Communism and anarchism are the same thing because they both want to create a classless, stateless society. What you're describing seems to be some sort of social corporatism or technocracy. I support the existence of currency and private property but I believe that ownership of land and capital should be broadly distributed. Here are some interesting ideas you may not have heard of as well as a website with summaries of major economic ideas. You might know about the major theories already but it's convenient to have them in one place and it does a better job than wikipedia.
Clearly the correct name for what I describe is Liberal Communism. It's a system that re-creates aspects of a Liberal system inside of a system that is formally Communist (in the sense that the government owns everything).
Hello! A reader named Gabriel linked me over here because I am working on a design for a new system of governance, so your project is related. Here's my ToC if you want to read - https://bestofagreatlot.substack.com/p/table-of-contents
I've read through your 3-part communism series, and I'm not super convinced that it's a viable system design yet, but it's certainly interesting! Here's a concern that I'm not sure if you've thought of. You wrote: "each of these banks are allowed to put some of their deposits towards high-risk, high-reward investments, and the CEOs are properly incentivized in all the ways we discussed back in Part I"
Not all VC firms act the same. Some of them fund hugely risky bets in the hope of achieving many billion dollar outcomes - i.e. building something global - while others of them invest in more mature companies to take it to the next level. There's a niche type called a search fund that invests in companies that have stalled out and they bring in new leadership to take over and make them work better, for example. Some companies succeed because of family financing and grit because they simply can't get VC capital for some reason. In your model, AFAICT, you've set banks up as running VC firms, but I'm having trouble seeing the incentive structure as strong enough to support the wide variety of investment theses and paths that exist in our current society.
Imagine a bank running a VC firm that has an investment thesis. The CEO is currently making enough money that he's giving most of his percent of the profits back to the government, because he's hit the wealth cap. Why bother trying a new type of VC? Why bother taking riskier bets? I imagine you'll say some of the other banks aren't doing as well, and so they will take the risk rather than the bank that's fat, but the banks that aren't doing as well presumably won't have the capital to make enough bets to try a new thesis. And fundamentally the wealth cap acts as a brake on taking risks. I would naively guess that this world has a lot more variability, because growing companies past a certain point just doesn't pay off at all, but as a result, a lot of things are worse
... because no one benefits by making them better.
But the core of what I think I'm saying is that some parts of your structure are designed by you (each bank will have a VC), and some parts are designed by the system itself (the VC will fund new companies), and any parts that are designed by you might be right now, but if there's not a mechanism for them to evolve well, they won't be right in the long run.
Anyway, perhaps there's a collaboration here at some point. :)
Right, it is difficult to fit everything into a few essays. I've treated this Substack as a place for me to place some rough drafts, but perhaps later I will organize this into a book, at which point perhaps these essays can be made more cohesive. To answer you directly, I have written about the higher level evolution of the system. See what I wrote here about how to amend the constitution:
Perhaps I should have said this explicitly in the essays about Communism, but I was assuming that any such society would see it's constitution evolve in a manner as I wrote about that essay (2 part) essay about how constitutions should evolve.
Thank you for the thoughtful reply. I can only answer briefly right now. Let me respond to this:
"but I'm having trouble seeing the incentive structure as strong enough to support the wide variety of investment theses and paths that exist in our current society"
When writing such a high level proposal as I have, which is no more than a sketch, I don't think it makes sense to try to specify the details of a fast-moving target such as finance. Rather, all one can do is speak about the general principles of governance that should apply to the industry. The VC industry was very different 20 years ago and it will be very different 20 years from now. Suppose someone wanted to implement my ideas in the year 2043, any specific advice I give this year would be out of date.
The general trend has been towards more and more specialization, as you note. Whereas once upon a time, back in the 1970s "venture capital" referred to unspecialized firms that were focused on all parts of launching and growing firms, nowadays, as you say, the firms are much more specialized, with each focused on just one part of the growth process. And 20 years from now the industry will again be different.
In a proposal such as what I've tried to sketch here I don't think I can specify the correct level of specialization, since that will change every year. I can only try to imagine some higher level mechanism that might allow society's savings to go towards the formation of new firms. I could write a whole book on that subject, but here on this Substack, my goal was only to suggest that such a thing is possible.
The overall theme of these essays can be summarized "We can build a pragmatic Communism by borrowing some of the most pragmatic ideas from liberal free market systems." The idea isn't exactly new: when Communist systems in the USSR and China got into trouble in the 1970s, both of them decided to adopt some free market ideas to help improve their systems. Both of them attempted to do this while running almost totalitarian political systems, both saw the tension between an opening economy and the closed political system. I've tried to suggest here that it should be possible to have a wide open political system that still works with an economic system where most of the productive forces are in the hands of the government.
I don't really expect to see such a system established in my lifetime but I hope to encourage at least some experimentation with greater government ownership of productive forces, and so it is important to me to make the case that such activity is easy to reconcile with democracy (as we've seen on a small scale in the various European nations that keep their oil resources under the control of democratic governments).
About this:
"The CEO is currently making enough money that he's giving most of his percent of the profits back to the government, because he's hit the wealth cap."
For all such people, there are two options:
1. keep doing the work for the love of the game. If you give a great artist $50 million dollars they will continue to produce great art, they simply won't have to worry about money any more. Presumably there are some entrepreneurs who are like this, creating new businesses purely as an art form, an expression of their need to create something. Building businesses is their chosen art form.
2. retire and go enjoy life.
Both answers are fine. If the entrepreneur lives in a society that only allows them to keep $10 million, and they already have $10 million, so they can't earn any more money, then they can either keep working because they love the work, or they can retire and go enjoy life. If they retire, then they create room for younger people to step up into that role and try to create something amazing.
Communism and anarchism are the same thing because they both want to create a classless, stateless society. What you're describing seems to be some sort of social corporatism or technocracy. I support the existence of currency and private property but I believe that ownership of land and capital should be broadly distributed. Here are some interesting ideas you may not have heard of as well as a website with summaries of major economic ideas. You might know about the major theories already but it's convenient to have them in one place and it does a better job than wikipedia.
https://en.m.wikipedia.org/wiki/Progressive_utilization_theory
https://en.m.wikipedia.org/wiki/Distributism
https://thenextsystem.org/
https://m.youtube.com/@ownershipeconomy/videos
https://www.exploring-economics.org/en/orientation/#discover
Clearly the correct name for what I describe is Liberal Communism. It's a system that re-creates aspects of a Liberal system inside of a system that is formally Communist (in the sense that the government owns everything).
Hello! A reader named Gabriel linked me over here because I am working on a design for a new system of governance, so your project is related. Here's my ToC if you want to read - https://bestofagreatlot.substack.com/p/table-of-contents
I've read through your 3-part communism series, and I'm not super convinced that it's a viable system design yet, but it's certainly interesting! Here's a concern that I'm not sure if you've thought of. You wrote: "each of these banks are allowed to put some of their deposits towards high-risk, high-reward investments, and the CEOs are properly incentivized in all the ways we discussed back in Part I"
Not all VC firms act the same. Some of them fund hugely risky bets in the hope of achieving many billion dollar outcomes - i.e. building something global - while others of them invest in more mature companies to take it to the next level. There's a niche type called a search fund that invests in companies that have stalled out and they bring in new leadership to take over and make them work better, for example. Some companies succeed because of family financing and grit because they simply can't get VC capital for some reason. In your model, AFAICT, you've set banks up as running VC firms, but I'm having trouble seeing the incentive structure as strong enough to support the wide variety of investment theses and paths that exist in our current society.
Imagine a bank running a VC firm that has an investment thesis. The CEO is currently making enough money that he's giving most of his percent of the profits back to the government, because he's hit the wealth cap. Why bother trying a new type of VC? Why bother taking riskier bets? I imagine you'll say some of the other banks aren't doing as well, and so they will take the risk rather than the bank that's fat, but the banks that aren't doing as well presumably won't have the capital to make enough bets to try a new thesis. And fundamentally the wealth cap acts as a brake on taking risks. I would naively guess that this world has a lot more variability, because growing companies past a certain point just doesn't pay off at all, but as a result, a lot of things are worse
(Substack cut me off :)
... because no one benefits by making them better.
But the core of what I think I'm saying is that some parts of your structure are designed by you (each bank will have a VC), and some parts are designed by the system itself (the VC will fund new companies), and any parts that are designed by you might be right now, but if there's not a mechanism for them to evolve well, they won't be right in the long run.
Anyway, perhaps there's a collaboration here at some point. :)
Right, it is difficult to fit everything into a few essays. I've treated this Substack as a place for me to place some rough drafts, but perhaps later I will organize this into a book, at which point perhaps these essays can be made more cohesive. To answer you directly, I have written about the higher level evolution of the system. See what I wrote here about how to amend the constitution:
https://demodexio.substack.com/p/thesis-1-there-is-one-correct-way?s=w
Perhaps I should have said this explicitly in the essays about Communism, but I was assuming that any such society would see it's constitution evolve in a manner as I wrote about that essay (2 part) essay about how constitutions should evolve.
Always happy to share ideas.
Thank you for the thoughtful reply. I can only answer briefly right now. Let me respond to this:
"but I'm having trouble seeing the incentive structure as strong enough to support the wide variety of investment theses and paths that exist in our current society"
When writing such a high level proposal as I have, which is no more than a sketch, I don't think it makes sense to try to specify the details of a fast-moving target such as finance. Rather, all one can do is speak about the general principles of governance that should apply to the industry. The VC industry was very different 20 years ago and it will be very different 20 years from now. Suppose someone wanted to implement my ideas in the year 2043, any specific advice I give this year would be out of date.
The general trend has been towards more and more specialization, as you note. Whereas once upon a time, back in the 1970s "venture capital" referred to unspecialized firms that were focused on all parts of launching and growing firms, nowadays, as you say, the firms are much more specialized, with each focused on just one part of the growth process. And 20 years from now the industry will again be different.
In a proposal such as what I've tried to sketch here I don't think I can specify the correct level of specialization, since that will change every year. I can only try to imagine some higher level mechanism that might allow society's savings to go towards the formation of new firms. I could write a whole book on that subject, but here on this Substack, my goal was only to suggest that such a thing is possible.
The overall theme of these essays can be summarized "We can build a pragmatic Communism by borrowing some of the most pragmatic ideas from liberal free market systems." The idea isn't exactly new: when Communist systems in the USSR and China got into trouble in the 1970s, both of them decided to adopt some free market ideas to help improve their systems. Both of them attempted to do this while running almost totalitarian political systems, both saw the tension between an opening economy and the closed political system. I've tried to suggest here that it should be possible to have a wide open political system that still works with an economic system where most of the productive forces are in the hands of the government.
I don't really expect to see such a system established in my lifetime but I hope to encourage at least some experimentation with greater government ownership of productive forces, and so it is important to me to make the case that such activity is easy to reconcile with democracy (as we've seen on a small scale in the various European nations that keep their oil resources under the control of democratic governments).
About this:
"The CEO is currently making enough money that he's giving most of his percent of the profits back to the government, because he's hit the wealth cap."
For all such people, there are two options:
1. keep doing the work for the love of the game. If you give a great artist $50 million dollars they will continue to produce great art, they simply won't have to worry about money any more. Presumably there are some entrepreneurs who are like this, creating new businesses purely as an art form, an expression of their need to create something. Building businesses is their chosen art form.
2. retire and go enjoy life.
Both answers are fine. If the entrepreneur lives in a society that only allows them to keep $10 million, and they already have $10 million, so they can't earn any more money, then they can either keep working because they love the work, or they can retire and go enjoy life. If they retire, then they create room for younger people to step up into that role and try to create something amazing.