how democratic socialism would work - Politics Forum.org | PoFo

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As either the transitional stage to communism or legitimate socio-economic ends in its own right.
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#14262186
The way I think democratic socialism would work would be as follows.
1.The country would be divided in municipalities
2.Each municipality would have a credit union
3.members of credit unions would vote democratically on what businesses to fund
4.The loans would be interest free
5.Credit unions could link up through the internet to fund major projects
6.Only people who work in the business would be allowed to be shareholders and they could decide how to allocate their money.(people who work harder would get bonuses for instance)
7.There would also be public forums (free togas provided)
#14262792
Where is the party and the gigantic state bureaus employing 100,000s of people? You might have got lost on the way to the libertarian forum. This does not sound like socialism to me. Letting the people with all the money choose what do do with it while everyone else freezes to death is what got us here in the first place!
#14263145
I tend to agree with Decky (on this point)

established wealth directing new spend seems neither socialist or democratic

I have no desire to see a gigantic state bureau but the economic arrangements which we establish have to involve a voice for all. not just able44 bodied people with an business but mothers, pensioners, the disabled and those currently excluded from owning capital by the unequal distribution of wealth in society

We to make sure that all people have a right to productive work in worker run collectives that are democratically controlled by workers and which operate according to a broad plan which is approved by the elected representatives of all the peoples

anything short of that will perpetuate inequality, environmental destruction and leave a workforce driven by fear of redundancy
#14263172
What you're describing sounds a bit like mutualism. You might want to check it out. I'm not particularly partial to mutualism(any more than I am to anarcho-syndicalism or anarcho-communism -- I consider myself "anarchist without adjectives"), but I like it a lot better than the kind of authoritarian state socialism people like Decky promote.
#14263174
ronimacarroni wrote:3.members of credit unions would vote democratically on what businesses to fund
4.The loans would be interest free

That seems to lead to complete economic annihilation.

That is because having an interest rate of zero percent forever, would mean that you have set an interest rate which is below the rate of inflation. That is almost like paying people to lend and borrow from each other. At the beginning, people would be democratically voting to support all sorts of grand and showy projects all over the place, and eventually they will have created a number of bubbles so large that when they burst - and they would indeed burst - there would be basically nothing that you would be able to do to prevent the entire system from falling apart.
#14263177
Paradigm wrote:I consider myself "anarchist without adjectives")


Hi Paradigm

I consider myself to be that as well

But I see your political compass score resembling one of an "anarcho"-communist.

In your society, would human relations be voluntary? If yes, we agree on everything.

I've never understood how an anarchist without adjectives could be -9.00 on a political compass scale regarding economic issues.
#14263188
Husky wrote:Hi Paradigm

I consider myself to be that as well

But I see your political compass score resembling one of an "anarcho"-communist.

In your society, would human relations be voluntary? If yes, we agree on everything.

I've never understood how an anarchist without adjectives could be -9.00 on a political compass scale regarding economic issues.

The reason I'm so far left on the economic scale is because I'm vehemently anti-capitalist. Plus, as I said, anarcho-communism is one system I could support, but not the only system. In terms of what is to replace capitalism, I'm very much a pragmatist. Whatever works, so long as it is non-hierarchical and decentralized. As far as human relations being voluntary, it depends what you mean. I'm wary of the word "voluntary," because the way right-libertarians tend to use it tends to be dismissive of the implicit coercion involved in private property. But with that caveat, yes it would involve voluntary relations between equals.
Last edited by Paradigm on 28 Jun 2013 23:13, edited 1 time in total.
#14263191
Rei Murasame wrote:That seems to lead to complete economic annihilation.

That is because having an interest rate of zero percent forever, would mean that you have set an interest rate which is below the rate of inflation. That is almost like paying people to lend and borrow from each other. At the beginning, people would be democratically voting to support all sorts of grand and showy projects all over the place, and eventually they will have created a number of bubbles so large that when they burst - and they would indeed burst - there would be basically nothing that you would be able to do to prevent the entire system from falling apart.

Well I'm sort of basing the interest free credit union on Proudhon.
Also I forgot to mention that land would belong to the municipalities.
Right now I think the best course of action to realize such a society would be to subsidize credit unions.
I'm generally opposed to subsidies because they create inflation of profits, but credit unions are not for profit, so it all works out.
Also I think we can all agree by now that big banks suck.
#14263193
^^Artificially low interest rates and the associated increase in the money supply lead to reckless, speculative borrowing, resulting in clusters of malinvestments, which eventually have to be liquidated as they become unsustainable.

As Rei said- economic annihilation.
#14263198
ronimacarroni wrote:4.The loans would be interest free
Very few people would be willing to loan, at 0%, what they've saved.

I, for instance, would not loan you 4 rashers of my bacon so that you can feed yourself today in return for 4 rashers of your bacon, tomorrow, next week, next month, next year or whenever you can pay me back. Since I have given up the pleasure of eating 4 rashers now, I demand more than 4 rashers from you at a later date.

That is, most people would loan at an interest rate >0%.
Last edited by Soix on 28 Jun 2013 23:36, edited 1 time in total.
#14263199
Husky wrote:^^Artificially low interest rates and the associated increase in the money supply lead to reckless, speculative borrowing, resulting in clusters of malinvestments, which eventually have to be liquidated as they become unsustainable.

That's only if you have fixed assets such as land that can be speculated on. In a society based on possession rather than property, as Proudhon advocated, such speculation would be null and void. That would also avoid inflation. Community credit systems with zero or very low interest have existed at several points throughout history, including in medieval villages where the reach of the state was minimal. Mutual credit essentially mimics the action of mutual aid, which is the original form of exchange in human societies.
#14263458
if interest rates are zero then there are no incentives to save. so the "bank" will have to raise money through some sort of tax.

theres nothing wrong with that but I think it would be better described as a sytem of taxation rather than a system of credit

if tax is to be levied it should be used for the good of the whole society not just municipalities some of which will be inherently wealthy and some of which will be very poor.

rather than shareholder owned co-operatives - I would prefer to see of worker collectives operating according to broad plans sets democratically

the collectives would offer people, balanced jobs based on a mix of more and less rewarding work.
#14263512
ronimacarroni wrote:3.members of credit unions would vote democratically on what businesses to fund
4.The loans would be interest free
Rei Murasame wrote:That seems to lead to complete economic annihilation.

That is because having an interest rate of zero percent forever, would mean that you have set an interest rate which is below the rate of inflation. That is almost like paying people to lend and borrow from each other.
As others point out, no individual stands to gain from lending. Wouldn't the problem be a diminishing pot, after inflation, for funding startups ? A solution would be some kind of corporation tax.

Rei Murasame wrote:At the beginning, people would be democratically voting to support all sorts of grand and showy projects all over the place, and eventually they will have created a number of bubbles so large that when they burst - and they would indeed burst - there would be basically nothing that you would be able to do to prevent the entire system from falling apart.
I think that's a real danger. How about if the credit unions or whatever employ professional bankers to whom startups apply for loans? These would essentially be public sector employees payed/promoted (on a sensible scale!) by their track record of picking viable businesses - ie not capitalists.

Basically David Schweickart's market socialism model.
#14263672
Julian wrote:if interest rates are zero then there are no incentives to save. so the "bank" will have to raise money through some sort of tax.

theres nothing wrong with that but I think it would be better described as a sytem of taxation rather than a system of credit

That assumes that they need to turn a profit, which isn't the case if it's owned by its members. Then it becomes simply a form of mutual aid, where people extend credit to other people who need it, and in return will have credit extended to them when they need it.
#14263709
Paradigm wrote:That assumes that they need to turn a profit, which isn't the case if it's owned by its members. Then it becomes simply a form of mutual aid, where people extend credit to other people who need it, and in return will have credit extended to them when they need it.

I think sudenimes is right about the diminishing pot though.
I hadn't thought of that.
As for the professional bankers. I think they could rate companies, but the ultimately the decision should be made by the >51% majority.
#14265050
Rei Murasame wrote:That seems to lead to complete economic annihilation.

That is because having an interest rate of zero percent forever, would mean that you have set an interest rate which is below the rate of inflation.


Having no interest rate does not actually preclude banking fees, though I suspect he would have a problem with those too. Moreover, the terms of payment could be linked to inflation without it being an interest rate. There is also a point to be made that were this the only banking system, there probably wouldn't actually be any inflation. One cannot assume that there would always be inflation once the mechanisms that cause inflation are removed.

That is almost like paying people to lend and borrow from each other. At the beginning, people would be democratically voting to support all sorts of grand and showy projects all over the place,


Possibly, possibly not. Believe it or not, people are actually capable of establishing sensible priorities by voting. This doesn't happen in political systems mainly because those systems are explicitly designed to prevent such behavior.

and eventually they will have created a number of bubbles so large that when they burst - and they would indeed burst - there would be basically nothing that you would be able to do to prevent the entire system from falling apart.


Where's the motive to create the bubbles once the profit and interest is removed? Generally speaking, bubbles only get pumped when there's a structural origin for the bubble--tax law makes it preferable to invest in housing, the government's doing a land grab so there's opportunities to buy in at below market rate, etc. If people are just doing whatever they want to do, there wouldn't be the kind of focused investment that's required to pump a bubble.
#14265053
Paradigm wrote:That assumes that they need to turn a profit, which isn't the case if it's owned by its members. Then it becomes simply a form of mutual aid, where people extend credit to other people who need it, and in return will have credit extended to them when they need it.


The problem is that some people will legitimately fail at what they take a loan to do, or that it honestly was a bad idea to begin with. As it stands, the credit union would have no method to recover other than people deciding to throw more money into the pot. Probably not the best approach.

Probably the best approach would be to have the credit union's members (or board of directors, most likely) vote to establish how large of a pool of money they want to have for loans each quarter (or over several quarters), then set interest rates relative to that pool; if they're fully funded that quarter, loans are at no interest, if they're down that quarter, then interest is required at a rate sufficient to fully fund themselves.

Saying "never have interest" is fine and all, but from a practical standpoint loans are often taken and wasted, and that's not in keeping with the goals of mutual aid at all.
#14265270
Someone5 wrote:The problem is that some people will legitimately fail at what they take a loan to do, or that it honestly was a bad idea to begin with. As it stands, the credit union would have no method to recover other than people deciding to throw more money into the pot. Probably not the best approach.

Probably the best approach would be to have the credit union's members (or board of directors, most likely) vote to establish how large of a pool of money they want to have for loans each quarter (or over several quarters), then set interest rates relative to that pool; if they're fully funded that quarter, loans are at no interest, if they're down that quarter, then interest is required at a rate sufficient to fully fund themselves.

Saying "never have interest" is fine and all, but from a practical standpoint loans are often taken and wasted, and that's not in keeping with the goals of mutual aid at all.

Yes, I can see the need for such practical considerations. Normally, when I think of mutual credit, I think of how people would use it as currency in their everyday life, as sort of an ongoing debit and credit balance, in which case I don't think interest would be needed. But for larger loans such as establishing new co-ops or creating new construction projects, I can see a need for some sort of risk premium. I remember when reading Silvio Gesell, he spoke of interest having three components: risk premium, expected rate of inflation, and true interest, meaning the return of capital. The latter part is what we're really trying to eliminate. The other two should be minimized by making smart investments and keeping an eye on the velocity of money(inflation has more to do with the velocity of money than the sheer quantity of it, though the two influence one another greatly).
#14265275
One huge advantage of mutual credit is that the currency supply is self-regulating—the money supply expands and contracts as needed, without any managing authority.

The downside, is that it is difficult to control the system in a large and complex economy. For this reason, mutual credit systems are usually established among small communities. The reason it is difficult to control is the fact that someone could ring up a huge negative balance, and then leave that geographical location.
#14265286
Husky wrote:One huge advantage of mutual credit is that the currency supply is self-regulating—the money supply expands and contracts as needed, without any managing authority.

The downside, is that it is difficult to control the system in a large and complex economy. For this reason, mutual credit systems are usually established among small communities. The reason it is difficult to control is the fact that someone could ring up a huge negative balance, and then leave that geographical location.

Indeed. I think this speaks to the need for federation, so that different mutual credit systems are linked together by a larger network.
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