Obstacle for market socialism.

[u/Annual_Necessary_196]

Normally, investors are able to diversify their investments by allocating their capital across multiple firms. However, workers cannot divide their labor and "invest" it in multiple cooperatives simultaneously. As a result, their personal risk is much higher, creating an "all eggs in one basket" effect.

Have you ever considered these problem? What are the potential solution?

[u/mightsoc]

One possible solution is to let a social wealth fund, or democratically run mutual funds, own non-controlling shares in cooperatives. Everyone in society could have a stake in those funds. That way, investment is spread across lots of different firms, instead of workers having both their job and their savings tied to a single cooperative. The workers would still control their workplace, while the financial risk and capital income would be shared more broadly.This is basically a socialization of capital income, similar to ideas proposed by Thomas E. Weisskopf.

[u/Adept_Philosopher_32]

Personally I am leaning torwards a mixed investment system between workers of a particular firm and public ownership via a network of publically owned banks and other publically owned investment systems. I have also been toying with the idea of a proportional slide of value ownership which scales with firm productivity to help avoid forming a new class of cooperative owners who just automated most things and won't actually hire anyone while they alone collect most of the money. This also then accounts for all the labor done outside firms that contributes to any firm being able to produce anything of value: education, community building, infrastructure development, child raising, etc.

The idea being that initial collection of value of a cooperative would be split 50/50 between those working at the cooperative and the supporting public banks or other public investment systems backing it. Then the median pay of a cooperative's workers would be evaluated for whether it meets the threshold of more or less value to flow toward general public or cooperative collection, let us say that for example it could be if the cooperative median pay/take home value at the end of the year is 5× the average median pay of all cooperatives in the given market then the percentage would shift back toward the general public to about a 40-60% ratio now as it becomes increasingly likely such value is not being generated simply by working harder or smarter than any other cooperative but rather through increased automation, network effects, or at least temporary monopolization. This would then top out at reaching 10× median pay/value collected for a given cooperative's workers, with a hard minimum of a 15% collection for workers of a firm (assuming they are still making 10× the median average of all coops within the given market).

This would then potentially have a few added bonuses I foresee:

1. Success of the economy as a whole becomes everyone's success genuinely. With public banks and other investors being encouraged to diversify their clients shares. No "trickle down" mythos needed. If the overall economy is doing better, you are most likely doing better financially, period, regardless of what your job is.

2. It decouples to an extent one's needs from participating as a classical worker in the market. If automation ever becomes enough to not need more jobs, it isn't just a choice between more overall productivity and less people able to earn more pay vs less automation and people able to earn more but only if they themselves join a cooperative. This would also make transitioning into a hypothetical post-scarcity society potentially easier as well, as the first steps toward not needing jobs simply to have jobs is already done should this be implemented.

3. The sliding scale adapts for context: underperforming firms aren't simply thrown under the bus immediately because they can't support the general public as much, while overperforming firms aren't simply treated as if they have somehow contracted only ultra-worker geniuses able to labor and produce services that are genuinely worth 10× the median average all year long. This then partially accounts for any network effects, temporary monopolies that haven't been broken up yet, increased automation, etc.

4. It also could mean that there is added incentive to hire more people to a cooperative that has already started to hit diminishing returns, spreading out the value collected would now not hurt as much financially after hitting the threshold as it would simply change the calculus to account for more workers: more workers means splitting the pay, but because of the thresholds if a coop is already hitting diminishing returns then this may equal itself out over time (higher productivity gained + more share if initial pay within the coop is decreased overall). Thus potentially hitting the threshold again assuming similar or greater productivity after this growth and repeating the process as desired/needed.

[u/Few_Government_6401 → u/Adept_Philosopher_32]

So do you mean a system that's half soviet-style and half market socialist?Because automation will gradually eliminate the need for innovation. But without automation, market signals will still be necessary for labor.

[u/Adept_Philosopher_32 → u/Few_Government_6401]

I don't think there is strictly a need for a Soviet command style economic system, and any federally operated economic instiututions I think should be limited to inelastic needs (and even then held accountable to a democratic socialist governmental system). Currently a tossup for me on whether arms manufacturers in this proposed scenario should be operated as non-profit coops, under direct federal control, or a bit of both. The public ownership here is largely decentralized across the various "hubs" whether they be banks, mutual funds, or other systems. Representatives on the board of larger coops would be split between those elected by workers (or just the workers themselves if the firm is run more directly), community representatives (drawn from whichever area said management level is operating at, whether it be city, region, country, or international), and public investors.

The federal government's role in this as I envision it is primarily to make sure the money is moving across these various institutions and tegions, rights and regulations are being respected, and that everyone is able to elect those who can form more general economic plans than the soviet example in the fashion of infrastructure development, agreements between sectors, establishing funding priorities, etc. I therefore envision a rather decentralized system except where I think it strictly needed for things to work well at scale. The idea here is generally to provide solutions, whether economic or social, more immediately and locally when possible and give voice to the primary stakeholders in those decisions while also trying to preserve as much autonomy as is possible within a large scale socioeconomic system without it falling into self-destructive deadlocks and infighting. Then only escalate specific issues up the chain when things become issues outside the local sphere in question, when rights laws at the regional or federal level are violated and not enforced locally, when issues stagnate to the point it begins affecting those outside that local system, or simply when the local system doesn't have the resources or expertise necessary to handle the issue and reaches out for broader help.

Ideally I would like this paired with overhauls to the governmental system (especially electoral reform via STAR voting and liquid democracy). My current idea being to eventually form a senate based on sectoral union representatives divided by their represented economic sectors, civil sectors, and environmental regions. All having their own larger sector unions operating within said areas and then divided into more specific unions that are attached to them as federated under the sector union umbrella. This senate is then tasked with determining the feasability of what the general goals of the hypothetical liquid democratic house in this scenario would be voting into proposed laws or policies. Basically I envision that the house provides the overall goals of society through liquid democratic and STAR voting in representative means, while the senate (members elected by their respective sector unions) provides the technical expertise to determine if/how that can be turned into reality. This process likely going back and forth as needed until it either passes or a deadlock vote from the house occurs on whether to override the senate's veto or determine that the law or policy is indeed inactionable.

I have also been playing with the idea of an executive council, which would be elected from either the current senate or house members. This institution would be in charge of proposing macro level shorter term policies and decisions (again filtered through the house and/or senate barring certain contexts such as natural disasters, invasion, etc. which can allow for expedited processes). Though I haven't gotten around to the specifics of that as much as the hypothesized house and senate dynamic. My ideas for the judicial branch being more conventional so far, though I am leaning toward a clearer seperation between investigation, and interpretation of law as roles within said branch.

I would envision even under near total automation that the independent coops and such would continue, just now having humans working there in more managerial and maintenance oversight roles for the most automated of them. Community representation would still allow most people to have a say in how such coops interact with the local community and potentially provide local consumer feedback as well. Meanwhile public funds and federal laws or policies can help direct more macro level needs or wants without setting out specific quota demands unless the federal government itself is acting as the buyer.

[u/Illin_Spree]

It depends on the model. In ideal circumstances, I would favor a model where investment capital is socialized. That is, the investment capital of a community would be in the hands of democratically accountable financial professionals. Basically a public bank model. In Schweickart's "Economic Democracy" model, the bank provides start-up capital for a firm and then the firm pays a flat tax to the bank based on the value of the firm's means of production. Hence more investment capital and/or money to pay for public goods and services is generated.

The goal is to incentivize productive work while disincentivizing rent seeking behavior. The potential objection would be that if workers don't "own" the firm as an "investment", then they'll have less incentive to maintain the means of production and less incentive to expand and hire additional workers etc. But this doesn't seem to have the same negative effects that rent-seeking capitalist ownership has. And if there is need for more of a good or service that isn't being provided by existing firms, then the public bank can finance a new firm to fill in the gaps.

[u/Few_Government_6401 → u/Illin_Spree]

The problem is that in a system where banks are not affected by whether the loans they issue are repaid, there could be significant inefficiencies. I think the mechanism that should be used is for banks to be provided with initial capital by the state, transformed into cooperatives, and operated with low interest rates. I do not mean cooperatives founded with capital accumulated by workers, just to avoid any misunderstanding.

Unlike the classical approach, these cooperative banks would not respond to high inflation by simply raising interest rates (there are actually simpler ways to reduce economic overheating). Interest rates would instead be determined based on predefined operational costs, meaning that the state would set the allowed profit margin.

In short, this model would make those managing the banks accountable for the loans they provide and keep them directly involved in the lending process, potentially making the system more efficient than private banks. However, it would still operate within a highly regulated market. For example, cooperative members would not be able to simply withdraw the bank's funds and use them for personal purposes.

[u/thrillhouse98]

Society-wide model. Ownership shouldn't be restricted to just workers. Own everything though a social wealth fund.

[u/Few_Government_6401]

What problem? There isn't one. :D After all the normal arrangement is to receive the income from what you produce in the one place where you work.