A Workable Transition to Democratic Retirement Systems
(Part of Alternatives to Wall Street. See also section III., item G-1 of Projects overview)
By (econdemocracy at gmail)

Chomsky has pointed out that, for its reactionary advocates, the "beauty" of the move to turn social security into a system based directly on the stock market is that it would put workers in a position such that they "have to be dedicated to opposing their own self-interest." That is, unless they support downsizing, layoffs, less benefits, less job security, less environmental protection, etc, then they risk a loss to corporate profits which could badly damage their ability to retire.

It's worth noting that even without such reactionary programs the ordinary status quo has long included a significant "perverse incentive" for Americans to "root for things that are against their own interest" -- after all, there are 401(k)'s and other individual investments in the stock market.

So long as people's life savings are in the stock market, they have a vested interest to root for things against their own interest.

Therefore, it's not realistic to envision significantly reducing corporate power so long as the situation persists that Americans' life savings will significantly be damaged if we even begin to succeed -- unless we can start building a viable alternative. It follows that, whether or not the reader supports the particulars of what is outlined below --a rough first draft-- the logic just pointed out is clear: one way or another, we need some alternative, or else we won't succeed --and/or create disasters if we do succeed-- in sharply reducing, let alone eliminating, the corporate based system presently ruling our lives and the planet.

Money is not simply green pieces of paper, or electronic devices storing numbers. Ultimately money is about a social contract, a guarantee that it be accepted in exchange for something. Investment for retirement has as its purpose a guarantee to be able to meet certain basic human needs (plus possibly "non-basic" wants). Therefore, in seeking to create an alternative to the stock market we need to ask how to create a system which could guarantee people at or above a certain age, the meeting of their life's basic needs.

We do not look to government to implement "social democratic" laws because first, corporate power in the U.S. makes significant gains exceedingly unlikely at this point in time. Second, and more importantly, because we desire, and humanity deserves much better than "social democratic" regimes of social-political-economic life.

As noted in progressive articles, most of the stock market is owned by a very small percentage of Americans. However, at the same time, easily half of Americans have a sufficiently large portion of their own savings invested in the market directly or indirectly, that a large stock market downturn would cause them to suffer significant and harmful loss to their life savings. Another reason against limiting ourselves only to the route of pressing government to implement sweeping changes, is that the political process --even granting that it had a chance to make it through the huge corporate power over politicians-- would move forward over a period of weeks to months (if not years), while the market collapse resulting from any but quite minor reforms would take place over days, if not hours. Thus, before a new "social democratic" system were in place as a substitute to our largely corporate-investment based system of retirement, the collapse would be at hand. This is one of the ways the current system preserves itself.

Much more powerful than social democratic laws the government can give -- and can take away -- are systems in place which are run and controlled democratically by the people and so cannot be taken away.

The Free Software movement offers some perspective. If Microsoft were to be persuaded to make certain software license-free, it could take that back. Instead, the Free Software movement has created software which is not merely typically free in its cost, but which is owned by the public, by everyone, and which is controlled by a decentralized and fairly democratic community. While subject to legal and other attacks, it is fundamentally stronger than the "license-free Microsoft product" hypothetical since the software is not Microsoft's or the White House's or anyone's to "Take away". This is the level of strength and protection for which we should be aiming, for both pragmatic reasons, and for the value of decentralized democratic control.

Beyond the "government can't take it back" aspect, are the intrinsic values inherent in the direct public control itself. Do we deserve any less? Why settle for mere social democratic government run programs? Should our vision of what we aspire to not be ahead, today, of what it was when such programs first emerged decades ago? In addition to these reasons of principle, if we are ever to transition to some form or other of a democratic future economy (e.g. Albert/Hahnel's Participatory Economics), economic systems under more directly democratic public control need to be experimented with, today, on those pragmatic grounds alone.

In any case, the long term goal is a world without corporations -- industry and production may include large-scale enterprise, but owned and run by workers and communities (not by capitalist, Vanguard Party, or managerial elites), but not "corporations" in today's sense. Clearly then, we will not reach that day with the present stock market/retirement system of investment (even if Social Security survives in its present form to provide for a portion of retirement income).

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How to proceed? We know, roughly, what we want to exist in the long run: in a good society, in a democratic economic system, in a decent world, having our life needs which are basic necessities met would be an automatic guarantee for all. In particular, in a civilized world "saving" for retirement --in the sense we know it today-- would be nonexistent since food, housing, healthcare, and other basic necessities would be available as fundamental rights.

But "how to get from here to there"? First, we need steps which can be implemented within today's system. Second, these steps need to be of a nature which would not cause economic calamity such as massive stock market collapse, or endanger such calamity and thus solidify blockages to our ever implementing the steps -- at least, not prior to alternative protective guarantee systems being safely in place. The latter point suggests something which allows for a gradual but accelerating shift -- a transition.

Below is an outline of a system somewhat related to an "hour bank" but working with both time and money, and with a "local currency" flavor of community, grassroots democratic control, yet being at least regional, and desirably, national in its scope.

This system would be accepted by thousands of community-owned organic gardens, and perhaps also coop supermarkets); by community run health clinics, and other community owned enterprises; by intentional living communities, democratic unions, workplace collectives like the Canadian Mondragon, and so forth [these are discussed in greater detail in the full text of "A Workable Program for Dismantling Corporate Power," whose sub-article on an alternative democratic retirement system is also published (and you may be reading) as a stand-alone piece].

Each of these would be "adopting" the credit system, meaning, agreeing to accept, these credits. Additional details follow. Let us first illustrate the basic idea including the critical ability to "transition" using an example.

Let's begin with someone middle-class with relatively more money and less time. Imagine you are 50 years old today and you have $200,000 in savings. You wouldn't risk it all in a transfer to the alternative economy and credit system, but perhaps you'd be willing to put $10,000 of your savings into this decentralized, communitarian "bank of credits".

Perhaps 5 years later, there's significantly more robustness in our system, and you're willing to put another $50,000 into it. A few years later, you may add a more.

When you retire, you can live on a combination of Social Security, your personal retirement (say 2/3 of what it would have been), and some "Credits" in this democratic, decentralized, people's system.

With each passing year, more and more people participate, and transition some of their life savings (The funds they give from the mainstream economy can be used for capital purchases by the institutions of the democratic economy, for example; see below for other examples and a more detailed illustration).

At some point in time, the first retiree who is (almost) 100% "on" the new system becomes a reality. As more years pass, more and more people "shift away" from the corporate system of retirement. While stock market collapse cannot be completely ruled out, one can envisage a series of steps in which the size of the stock market "Downturn" is proportional (when averaged over 5-year periods, say) to the increased size of the alternative economic "life support system" we are creating.

For example, if the stock market is worth half as much, but you now have about the same amount of "money" -- guaranteed access to the same amount of food, housing, etc -- when combining your stocks and your "people's bank" of credits, then you are no worse off materially, and better off security, peace of mind, democracy, and other non-tangibles.

Of course, other things need to happen at the same time as the shift suggested above, in order to make this a reality and success. In particular, other aspects of life need to have viable alternatives outside the corporate system. Nevertheless, a spectrum of such projects allowing areas of life to "shift away" from the corporate system, when put together, becomes very viable, increasingly strong, and increasingly attractive model to larger and larger portions of the population. The present article attempts to provide an outline for a compelling vision of such a spectrum -- compelling enough to foster vigorous additional discussion, followed by implementations, of the ideas presented here, or of appropriately modified or extended and improved versions.

One might also note that a working alternative economy system which sustains retirement is in a sense a microcosm of what we seek for everyone, since it would need to meet not just one area of life's basic needs (food versus housing, etc) but all of them. This is substantially true, though during the transitionary period, retirees, unlike the rest of us, would have some other sources of income to complement their "income" (or credits) from our new economic system.

Certainly we wish our system to be robust, both in its eventual form, and during its embryonic initial states and as it expands. It is only natural and wise to have a rich ecosystem of related activist projects being explored by various organizations, and having significant overlap in goals and even function.

Some projects will focus on development of community owned and run food production systems; others on networks of people who co-insure one another in sufficiently large pools; others on the delivery of nonprofit community-based healthcare, house building, certain vocational guilds, etc. Part of this "ecosystem of related projects" will be those organizations and groups which focus not on particular vocation, nor one a particular life need (necessity), but which look at other goals -- one such being projects, such as the one proposed here, which aim to build a system which can serve those who are retired.

(Discussed outside this article, as part of the Workable Program for Dismantling Corporate Power piece, is what capitalist lingo would call "multiple revenue streams" and what we might call multiple threads of support, for each individual, and each organization in the new democratic economy. Each individual, supported as they would be via the emerging and growing networks of community agriculture, co-insurance, etc, as 'safety nets' would simultaneously have more and more options within both the mainstream economy and the alternative economy for "earning money" through a collection of 2 or 3 or more skills they have -- and which they can offer not only to corporations via workplaces and via tele-commuting, but also offering them to this growing network of alternative institutions. This connects to our second example, of someone who has relatively more time, and relatively less money, see below)

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In 1998 the median total wealth/savings in the US for households in their 50s was $120,900 with a full quarter of households in that age bracket having $326,700 or more. The above example therefore outlines options available to a large fraction of Americans. What about households and individuals with little or no savings?

The "hour credits" in the system described above can be literal: someone with more money and less time can make a deposit through contributing current-economy money, and someone with less money and more time, and get credits in by working at a "member" institution like their local credit union, community supporter agriculture, coop supermarket, worker-run shop, and so forth.

For example, if you volunteer 10 hours of work at a community owned or worker owned cafe, that would credit you with 10 hours in this national bank. Mechanisms could include the cafe making a deposit using (regular) cash which it can afford due to the extra sales, or using some of the credits it has earned in other ways in this alternative system (when it served food to a house-builders guild, or to an intentional community, etc), to make the payment directly in hour-credits (so that 10 hours would be deducted from this cafe's "account" within our hour system) -- or some combination of the two.

While encouraging you to join the worker/owners of this cafe, you could participate in this way, within agreed upon regulations the cafe sets, even if you just wanted to work for only 10 hours to test the waters, without committing to fuller involvement.

This example assumes you are not a member of an intentional community like Twin Oaks in which all the material needs of each member are guaranteed. In such a community, the community itself would have a single account, so that sales by that community to the mainstream economy can earn it dollars, while trade with other democratic institutions can earn is credit-hours (see more, below).

This example would apply to someone who is relatively cash-poor and living in a rural or urban area, or to someone who is a member of an intentional community like Heathcote, where some resources are shared, but where there is not a universal guarantee of all of life's needs for each member. Additional systems of support which would help such a person earn hour-credits towards her retirement might include an infrastructure of free/open source software making it easier to set up eBusinesses; and free or discounted internet access to each intentional community, or participating urban neighborhood or rural "grouping" who join collectively.

There should also be support systems and infrastructure to help physically transport goods (e.g. vegetables grown at an urban organic garden or intentional community, or ready-made vegan sandwiches) to local supermarkets for sale; this infrastructure of support would include free or discounted or at least hour-credit accepting business support and help in establishing such relationships with supermarkets; when possible, with coop supermarkets in the democratic economy, but where needed, with "regular" supermarkets".

The author of this piece is a faculty member, and if faculty members were given support and assistance towards creating it, a network of us working at community colleges or 4-year institutions who support the alternative economy and who work with university's "cooperative extension" and with community groups could also facilitate as a "Matchmaker," helping facilitate the offering of courses on a variety of topics (e.g. permaculture) which someone with the time and expertise, living in either traditional settings or in an intentional community, can offer.

[Some of the ideas in the above three paragraphs emerged following a visit of the author to Heathcote intentional living community in Maryland during July of 2003]

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Note that such an arrangement, on top of benefitting the alternative economy and alternative retirement mechanisms outlined above, would also create a de facto national [and eventually at a more advanced stage, a global] minimum wage when credits are earned through hours of work. When credits are earned through the giving of current-economy money, grassroots and progressive institutions are financially supported by people such as in the first example (who have relatively more money and relatively less time) depending on the sliding scale which is used in making such purchases of credits.

There are other positive externalities to this system. It could help to at least partially alleviate the difficulties noted by Paul Burrows* concerning how democratic workplaces existing in the current economy can deal with the fact that different workers may have very different economic realities outside the workplace [(*) See Work After Capitalism, starting at "For example, if one worker [in the collective] is a landed immigrant with no money... ..while the other worker has investments that earn her a steady income..."]

An agreed upon democratic mechanism --presumably based in the "member" institutions-- would decide how to allocate the credits/money in this fund. Large capital purchases which allow greater stability and independence (from the mainstream economy) to international communities and community enterprises could be made through this allocation process. Cash from the regular economy under deposit could be used to buy items which are not yet available in the alternative economy of member institutions of this hour bank system.

Extra hours and cash may both be used in a joint "insurance fund" for both cooperative enterprises/businesses and individual workers. Each institution or individual would own the credits in her/his/its account, subject to some fees to pay for the administration of the system, insurance such as just mentioned, or some amount, say 1-5%, which is reserved from all accounts and pooled together for joint ventures, large-scale projects benefitting an entire region or nation, donations to non-profits, etc.

As suggested earlier, sick as well as partially or fully retired people can "draw" on their credit via a local "member" community clinic, doctor/nurse owned clinic, coop supermarket, CSA, or other group which is a member of this system, i.e., which agrees to accept such credits.

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The system could operate along these lines for a period of time as it gains strength. Eventually, there are enough economic units --guilds of house-builders, community owned organic gardens, democratically run health mutual insurance groups, community owned health clinics, etc-- which generate a sufficiently wide range of goods that there is less and less of a need to use dollars, and we could just use this credit system to facilitate the exchange of goods among the member institutions/communities in this new economy. We may even have a "trade surplus" with the mainstream economy.

To make this concrete, consider the following example: Say that the Dancing Rabbit (DR) intentional living community grows more produce than it consumes, and thus supplies extra organic produce to the other intentional living communities (and some "regular" communities) in its geographic region. Correspondingly, it gets both cash and hour-credits in return; hour-credits are transfered from another member institution's account to DR's account if the produce goes to in institution which is a member; or else the (regular) cash paid by the recipient is there for DR to a) buy things available only in the mainstream economy and b) increase its credits in the hour bank -- or some combination of the above.

With these credits, DR eventually acquires wind power turbines which are built at another intentional community, and it can use credits to obtain the materials from which to build housing, and to pay a house-builders' guild which is part of our network, to help DR members build another house at Dancing Rabbit. Perhaps DR gets additional credits since it not only provides produce but also weaves some organic blankets, clothes, etc, which it supplies, again via a distribution system based on the democratic and decentralized/autonomous but interconnected and cooperating member-institutions. These additional credits may be used to obtain other goods or services, e.g. health coverage, for DR's members.

Some intentional communities will be more capital intensive, others more labor intensive (providing babysitting, house building/repair, etc, to other member communities and to the outside "mainstream" world) while others member communities/organizations will have other areas of specialization.

In sum, each member community, or organization, guild, individual, etc, earns credits either with dollars (gotten by selling goods to the "outside world") or through contributing goods, services, or labor directly into our system. Each member group or individual* uses these credits to supply her/him/itself with the basic needs of life: housing, food, clothes, energy, and so forth.

Even transportation can be made 100% independent of the outside corporate economy, for example, with electric vehicles one can plug in and recharge via wind power, solar owned by one's egalitarian community, so one is no longer hostage to gasoline/hydrogen pumps and corporate, centralized distribution system. [(*): Again, people can participate as individuals; however encouragement and, perhaps, incentives would be there to promote people joining in through membership in a suite of professional guilds, intentional communities, worker-owned workplaces, etc]

Additional Notes:

Appendix: A Crash Course on Gnutella: Gnutella is not a program but a protocol. Gnutella "clients" are programs like LimeWire, BearShare, etc. How does Gnutella work in a "De-centralized" way and what makes it more powerful then the Napster model? To quote:

"Here's essentially how searching for stuff on Gnutella works. Let's say you're home, making cookies, and you need a cup of sugar. You decide to try to borrow sugar from a neighbor. Of all the homes in your town, you know only 5 neighbors personally (typical here in California). You send your kids to all 5 homes, asking for a cup of sugar. Unfortunately, your kids report back that none of the neighbors had sugar

"But wait, each of the five has, in turn, five additional neighbors they know besides you. They're willing to dispatch their kids to help you in your sugar search. These kids are sent. Lo and behold, one of the houses has sugar. The neighbor's kid first runs back home with the sugar, then your kid brings home the goods in turn.

"The kicker is, in this town, you don't know whose sugar it was--and you don't care! If you really tried, you could find out, but in general, the person who provided the sugar is anonymous. This comes at some cost, however. As your kid was out looking for sugar, likewise other neighbors' kids--hundreds of them--were ringing your doorbell incessantly, asking if you had a teaspoon of vanilla, a screwdriver, a vacuum bag...you get the idea.

"Therein lies the reason why Gnutella (and similar technologies) stand to avoid the same fate as Napster. There's no central authority to place blame. Everyone's a peer. The RIAA would have to target everyone. Even then, identifying an individual user is a difficult proposition, with technologies in place who have the side effect of masking identities, such as ISP gateways, firewalls, proxies, etc.

This article is a sub-article of the expansive work in progress, "A Workable Program for Dismantling Corporate Power" whose rough outline follows. Below in red letters is where the present article fits into the larger meta-article/project:

A Workable Program for Dismantling Corporate Power

I. Principles and Strategies
II. Dismantling Corporate Power by Removing the Economic Guns Pointed at
us (part 1): The Project (and analysis) by vocation -- III. Dismantling Corporate Power by Removing the Economic Guns Pointed at us (part 2): The Project (and analysis) organized according to areas of human need -- IV. Robustness of our Economic Ecosystem: "Be Strong like Metal, Not like Glass" V. Where to Start? An Action Plan