A New World Order

A New World Order : Democrism – The Third Economic System

Theory and Practice

Distinction between Democracy and Democrism: Democracy is associated with a political system. It denotes a particular type of government which is created by the people by franchising their right to vote to elect their governing representatives directly or indirectly through a political party system. President Abraham Lincoln in his Gettysburg speech (19 November, 1863) defined democracy as the ‘Government of the People-by the people-for the people’. On the other hand Democrism is the word coined by me to denote an economic system for differentiating it from Capitalism and Communism.

Meaning of Democrism: Democrism denotes ‘economic government or economic rule of the people-by the people-for the people’. It requires establishment of strong ECONOMIC GOVERNMENT and its method of formation is illustrated in point No.2   In Democrism everyone /every worker will have share in the capital of all the industries and every industry will be owned by all workers. In other words ‘Each Industry for All and All Industry for Each”.  It will lead to “PEOPLE’S DIRECT OWNERSHIP OF CAPITAL”.  What would be the resultant and natural consequences if the people have direct ownership of capital?

1. Each Industry for All and All Industries for Each:

In Capitalism a very few people own all capital share of a country;

In Socialism no people own no capital share of a country; and

In Democrism every people own equal capital share of a country.

What does it mean?

First of all if a country ventures to launch an industry all the workers of the country will contribute a capital share out of their wage income. In the same line of ideology all the industries of the country will be started by the workers according to their wage income. Moreover a ‘National Investment Fund’ will be created by the working people. This national Investment Fund will be utilized to buy all the ‘capital Share’ of the existing corporate companies at ‘par value’ over a period of time without disturbing the existing capitalists. In the due course he ‘capitalist classes will be wiped out in the country and there will be only a working class that will directly administer the capital creation and accumulation of the country.  Thus not only the new companies but also the existing companies will be directly owned the people. This will lead the economy to the ‘Industrial Justice’ of ‘Each Industry for all and All Industries for Each’

2. Implementation of Democrism by “Economic Government”:

Moreover to empower the workers to rule over their country economically (i.e. administration on the what to produce, how to produce, and for whom to produce. and their  justifiable distribution, determination of employment, national income, poverty alleviation etc.,)  an ‘Economic Parliament’ like ‘Senate’ will be constituted anew to run the government actively apart from the present passive Political Government. In the political government the representatives of people for parliament are elected from the districts or states of a country. Whereas in the ‘Economic Government’ the representatives of people or workers will be elected by industry wise. For Example let’s assume there are 100 industries in a country like railways, iron and steel industry, textiles, information technology, construction, cottage and village industries, agriculture etc. and 10 billion workers are engaged in these industries. According to pro rata of workers population of each industry the representative of workers will be elected to the Economic Parliament of the government.

To uphold democratic administration the ‘head of the government’ in the name of  ‘Economic President or Economic Prime Minister’ as the case may be, will be elected by the ‘workers-representatives’. To assist the ‘head of the government’ an expert ‘Economic Commission’ from various fields of industries will be appointed with the approval the ‘Economic Parliament’.

3. Capital Justice:

By the enforcement of People’s Direct Ownership of Capital or the Democratization of Economy there will be only one economic system in the world created by the general will of the people on the basis of Capital Justice. Capital justice means distribution of national capital to all the workers equally or according to their wage. Because it is the people  not only produced consumption goods but also capital goods. It is the capital goods that provides ‘right to work’ to the people and thereby ‘right to live’ and its provision of which radiates as the foundation of all political constitutions. Since the People’s Direct Ownership of Capital assures one’s right to live no one has the liberty to marketing the share capital. All share markets in the world will be abolished. It is the crux of capital justice in Democrism.

4. Property Right to Proletariat only:

The workers produce not only consumption goods but also capital goods. But in both capitalist and socialist economies the workers are paid wage-income to buy consumption goods only. The value of money to buy capital goods is exploited by capitalists in the name of profit in capitalist economy and by the State in the name of common wealth in socialist economy.

On the establishment of People’s Direct Ownership of Capital the entire wealth of the nation will be distributed to all workers according their wage. By the virtue of this distributive justice all workers will have ‘Compulsory Property Right’.This will ensure the ‘economic justice’ of ‘Property Right to Proletariat Only’. When each and every worker equally or justifiably shares in the national wealth they will secure ‘economic security’, ‘Job Security’ and ‘Economic Freedom’. Subsequently their ‘fear about future’ will automatically disappear.

5. Administration by the workers  (Administrative justice):

Since each industry is directly owned by all the workers the administration of each industry cannot be looked after by all the workers as the nation as a whole. The administration of each industry will be entrusted in the hands of the manager-workers of that industry. These manager-workers should keep transparency and maintain accountability not only to the workers of that industry but also to the whole working class of the country. This is the ‘administrative justice’

 6. Industrial Peace:

There will be no room for any industrial dispute like ‘strikes and lock outs’ in any Industry as management of the industry has been directly entrusted in the hands of the workers themselves. No workers indulge in industrial disputes against themselves. There will be smooth flow of production and distribution with an accelerated tempo in all industries. Since each industry is owned by the workers, no worker will be treated as a commodity to buy for ‘wage-price’ as it has been practiced in the capitalist and socialist economies. The workers will be treated with utmost dignity and humanity.

7. Investment by workers only and Investment Justice:     

Capital is the stock and investment is the flow. Capital is one of the two factors of production in binary economics. Capital is already taken into account in the CAPITAL STOCK of a country. It is also termed as stock of accumulated labor in the past. Basically it is used as a source to determine the volume of employment, volume of production and volume of income. Whereas investment is a flow towards capital stock over a period of time. Investment is created out of one’s income and more often it emerges from one’s savings.

The capital stock maintains the employment of present workers and their wage income. Therefore it is the indispensable duty of the present workers to create investment out of their wage income to provide employment opportunity for all future employees waiting for job. Today’s employees cannot find job as the ‘Yesterday’ employees had not created adequate investment and the ‘Future’ employees will not find job if the ‘Yesterday’ employees could not have created new investment out of their savings. Thus the investment unites all the employees inseparably in time link of ‘Yesterday, Today and Tomorrow’ and thus nurtures ‘Industrial Fraternity’ among the workers. Therefore it is the Investment justice that demands all the workers to pursue the path of economic cooperation for the creation of adequate investment and upholds the ‘Time Link’ not to be broken at any cost. The ‘Time Link’ can be preserved only by the working class but not by any few capitalists or the State. Therefore the basic economic concept should be developed as follows:

“Work according to Energy,

  Wage according to Work and

Investment according to Wage.”

8. Investment according to Wage: 

The economic system of ‘People’s Direct Ownership of Capital’ put every worker under economic obligation for creating investment according to his wage for generating employment opportunities for his future generation. For the creation of National Investment, every worker will contribute a specified share of his wage income. In other words every worker will contribute an Investment Share according to his wage. For instance if a company is floated by issuing 100 billion shares of $1 each , all the shares will be distributed only to the workers of the country according their wage. This process will be continued perpetually whenever share are issued. No individual will be allowed to swindle as many shares as he can buy with his money power. The shares will be issued usually according to the three income groups i.e. lower, middle and higher income groups. 

9. Dual Income:

On the “People’s Direct Ownership of Capital” we know that all the workers will own a share of capital in all the countries. Therefore the profit earned by all the industries or the ‘national profit’ will be directly owned by all the workers of the country. It will lead the workers to get wage-income for their work and dividend-income for their capital share i.e. for their contribution of investment. For distribution of wage we have to follow ‘efficiency justice’ and for the ‘dividend’ we have to adhere to ‘Distributive Justice’

10. Distributive Justice:                   

For the contribution of ‘investment according to wage’ the workers assume full economic responsibility not only for the growth of economy but also for the creation of new employment opportunities for their successors. In the creation of investment low-income workers bear more ‘Investment Burden’ than middle and higher income workers. They have to sacrifice even the consumption of their bare necessities. The same condition of economic scarification prevails higher to middle-income group than to higher income group. The ‘Investment Burden’ or Economic Scarification varies from one income-group to another. The distributive justice of dividend payment equilibrates the economic scarification of all the workers. Now the economic doctrine develops as follows:

                             “Work according to Energy,

                              Wage according to Work,

                              Investment according to Wage and

                              Dividend according to Investment Burden”

11. Creation of Egalitarian Society:            

When all the workers contribute a particular percentage of shares of income as investment to the National Investment according to their wage income, the ‘Investment burden’ of the low income group of workers will be greater than the ‘Investment burden’ of the high income group of workers. For example if low income group of people contribute $.3,000 per annum  as investment out of their annual wage income of $30,000, their investment burden would greater than that of high income group of people who contribute $10,000 per annum as investment out of their annual wage income of $.120,000 because the low income group of people have to sacrifice even the consumption of necessities as their saving power is nil at that wage income and on the other hand the high income group of people need not sacrifice any consumption of goods but only to convert their savings into investment. Therefore, the low income group of people bear greater ‘investment burden’ for the development of the national economy than the high income group of people. Then it is the economic justice that the ‘more dividend’ should be paid to the low income group of people than the high income group of people on the basis of ‘investment burden’. More the investment burden means, more the dividend and less investment burden means less the dividend. This distributive justice of dividend will lead the economy towards Egalitarian society.  

First of all the higher dividend received by the ‘low-income group and the lower dividend received by the ‘middle-income group and similarly the dividend distribution between middle-income and high-income groups will reduce the ‘Income Gap’ between the three income groups. Secondly, in Democrism the concept profit will not be used as a tool of exploitation of workers but as a ‘mechanism’ for the establishment of Egalitarian Society’. Now the basic economic concept will widen its domain of principle as follows: 

                 “Work according to Energy,

                      Wage according to work,

                  Investment according to Wage,

                  Dividend according to Investment Burden and

                  Equality according to Dividend”

12. Classless Society

Establishment of Classless society is the fundamental object of all economic systems. There are two economic approaches to create classless society. One is ‘Negative approach’ and the other is ‘Positive approach’. After October revolution the Bolshevik masters in communist countries did not have any economic technique to establish classless society without violence. They simply abolished ‘the right to property’ in the constitution and forcefully confiscated the property of rich and appropriate it as ‘State Ownership’. Thousands of rich and capitalists brutally murdered under the guise of creating ‘Classless Society’.

In democratic capitalist countries ‘right to property’ has been made one of ‘fundamental rights’ of constitution mainly to protect the property of rich people. According to Keynes the capitalist system will operate unless economic disparity prevails between rich and poor because it the rich people who finance the required capital for the industries to create employment opportunities.

The ‘People’s Direct Ownership of Capital’ i.e. Democrism follows ‘Positive Approach’ to create ‘Classless Society’. In the system of ‘People’s Direct Ownership of Capital’, all the capitalists become workers and all the workers become the capitalists. Moreover the class distinction between ‘producers and consumers’ and ‘employers and employees’ will also disappear instantly without any violence. Therefore the People’s Direct Ownership of Capital’ is the only positive economic technique to create a classless society.

Since the theory of democrism follows Positive approach by ensuring equal share of capital wealth to all to establish classless society, the equal ownership of capital wealth to all the workers will provide them inalienable economic power , economic security and economic equality, by which they can protect themselves from exploitation and lead the mankind towards an Ideal Society. Now the economic doctrine develops to reach its ultimate goal as:

                      “Work according to Energy,

                       Wage according to work,

                       Investment according to Wage,

                       Dividend according to Investment Burden,

                        Equality according to Dividend and

                        Ideal society according to Equality”

13. Tax – Free Economy:

For effective operation of economy the ‘People’s National Profit’  the diagram in      divided into three segments such as

1. Income-compensation profit,       

2. Tax-compensation profit and 

3. Producers’ deficit money-inflow (income) compensation profit.

 Income compensation  profit:

 It means the first segment of National profit will be kept apart for distribution of dividend according to investment burden of the poor people. In order to fill the income-gap between low-income and high income groups a considerable portion of this national profit will be italicized not only for increasing the purchasing power of poor people but also employed for the establishment of egalitarian society. The execution of this technique has already been explained above
Tax-compensation  profit:

 It denotes the second segment of National profit. This portion of national profit will be directly allotted to the government to meet its expenditure. This profit is nothing but the government revenue which is so far earned in the form direct and indirect taxes from the people. All kinds taxes will be abolished in the economy and the people will directly contribute a part of their National profit to the government for its expenditure. There will be “tax-free’ economy in the country. By doing so, a huge volume of money spent for collection of taxes will also be wiped out. Moreover corruption involves both in the collection of taxes and in the evasion of paying direct taxes and economic immorality of tax payers for paying the tax will automatically disappear. People will behave with high economic honesty.
Producers’ deficit money-inflow compensation  profit:

It means the third part of National Profit to uphold the stability of economy at all levels of employment. In monetary terms stability of economy means equilibrium between out-flow of money during production of goods and inflow of money on the sale of goods produced at a particular time at static economy and the monetary equilibrium all levels of money supply in a dynamic economy. If the producers fail to get the expected money income from sale of goods, the stability in volume of employment, production and income of workers will fall. The economy will be crunched into recession and the workers will lose their employment and thereby their ‘right to live’... If industries suffer to get ‘expected income’ by sale of goods the third  part of National profit will be  set into flow towards the industries to compensate their deficiency of ‘expected income’ to sustain the level of employment and production. In other words it is the workers who help themselves to sustain their ‘right to work’. To put into real terms unemployment will never arise due to deficiency in effective demand i.e. due to failure of consumers to buy the goods produced for them, as deduced by John Maynard Keynes.

14. Maintenance of stable economy:    

The vital factor that underlies in all economic systems is to maintain the economic machinery in perfect condition perpetually to ensure stable economic growth with required accelerated tempo especially to wipe out poverty and unemployment. The smooth operation of economic machinery requires ‘a perfect and sustained monetary equilibrium’ in the circular flow of money between producers and consumers. “The rate of money-flow (for example Rs.100 billion) from the producers to the consumers when the production of goods takes into effect in a particular duration of time should be equal with the rate of money-flow (the same Rs.100 billion) from the consumers to the producers when the consumption of goods takes into effect in the same duration of time”

If the consumers create ‘a time lag’ in spending their money income of Rs.100 billion the producers will face deficiency (for example Rs.10 billion) in their required money income of Rs.100 billion, and it will force the producers to reduce the volume of production by Rs.10 billion in the next round of production and the level of employment accordingly. In order to wipe out the “ deficiency of Rs.10 billion in the producers’ required income of Rs.100 billion” to sustain the economic activities in the next round, the third portion of the ‘National profit’ i.e. “Producers’ deficit money-inflow of profit” will be utilized to fill the ‘Monetary gap’ of producers even if the goods are not sold. Goods may perish but not the life of workers due to unemployment as it is now happening in capitalism and socialism. If we want to put into Keynesian terms unemployment will not arise due to lack of effective demand when the third portion of National profit is properly used.

In democratization of economy the very concept of profit will be expelled from the ‘factor of exploitation of workers’ but will operate as an economic crusader retrieving the workers (people) from clutches of taxation, economic inequality and economic disequilibrium. In other words the concept of profit will be used here as an ‘economic technique’ or as ‘economic stabilizer’ or as ‘an economic equilibrator’ ‘to maintain dynamic stability in economic activities such as volume of employment, production and income instead of an ‘exploiter’ by capitalists as in the capitalist economy.

I5.Prosumer-Society: 
On the democratization of an economy and subsequently in consequence of the principle “Investment according to wage”, all the consumers (workers) will become the producers. So the economic discrimination between consumers and producers will naturally disappear.  A PROducer cum conSUMER society, known as PROSUMER Society will newly emerge in the economy. In the prosumer society we can deduce that all the consumers will naturally become the producers of the commodities which they want to produce. The people as a whole will determine what to produce, how to produce and how much to produce and they will bear the ‘risk factor’ of production to maintain economic stability.

16. Just price: 

A Just Price is a price of a commodity determined by consumers themselves who want to buy that commodity in a prosumer society since all the consumers are the producers in a prosumer it is the consumers themselves who will fix a price of the commodities which they want to consume. Therefore it is the Just price. The consumers will not agitate against the price that they have fixed. There will be no tussle between demand and supply forces initiated by producers and consumers in the fixation of price. There will be contentment and consentaneous general will among the consumers in fixation of the price instead of competitiveness. It is Just price because there is no room of ambiguous feeling the price level is higher or lower.

Moreover it is the just price because even if the price fixed is considered to be much higher than the cost of the goods, it will yield higher margin of profit. Higher the profit means higher distribution of the dividend; higher the dividend means higher the dividend-income to the consumers who are in the parenthesis of low and middle income groups. What the consumers pay more in the form of ‘marginally increased price’ will be immediately compensated more than that in the form ‘higher-dividend-income’ A rise in price-level will always tacitly help the consumers to fill their ‘income-gap’ instead of exploiting them. The profit created will be drained to the consumers as they are the producer as well in the Prosumer Society.
We have already seen there is ‘tax-compensation profit’ in the domain of National profit of the people. If the price-level is reduced to the point where it will cover only the ‘government expenses’, the people will get no dividend to enhance their income along with wage-income. The ‘profit-free price level’, though it will be comparatively low, will not help the low-income group of people to harvest the benefit of the ‘dividend-income’ to increase their total income. So the people will tend to push up the price-level up to a point where the national profit will be enough to yield ‘higher rate of dividend’ then the ‘marginal increase of price-level

The higher volume of dividend than the ‘marginal increase of price level’ in respect of low income group of people will be termed as ‘income gain’ for them. We can term the ‘income gain’  as “Income Equilibrator” because it reduces the income gap between low and high income group of people as ‘dividend will be distributed  according-to-Investment-burden’
At a particular point on the curve of price level the poor will receive more dividend than the rich. Thus the ‘Income equilibrator’ transfers a portion of money-income of rich to the poor bit by bit. This gradual transfer of money income will reduce the income gap between poor and rich and will tend to attain economic equality. The economic equality cannot be attained at a single stroke of lightning. The combined socio-economic circumstances should be taken into account. In the name equality we should not crush and squeeze the rich. A universal harmony and consensus should prevail among the people in the attainment of equality.There are various points on the curve of price line at which the rate of dividend will be greater than the ‘marginal increase of price level’ such a point on the curve of price line determines the ‘Just price’ of the economy at a particular level of production. 

17. Interest-free economy:

In consequence of democratization of economy the just price will act in smooth concerted way by increasing total income along with wage-income and increased dividend payment. Since any increase in the price level will increase the payment of dividend the total income, i.e. wage plus dividend, of the poor will increase their purchasing power. Moreover, the just price is determined by the universal consensus of consumers only. So, if the price level increases it is increased so in order to widen the profit margin and it will be effective to pay higher ‘dividend – income’ to the poor people. Therefore any increase in price-level will increase the purchasing power of the poor people but not forfeit it.

The vicious wage-price spiral inflation will not emerge in the democratization of economy. Here there is no “market price” determined by the interaction of demand and supply forces, but only the ‘just price’ determined by consumers themselves. Therefore the mode of operation of the economy will be “inflation-free’ of any kind.

18. Administration of Natural Resources:                 

In the democratization of economy it is the people, only the people, will take utmost care and absolute control over the allocation and allotment of Natural Resources. The natural resources are not only very scarce but also remain very source of all production and distribution of goods and services of any economy. The people will take exclusive control over the natural resources and assume full liberty and authority in their allocation to the various production and economic activities quashing government’s participation in any way or in any form.

When the natural resources come under the direct control of the people, they will not allow the natural resources for the production of destructive goods like nuclear weapons which are now threatening the very existence of human race and such hazardous commodities like ganja, opium and other narcotic drugs which are harmful to human health. At present the narcotic drugs are widely spreading their wings throughout the world, especially among the youth, and posing hazardous risk to the very life of the people. Since there is worldwide network in trafficking and strong nexus among the politicians, executives and underworld dons in the business of narcotic drugs for monetary benefits ignoring the welfare of the society and taking no thought of the health of future generation, the enforcement of laws and execution of punishments seem to be ineffective and impotent on checking and abolishing of the flourishing of the trade day by day. The only solution now remaining at last is the democratization of economy and entrust the natural resources in the hands of the people.

19. Saving of the Planet from Global Warming under People’s Direct Ownership of Capital:

Climate Justice and Equity: For a number of years, there have been concerns that climate change negotiations will essentially ignore a key principle of climate change negotiation frameworks: the common but differentiated responsibilities.

This recognizes them historically that

a). industrialized nations have emitted far more greenhouse gas emissions (even if some developing nations are only now increasing theirs);

b). rich countries therefore face the biggest responsibility and burden for action to address climate change; and

c). rich countries therefore must support developing nations adapt—through financing and technology transfer, for example.

This notion of climate justice is typically ignored by many rich nations and their mainstream media, making it easy to blame China, India and other developing countries for failures in climate change mitigation negotiations.

Development expert, Martin Knorr, calculated that taking historical emissions into account, the rich countries owe a carbon debt because they have already used more than their fair quota of emissions. Most scientists (if not most politicians) now believe that man's consumption of fossil -fuels and planetary deforestation activities are causing carbon buildup in the atmosphere and triggering global warming. The questions are how long, how fast, and how much damage is being done. The scientist Flannery believes that we are rapidly approaching the point where irreversible temperature changes will melt the ice caps, cause mass extinctions, and destroy coastal cities. Weather Makers is his call to act.

20. Elimination of nuclear weapons:    

If we deeply contemplate to find out the root cause for the production of “Weapons of Mass Destruction” (WMD) like nuclear weapons, ballistic missiles, poisonous chemical weapons, we deduce the fact that it is the State, only the State, having the ownership of capital, produces such kind of weapons throughout the world in the name of ‘self-defense’ or ‘military balance’ or to enjoy the dignity under the guise of ‘super power’. These weapons are produced by the State without the knowledge and approval of the people, though the capital used for the production of such weapons, is ravished from the tax payments of the people.These weapons convert the whole world as ‘open battle-field’ and kill millions of innocent people. The people who pay the tax for their own welfare are not aware of the conversion of productive capital into destructive capital. They are always being kept in utter darkness.

The only solution for the people to save themselves from the nuclear holocaust is the immediate execution of democratization of economy i.e. ‘peoples’ direct ownership of capital. Because on the direct ownership of capital people will not allow at any cost their capital and their industries to produce the ‘weapons of mass destruction, and thereby to destroy-themselves. No summit meetings on reduction of nuclear weapons ,bilateral or multilateral treaties on non-proliferation of nuclear technologies will ensure world peace. I believe the only hope for human survival and scope for the world peace anchor on the democratization of economy apart from solving poverty and unemployment.    

21.  Elimination of Terrorism:

The Statement, ‘One man’s terrorist is another man’s freedom fighter’, has become not only a cliché but also one of the most difficult obstacles in coping with terrorism. The matter of definition and conceptualization is usually a purely theoretical issue but in the struggle against terrorism, the problem of definition is a crucial element in the attempt to coordinate international collaboration.

The destructive weapons in the hands of wrong persons induce them to indulge in terrorism. If there is no destructive weapon there are no terrorist activities. For instance, the terrorists cannot hijack planes with bare hands with the intention of destroying the twin towers of World Trade Center in New York and terrorize the whole world by killing three thousand people at a stroke of lightning. In stationary vehicles, in flying planes and in suitcases arms and ammunitions and deadly explosives are used to kill innocent people. We can find no terrorists with bare hands to fulfill his political ends. There is a notion among people that Saudi Arabia is the epicenter of global terrorism where huge monetary resources are available in the name of heavenly law. The arms and explosives constitute the basic element for terrorism.

The production of such deadly weapons cannot be properly controlled and cannot be prevented to pass into hands of terrorists in the capitalistic mode of production whose only aim is profit motive but not social welfare. Before shifting the epicenter of terrorism from the Saudi Arabia to other parts of the democratic countries, we have to close all the venues and mode of production and distribution of destructive weapons. Even human suicide bombers cannot turn into terrorists unless they are equipped with explosives. The capitalistic mode of production is never effective to keep the self-interested capitalists under control in the production and distribution of such destructive weapons required by the terrorists. May the aim and pattern of terrorism be any design; the accessibility to the destructive weapons by the terrorists should be wiped out completely for the eradication of terrorism in the world.

Only in the democratization of economy the people as a whole would have absolute ownership of natural resources and control over the allocation of them for production and distribution of such terrorist-weapons. The individual consumers will be served with only consumption goods; no terrorist group or the state will gain access to procure natural resources for the production and distribution of weapons that terrorists require. Sooner the democratization of the economy sooner will be the world peace on the eradication of terrorism. If the views and visions of the people in this regard are clear and courageous, the result will be peace and prosperous.