The United States is the wealthiest nation in the history of the world. By the end of the 21st century it will have the technological capacity to increase the income of all its citizens many times over or to radically reduce work time and thereby allow a new flowering of democracy, liberty, and personal and community creativity. The new century could be–should be–one of innovation, hope, even excitement.1
Few Americans approach the century this way. The future is clouded by problems rather than opportunities; it appears as an era of great political difficulty and danger. At the most obvious level is the threat posed by terrorism and war—and the many challenges to liberty which overly zealous approaches to both have produced. At another are the growing social, economic, racial and other difficulties catalogued in the preceding pages. Critically, confidence that the great traditional values at the very heart of the American experience can be sustained has been declining rapidly.
A society committed to enhancing equality, liberty and democracy which is unable to achieve such values in practice–indeed, which is moving in precisely the opposite direction–is committed to a morally incoherent politics. If such a politics continues through time, ever greater cynicism must develop; and with it, an ever deepening sense that American society has lost its moral compass, that government policies are merely the result of power-plays and brokering between interested parties which do not and cannot claim any deeper democratic or moral legitimacy.
A political-economic system can continue to violate the values it affirms for a very long time without major consequences. It is unlikely, however, to be able to do so forever. The question is: Can a meaningful, morally coherent, and ultimately positive politics be constructed in the emerging era of technological abundance?
Can a new direction be set which acknowledges the systemic nature of our problems and openly posits a concrete alternative and a process which might move in a new direction? Can the system be changed?
It is important to stand back from the difficulties of the current moment to consider underlying issues of principle which will frame the politics of the coming era—to and through times of war and terrorism… and beyond. Leaving aside the question of near- or long-term political-economic feasibility, four quite fundamental contentions are suggested by the evolving political-economic developments we have reviewed:
First, that there is no way to achieve movement towards greater equality without developing new institutions which hold wealth on behalf of small and large publics;
Second, that there is no way to rebuild democracy with a Big “D” in the system as a whole without nurturing the conditions of democracy with a small “d” in everyday life—including the economic institutions which allow and sustain greater stability of local community life;
Third, that there is no way to achieve democracy in a continental scale system moving towards 400 million people–and possibly a billion or beyond–without radical decentralization, ultimately in all probability to some form of regional units;
Fourth, that there is no way to achieve meaningful individual liberty in the modern era without greater individual economic security and greater amounts of free time—and that neither of these, in turn, is possible without a change in the ownership of wealth and the income flows it permits.
These four contentions stand on their own. Indeed, at this point in American history, the ball is in the court of those who hold that equality, liberty and meaningful democracy can be achieved without meeting the challenges suggested by the four basic points. Further related questions are whether there is any other way to achieve gender equality, ecological sustainability, and the sustained reality of meaningful community.
The Pluralist Commonwealth model holds, beyond this, that democratic control of large economic enterprise—a central problem confronting all political-economic systems—can never be achieved without transforming and making public the ownership of large-scale wealth and without developing a new culture—and, further, that this can only be done by building on the four key elements:
Without local democracy there can be no culture of democratic practice; without security and time, there can be only a weak citizenry; without decentralization it is difficult to mobilize democratic practice and accountability; and without major and far-reaching new forms of wealth-holding, there can never be adequate support for the conditions and policies needed to build a more egalitarian and free democratic culture in general.
Finally, the model is based on the judgment that greater equality, greater individual economic security, greater amounts of free time, and–upon this basis–the reconstitution of a culture of common responsibility are ultimately required if we are ever to reorient our community and national priorities in general.2
The central argument of this essay is that the first decades of the 21st century are likely to open the way to a serious debate about these and other systemic questions—and, further, that real-world conditions during the coming period are likely to offer possibilities for establishing substantial foundations for a longer-term systemic transformation thereafter.
The prospects for near-term change are obviously not great—especially when such change is conceived in traditional terms. Indeed, although there may be an occasional “progressive” electoral win, there is every reason to believe that the underlying trends will continue their decaying downward course. In many ways, times are likely to get worse before they get better.
On the other hand, fundamental to the analysis presented in the preceding pages is the observation that, for precisely such reasons, we are likely to see an intensified process of much deeper probing, much more serious political analysis, and much more fundamental institutional exploration and development. We have also noted that there are important signs of change in the traditional “laboratories” of democratic process: states from Alaska to California, and from Alabama to Vermont have moved forward to create—and systematically build political support for—many new political-economic experiments and strategies. Federal fiscal and other decisions are now producing pain and reassessment at every level.
Traditionally, a distinction has been made between “reform,” on the one hand, and “revolution,” on the other. The former implies non-violent improvement in the outcomes of a given system—with no fundamental change in its basic institutional structure. It cleans up around the edges of the existing system, as it were, sometimes slowly, sometimes in major political outbursts. The latter, revolution, commonly implies abrupt and often violent change—above all of the fundamental institutional structures of the system.
The kind of change which appears in the various trajectories of emerging American development involves an unusual combination of strategic approaches. Like reform, in the main it involves step-by-step, nonviolent change. But like revolution, the process is oriented to the development of quite different institutional structures to replace traditional corporate forms over time. It might appropriately be called “evolutionary reconstruction.”
A politics based on evolutionary reconstructive principles does not abandon reform when it can achieve important gains. On the other hand, such a politics explicitly seeks to understand—and to foster—the longer-term foundational requirements of the values it affirms. It is not satisfied with, nor misled by, occasional electoral gains which do little to alter the direction of long-term trends. It is a politics of historical perspective and commitment to the long haul.
Few predicted either the 1960s or the conservative revolution which followed. Major eruptions and political realignments are the rule, not the exception in American history. Large numbers of working Americans, blacks and Hispanics who will become a majority as the century develops, senior citizens (and those who will shortly become seniors), women who seek practical ways to achieve thorough-going gender equality, liberals and conservatives alike who value family and community, environmentalists who cannot secure protections either for endangered goals or sustainable growth along current lines of development—all are finding it increasingly difficult to realize their objectives through traditional means.
A fundamental question is what may happen as various groups, each beginning with more narrowly defined interests, come to the realization that what they value most cannot be achieved without a new approach. If, as appears increasingly likely, such awareness begins to intersect with the knowledge and experience gained through the development of new strategies and ideas, quite new possibilities are likely to become available to politics in the coming era.
There are also numerous indications of underlying political instability in the American system: Millions have expressed their discontent by breaking with the major political parties to vote for Ross Perot, Pat Buchanan, and Ralph Nader, to elect Jesse Ventura in Minnesota, and to support Howard Dean’s insurgent campaign for the Democratic nomination in 2004. [Editor’s note: and Bernie Sanders’ in 2016] Such “unexpected” developments also suggest that beneath the surface level of “politics as usual,” it is by no means clear that the public is or will remain quiescent forever—especially if social and economic pain continues, if political elites continue to overreach, and if new directions begin to be clearly defined.3
The term “conjunktur” designates a coming together at one moment in time of diverse trends to create new, unforeseen and often dramatic opportunities for change. A major electoral shift or political realignment is easily conceivable—and with it, the truly interesting question of the first decades of the century: whether foundations for something much more far-reaching might be established for the period beyond.
The legitimacy of present economic arrangements and entitlements is also likely to be called into question by large-order developments which intersect with—and strengthen—ongoing efforts to achieve change:
In the late 1990s, economist William Baumol pointed out that per capita GDP in the United States had increased ninefold since 1870–and that almost 90% of this growth was due to innovations developed over the previous 130- year period. Even pre-1870 innovations such as the steam engine and the railroad, he observed, “still add to today’s GDP.”4
Nobel Laureate Robert Solow has similarly pointed out that current economic growth must overwhelmingly be attributed to “residual” factors which, broadly speaking, involve the contributions of inherited technological knowledge. Again, research by economist Edward Denison has shown that advances in knowledge are “the biggest and most basic reason for the persistent long-term growth of output per unit of input.”5
The moral—and hence, ultimately, political—implications of this growing understanding are beginning to be recognized. Above all, as historian Joel Mokyr observes, the knowledge we receive from the past comes to us through no effort of our own as a “free lunch.” The implicit question is inherently explosive: If so, who should rightly benefit, and in what proportions, from this extraordinary inheritance—this free gift which produces so much of our common abundance?6
Seth Shulman, author of Owning the Future, has made the obvious connection: The elites who hold most of the rights to modern technologies “are legally sanctioned, but the legitimacy of their claims often remains dubious because of the debt they owe to innovations that have been made possible only by years or decades of collective advances.”7
The “current” technological contributions which produce such huge rewards for the fortunate few, in short, are a mere pebble placed atop a Gibraltar of received science and technology which makes the modern additions possible—and which was often paid for by the public and which can be traced back through many generations, indeed, centuries. Current elites, Bill Gates Sr. urges, disproportionately reap the harvest of what is inherently a collective investment. Gates proposes their estates be taxed accordingly.8
The late Herbert Simon, another Nobel Laureate, defined the central issue this way: “[A]ny causal analysis explaining why American GDP is about $25,000 per capita  would show that at least two-thirds is due to the happy accident that the income recipient was born in the U.S….” Simon termed the vast gift of the past a sort of “patrimony” received simply by the chance of birth—and, like Gates, urged that this should be the subject of large-order taxation.9
We have noted growing anger at the extreme wealth of some amidst the great poverty of others—and, too, at the corrupt practices of many leading corporate executives. We have seen that elite ownership has very little to do with the demands of efficiency and productivity, and that a variety of institutional forms can manage wealth effectively—indeed, often more effectively than traditional forms.
The new understandings which the knowledge economy increasingly underscores are the moral wild cards of the era of technological abundance. As recognition that the sources of modern abundance are deeply rooted in the legacy we all receive from the past continues to develop, it is likely to bring with it a powerful critique of all justifications of current wealth ownership patterns and a powerful rationale for new, broader allocations and institutional strategies.*/10
Little has been said in the preceding pages about global issues and international relations. The reason is not only that this essay is devoted primarily to American developments. It is that it is extremely difficult to imagine a fundamental shift in America’s stance towards the rest of the world absent a transformation of our own ways at home. The argument of Alexis de Tocqueville and John Stuart Mill that ultimately democracy in a nation depends upon the development of democracy in communities is echoed in the judgment that America is unlikely to play a different role in the world until it is a different America–until it finds ways once again to realize values of equality, liberty, democracy and, one day, perhaps even of community. Efforts to persuade the United States to respond more humanely to global problems are both laudable and essential. If we Americans truly hope to help others around the world, however, we have much hard work to do, first and foremost, here at home.
Large-order institutional restructuring, we tend to forget, is exceedingly common in the long sweep of world history. The difficulty lies in pulling ourselves out of the present ‘moment’ to consider our own possibilities in broader historical perspective.
The current years of terrorism and war are not the first time our nation has been challenged by grave danger, nor is this the only time it has experienced great violence at home. Indeed, we have survived even Civil War, and losses many times those of recent years. The fundamental questions posed throughout this essay may or may not be answered. They will not, however, go away.
We have begun a new century. The coming decades will establish the terms of reference for further, future change. It is not possible to know whether a new direction based on the developing ideas, models, practical experiments, and new alliance explorations can lay the foundations for the next political-economic system. Or whether, over time, a new basis can thereby be established for a politics capable of unleashing the moral energies which can flow from a renewed commitment to achieving equality, liberty, and democracy.
It is possible, however, for one person–each person–to help refine our understanding and our strategies and to help establish the practical and political elements needed in the first stage of any realistic forward-moving developmental process. Each step is valuable on its own terms, no matter what.
Long before the Civil Rights movement, there were many years of hard, quiet, dangerous work by those who came before. Long before the feminist explosion were those who labored to establish new principles in earlier decades. It is within the possibilities of our own time in history that—working together and openly charting an explicit new course—this generation can establish the necessary foundations for an extraordinary future and for the release of new energies. It may even be that far-reaching change will come much earlier and much faster than many now imagine.
(For footnotes, see below.)
Excerpted from America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy, 2011, by Gar Alperovitz. Used with permission. Alperovitz has had a distinguished career as a historian, political economist, activist, writer, and government official. For 15 years, he served as the Lionel R. Bauman Professor of Political Economy at the University of Maryland, and is a former Fellow of Kings College, Cambridge University; Harvard’s Institute of Politics; the Institute for Policy Studies; and a guest scholar at the Brookings Institution. He is the president of the National Center for Economic and Security Alternatives and is a co-founder of the Democracy Collaborative, a research institution developing practical, policy-focused, and systematic paths towards ecologically sustainable, community-oriented change and the democratization of wealth. He is also the co-chair of the Next System Project, a project of the Democracy Collaborative.
* The evolving recognition that the technologies and other gifts of the past at the heart of the knowledge economy are different–and that they are not primarily the result of current effort or merit–also recalls the understanding of leading figures of the early Chicago school of economics. Here, for instance, is Frank Knight: “Existing capacities to render service, including ownership of wealth, are in turn the result of the working of the economic process in the past…” “There is no visible reason why anyone is more or less entitled to the earnings of inherited personal capacities than to those of inherited property in any other form; and similarly as to capacity resulting from impersonal social processes…” Frank Knight, Freedom and Reform (New York: Harper & Brothers, 1947), pp. 9, 151.
- For an earlier formulation of these themes, see Gar Alperovitz, “Distributing Our Technological Inheritance,” Technology Review, Vol. 97, No. 9 (October 1994), pp. 31-36.
- An important illustration of the relationship of norms to public policy involves accepted child labor laws which regularly challenge free market doctrine. For a discussion, see Dani Rodrik, Has Globalization Gone Too Far? (Washington, D.C.: Institute for International Economics, 1997).
- For a forceful statement of the argument that there is “surging discontent just below the surface” of the American political system, see Walter Dean Burnham, “Whole Lotta Shakin’ Goin’ On: A Political Realignment Is On the Way,” The Nation, Vol. 270, No. 15 (April 17, 2000), pp. 11-15, p. 11.
- William J. Baumol, “Rapid Economic Growth, Equitable Income Distribution, and the Optimal Range of Innovation Spillovers,” in, Economic Events, Ideas, and Policies: The 1960s and After, ed. George L. Perry and James Tobin (Washington, D.C.: Brookings Institution Press, 2000), p. 27.
- Robert M. Solow, Nobel Prize Lecture, December 8, 1987, http://www.nobel.se/economics/laureates/1987/solow-lecture.html [05/13/03]; Barry Bluestone and Bennett Harrison, Growing Prosperity: The Battle for Growth with Equity in the Twenty-first Century (Berkeley: University of California Press, 2000), pp. 105-106. Edward F. Denison, Accounting for United States Economic Growth 1929-1969 (Washington, D.C.: The Brookings Institution, 1974), p. 79; Edward F. Denison, Trends in American Economic Growth, 1929-1982 (Washington, D.C.: The Brookings Institution, 1985), p. 28.
- Joel Mokyr, The Lever of Riches: Technological Creativity and Economic Progress (New York: Oxford University Press, 1990), p. 3.
- Seth Shulman, Owning the Future (Boston: Houghton Mifflin, 1999), p. 155.
- Bob Thompson, “Sharing the Wealth?” The Washington Post, April 13, 2003, p. W8; William H. Gates Sr. and Chuck Collins, Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes (Boston: Beacon Press, 2002).
- Letter from Herbert A. Simon, reproduced as “Herbert Simon, the Flat Tax and Our Common Patrimony,” Basic Income, No. 29, Newsletter of the Basic Income European Network (Spring 1998), http://www.bien.be/Files/Newsletter/BINews29.pdf [01/06/03]. In fact, per capita GDP was $31,830 in 1998.
- As previously noted Edward Perkins estimates that per capita income in the colonies in the 1770s (for the free population) was roughly equivalent to $1,805 (2002 dollars). See Part V Introductory Note, Endnote 5, above. Actual income per capita in 2002 was $31,034. The 1770s figure is approximately 6% of the modern figure. If, on a rough assumption, individuals worked as hard in both periods, the extraordinary seventeen-fold increase is a rough measure of the contribution of inherited technology and capital accumulation in the U.S. over this time period. And–given the longer hours commonly worked in the earlier period–there is every reason to believe that this is a conservative estimate. Edward Perkins, The Economy of Colonial America (New York: Columbia University Press, 1988), p. 212; Thomas Weiss and Donald Schaefer, “Introduction,” American Economic Development in Historical Perspective ed. Thomas Weiss and Donald Schaefer, (Stanford, Calif.: Stanford University Press, 1994), p. 2; Bureau of Economic Analysis, “National Income and Product Accounts Tables,” Table 1.9 http://www.bea.gov/bea/dn/nipaweb/index.asp [04/28/03]. See also Moses Abramovitz and Paul David, “American Macroeconomic Growth in the Era of Knowledge-Based Progress: The Long Run Perspective,” The Cambridge Economic History of the United States, Vol. III The Twentieth Century, ed. Stanley Engerman and Robert Gallman, (Cambridge: Cambridge University Press, 2000), pp. 1-92.