the most impactful way of solving this distribution problem was the market: a system that distributes goods through many individual bargaining interactions.
Problems with production specifically revolved around who supplied the labor. Some things we produce involve a level of complication that cannot be done individually, like a bridge, or house. One way of organizing production of these things has been through collective efforts where everyone within a community helps produce them. In this arrangement, the logistics are worked out together, where people meet and collectively discuss the who, what, when, where, etc. This ‘collective’, or ‘communal’, or ‘communist’ organization of labor has existed in many places and many times.
Yet, several other methods of organizing production involved the division of people into two classes, where one group of people supplied all of the labor, and one did not. One way of organizing labor like this is Slavery, wherein the first group, known as slaves, are the property of the second group, the masters. Such a system requires that the slave not only produce what they need for themselves, but in addition to what the master demands from them. This surplus that comes entirely as a result of the slave’s labor is the property of the non-laboring master. Another arrangement wherein one class produces a surplus that the other class gets is Feudalism. But, the class providing all of the labor is not owned as property by the other, so they are not slaves, but instead are serfs. Class division is determined by birth, so a Lord gives
birth to a Lord, and Serfs breed more Serfs. In this arrangement, the Serfs work their land not only for themselves, but for the Lords which preside over them. Monday through Wednesday, Serfs might work their own land, and Thursday through Saturday, they will produce for the Lords, a surplus. And on Sunday, they rest (naturally, the institution presiding over this arrangement was the Roman Catholic Church). When this system ended, it was replaced with the current system we have today— Capitalism.
WHAT IS CAPITALISM?
Similar to Slavery and Feudalism, Capitalism is a system wherein two classes exist; the ownership class, who owns the means of production, and the working class, who sells their labor to the ownership class who then uses that labor to grow their own capital. In exchange, workers are compensated with as little as possible, as doing otherwise would cut into the profits that Capitalists are trying to maximize. It consists of four pillars: private ownership of the means of production, competitive markets in goods and services, private control of investment, and contractual wage labor.
The first pillar is the private ownership of the means of production. Marx defines the means of production as “…the instruments and the subject of labor” , where tools are the 3
instruments and the raw materials are the subject of labor. In Capitalism, the means of production are privately owned by individuals, rather than them being owned by the state or collectively by the workers who produce the goods. The individuals who own the means of production are summarily known as the ‘ownership class’, and they comprise one of the two groups of the Capitalist mode of production. More specifically, they are the group that does not supply the labor in the production process.
The second pillar of Capitalism is the market economy. A market economy is “an economic system controlled, regulated, and directed by market prices; order in the production and distribution of goods is entrusted to this self-regulating mechanism.” This self regulation 4
implies that “all production is for sale on the market…accordingly, there are markets for all elements of industry, not only for goods [and services], but also for labor, land, and money.” 5
Marx, “Das Kapital” p. 91
3
Polanyi, “The Great Transformation” p. 71
4
Ibid.,
The market includes mechanisms for determining the price of items, facilitating sales and purchases, and like the aforementioned description above, a mechanism for distribution. This is in contrast to a command economy, where the price and distribution are not effected in a decentralized manner, but rather dictated by the state.
Private control of investment is the third pillar, and is similar to the first. But rather than it involving private ownership of capital goods (synonymous to the means of production), it is the private ownership of capital itself. This method of investment means that private individuals can dictate where they invest this capital, as well as whom and what it is invested in.
The fourth pillar of Capitalism is contractual wage labor, which is the term used to describe the way that the ownership class— the private individuals who control both the means of production and investment, hire labor to use their means of production to grow their capital. The ownership class does this by offering workers the “lowest possible wage…the price of that which is…absolutely necessary to keep oneself alive.” The result is that the 6
working class sells their labor, and agree upon a contract: for x hours a day, for x days a week, they come to the capitalist’s means of production, and use the tools provided, to produce something. At the end of their shift, the worker leaves the tools they utilized and leaves what they produced with the capitalist. The capitalist then sells what was produced for profit, and pays the worker as little compensation as possible, in order to maximize profit.
In short, Capitalism can be summarily understood as an evolutionary stage of a mode of production wherein populations are divided into two classes, one which supplies the majority of the labor involved in the production process, and one class which does not. It involves four distinct pillars, (1) private ownership of the means of production, (2) the market, (3) private control of investment, and (4) contractual wage labor.
INEQUALITY
In contemporary Capitalism, inequality is rampant. As I explained earlier, it is an evolutionary stage of a mode of production that divides populations into two groups: one that supplies the majority of labor and another that does not. In his paper, “The Capitalist System”, Bakunin’s claim that Capitalism is inherently unequal revolves around that same division. He acknowledges the argument that both are forced to come to the market to purchase or sell
Bakunin 1877: 3
labor, but does not accept the assertion that this makes them equal. Bakunin states that workers are forced to sell their labor by the threat of hunger —“…I do it because my family and I would starve to death if I did not work for an employer”, while Capitalists are forced to seek 7
out and purchase labor at the threat of being reduced “…to the ranks of the common laborers”. Thus, while both the worker and the Capitalists are forced to either sell their labor or 8
purchase it from others, they are not the same —the worker has only the opportunity to maintain a level of sustenance for themselves and their family, and risks starvation, while the Capitalist has the opportunity to increase their profits and runs the risk of being reduced to the position of a worker.
Bakunin asserts that this division is at the core of inequality, because if there was equality between workers and Capitalists, the “misery of the proletariat would not exist”, and “there would be neither Capitalists, nor property owners, nor the proletariat, nor rich, nor poor: there would only be workers”. According to Bakunin, this inequality between workers and 9
Capitalists is made worse because of Capitalism’s tendency to concentrate wealth "evermore in the hands of an ever diminishing number of Capitalists” , while at the same time squeezing 10
profits from the wages of the working class. This is achieved through competition among Capitalists to grow their capital, and through the determination of workers’ wages by supply and demand. If wages were to rise, then the “growth of the population outstrips the growth of production” resulting in “a relative sinking of the level of wages.” As a result, workers wages 11
maintain a relatively low level, while the ownership class grows their capital. Bakunin’s argument for why Capitalism is inherently unequal highlights how the private ownership of property drives wealth inequality.
The resulting wealth inequality that occurs from this division stands out as the most apparent form of inequality in Capitalism today, with phrases such as the 1%, etc. being common in contemporary political discourse. Piketty uses wealth and capital interchangeably, and defines wealth as “the sum total of nonhuman assets that can be owned and exchanged on some market.” To use the United States to illustrate, in 2012, the top 0.1%’s share of 12
Mikhail Bakunin: “The Capitalist System” p. 2
7 Ibid. p. 4 8 Ibid. p. 2 9 Ibid. p. 2 10 Ibid. p. 2 11
Piketty, Capital in the 21st Century: p. 38
wealth was 22%, up from 7% in the 1970’s. So, not only is the wealth share clearly unequal, 13
with the richest 0.1% in possession of 22% of wealth, such inequality is growing. This inequality of wealth has led to an inequality of opportunities today, whether they be in politics, education, or elsewhere.
From here on out, ‘equality of opportunity’, is defined as all citizens within a state having a fair chance to attain a position, whether it be political office, entrance to a school or university, a position of employment, or something else. I will also co-opt John Rawls’ understanding of ‘fair chance’ for this definition — that “those who have the same level of talent and ability and the same willingness to use these gifts should have the same prospect of success regardless of their social class or origin.” Such a definition still allows for different 14
outcomes among citizens, but limits the source of these differences to individual talents and ambition.
In Capitalism, unequal opportunities have all but become a modus vivendi. Capitalism involves the division of people into two groups, the ownership class and the working class, where the ownership class enjoys a majority of the wealth. That wealth is readily converted into power, which is then wielded to provide better opportunities in every other part of life, whether it be in politics, education, or elsewhere, for those who possess it. This results in unequal opportunities between those who are wealthy and those who are not. In the coming paragraphs, I will explain how an inequality of wealth leads to an inequality of opportunity in other areas of life, specifically in the realms of politics and education.
Political inequality comes as a result of the ownership class converting their capital into political power. In their 2014 article, Gilens and Page concluded that the “preferences of economic elites…have far more independent impact upon policy change than the preferences of average citizens do.” and that when “a majority of American citizens disagree with 15
economic elites or organized interests, they generally lose.” This can be achieved through 16
many different methods, but I will outline two ways that it occurs. The ownership class can deny the working class of equal political liberties by either outright buying the allegiance of
Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax
13
Data p. 37
Rawls, Justice as Fairness: p. 44
14
Gilens & Page, Testing Theories of American Inequality: p. 576
15
Ibid. p. 576
politicians, or when wielded much more mildly, by thwarting the aims of democratic processes in order to render the political opportunities of working class people “merely formal”. 17
Politicians having their (re)election campaigns bankrolled by corporate contributions can serve as an example of the former method , while lobbying efforts on behalf of corporations to 18
influence policy decisions might illustrate the latter. When policymaking becomes dominated by “powerful business interests and a small number of affluent Americans” , then citizens do 19
not experience an equal opportunity to voice their needs and concerns in the political arena. Such unequal opportunities also manifest themselves in the form of education. Again, using the United States as an example, where in March, the Justice Department indicted parents of some of the wealthiest students on racketeering charges. These parents had paid millions of dollars to effectively “buy spots for their students at top universities…using their wealth to create a separate and unfair admissions process”. But this is just a salient case; 20
under Capitalist society there also exists private schools, which allow those with the means (see: wealth) to purchase an opportunity for an elite education for their children, while those who cannot afford to do so are confined to utilizing the public education system available to them.
Having discussed how Capitalism creates wealth inequalities through the private ownership of the means of production, and how wealth inequality in turn creates unequal opportunities in other parts of life, whether it be education, politics, or something else, I would like to briefly cover several other ways that Capitalism creates an uneven playing field that results in unequal opportunities. It is important to understand that those who are in charge of the decision making process tend to make decisions that benefit themselves. In Capitalism, it is the ownership class that makes the decisions on how a firm is to be ran, and the decisions they make are centered around maximizing their profits. This not only results in the suppression of wages, because the cost of labor is included as a cost of production, but it also denies workers an opportunity to influence the direction of the enterprise they work at. Capitalists not only make decisions about the organization and operation of firms they already control, but they also have private control over which firms and regions they choose to invest in. Now,
O’Neill, Free and Fair Markets Without Capitalism: p. 82
17
The Hill, “Collins receives more donations from Texas fossil fuel industry than from Maine
18
residents”
Gilens & Page, “Testing Theories of American Inequality, p. 577
19
NYTimes: Actresses, Business Leaders and Other Wealthy Parents Charged in U.S. College
20
because capital “tends to move to where capital is already plentiful” , this means that regions 21
that are already heavily invested in will tend to receive more funds for investment, while regions that are not already invested in tend to get left out. This creates unequal opportunities for those who reside in regions that do not receive much investment. I will discuss these problems caused by Capitalism, and how Market Socialism provides solutions to these problems, in more detail later in the chapter on equality.
ECOLOGICAL SUSTAINABILITY
Profit is at the core of Capitalism. Capitalists do not start a business to provide food for a community, or to clothe a city; they start a business in search of profit. Because Capitalism promotes the pursuit of profits over all else, it needs and creates consumers. This leads to a vicious cycle: as Capitalists search for more and more profits, they find and develop new markets among different target groups of people or by expanding into other countries. This endless pursuit of profits has, as a byproduct and unintended consequence, led to endless consumption. Capitalists admit as much — Victor Lebow stated that “our enormously productive economy demands that we make consumption our way of life”. In saying this, 22
Lebow reveals that consumption isn’t the main goal of Capitalism (profit is), but in order to reap those profits, businesses must grow, and they must grow by maintaining continuous consumption.
Now, this is where it becomes apparent that this endless consumption is a problem unique to Capitalism, not caused by industrialism or human nature. Capitalism is only healthy when it is growing. Such growth is sustained through continuous consumption of both existing products and new ones. It is not in human nature to want an infinite amount of things, nor is it the nature of industrialism to produce endlessly; but to sustain endless growth, Capitalism necessarily requires humans to consume infinitely and industries to produce ad nauseam. In an environment where resources are limited, infinite growth is a problem.
Since limitless growth in the pursuit of profits is at the core of the problem, it is important to outline the solution. That is, what comprises an ecologically sustainable society. From here on, ecological sustainability can be defined and understood as “development that
Schweickart, “After Capitalism” p. 52
21
“Victor Lebow, “Price Competition in 1955,” Journal of Retailing 31/1 (Spring 1955).”
meets the need of the present without compromising the ability of future generations to meet their own needs.” 23
With the onset of the industrial revolution, humans have burned fossil fuels to power society. The production and use of these fossil fuels is the largest contributor to air pollution , 24
and the effects equate to a public health emergency, according to the WHO: “Before we knew that pollution was responsible for diseases like pneumonia and asthma. Now we know that it leads to bloodstream, heart and cardiovascular diseases, too”. And these health effects from 25
air pollution will not only impact human life, but all life on Earth. This air pollution is also warming the planet: 2016 was the third year in a row that set a record for global temperature, being on average, 1.26 degrees Celsius warmer, a level not seen for 100,000 years. And the 26
world’s oceans are absorbing the majority of the heat produced by global warming, estimated at 90%. However, as oceans warm, the survival of many species are jeopardized: “In the sea, 27
especially, temperature changes are gradual and moderate and many animals are so delicately adjusted that they cannot tolerate an abrupt or extensive change in temperature of the surrounding water. If such occurs they must migrate or die…” 28
Forcing life on Earth to migrate or face extinction, while abhorrent, is not the only negative effect of climate change. As oceans warm, water evaporates into our atmosphere, causing more intense storms, hurricanes, and rainfall events. As ocean temperatures rise, they accelerate the melting of polar ice caps, which reflect heat back out of our planet. As these ice caps melt, they reflect less and less heat, accelerating the cycle, causing sea levels to rise. This quick warming of our land and oceans and the immediate effects of such warming are extremely detrimental, but combined with other impacts, it becomes an existential threat.
Vos, “Defining sustainability: a conceptual orientation” p. 335
23
Magdoff & Williams, “Creating an Ecological Society: Toward a Revolutionary
24
Transformation.” p. 50
“John Vidal and Toby Helm, “Shock Figures to Reveal Deadly Toll of Global Air Pollution,”
25
The Guardian, January 16, 2016.”
Magdoff & Williams, “Creating an Ecological Society: Toward a Revolutionary
26
Transformation” p. 40
Magdoff & Williams, “Creating an Ecological Society: Toward a Revolutionary
27
Transformation” p. 43
“Linda Lear, ed., Lost Woods: The Discovered Writing of Rachel Carson (Boston: Beacon
28
We must also not forget that such an existential threat is not beyond us; we created the economic system that caused it. The unfettered pursuit of profits by the ownership class on the backs of the working class that is inherent to Capitalism is central to the problem of man-made climate change. This unequal distribution of wealth and resources has led to severe inequality in consumption. The wealthiest 10% of the population uses about 60% of the planet’s resources and contribute about the same level of pollutants, highlighting “a wildly skewed social system”. In Chapter 4, I will outline several of the ways in which Capitalism has led to 29
the current ecological crisis, and how Market Socialism provides solutions to the problem of climate change.
WHAT PROPONENTS OF CAPITALISM MIGHT SAY
A proponent of the Capitalist system may suggest that the modern industrialized world that we inhabit today might not have been possible without Capitalism. Indeed, Capitalism has been so successful because it doesn’t attempt to force individuals to act in the interest of the collective, but in the interest of themselves. In Capitalism, individuals are motivated by the prospect of enriching themselves; this leads people to innovate and create solutions to problems or fulfill desires and has the net effect of improving the well-being of the community. The world we have created, and the economic system that helped us get here, is now taken for granted. It is an improvement over Slavery and Feudalism, as no one owns another person, and there is a clear level of class mobility, and criticizing our economic system only sours people’s opinions of it rather than helping to improve it.
In regards to inequality, proponents of Capitalism might make the argument that it is a human problem, not a problem of Capitalism. Thus, inequality is a feature of humanity, not a bug of Capitalism. It may be asserted that people are not born equal in terms of physical and/ or intellectual capabilities, and that Capitalism provides incentives to further those capabilities, and any inequities under Capitalism must be just manifestations of human inequities. A Capitalist may also use the same argument that humanity is flawed to take the position that Capitalism is better than the alternatives, pointing out that humans aren’t compassionate, kind, or just, and therefore, Socialism in any form would be inoperable. They may point to the severe poverty and political oppression of the working class under the Soviet Union, or the failures of a centrally planned economy as evidence. But then one must ask: are we good enough for
Magdoff & Williams, “Creating an Ecological Society: Toward a Revolutionary
29
Capitalism? Should we be allowed to “continue living under the present system which permits [us] to oppress and exploit one another?” If inequality is inherent to humanity, should we 30
continue living under a system that exacerbates it?
On ecological sustainability, proponents of our current economic system may again claim that the problem lies not with Capitalism, but with people. This time, with having too many people. They may claim that overpopulation is the root cause of being ecologically unsustainable, not the pursuit of limitless growth and profits under Capitalism. But, when it comes to ecological sustainability, a capitalist might not only claim that Capitalism isn’t the problem, it’s the solution. In Capitalism, individuals are rewarded for innovating and creating new solutions and products that people have a demand for —and this extends to the realm of ecological sustainability.
While I do concede that Capitalism has allowed us to create the global society that we inhabit today, I want to point out to the reader that it is still only an evolutionary stage of a mode of production that divides populations into two groups, those who work and those who do not, and that this division is inherently unequal. While inequity may exist abundantly amongst humanity and nature, it does not follow that it must exist in the way we organize our work, or that organizing society any differently is less desirable or impossible. And it is this inequality that is inherent to Capitalism that is behind the destruction of our environment as well. While capitalists argue that it is an over-population problem, the richest 10% of the population accounts for about 60% of consumption. 31
“Are We Good Enough?” Pyotr Kropotkin
30
Magdoff& Williams, “Creating an Ecological Society: Toward a Revolutionary
31
Chapter 2: Market Socialism
INTRODUCTIONProponents of Capitalism may make the argument that the world we have created, and the advancements we have developed, are due to the Capitalist economic system. I must concede, they are correct. Capitalism has allowed us to create a truly global society; it has provided us with advancements in technology, transportation, the list goes on. The world we have created is nothing short of remarkable. Yet, it still falls short in the creation of a just society. Through the private ownership of property, Capitalism allows for extreme wealth inequalities to develop, which denies all citizens an equality of opportunity in other areas of life, such as politics, as a result of capital providing “economic elites…[with a] far more independent impact upon policy change than the preferences of the average citizen” , or the 32
capability of economic elites to use their capital to procure better educational opportunities. Indeed, Capitalism being the economic system that got us to where we are today is not a claim that I will contest; it is this precise assertion that is the problem — Capitalism got us to where we are today. Having gone over the reasons why it is clearly deficient, I propose that we replace it with a new economic system, specifically, Market Socialism. Going forward, I will co-opt David Schweickart’s ‘Economic Democracy’ as the template for Market Socialism. 33
WHAT IS MARKET SOCIALISM?
Just as Capitalism can be understood as having four pillars, being the Private Ownership of the Means of Production; the Market; Private Control of Investment; and Contractual Wage Labor, Market Socialism can be understood as having multiple pillars as well. They are: Worker Self-Management; the Market; and Public Control of Investment. Each of these pillars will be examined in further detail below.
Worker Self-Management
Unlike Capitalism, where the Means of Production are owned privately and the profits from the enterprise are privately enjoyed as well, Market Socialism demands worker self-management.
Gilens & Page, “Testing Theories of American Inequality” p. 576
32
Schweickart, “After Capitalism” p. 45
Rather than being owned privately, enterprises are owned by society and controlled by those who work there. Workers are in control of workplace organization, enterprise discipline, techniques of production, what to produce and how much, how much to charge, and how to distribute the profits of production among those who work there. All of this is done through 34
democratic processes, wherein each worker is allowed one vote. For firms that are much larger, this democratic process can be used to elect representatives to workers councils, which will appoint an overall manager and maybe other levels of upper management. However, this is different from Capitalism, as these positions are not decided by shareholders or a board of directors, and it is different from Communism, as these positions are not filled by the State or community as a whole. Rather, these positions are to be filled by people democratically elected by those who work at the enterprise.
In regards to worker managed firms under Market Socialism, it has been argued that they are “unavoidably destined to suffer…a gradual degeneration from democratic forms to capitalist forms of organization.” I’d like to point out that firms under Market Socialism 35
democratically elect workers to workers councils, whereas under Capitalism, these upper management positions are decided unilaterally by owners or shareholders, without taking into account the opinions of workers. The criticism against Market Socialism is that in cooperative firms, these elected workers councils become occupied by a separate class of workers within the cooperative, leading to a system where workers are exploited by a different class of managers and bureaucrats. While this is a possibility, I believe several steps can be taken in order to prevent such a degenerative process from occurring. A Market Socialist state must already make worker self-management the mandatory form of economic organization so that “alternative economic organizations cannot become dominant.” Seeing that Market Socialist 36
states already regulate the type of organizations allowed, there is no reason that they could not put in place, limits to the number employees or amount of capital that these economic organizations are allowed to employ or possess. Because firms under Market Socialism are “regarded not as a thing to be bought or sold (as it is under Capitalism) but as a community” , 37
these firms may not be as driven to grow in size, in terms of employment or capital acquirement, out of necessity to prevent being bought or sold by other enterprises.
Schweickart, “After Capitalism” p. 47
34
Errasti, “The viability of cooperatives: the Fall of the Mondragon cooperative Fagor” p. 2
35
Thomas, “Republic of Equals” p. 220
36
Schweickart, “After Capitalism” p. 49
I would like to take some time to elaborate on the difference between the types of ownership (private, public, and state owned). Under Capitalism, firms are private property and can be bought or sold by the owner as they please. Under Market Socialism, firms are not commodities that can be bought and sold; instead, they are “regarded as a community.” 38
Earlier, I stated that these firms are owned by society as a whole, but controlled by the workers. To explain, these firms are regarded as communal property, and the workers effectively “rent their capital assets from society.” Since these firms are seen as communities, 39
they come with rights as well as responsibilities. Namely, the right to a democratic voice via a vote and/or representation, and the responsibility to pay a capital assets tax.
Communal ownership of firms under Market Socialism is expressed in two ways: through a capital assets tax, which is a flat rate tax that every firm must pay, and through a depreciation fund that firms must maintain. The capital assets tax will be explained in further detail later on, but this tax will supply the bulk of revenue for investment. The depreciation fund will be controlled by firms themselves, and must be used to replace or repair existing assets, however it cannot be used to supplement income.
The Market
Shockingly, Market Socialism maintains the Market, but replaces all the other pillars of Capitalism (Private Ownership of the Means of Production, Private Control of Investment, and Contractual Wage Labor). Thus, Market Socialism is a market economy. Prices are “largely unregulated except by supply and demand” , save for some price controls or price supporting 40
methods as necessary, just like Capitalism. And just like in Capitalism, firms compete amongst one another for profits. However, the way profits are calculated are slightly different: in Capitalism, labor costs are factored in as a cost of production. In Market Socialism, labor costs are not counted as an expense. All profits that are left over after accounting for the costs of production, the capital assets tax, and depreciation fund are shared among the workers, according to the way they democratically allocate them.
I would also like to preemptively defend Market Socialism from critiques by other socialists; centralized planning is typically the go-to replacement for the Market when it comes
Ibid., p. 49 38 Ibid., p. 48 39 Ibid., p. 49 40
to solving the problems of production and distribution. However, it has been argued many times over that “such an approach to the economy is irrational.” Schweickart defends his 41
model of socialism involving the market by arguing that central planning is “both inefficient and conducive to an authoritarian concentration of power.” Hayek asserted that the price system 42
under a market is superior because of “how little the individual participants need to know in order to take the right action” , which is contrasted with central planning, where one or a small 43
number of individuals must have an in depth understanding of the needs and desires of many to properly plan the economy.
However, critiques of the market part of Market Socialism in preference of a command economy are not the only ones that exist. Some, like Alan Thomas, have criticized Market Socialism in favor of a differently organized market economy, such as Property-Owning Democracy. Thomas criticized the market for being exploitative for workers, where “the less productive will exploit the more productive” resulting in wage compression, where “the self-44
serving biases of the worse off will see them exploitatively undervalue the productive contributions of the more talented while overvaluing their own.” The outcome is that the 45
wages of those who are more productive will be driven down by less productive workers through the democratic process of determining wages. Thomas also criticized Market Socialism by arguing that the labor market will be less robust, meaning that the “worker who feels herself to be exploited cannot simply move to another employer.” Yet, for this to be true, 46
Thomas’ definition of exploitation must be infallible, which it isn’t. Thomas defines exploitation as a person’s contribution being undervalued “on a competitively efficient market” given that 47
they had no alternatives and the value was extracted by someone else. Under such a definition, “many of the predistributive and redistributive features of POD (including taxes on wealth, capital and income) mean that because many people in POD, like many people in Market Socialism, will also take home less than what they could command in an idealized
Irving, “Hayek’s Neo-Roman Liberalism” p. 7
41
Schweickart, “After Capitalism” p. 49
42
Hayek, “Individualism and Economic Order” p. 86-87
43
Thomas, “Republic of Equals” p. 227
44 Ibid., p. 227 45 Ibid., p. 227 46 Ibid., p. 225 47
capitalist marketplace, POD is also exploitative.” Thus, the same definition of exploitation 48
Thomas uses to claim that Market Socialism is exploitative also makes Property-Owning Democracy exploitative relative to an idealized Capitalist marketplace.
But, I would like to point out that Thomas’ criticism of Market Socialism that allowing workers to manage the workplace will only result in them exploiting themselves is maybe not all that bad. Thomas argues that the exploitation occurs through wage compression, where those who work harder find their wages being lowered by those who do not work as hard through the democratic deliberative process. If you accept Thomas’ understanding of the term ‘exploitation’, then sure, you may conclude that Market Socialism is exploitative. But then you must also conclude that such a form of exploitation results in workers being more equal, in contrast to the exploitation that occurs under Capitalism, where those who already possess private property, capital, or both, exploit workers by extracting a surplus value from their labor. Is this not a better form of exploitation than under Capitalism?
Public Control of Investment
In Market Socialism, investment is not privately controlled. All firms must maintain a Depreciation Fund and pay a Capital Assets Tax. The Depreciation Fund is to be maintained by the firm, and is used to repair or replace existing machinery or other assets within an enterprise. The Capital Assets Tax is the method of social investment, and is how the public ownership of firms manifests itself. As stated earlier, it is a flat rate tax that every firm must pay, and produces the revenue for investment back into the country. This tax is a tax on the capital assets of firms, including land, buildings, and equipment, and can be seen as a “leasing fee paid by the workers of the enterprise for use of social property that belongs to all.” The 49
revenue produced from this tax is only to be used for new investment. This differs from private control of investment, which is how it works under Capitalism, in that the revenue for investment is generated publicly instead of coming from the savings of private individuals or corporations.
Since the revenue is generated publicly, the distribution of that revenue becomes a public matter as well. The way that it will be allocated is to be democratically decided, and there are several ways to do this. One way could involve democratically planning the allocation
Raekstad, “Property owning democracy as an alternative to capitalism” p. 4
48
Schweickart, “After Capitalism” p. 50
of these funds. Now, having just defended a market system over central planning, I am not suggesting that the same is done for investment. Centrally planning investment for a state is not the same as centrally planning it’s entire economy; in a country like the United States, investment only accounts for 10-15% of GDP. But, if implementing this method appears 50
hypocritical, there are other ways to distribute the funds earmarked for investment. One of those ways is to co-opt the market in a similar manner to Capitalism. Funds are distributed to public banks, who are charged a centrally determined interest rate and expected to turn them and make a profit. Banks would compete amongst each other, balancing the risks they take on with the interest rates they charge. Just as in Capitalism, the managers of banks that are successful in turning a profit are rewarded, and those that fail to do well are let go. However, this differs from Capitalism because the profits that are generated by the bank do not stay with the bank as private profits, but are returned to the state for reinvestment.
Now, both of those are two solid ways to distribute the investment funds from the Capital Assets Tax, but the most probable method will be somewhere in between. The method Schweickart lays out involves distributing the funds “according to a principle of fairness first, and then to bring in competition.” To elaborate on Schweickart’s principle of fairness, each 51
region ought receive it’s fair share of investment funds, wherein “fair share” corresponds to it’s per capita share; if a region has “X percent of the population, it gets X percent of the money available for investment.” This means that regions do not compete for investment funds, as 52
they do in Capitalism, e.g. offering tax breaks to corporations if they open a factory within the region. This will help to reduce regional inequality, and I will come back to and expand on this 53
later.
I would like to take some time to further elaborate on what happens once the funds from the revenue generated by the capital assets tax are distributed to public banks. To recap, how these funds are to be distributed will be determined democratically, and there are multiple ways of doing it, whether it be through central planning, allowing the market to allocate them, or any combination in between. Regardless, these funds will reach public banks. Once there, banks will make the funds available to the public. Schweickart makes it clear that these funds
Schweickart, “Against Capitalism” p. 73
50
Schweickart, “After Capitalism”, p. 51
51
Ibid., p. 51
52
CNBC: Amazon will get up to $2.2 billion in incentives for bringing new offices and jobs to
53
will not be issued out in the form of loans, but as grants. These grants aren’t just free money; they count as additional capital assets and thus the capital assets tax on them must be paid, which effectively “functions as an interest rate.” However, because these funds are previously 54
generated from prior capital assets taxes, firms are not responsible for repaying the principle, just the interest rates (capital assets tax). Within a region, each bank is to be given a certain share of these funds. The way these funds are to be allocated to public banks within a region depends on the size of the bank, how many firms the bank services, and the banks track record on prior success in servicing grants to sound firms. If banks cannot find firms to provide grants with, then the excess funds must be returned to the state for reinvestment elsewhere. This provides communities with “a strong incentive to seek out new investment opportunities in order to keep the allocated funds at home.” 55
Public Sector
Having described the continuation of the market and competition under Market Socialism, I would like to address some of the goods and services available to citizens outside the market; that is, what the Public Sector under Market Socialism might look like. Seeing that human solidarity is “perhaps the most fundamental of socialist principles” , provisions for healthcare, 56
childcare, retirement, and public schooling are necessary. Other services will surely be provided by the state as well, as the public sector will not be limited to just these things. In order to accomplish this, it is necessary that the principle of intergenerational solidarity must be embraced. Schweickart describes this principle as a citizen regarding “all the children of his or her society as being, in some sense, his or her children, and all the elderly as being his or her parents.” 57
Today, most Capitalist countries already provide public options for these services, so such provisions are not exclusively socialist. Because of this, we can assume that societies implementing Market Socialism will have learned from the experiences of other efforts under Capitalism to provide for their citizens and use that knowledge to craft their own programs. However, such programs must be universal; whether it be healthcare, childcare, or education, they must be made available to everyone regardless of their ability to pay.
Schweickart, “After Capitalism” p. 54
54 Ibid., p. 54 55 Ibid., p. 72 56 Ibid., p. 72 57
The organizational structure of the public sector under Market Socialism will take the form of a mix between a command and cooperative model, wherein jobs for healthcare, or any other public sector job for that matter, will be publicly funded and controlled by the state, however the workplaces themselves will still be democratically managed. I would however, like to make one modification to Schweickart’s model for Market Socialism: private education will only be allowed for religious reasons, and those institutions which are private will still have to meet the same requirements for the teaching materials and education standards as other public schools. Private education institutions that are not for religious purposes will be abolished. These private institutions will be eligible to receive public funding, as making them ineligible for such funds would create a system where kids only have the option to attend these private institutions if their family is wealthy enough to afford it. Such a system would strongly violate the principle of equal opportunity, and therefore allowing these schools to receive public funding will create an equal playing field for all families who want their kids to have a religious upbringing, regardless of their wealth.
International Trade
Having explained how Market Socialism would operate on a national level, I would like to spend some time addressing the international arena. Unless met with military aggressions by other Capitalist states, a country that utilizes Market Socialism ought to perform well. However, interactions between states will of course be different. Mainly, there will be no cross-border flows of capital. Capital will not flow out of the country, because firms are owned collectively by society and cannot be sold out on foreign markets. Investment capital will also remain inside the borders, as they are “publicly generated and mandated by law to be reinvested domestically.” On the flip side, capital will not flow into the country either, as there are no 58
“stocks, corporate bonds, or businesses to buy.” Again, firms are collectively owned by 59
society as a whole, and are regarded as communal property, not private commodities to be traded, or bought and sold.
The elimination of cross-border capital flows has two positive impacts: (1) There will cease to be any downward pressure on the income of workers by firms threatening to
Ibid., p. 77
58
Ibid., p. 77
outsource their labor for production , and (2) states cannot cite the need to attract capital as a 60
reason to have lax environmental standards. The first benefit is caused by the public ownership of the means of production; when firms are no longer privately owned, but owned by society as a whole, they cannot be bought up by foreign capital. This means that places like the United States or the European Union cannot outsource the costs of production to the global south, where wages for labor are much lower. The second benefit is caused by a similar function, albeit reversed. States that implement Market Socialism cannot attract capital investment into their country by offering incentives to investors via the relaxation of environmental protection regulations.
However, stopping the flow of capital in and out of a country does not go far enough in fighting international wage competition or the softening of environmental regulations. Free trade agreements under Capitalism cause such effects, as they are “primarily about allowing unhindered capital movement, protecting intellectual property rights, undermining workers’ ability to organize and fight for better conditions in the North and the South, and weakening environmental regulations, all of which facilitate corporate profit-taking” while being sold to 61
the general public as enhancing freedom. Under Market Socialism, a policy of free and fair trade will be adopted. When it comes to trade between states that are “roughly equal in terms of worker protection and environmental regulations” , free trade is fine. But when it comes to 62
countries that are not equal in these terms, market socialist states will adopt protectionist ‘fair trade’ policies. The reasoning behind these fair trade policies is that a state should protect its own workers from the downward pressure on wages brought on by cheaper labor elsewhere, and to “contribute positively toward alleviating global poverty.” Thus, Market Socialist states 63
will impose a social tariff on imported goods, designed to counterbalance “low wages and/or a lack of commitment to social goals regarding the environment, worker health and safety, and social welfare.” 64
Ibid., p. 77
60
Magdoff & Williams, “Creating an Ecological Society, Towards a Revolutionary
61
Transformation” p. 75
Schweickart, “After Capitalism” p. 78
62
Ibid., p. 78
63
Palley, “Plenty of Nothing: The Downsizing of the American Dream and the Case for
64
Now, protectionism often gets a bad rap in its contemporary sense, because it tends to have the impact of forcing the cost of those tariffs onto their own domestic consumers. In this case, that is the point; when a market socialist state trades with a poorer country, it levies a tariff on those imported products which its consumers pay, and the revenue generated from that is gifted back to the poorer country of origin which the tariffs were placed on. Remember, the goal of this socialist protectionism is to help alleviate global poverty while protecting local industries, which this accomplishes. The funds generated from the tariff are sent back to the workers in the country of origin, helping their economic standing, and it protects local industries by raising the prices of imported goods to levels that are competitive with domestic production costs. The end result is that consumers in rich countries “must pay ‘fair prices’ for their imported goods — to protect their own workers from destructive wage competition, and to help alleviate global poverty.” 65
CRITICISMS OF MARKET SOCIALISM
Market Socialism as an alternative economic system is heavily contested, as it is situated to the left of Capitalism but to the right of most other Socialist models because of its use of the market. With that being said, I would like to address some of those criticisms here.
Criticisms from the Left
Because most Socialist models opt for some form of a central planned economy over a market economy, the bulk of leftist’s critiques of Market Socialism have to do with the market. It has been argued that markets are unfair for laborers, inefficient, and conducive to antisocial behavior. In regards to a market economy being unfair, critics have asserted that laborers are compensated for the “market value of their contributions” instead of the true social value of 66
their contributions. To illustrate, Hahnel makes the argument that a plastic surgeon in Hollywood is valued higher than a physician in a rural county, even though the rural physician’s social contribution will surely outweigh the plastic surgeon’s. And so the criticism is that all forms of market economies “distribute the benefits and burdens of social labor unfairly because workers will be rewarded according to the market value of their contributions rather
Schweickart, “After Capitalism” p. 80
65
Hahnel, “Economic Justice and Democracy”, p. 173
than their personal effort or sacrifice.” Critics also point out that any effort to correct this 67
unfairness will lead to market inefficiencies.
Hahnel makes the claim that market socialist economies will be inefficient for the same reasons that they are inefficient in Capitalism: “if taxes and subsidies do not adequately internalize externalities, if stabilization policies do not sufficiently counter disequilibrium dynamics, and if antitrust policies fail to make markets perfectly competitive in private-enterprise market economies, they will fail to do so in public-private-enterprise economies as well.” 68
Hahnel also argues that markets destroy the social ties that bind us. He states that “market economies cast people into the antagonistic roles of buyers and sellers everyday where empathizing with one’s opponent is counterproductive to one’s own well being.” 69
Forcing individuals to fit into the mold of a buyer or seller necessarily forces one to look out for their own well-being rather than the well-being of all, effectively punishing one for empathizing with their counterparts.
Another criticism of the market relate to ecological destruction. When you must operate in a system that is centered around profit, which Market Socialism is, and you are compelled to seek out profits or watch your business fail, then you are forced into ignoring negative externalities. So it is argued, that the exploitation of natural resources by firms would occur just the same under Market Socialism as it would under Capitalism because in both models, firms would be seeking out profits and overlook the denigration of the environment until it is no longer profitable to do so.
Ibid., p. 175 67 Ibid., p. 178 68 Ibid., p. 179 69
Chapter 3: Equality
INTRODUCTIONIn this chapter, I will go into further detail on the topic of equality, and how the implementation of Market Socialism will lead to a more equal society than Capitalism. Specifically, I will be discussing equality of opportunity, which, if you recall, means that all citizens within a state should have a fair chance to attain a position, whether it be political office, entrance to a school or university, a position of employment, or something else. I will also co-opt John Rawls’ understanding of ‘fair chance’ for this definition — that “those who have the same level of talent and ability and the same willingness to use these gifts should have the same prospect of success regardless of their social class or origin.” This understanding allows for different 70
outcomes among citizens, but limits the source of these differences to individual talents and ambition. I will explain how Market Socialism extends equal opportunity to citizens through the elimination of the private ownership of property, the democratic control of the means of production, social control of investment, and international fair trade policies.
ELIMINATION OF THE OWNERSHIP CLASS
The first pillar of Capitalism involves the right to private property, which is guaranteed by the state. Since everyone cannot own private property, two groups emerge: The owners of private property (Capitalists), and those who do not own private property, or workers. I think it is necessary to make clear the distinction between private property and personal property here. Private property is “the power possessed by private individuals in the means of production which allow them to dispose as they will of the worker’s labor-power” , meaning the power of 71
someone, through the ownership of the means of production, to exploit those who they employ. However, personal property encompasses “objects and possessions designated…as embodying the so-called satisfaction of material and cultural needs, such as consumer goods and property items produced, bought, inherited, won, or given.” For the Capitalists, the 72
private ownership of property means that they have “the power and the right, guaranteed by
Rawls, Justice as Fairness: p. 44
70
Brenkert, “Freedom and Private Property in Marx” p. 123
71
Betts, “Private property and public culture: a forgotten chapter of East European Communist
72
the state, to live without working.” Now, because the working class does not own property, 73
they are forced to sell their labor to those who do. The goal of the Capitalist is to extract as much profit as possible via the ownership of the means of production. If Capitalists do not push to extract as much profit as possible, then they will be unable to compete with others and succumb to those who will extract as much profit as possible. In order to do this, the Capitalist must work to reduce the costs of production, including labor. That is, to get as much work out of the worker for the lowest possible cost. The goal of the worker, on the other hand, is to make as much money as possible for the least amount of work possible. Thus, through the private ownership of property, two classes, which are in conflict with one another, emerge. This private ownership of property allows Capitalists, which are already wealthier than workers by the virtue of owning the means of production, to further increase the amount of capital they possess. Workers, however, are forced to sell their labor “…by the fear of seeing themselves replaced by others…at the lowest price.” So while Capitalists are able to use their 74
private property to enrich themselves, workers are unable to do the same. This creates a widening gap in the ownership of wealth between Capitalists and workers. Today, “the richest 10 percent own around 60 percent of national wealth in most European countries, and in particular, France, Germany, Britain and Italy…[while] half of the population own virtually nothing: the poorest 50 percent invariably own less than 10 percent of national wealth, and generally less than 5 percent.” Therefore, the private ownership of property is at the core of 75
wealth inequality under Capitalism.
This inequality of wealth opens up the potential for Capitalists and owners of private property to use their capital to create unequal opportunities for themselves in other areas of life. For Capitalists, accumulated wealth is readily converted into power, which is then wielded to provide better opportunities in other parts of life, for those who possess it. In the upcoming paragraphs, I will highlight how this wealth inequality affords them better opportunities than others in politics and education, and thereby results in an inequality of opportunity for all citizens to have a fair chance at impacting policy decisions or receiving the best possible education.
Bakunin, “The Capitalist System” p. 1
73
Ibid., p. 2
74
Picketty, “Capital in the 21st Century” p. 184
Unequal opportunities in politics arise from the conversion of wealth into power by Capitalists. They use their capital to fund organized interest groups, lobby politicians, or outright buy their loyalty. In the United States, the results of Gilens & Page’s research found that the average citizen’s opportunity to influence public policy is nearly non-existent: “When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact on public policy.” Gilens & Page further noted that 76
economic elites “have far more independent impact upon policy change than the preferences of average citizens do.” Although the United States stands out when it comes to inequality, it 77
is not an American phenomenon. Schakel notes that in the Netherlands, “policy change is unlikely when the poor are in favor while the rich are mostly opposed…[and] when the opposite occurs, change is more likely.” 78
It appears that regardless of which Capitalist country this occurs in, some people are able to have an outweighing effect on policy preferences and change within a country because they are wealthy. This means there is an unequal opportunity to impact policy. Therefore, the unequal presence of wealth prevents citizens within a state from having an equal opportunity or fair chance at influencing the policy decisions of their government, regardless of their social class or origin. Rather, it appears that a citizens chance at affecting public policy under Capitalism is directly related to their social class or origin. By preventing the large-scale ownership of private property, which as we have already discussed, is at the core of wealth inequality, Market Socialism takes steps to build a country in which all people, regardless of their accrued wealth or annual income, can have an equal opportunity at influencing public policy.
Education is another issue area where wealth inequality creates unequal opportunities for citizens to attain the education of their choice. Under Capitalism, private education institutions exist, where those who can afford it are able to purchase an elite education for themselves or their children. The motivations for opting into a private education over a public one can range from desiring a religious education, to believing that “competition among
Gilens & Page “Testing Theories of American Politics: Elites, Interest Groups, and Average
76
Citizens” p. 575 Ibid., p. 576
77
Schakel, “Policy responsiveness in the Netherlands” p. 9
