Business ethics of Capital Distribution
By PROF VISWANATHAN
International Socio-Economic Research Bureau,
Chennai,India (E Mail: email@example.com)
“Man is born free, and everywhere he is in chains. Many a one believes himself the master of others, and yet he is a greater slave than they. How has this change come about? I do not know…”
*— Rousseau, Jean Jacques – ‘The Social Contract’ (p: 100)
Economic Slavery and Ownership of Capital:
Rousseau reserves no hesitation to admit his inability because of the reality that he witnessed the complications that deeply rooted in the premature socio-economic order existing during his time. But in the midst of knowledge explosion at present I can deduce the reason for the socio-economic slavery of the people. I know the answer for the slavery. It is both very simple and highly complicated to explain in the present context of permutations and combinations of socio-economic orders. The answer is very simple on the fact that as soon as the man surrenders his capital to a few capitalists in the name of capitalism or to the ‘State’ in the name of ‘Socialism’ especially after industrial revolution man has become slave to the capitalists or the ‘State’. On the other hand the answer is very complicated that requires deep acumen to find out exact faults and defects that have deeply anchored in each and every segments of socio-economic order like religion, customs and conventions, education, law, politics, and psychological behavior of man; these socio-economic segments have still been propelling the views and visions of man to surrender his capital to the capitalists or to the ‘State’ instead of retaining it with himself to regain ‘the economic power of capital’ to get rid of any kind of slavery. The surrender of capital is the utter ignorance of man that has ever been witnessed in the long stretch of the history of mankind.
A new kind of slavery extensively known as ‘Economic Slavery’ came to surface over the social fabrication during the Industrial Revolution. During this period of Industrial Revolution huge machines came to play a vital role in the production of goods and services. The owners of such huge machines i.e. capital emerged as the masters of the society and the rest of members of society, a vast majority of workers, turned into ‘economic slaves’ in all the capitalist societies.
After the Industrial Revolution when these huge machines were directly owned by the ‘State’ the same workers in the name of ‘Socialism’ in all socialist states.
This is the process of slavery what Rousseau says that man is born free and everywhere he is in chains. How do we have to shiver into pieces these ‘chains of slavery’ which are still binding the workers physically and mentally even in all democratic societies. The answer perches on the elucidation of the people to understand ‘What is Capital Justice? or Business Ethic?’ and on the finding out an ‘economic technique’ of ‘how to entrust the capital directly to the people which is solely created by them?’
‘What is Capital Justice?’
I venture to state the only reasonable approach to solve any problem is first and foremost to understand the problem; and to understand such a problem we have to stand under the problem with perfect view and vision of justice and without being a traitor to our own conscience. So it commands me to keep my thought perpetually in a balanced attitude without taking even a least privilege neither towards capitalism nor towards socialism. I believe myself I can settle with this pre-requisite condition before writing my concepts in the interest of justice and welfare of mankind. And now let me define the idea of ‘Capital Justice and Business Ethic”
“‘The Constitution of Natural laws’ codifies the ‘Economic Justice’ being the basic structure of economic system on which the beautiful elements of the super-structure of a well – ordered society are constructed”
Having the liberty of reason I wish to state that according to Economic Justice of business ethic, the capital of a country is created by the people and for the people and hence it should be directly owned by the people’. Once the capital, which is now owned by a few or by the State or by the both, comes under ‘People’s Direct Ownership’, consequently each worker is assured a direct share of national stock of capital. It leads to ‘Each Industry for All and All Industries for Each’. This is the crux of ‘Economic Justice’.
“On the direct ownership of capital by the people in conformity with ‘Economic Justice’ , a new economic system known as ‘DEMOCRISM’ will emerge on the basis of ‘Economic Democracy’ demolishing all the socio-economic evils that are futilely pervading in every economy due to its faulty formulation. For the sake of simplicity, I am assuming the Capitalism and Communism as First and Second theories and introducing my ‘Democrism’ as ‘Third Theory’ to differentiate it with present theories”.
Right To Own One’s Due Capital according to Business Ethic:
The “Declaration of Independence” of United
States of America proclaimed on 4th July, 1776 states as follows:
“We hold these truths to be self-evident that all men are created equal, that they are endowed by their creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”.
With all its mighty force the ‘Declaration’ emphasizes that among all human rights, one’s ‘Right to Live’ is supreme, beyond the zenith, that cannot be forfeited by any one or by any force without the consent and confirmation of Justice. In the name of war or in the name of patriotism or in the name of religion or in the name of law or in the name of caste, creed and conventions no one has any divine or earthly authority to forfeit one’s ‘Right to Live’ on the earth. Even if a man dies due to appalling poverty it implies that the man’s ‘Right to Live’ has been forfeited and the whole society in which he is a member should take collective responsibility.
In the modern economic systems no one can produce whatever he wants without the help of others. On the introduction of division of labor in the factory system of production, one can produce only a particular part of a commodity and he has trained and educated only to do the particular job. Under these economic conditions one’s ‘Right to Live’ exclusively depends on one’s ‘permanent job opportunity’ or one’s “Right to work”. In turn one’s job opportunity always remains as a dependent factor of volume of capital or investment flow. If the volume of capital becomes insufficient, one’s job opportunity will be worst affected and consequently his ‘Right to Live’ will be confiscated. Since the supreme duty of every civilized society is to provide ‘Right to Live’ to each and every member of it and moreover the ‘Right to Live’ is exclusively depending on the volume of capital, the society should honestly and justifiably provide and allocate a due volume of capital to uphold all its members the unalienable ‘Right To Own Due Capital’ as a Fundamental Right to ensure one’s ‘Right to Live’. This is basic concept of “Capital Justice”. (Upholding equally ‘people’s Direct Ownership of Capital’ to ensure one’s ‘Right to Live’ with dignity and security is the basis of Capital Justice’)
Generally in economics we classify the goods produced as ‘Consumption goods and Capital goods’ depending of their usage by the final consumers. If the goods like ‘cars’ are used for personal usage by the consumers they car called consumption goods whereas if the came cars are used for ‘hiring purposes, as taxis, to earn income they are called capital goods. I am not erroneous to say that both the consumption and capital goods are produced by the workers as a whole. No one dare enough to advocate that the consumption goods are produced by the ‘consumer-workers’ and the capital goods are produced by the ‘capitalists’ or by the ‘State’, in capitalism and socialism respectively. Both kind of goods are produced by the workers and only by their workers according to their ability as per ‘Work Justice’ (i.e. work according to ability).
The Wage Justice declares ‘Wage according to Work’. The work includes the production of both consumption and capital goods as a whole. But the workers are not paid wages to equivalent value of the volume of capital and consumption goods that they produced. Both the capitalists and communists pay wages to workers equivalent to the value of consumption goods only. They have been nakedly exploiting a huge volume of workers wages in name of profit by which they purchase capital goods which are solely produced by the workers. No one has derived neither ‘divine authority’ nor ‘temporal authority’ to forfeit a part of workers’ wages in the name of ‘capital’ without the ‘General Will’ of workers or legal approval of working class.
The capital not only possesses huge productive capacity to produce goods and services but also possesses enormous ‘economic power’ like nuclear of an atom. With the economic power both the capitalists and the State can control all the socio-economic-political activities of the working class and subjugate them as ‘economic slaves’ and always threaten their ‘right to live’.
I find no words to register my mental agony that a great ‘distributive injustice’ has been enforced on working class by negating distribution of capital against legal and moral grounds. This ‘distributive injustice’ exhibits the inherent defects that have been deeply rooted in our economic systems. Invariably all the economic and social thinkers have fiercely demonstrated such defects and distributive injustice. For instance John Maynard Keynes, who is still considered to be the most intelligent among the economic thinkers, writes in his revolutionary book, “The General Theory” as follows:
“The outstanding faults of economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income”
Keynes has established thought in his words and justifiable views in his vision that the capital too should be equally distributed among the people to rectify the grave faults of our economic systems. I dare to say if both the consumption and capital goods are distributed among the people in satisfaction of justifiable views and visions of Keynes, it would beyond all doubts, lead the society for the establishment of ‘Democratic Economy’ or ‘DEMOCRISM’, a new economic system which I advocate for the establishment of an ‘Ideal Society’.
It will be the ultimate fact that when the capital is distributed among the people in coordination with ‘Distributive Justice’ “All Industries will be owned by Each Worker and Each Industry will be owned?
? by All Workers”. In the establishment of such industries neither the capitalists nor the state would be allowed to claim any capital ownership. The creation of all the industries would be “by the people, for the people and of the people” This would be called as ‘Democratic Economy’ or “DEMOCRISM” – The Third Theory – assuming Capitalism and communism are first and second theories.
Understanding of Capital Justice or Democrism i.e Business Ethic:
The crux of the problem of understanding “DEMOCRISM” i.e business ethic, rests on the two theoretical pillars : Firstly the process of distribution of national Capital (i.e. Capital Stock of a nation) to the people and secondly the creation of ‘new investment’ of the people, by the people and for the people.
The distribution of national capital will ensure the people the ‘Economic Justice’ of ‘Each industry for all and all industries for each’ and the ‘creation of new industry’ will enable the working class to contribute a share of their wage in the form of ‘share’ for the establishment of new industries in which a worker will have a share in all industries and all the workers will have a share in every industry to uphold ‘Investment Justice’. I will explain the ‘Investment Justice’ in forth coming chapters.
First let me explain the distribution of national capital to the people for the establishment of “Democracy in Economy” i.e. the “Economic System of Democrism” (The Third Theory) with an hypothetical example.
Capital – Output Ratio: Suppose the national capital of country amounts to $ 3,000 billion with the help of this capital stock the country produces $ 1,000 billion worth goods and services. It indicates the Capital : Output Ratio of the country is 3 : 1. In other words in order to produce $ 1 dollar of goods the country requires $ 3 dollar worth of capital.
Again let me assume the annual income of a ‘hypothetical worker’ is $100,000 and he spends all his income for the purchase of consumption goods. Since the capital : output ratio is 3 : 1 for the production of $ 100,000 worth of consumption goods, $ 300,000 worth of capital goods would have been used. Similarly according to the total income of all the workers a capital stock should have been used three time of income. Generally speaking for the production of a particular amount National Income, a particular volume of Capital stock would have been used and it determines Capital : Output Ratio. This Capital Stock is legally entitled to the workers only but it has been fallaciously handed over to a few capitalists or the State. This is fallible of infallible justice. In order to uphold ‘Economic Justice’ the capital stock also should be distributed to all the workers according to capital : output ratio. This mode of proportional distribution of national capital to all the workers will guarantee and ensure an active powerful ‘Economic Democracy’ among the people than the passive and week ‘political democracy’ to protect one’s liberty.
In the modern production system since ‘the capital’ has occupied the position of hub in the production process of consumption goods and services and moreover it determines one’s ‘right to work’ and ‘right to live’ no worker is entitled to merchandise his capital to other workers. No worker is permitted to hold a share of capital more than his country’s ‘capital : output ratio’. Marketing of capital share in democratic economy is forfeited because of the fact it will lead to sell one’s ‘right to live’ ‘right to work’ ‘economic security’ and ‘economic equality’. Justice warns man not to sell economic liberty even if he sells political liberty.
Distribution of Capital and Business Ethic: Capital is inseparable block. It cannot be divided into convenient parts to distribute to the workers according to their wage-income. It forms huge industries. The workers can only claim a ‘capital right’ in the national capital stock and a ‘dividend-income’ according to their share of capital. The capital goods cannot be distributed to the workers as consumption goods. But every worker can claim a certain value in the national capital to ensure their capital right. The value of capital would be distributed to the workers equally or according to their income. The distribution of capital is just a ‘book-keeping entry’ to assure every worker that they have a capital right in the national capital.
Every worker will have a ‘Capital Account’ in his bank and a ‘capital – share-value’ according to his annual income will be credited. The workers will be strictly restricted to bargain his ‘share of capital’ to other workers as it is now practiced in the ‘share-market’. The ‘share-gambling’ involved in the share market would be completely abolished. On the other hand there will be only ‘commodity market’. Since one’s share of capital represents one’s ‘right to live’, ‘right to work’ and economic liberty and security the sale of capital will not be permitted at any cost in the ‘People’s Direct Ownership of Capital’ i.e. ‘Economic Democracy’.
In the distribution of national capital to the people the ‘capital : output ratio’ would be taken as guideline to ensure ‘capital to each worker according to his wage’. Right from ordinary village workers to the top-most managing director of a huge company the ratio would be strictly followed in the capital distribution as it preserves ‘distributive justice’. No one would be afford undue advantage to claim more capital – share than the one’s income ratio. The aggregate national capital would be distributed to all the people without any d
iscrimination of one’s labor. This is the idea of ‘Democrism’ i.e. ‘Economic Democracy’. I wish to take liberty to express such kind of distribution would uphold the noble concept of ‘Capital Justice’.
Mahatma Gandhi emphasizes this capital justice in his own fashion of spiritual style as follows:
“We should aim at getting only what the rest of the world gets. Thus, if the whole world gets milk, we may also have it. We may pray to God and say : “O God, if you wish me to have milk, give it first to the rest of the world”*
-*Gandhi. M _ “Speeches and Writings of M. Gandhi” (p:384)
If any one wishes to portray his argument that the above example presented by Gandhiji in the distribution of milk can only be coordinated to the ‘distribution of income’ but not the ‘distribution of capital – wealth’, Gandhiji replies them as follows:
“Earn your crores by all means. But understand that your wealth is not yours; it belongs to the poor. Take what you require for your legitimate needs, and use the remainder for society ……But I have visions that the end of this war will mean also the end of the rule of capital. I see coming the day of the rule of the poor, whether that the rule be through force of arms or of non-violence”. **
**- Gandhi. M : “Harijan”, Feb. 1, 1942
The views and visions of Gandhiji are placidly warning the capitalistic society that the capital – wealth should be honestly handed over to the people within the frame of supreme justice; otherwise, he cautions, that the poor would take even the deadly arms to uphold their legitimate right to own their capital through non-violence as the ‘rule of poor through bullet’ instead of ‘rule of poor through ballot’ that could be the only solution for all evils suppressing the poor.
Now I explain the basic concept of Democrism in ordinary terms. In Democrism In Democrism in order to ensure a sense of security regarding the ‘capital ownership’ in the minds of every worker, ‘a capital account’ would be opened in his name and his legitimate due capital would be credited in his capital account.
The capital in the view of a common man may look like a commodity as machines and factory buildings. But it is not so in real sense. The capital contains in its core an enormous ‘Economic Power’ only by which one can save and ensure one’s ‘right to live’ in the world, which is valued as supreme right of all the socio-economic-political rights. No worker, therefore, would be permitted to sell or buy one’s share of due capital. Capital is not a marketable commodity because if the sale of capital ‘in the form of share’ is allowed among the workers, it is nothing but allowing the workers to sell their ‘right to live’, ‘economic liberty’, ‘economic equality’, ‘economic security’ and so on. The sale of capital would lead the workers towards their economic slavery; no political revolution can uplift them. That is why Rousseau says in his Social Contract ; “Man is born free and everywhere he is in chains”
It is Universal law that the natural force of all evolutions is to lead all imperfect systems towards their perfection overcoming one hindrance after another hindrance in its process. If the hindrances are many and powerful the natural force of evolution will consume more span of time to overcome them. “Perfection” is the law of nature; and “Evolution” is its mechanism. As per the ‘natural force of evolution, the capital should be owned by all the workers to attain its perfection and to uphold capital justice. In this context we know that our economic systems are crippled with imperfection and struggle hard to move towards perfection and therefore we have no other alternative except to wipe them out not to plunge the world into destruction.
As a matter of fact if both the imperfect capitalism and socialism want to move towards their ‘perfection’ as a rule of nature they have to restore the ‘capital’ to people and to ensure ‘People’s Direct Ownership of Capital’ the ultimate end product of perfection in the formation of economic systems. The People’s Direct Ownership of Capital would be out of all theoretical and moral contradictions and constitute a perfect economic system known as ‘DEMOCRISM’. On the establishment of Democrism the capital will be owned neither by a few capitalists as in Capitalism nor by the State as in Socialism but the people of all the countries. This “People’s Ownership of Capital” will be the rule of the nature and the natural force of evolution of any economic system. Nobody or no power in the world will oppose it.