Common Welfare Economy, Essay Example

The article briefly summarizing the future “Common Welfare Economy highlights twenty different points that are addressing today’s social and economic challenges. However, in my opinion, the system is nothing more than the result of trying to mix capitalist welfare ideology with communism. By addressing some of the points mentioned in the article, I will attempt to prove that there are several limitations of the described utopia of social and economic justice.

On social justice

Cooperation and collaboration is a good method of engaging with communities. However, the profit-oriented approach of today’s companies cannot be changed from one day to the next. Certainly not in America. There is one problem with the system: if it was introduced in Germany and Austria, what would happen to international companies and organizations operating in the countries? Would they have to cooperate with the public, and would this be a legal requirement? Would they contribute towards the country’s “Common Welfare Product”, or their native countries’? How can countries agree on “collectively shared values” at all on a global scale? And if international cooperation to create social justice worldwide can be developed, do nations have to give up their independence and put aside their strategic initiatives, just because they are a part of a larger “project”? We can all see where this led when the European Union was created. The criticism of the EU is a warning sign that countries’ demand for authority and integrity would not allow international cooperation. Based on the ideology of neoliberalism, deregulation on one side and increased regulation based on social norms would not be successful, as countries are trying to increase their level of influence on the global scale; that is normal, based on the principles described by Adam Smith in “The Wealth of Nations”. Further, it is hard to believe that companies and leaders will act according to ethical standards set by governments and will not try to “bend the rules”.

On governments

Governments’ tax income would disappear as a result of introducing a new system. Governments will – in a way – have more governing authority than before. They will be able to decide based on (in my opinion subjective) ethical standards. They will decide to grant advantages for some companies and deny them from others. As Cornerstone 4 (Felber 1) describes: “Market access becomes thus easier for ethical companies, and fair, ethical, regional and ecological products become more economic than unfair, non-ethical, and global products”. This initiative will certainly please those who have been fighting for greener economies, but would result in the slow disappearance of oil, gas, and other non-reusable energy companies. The profits of these companies would fall, and they would either need to invest into new, greener technologies, or go out of business. Currently, these companies are the largest taxpayers in America. They are also provided with the highest tax rates. If companies were taxed at an even higher level, it would affect not only their profit, but also result in the companies laying off millions of people.

On wages

Point 8 (Felber 2) states that the inequality between rich and poor will be reduced by limiting maximum wages at 1000% of the minimum wage. This approach certainly resembles something that communism was trying to achieve. Indeed, is it fair to say than one person’s work can never be creating more than ten times of the value as another’s? How can we say that the work a road sweeper on a minimum wage is worth exactly the tenth of a scientists’ who is in the process of discovering the next drug to treat cancer? This, indeed, brings up an ethical question. How can a scientist be motivated to work on his research, if he knows that the “surplus” will be put in a “generations fund”? He will be one of the main contributors towards the future of the social economy, while the road sweeper will put down nothing. Is it fair to expect contribution from one person and not another, based on the value they are able to create?

What about unemployment and self-employment?

The points outlined by the article do not address an important problem of today’s welfare economy: unemployment. Indeed, the welfare systems of the Western world are collapsing. While historically in the West (in particular in the United Kingdom) people were able to rely on the government to provide them with housing and money to support themselves, the trends are now changing. How would the Common Welfare Economy deal with unemployment? And how would it address the fact that not all people share the same values and attitude towards work? Would work be compulsory, like it was in the countries of the Eastern Bloc?

Further, the ideas of the new system are not clear about self-employment. As Cornerstone    10 would have “a majority of (small) privately owned businesses and a minority of large-scale enterprises owned (partly) by employees and public”. Would income caps be applied to business owners, too? Would they be the same? If not, then these companies will have a competitive advantage over the enterprises owned by the employees and the community. Further, the public ownership of large corporations resembles he ideology of communism.

On banking

Creating a global and regional banking system is one of the most challenging steps described by the Cornerstones. With several countries already opposing the Euro as a universal currency, and based on the experience that the global economic crisis almost resulted in the collapse of the Euro, it is hard to imagine that the creation of the “fair trade area” will be without problems. Further, agreeing on equal trading standards will be hard, as countries are likely to consider their own national interest instead of the “common welfare”.

Conclusion

The main limitation of the Common Welfare Economy idea is that it assumes that countries can agree on norms, ethical standards, and act in line with the common interest. Recent developments in the European Union show that many national governments are trying to pull out from the restrictions set by the EU. There are political movements in many countries, including Hungary and the United Kingdom to reduce the influence of the EU on national policies and strategies. The introduction of the  Common Welfare Economy would – in the current international climate – could not succeed. Finally, in order to reach an agreement, standards for regions should be agreed on. While Europe could be a regional hub, its economic relationship with other areas of the global world after the new system’s introduction is questionable. Ethical norms differ from one person to another, and one country to the next. By standardizing them, the new system would simply force its ideology on people and demolish the democratic systems that were built over a long time.

Felber, C. “Common Welfare Economy” 2011. Web.