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Social control of investment

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While there is no single approach or 'blueprint' for social control of investment, many strategies have been proposed. For example, Gar Alperovitz claims many real-world strategies have already emerged to democratize and decentralize the ownership of wealth and capital. In addition to worker cooperatives, Alperovitz highlights ESOPs, credit unions and other cooperative forms, social enterprises, municipally-owned utilities and public banks as starting points for what he has termed a "Pluralist Commonwealth".

Alternately, David Schweickart proposes a flat-rate tax on capital assets to replace all other business taxes. This "capital assets tax" is collected and invested by the central government. Funds are dispersed throughout society, first to regions and communities on a per capita basis, then to public banks in accordance with past performance, then to those firms with profitable project proposals. Profitable projects that promise increased employment are favored over those that do not. At each level, national, regional and local, legislatures decide what portion of their funds is to be used for public capital expenditures, then send the remainder to the next lower level. Associated with most banks are entrepreneurial divisions, which promote firm expansion and new firm creation. For large (regional or national) enterprises, local investment banks are complemented by regional and national investment banks. These too would be public institutions that receive their funds from the national investment fund.

Banks are public, not private, institutions that make grants, not loans, to business enterprises. According to Schweickart, these grants do not represent "free money", since an investment grant counts as an addition to the capital assets of the enterprise, upon which the capital-asset tax must be paid. Thus the capital assets tax functions as an interest rate. A bank grant is essentially a loan requiring interest payments but no repayment of principal.

While an economy of worker-self-managed enterprises might tend toward lower unemployment than under capitalism - because banks are mandated to consistently prioritize investment projects that would increase employment - Schweickart notes that it does not guarantee full employment. Social control of investment serves to increase employment. If the market provides insufficient employment, the public sector becomes the employer of last resort. The original formulation of the U.S. Humphrey-Hawkins Act of 1978 assumed that only in this way could full employment be assured in a market economy. Economic Democracy adopts this approach. Social control of investment then blocks the cyclical unemployment typical of capitalism.


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