Although the increased availability of investment capital through the National Mutual Fund (NMF) would undoubtedly contribute to the vitality of the free-enterprise system, the most important effect of the NMF would be to increase the personal freedom of the individual citizen. In this society, as in every society, there are three major factors that shape the day-to-day life of virtually everyone:
- the physical environment in which the individual exists,
- the amount of wealth that each citizen has at his or her disposal,
- the means by which this wealth is obtained.
In America, the physical environment is determined to a large and ever increasing degree by the major corporations. What we eat, what we wear, what we listen to, what we see, what we live in, what we work at, what we use to get from one place to another, in short, a significant percentage of our total environment is man-made – and not just man-made, but manufactured by the top 100 corporations. The power of the individual citizen to influence this process is virtually nil. Most often the choice is simply to either go along or drop out.
To some degree, the NMF would reverse this trend. The NMF would give to the individual an increased say in the policy of the nation´s corporations. The accumulation of NMF stock ownership in private businesses and industries would effectively broaden the ownership of the means of production. Every citizen, through the NMF, would become a stockholder in the private enterprise system. Businesses owned by the NMF would belong to the people and thus would be sensitive to pressure from public opinion. The profit motive would remain as an essential ingredient in day-to-day corporate decisions, but profit per se would no longer be the sole criterion for company policy. Corporate management would be ultimately responsible to the public, and therefore the public interest would become an important factor to be considered in making long-term decisions.
Broadening the effective ownership of the corporate enterprise system would undoubtedly also affect public attitudes toward business. The fact that business profits, and therefore NMF public dividends, would be influenced by NMF policy would tend to make the average citizen much more aware of the importance of efficient business practices. The growth of the NMF would cause many average citizens to appreciate the problems and responsibilities of business ownership for the first time. Mill hands, secretaries, clerks, and housewives would begin to be concerned with profit and loss statements because, through the NMF, these would directly affect their incomes. To some extent, this might create an atmosphere more conducive to cooperation between labor and management or, at least, reduce somewhat the intensity of the adversary relationship that now characterizes labor negotiations. The role of the NMF in making the interests of business more synonymous with the public interest, and vice versa, would thus undoubtedly result in many benefits both to business and to the public.
For the individual citizen, however, these benefits would be far overshadowed by the fact that the NMF would enormously increase the power of the average voter to determine the type of environment in which we all live. The NMF would provide a mechanism by which the immense wealth and power of the major corporations would gradually be brought under democratic control. The modern corporation is certainly the most important element in American society to have effectively resisted efforts to bring social institutions under democratic control. This is not to say that corporations are undemocratic in the sense that they fail to conduct public stockholder meetings with all the superficial trappings of New England town meetings. However, they are by no means democratic in a modern one-man-one-vote sense, due to the concentration of corporate stock ownership that places effective control of industry in the hands of such a tiny minority of the population. Democratization of ownership of the means of production, through a mechanism such as the NMF, would be a major step toward the principle of government (i.e., control of social institutions) of the people, by the people, and for the people.
Undoubtedly, there are many to whom the concept of subjecting corporate power to democratic control seems radical, perhaps even revolutionary. This perhaps is inevitable, even though the NMF would accomplish the democratization of industry through the free response of the market to a new source of investment capital, and not through nationalization or expropriation. Nevertheless, change is feared by most people and vested interests are quick to exploit this fear in order to protect the status quo. It should be noted, however, that only two hundred years ago the concept of subjecting governmental power to democratic control was considered by most people in this country to be revolutionary. Fortunately for us, our forefathers had the courage to make what for them was a revolutionary leap in the dark. They had enough confidence in the average citizen to entrust the enormous power of the national government to the democratic process. The experience of the past two centuries has been that the average person is not only capable of self-government but that democratic control of government is absolutely essential to the concept of individual freedom as we now know it. It does not seem unreasonable that future generations may regard democratic control of industrial power to be as essential to their freedoms as we believe democratic control of the government to be to ours today.
Financial Security and Personal Freedom
Important as the democratization of industry might be, however, it seems certain that the most significant contributions of the NMF to the cause of individual liberty would derive from the payment of a secure and independent income to every adult citizen regardless of all other personal circumstances. NMF dividends would give to every individual a degree of personal independence and freedom from economic constraints that can be derived only from the secure possession of wealth-producing property. Persons receiving NMF dividends would have a financial cushion. They would be able to be more selective than otherwise in choosing their employment and more independent in pursuing opportunities for advancement. They would have more freedom to seek additional education and more latitude to chose where they wish to live. Supplemental income from NMF dividends would give to everyone a degree of the financial security and personal independence that today is enjoyed only by the wealthy. Ordinary citizens would find their freedom to structure their own lives according to their own tastes increased enormously.
NMF income would, for example, make it possible for many individuals to go into business for themselves. The NMF would make investment capital much more readily available, and the existence of regular NMF dividend payments would free would-be entrepreneurs from the imperative of producing an early positive cash flow. For other individuals, the existence of NMF income would make it possible to choose from a much broader range of rewarding occupations. People could afford to be more selective in seeking out jobs that offer a personal sense of accomplishment and fulfillment. Recent studies have shown that a very large percentage of Americans are dissatisfied with their present occupations.1 The existence of NMF income would make it possible for many persons to quit their jobs and search for other work more to their liking. That this would in fact be the result of NMF payments can be inferred from numerous examples in recent years of men and women who, once having achieved a modest level of financial security, have abandoned high paying, prestigious jobs in order to take up more personally satisfying occupations, even at reduced pay amounting to a loss of many thousands of dollars per year in salary. Once NMF payments grew to something approaching a comfortable middle-class income, it seems reasonable to expect many people to follow this pattern.
Quite likely, there would be a revival of such personally satisfying occupations as handcraftsmanship. The reason why the skilled artisan disappeared was not that people developed a distaste for working with their hands. This is obvious from the fact that many persons today pursue handcrafts as a hobby. Handcraftsmanship as a source of income was effectively destroyed by the advent of machine-made goods that made it impossible to earn an adequate living by hand labor. Hand-craftsmanship simply could not survive in an economy where capital-intensive labor was subsidized by machine-created wealth and craftsmen were not.
The NMF would distribute machine-created wealth to everyone–to the handcraftsman as well as to the machine operator. Thus, people who were so inclined could profitably pursue hand trades, and their incomes would be supplemented by NMF payments.
There is, and always has been, a market for handmade goods, particularly when such products are available at reasonable prices. In the present economy, handmade goods are either enormously expensive, or the craftsman is forced to live on poverty wages. Supplemental NMF income would allow craftsmen to sell their work at a reasonable price and still maintain a decent standard of living. The result would almost surely be a great revival in handcraftsmanship and a corresponding increase in the quantity and quality of reasonably priced handcrafted goods.
Family farming is another example of an occupation that very likely would exhibit a strong resurgence if the NMF were put into effect. The small farmer was forced out of existence by the industrialization of farming. Many, if not most, family farms were abandoned reluctantly and only as the result of an irresistible economic squeeze brought about by the intrusion of high technology mechanization into the field of agriculture. The small farmer was left out of the part of an economic system that distributes machine-created wealth. Thus, the family farm, like handcraftsmanship, has all but disappeared from the mainstream of American life.
NMF supplemental income would provide a channel by which a single family could successfully operate a small farm without an enormous investment in farm equipment. The NMF would be a mechanism by which the small farmer could share in the wealth created by modern machines. Although the lure of the land has little or no appeal for many persons, there are millions of workers in air-conditioned offices and busy factories who would like nothing better than to farm a few acres in Missouri. Income from NMF payments would make such dreams a practical possibility.
Sociologists for decades have deplored the urban migration that has led to overcrowded city slums, as well as to depopulated and depressed rural communities. If the citizens of remote rural areas had some source of income from the technological/industrial sector, these regions would easily be self-supporting. In many cases what are now pockets of rural poverty could be turned into idyllic regions of remote serenity by NMF income payments.
It also seems quite possible that NMF income might stimulate an increased interest in the arts and in science for its own sake. If NMF income were available as a minimum guarantee, serious pursuit of an artistic career would be much less risky from a financial standpoint. It might be argued that this would only produce a great mass of mediocre painters, musicians, and actors. There are, however, good reasons to believe otherwise. One of the most prevalent reasons for bad art is commercialization; i.e., catering to the common taste in order to survive financially. NMF income would free aspiring but unrecognized artists from the need to compromise their work in order to eat. When an artist is financially independent, he or she can be true to his or her own tastes. Such a person can then concentrate on becoming recognized as an artist rather than worrying about financial problems. Great art is sometimes born of adversity, but it is more often a product of affluence.
The same holds true of scientific endeavors. In the early days of the scientific era, the pursuit of knowledge for its own sake was a highly respected concept and a primary motivating force for scientists. Much of the current disrepute in which science finds itself today stems from the fact that at present most scientists are salaried employees and derive their in-comes either from big business or from military projects.2 As a result, science in the past few decades has been largely confined either to commercial trivia such as spray deodorants and freeze-dried foods, or to military horrors such as the hydrogen bomb, intercontinental missiles, and biological weapons of mass annihilation. NMF income would allow the return of the gentleman scientist who pursues the intrigues of science purely for their esthetic value.
The NMF could also be expected to cause a great upsurge in volunteer work of all kinds. It is even conceivable that extremely interesting work, such as space exploration, and certain types of scientific research might be opened up to select groups of amateurs and volunteers. After all, if a particular endeavor is interesting enough, people will do it for nothing, providing, of course, they have some means for financially supporting themselves and their families. NMF income could provide such support.
The modern industrial system of salaried employment is anthropologically a very recent phenomenon. The human race survived and prospered for hundreds of centuries before the first factory or office was ever built. There is no physiological or psychological reason to suspect that the human species is particularly well adapted for modern employment in factories and offices. In fact, there is considerable medical evidence to suggest that the present day job environment subjects the human body to many stresses (or lack of stresses) for which it is not particularly well adapted either physically or mentally. If supplemental NMF income were available, there is every reason to believe that people would pursue occupations that would be much more conducive to mental and physical health than are present jobs.
The NMF and Individual Incentive
It might be argued that the payment of NMF income over and above all other sources of income would cause a significant percentage of the population to quit working and simply atrophy. There is, however, strong evidence to the contrary. A major four-year government-sponsored study carried out by the University of Wisconsin indicates that the recipients of unrestricted cash subsidies worked as often and earned as much as others who did not receive the money.3 The study did indicate that women showed a tendency to quit their jobs and return to their homes. Also, elderly men often changed to less demanding jobs requiring fewer hours of work, and persons in poor health were inclined to stop working altogether. However, these were offset by evidence of increased work incentives among other groups, particularly the young and relatively well educated. These showed a marked tendency to abandon low-paying jobs and seek better ones. The income subsidies evidently gave individuals enough financial security to quit working for a while in order to search for better jobs.
The results of this study, as well as simple observations of everyday life, do not suggest that money, in the form of wages and salaries, is the only incentive, or even the principle incentive, that causes people to pursue productive lives. A non-uniform scale of salaries may cause workers to choose one type of job in favor of another, but there is little to indicate that money alone is the principle factor that induces people to seek employment rather than simply sit in idleness. The Wisconsin study was conducted with persons in the very lowest income bracket, but there is no reason to suggest that the results would be substantially different if the cash recipients had been from the middle-class or high-income levels. The principal factor that causes people to work would appear to spring more from a psychological need to feel useful and achieve success than from a simple desire for money. Of course, in our present system, money is closely associated with success; but anyone intimately aware of what goes on in the average factory or office knows that increased recognition or responsibility, or even so trivial a reward as having an office with a window and a carpet, is often a greater incentive for hard work than simply the salary differential involved. Even where money is an important incentive, the total amount of money received is not nearly so important as the amount of money relative to what other people in the same factory or office, or even in the society at large, are being paid. There is little reason to suspect that a supplemental source of income paid equally to everyone would perceptibly affect in one way or another the system of practical incentives that cause people to leave their homes in the morning and go to work. After all, those persons in our society who work the hardest and longest are not typically those who are one jump ahead of the bill collectors. Those who work evenings and weekends and take work home from the office seldom do so because of absolute financial necessity. The compulsive workers among us are motivated by something much deeper than a weekly paycheck. There is no reason to believe that many, if not most, of us would not continue to work just as hard, if not harder, even if a substantial portion of our income were provided regardless of whether we worked or not. If the NMF were in effect, it seems quite likely that the primary incentives for work would remain what they are today; i.e., the need to socialize, to compete, to achieve, and to escape boredom. Most jobs would still pay wages and salaries, and only a few persons would feel no need for additional money. Furthermore, the urge to feel productive, to make a contribution, and to attract peer recognition would not disappear from the society.
Many wealthy Americans with independent incomes today hold regular jobs. There is no reason to believe that persons with NMF income would behave differently. The NMF would certainly not prevent anyone from working who desired to work. In fact, it would not impose anything on anyone. It would enlarge options, not narrow them. It would enable everyone to structure his or her own life more according to individual choice.
The NMF would extend the concept of individual liberty far beyond what any society has ever experienced before. Human beings would have the freedom to pursue whatever interested them. Jobs would be readily available for everyone who wanted work and the variety of occupations would be vastly expanded. People could afford to pursue interesting, but not necessarily economically rewarding, occupations because of supplemental NMF income. No one´s talent would go undeveloped for lack of opportunity. The NMF would give to the individual human being a degree of freedom for independent expression and creativity that today is almost inconceivable.
The Effect on Political Freedom
In many ways, the increased personal freedoms resulting from NMF income would be indistinguishable from political freedoms. If people cannot live where they wish, cannot travel where they want to go, and are prevented from providing their families with proper food and clothing, they are not free, and to some degree it is academic whether such restrictions are economic or political. However, income from the NMF would have a far more direct and long-lasting effect on the issue of political freedom than simply increasing the ability of the average citizen to afford a more personally satisfying lifestyle. NMF public dividends would provide to every individual a secure base of economic power.
There is a direct relationship between personal economic security and political freedom. Where a population is economically powerless, political freedom is almost meaningless, if it exists at all. To the degree that a person´s livelihood is under the arbitrary control of either the state or private power, that person is not free. Economic power has been used in the past just as often and just as effectively to subjugate people as has political power. When the wealth of a nation is controlled by any small minority of the population, whether that group be made up of feudal barons, a ruling politburo, or the boards of directors of the major corporations, true democratic government is impossible. Wealth is power, and political power cannot be separated from economic power. Genuine political democracy is possible only where there is genuine economic democracy. Where the average citizen has a secure source of income representing an equitable share of the society´s wealth-producing capacity, political freedom is virtually assured.
The history of the American Revolution is a classic example of the critical link between financial security and political freedom. It is no accident that the well reasoned principles of personal liberty and social justice that were the foundation of American revolutionary thought sprang from the pens of such men as Jefferson, Franklin, Madison, Hamilton, and Adams. These men were financially secure property owners living in a rich and fertile land. They were self-sufficient and, as a result, sell-confident; enough so that they dared to defy the British throne and trust their own wisdom over that of long-established traditions. A large percentage of the American colonists to whom the founding fathers directed their writings were the owners of prosperous farms and shops. This was a community of physically and financially secure citizens who felt no compulsion to tolerate the imposition of arbitrary authority from anyone, even the King of England. The American experience has been that people who are financially secure, especially through the ownership of the means of production, do not readily submit to political pressure or lightly forfeit their personal liberty.
It is readily understandable that most Americans of wealth and power today belong to that political party that emphasizes the importance of individual liberty and personal freedom. Almost invariably it is those who feel personally secure who most appreciate and promote the virtues of individualism. Those who are dependent from day to day on the sale of their labor for income cannot afford the luxury of very much independent thought or individual action.
NMF income would give every citizen the economic security to think independently and the power to make his or her views felt. No citizen would need to tolerate exploitation, and there would be little need for mass movements to protect minorities from oppression. The NMF would give to individuals the power to protect themselves.
A Bigger Pie with Bigger Slices
It has sometimes been suggested that all the benefits that the NMF would give to individuals could be achieved equally well by simply extending the welfare system or instituting a negative income tax. To the extent that these measures would redistribute the nation´s income and raise benefits to the poor, this may be true. But welfare, social security, and negative income tax proposals only redistribute wealth. They do not create it. The NMF is much more than just another scheme to take from the rich and give to the poor. The NMF is a means for increasing the productive efficiency of the nation´s industries so that more wealth can be produced at lower cost. Public dividends are paid on the increase, and they benefit everyone, rich as well as poor.
Redistribution of income through the tax system merely changes the way the pie is sliced; it does not increase its size. In fact, higher taxes on the rich may even reduce the size of the pie, because of disincentives to risk-taking and to individual initiative. Increases in the welfare state or the institution of a negative income tax discourage innovation and retard individual excellence. They tend to homogenize society, to hold back achievers in order to assist the poor. This virtually assures that in order for some to benefit, others must lose. Since it is the rich and powerful who stand to lose the most, the practical difficulties inherent in such measures are large.
The NMF in contrast would benefit everyone simultaneously, rich and poor alike. NMF investment would increase productivity and encourage innovation. The total pie would get larger and everyone would share in the increase. NMF dividends would place a comfortable income floor under everyone, but more important, they would impose no ceiling on anyone. An economy based on the NMF would distribute most income from high technology industries equally, but the rest of the economy would be fair game for competition. There would be no need to limit rewards to outstanding individuals, because everyone would be financially secure and therefore not vulnerable to exploitation.
Unfortunately, Western culture is so steeped in the tradition of competition, that the concept of everyone benefiting together sounds alien, almost subversive. Many people simply do not believe that it is possible for someone to have more without someone else having less. Many others believe that everyone benefiting equally is equivalent to no one benefiting at all. This, of course, is pure nonsense. No one starving is surely not the same as everyone starving. An entire nation well educated, housed, and medically cared for is certainly not the same as a whole country with none of these benefits. The United States has the knowledge and industrial capacity to provide a decent and dignified life for everyone. The industrial revolution has made it so that material prosperity for some no longer depends on the deprivation of others. Today poverty is technologically unnecessary.
The NMF would guarantee a minimum income to everyone, but it would do much more than that. It would provide incentives for innovation and generate the investment capital necessary to support material prosperity for all. Increased wealth would accrue to everyone; no one would benefit at another´s expense.