May 25, 2004

Socialism meets free markets

Many people believe the collapse of the Soviet Union 12 years ago proves that free market capitalism is the only viable socio-economic model for modern countries to follow. But David Schweickart, the speaker at the Big Problems lecture, "After Capitalism: How about Democracy?" would disagree that the fall of the Soviet Union means the end of socialism.

Schweickart, a professor of philosophy at Loyola University in Chicago, described to students and faculty on Monday how alternatives to free-market enterprise could incorporate many aspects of socialism while still being capitalist. The lecture, part of the Big Problems Curriculum series hosted by the New Collegiate Division, incorporated many of the ideas in his book, After Capitalism, which posits a coherent vision of an alternative to globalizing capitalism that Schweickart termed "economic democracy."

For Schweickart, economic democracy is only a natural progression from capitalism in its present form; as the world becomes more democratic, more countries are now welfare states that ensure their citizens protection, education, health and welfare.

"We, as citizens of a democracy, hold our government responsible for the state of our economy," Schweickart said. "The state of the government we believe to be a responsibility of the government. If there is a major economic crisis, we expect, in fact we demand, that the government intervene."

Schweickart said that while people think the U.S. government must intervene with business, it has not been asked why the government has not extended any of its ideology to competitive markets, particularly labor and capital investment.

"We also know today that productive enterprises can be run democratically," Schweickart said. "The fact is embarrassing because it raises an embarrassing question—why is it in such a country that deifies democracy like the United States can we not elect our bosses? If we reflect on what we know, we can see these problems cannot be solved without radical restructuring of capital markets and labor."

Much of Schweickart's model for economic democracy strived to preserve the efficiency strengths of a market economy, while mitigating its democratic aspects. Economic democracy would democratize Wall Street companies, Schweickart said, by giving power to the employees instead of third-party stockholders. The employees would elect the CEO and the management and would have an incentive to be efficient because they have a personal stake in the company.

Schweickart also called for the democratization of private capital. Economic democracy would see private surplus of many corporations allocated back to public investment through the investment of intermediary banks and a smaller percentage going to the pockets of the shareholders.

As for the workers, Schweickart believed his model would stimulate a right to work among the laborers.

"Under economic democracy, workers have incentive to make a company the best since their wages are directly controlled by performance of company," Schweickart said. He further stated that the government should actively seek to employ its citizens, giving loan priority to companies willing to hire and eventually be an "employer of last resort," giving jobs to further decrease unemployment.

Addressing the concerns of many anti-globalization activists, Schweickart said that a fair trade market will spur competition as long as it is with countries up to par with the United States. With poor countries, richer countries would adopt socialist protection agendas to stimulate the poorer countries' economies, such as imposing tariffs on its imported goods and giving the tariffs back to the poorer nations.

"My basic experience with students about these ideas is that they are generally contemplated and they haven't generated opposition," Schweickart said. "This idea of economic democracy should really be seen as part of a new global movement for democracy. It's more like a starting point; there are a lot of unanswered questions that other students can answer. There are an awful lot [more] activists now than there were 10 years ago doing a lot of important work for getting this started."

Several students in the audience appreciated the optimism Schweickart offered the younger generation. Megan Wachsparess, a second-year in the College, thought Schweickart was presenting students a picture of how to try to correct democracy instead of criticizing it.

"One argument that he did not mention directly but he alluded to was human rights," Wachsparess said.

Other students, like Sarah Gripshober, a third-year in the College, saw flaws in Schweickart's model.

"I couldn't help but wonder if it would be better to start this democracy of the economy with a company rather than have the government try to implement it," Gripshober said. Her reasoning was that if one company were successful in democratization, others would follow.