A Program Seeking Just Rewards

Michael Albert

Suppose we agree that people ought to be paid only according to how hard they work and how onerous their work conditions are. To attain these Just Rewards we must reduce and ultimately eliminate reward for property, power, and output; reduce and finally eliminate the impact of race and gender on remuneration; and increase reward for effort and sacrifice to appropriate levels.

 

Income Redistribution

A few percent of people in the U.S. economy receive exorbitant income from capital. At the extreme, people like Bill Gates earn many billions yearly. At the bottom, millions of householders earn modest returns from small stock holdings. About 20 percent of the population monopolizes productive skills, decision-making levers, and other variables enhancing their bargaining power. At the high end of this group athletes and movie stars earn tens of millions of dollars yearly. More typically folks who monopolize the levers of day-to-day decision making and largely control and define their own work and often that of others – including doctors, lawyers, managers, high level engineers, and elite university faculty, among others -- earn yearly incomes ranging from roughly $80,000 to $500,000 and sometimes much more. It is hard to figure an average for this "coordinator class," but $300,000 a year is probably indicative. 

The top one percent of the population holds about 40% of the wealth in the U.S. Bill Gates alone has just a bit more wealth than Zimbabwe, Ghana, Iceland, Panama, Costa Rica, Kenya, El Salvador, and the Dominican Republic combined. The next 9% holds another 33% so that the top 10% holds just under three-quarters of the wealth of society. The next 10% holds about 11.5%. The next 40% holds about 15%. The last 40% of the population holds about one half a percent of the wealth. Similarly, the average pay in the top twenty percent is about eight times the average in the bottom 40%. The average pay in the top 1% is over 30 times the average in the bottom 40%. The average U.S. CEO made 209 times the pay of factory workers in 1996.

Our first demands for Just Rewards seek to take some of the income or wealth from the capitalist and coordinator classes and redistribute it either to the general social good, or directly to the most needy in society. Here are some typical options.

Profit taxes

Profit taxes take wealth that oughtn’t accrue to some folks and return it to the social pot, thereby reducing excessive disparities. The ultimate is a 100% profit tax since profit does not reward effort or sacrifice. However, in addition to an ultimate goal, we need short-term demands, attainable in the present while aiming for the future. It is like building a skyscraper: You don't erect girders for the top floors before you lay them for the lower floors. Just as the first tasks in building a skyscraper need to support those that come later, winning short-term economic demands needs to reward deserving constituencies and also strengthen their dissent and empower them to win more in the future. A movement for a participatory economy might sensibly demand a 50% profit tax.

Wealth,  Inheritance, and Luxury Goods Taxes

A wealth tax makes it hard to retain great wealth. An inheritance tax makes it hard to bequeath great wealth to offspring. A luxury tax takes a cut whenever someone buys something beyond what most people can afford. Again, a 100% inheritance tax above some level makes moral sense, as does a high wealth tax that reduces holdings before they are bequeathed. And revenues from both these taxes could finance desirable public programs in health care, education, communication, etc. In a few years even a 30% wealth tax would greatly reduce disparities and generate public funds to rid society of homelessness, hunger, inadequate schools, and other offensive features.

Income taxes

Income due to institutional, organizational, or personal advantages also violates the norm to remunerate only effort and sacrifice and is therefore neither moral nor efficient. As one way to move toward Just Rewards regarding income, a movement for a participatory economy might demand highly graduated income taxes.

With all the above tax proposals it is essential that government isn't spending tax revenues on welfare for the rich, giving it all back to the wealthiest sectors. Rather the demand needs to be to rebuild inner cities, develop public health systems, improve public education, etc,

 

Affirmative Action

Beyond owning capital and monopolizing conditions or skills that enhance bargaining power, racism and sexism also distort remuneration in many societies. 

While the typical white household in the U.S. had $18,000 in financial wealth (net worth minus equity in owner-occupied housing) in 1995 (the latest year for which complete figures are available), the typical black household had just $200 and the typical Hispanic household had zero. Similarly, in 1991, 39.2 percent of white American households had incomes less than $25,000, but among Hispanics 54.4 percent were below $25,000, and for black Americans 60.6 percent were less than $25,000. 

Similarly, women who work outside the home earn only 62% as much as men, which is up from 47% in 1980 and from 38% in 1970 (struggle does pay off), but still obviously inadequate. Women who work full-time earn three-quarters of what men do, up from the three-fifths that prevailed through most of the 1970s.

Likewise, despite great advances in the past forty years, people of different races and genders still don’t generally get comparable work. Instead, by a variety of mechanisms jobs are often allocated on the basis of race or gender. In that sense, the culture and conditions of U.S. employment have for a long time acted as a kind of “affirmative action” for whites and men. 

Demands that reduce and ultimately eliminate race and gender effects on income are ones that equalize pay for comparable work, that remove barriers to entry to better jobs, and that facilitate entry to fields with currently skewed participation. Typically advocates of existing relations try to portray affirmative action in ways that divide workers from one another. One obvious solution is to have affirmative action both for overcoming caste oppression (race and gender) and class oppression as well. A second solution is to finance affirmative action out of funds redistributed from the top, coupling affirmative action with demands for full employment, etc., so it won't result in worsening conditions for white male workers already suffering the impoverishment and indignities of capitalism.

 

Proper Remuneration

Beneath capitalists and coordinators in modern capitalist economies are normal workers who lack capital, lack inflated bargaining power, work without significant say over their conditions, follow orders given by others, and are rarely remunerated at an appropriate rate for their effort and sacrifice. Perhaps one out of five adults in the United States fall in the coordinator or capitalist classes. The remaining four fifths -- the working class -- receive relatively meager income and accumulate minimal wealth despite that they expend more effort and sacrifice in their work than coordinators and capitalists (or suffer unemployment, which is even worse). The third set of programmatic demands for Just Rewards seeks to raise remuneration for those being paid little, but expending great effort and sacrifice in work. There are many approaches.

Full employment

Part of the income accruing from various taxes should support government full employment policies that will have the following beneficial results: (1) the unemployed gain employment and income, (2) all workers benefit from increased bargaining power due to reduced fear of being fired, and (3) society benefits from additional output guided by social choice and not profit-seeking, as we will see in future commentaries on economic program.

Minimum wage supports

Increasing the minimum wage, in conjunction with attaining full employment, puts a floor on personal income. However, minimum wage jobs are almost always the most onerous. Thus, if we were to reward only effort and sacrifice, they should be the highest paid in society, not the lowest. Still, short-run program must move in the right direction before it can gather momentum and finally win magnificent new structures. Thus a demand for a minimum wage that is 60% of the average income for the economy would seem like a good short term demand. To howls that this would bankrupt many businesses, an answer might be to reduce payroll at higher levels and to use accrued profit and property taxes to subsidize worthy smaller operations made "needy" by the program.  

Social wage payments

The “social wage” is a loose term for government policies that benefit working people. This includes expenditures on public health care, education, housing, and infrastructure, or even price supports on goods or food so as to reduce income demands on the poor. Policies which increase allocations for the "Social Wage" redistribute society's product to benefit those in need, and thus also move society toward Just Rewards.

Reverse income taxes

Just as it is possible to collect taxes, it is also possible to pay reverse taxes. Since our economy doesn't directly remunerate according to effort and sacrifice, the government can "tax and pay" to correct the deviations, not only taking away from those who are over-rewarded, but also paying out to those who are under-rewarded. The ideal demand is for a socially regulated accounting of job types that generates a measure of their broad implications for effort and sacrifice, plus a reverse payment for those that are under-remunerated by the market system. In this manner the funds accrued from profit, wealth, luxury, inheritance, and income taxes can be redistributed not only to social wage payments for public education, health care, etc., but also as reverse taxes paid directly to workers earning less than their job requirements warrant.

Job actions for higher wages

Naturally, a program seeking participatory economics will also support union and rank and file efforts to win higher wages by direct actions, strikes, etc. This not only raises incomes that are currently too low, it can cut into those that are too high, and it should involve activism that prepares the organizational means and workers commitment to win further gains.

 

Fighting For Just Rewards in a Movement for Participatory Economics

Finally, a movement that seeks Just Rewards in society has to practice what it preaches. This is necessary (a) to be believable, (b) to expand its own understanding of what its aims entail, (c) to provide hope through its internal practice, and (d) to welcome and nurture diverse participation. This last is especially important but rarely enunciated. What underpaid person would believe in the efficacy or the honesty of a movement that talks about attaining Just Rewards in society, but doesn’t practice Just Rewards internally? A consistent movement for a participatory economy should have its own internal dues financing and wage rates exceed its Just Reward demands for society.