Truth Reconciled

Economics has to do with the allocation of resources in a society. Plenty of economic theories already exist, and the world has already experimented with many different economic systems. The best economic system however, is the one that best incentivizes morality or progression towards morality. Similar to the political structure I theorized previously, the economic structure of a society should be prepared for many different scenarios.

The Ideal

Clearly, the best economic system is one in which everyone involved is all-knowing and perfectly moral. No rules are necessary in this case. Every person will do what is right in every transaction. No one will take more than their fair share of anything. No one will try to pull themselves up by pushing others down. No one will be suffering in poverty because the good society would not allow it, and no one would be freeloading on the efforts of others.

Unfortunately, we do not live in such a world. We humans are not all-knowing, and because of that weakness, we are not capable of being perfectly moral. All of our interactions are bathed in ignorance. The true intentions of those we interact with are a mystery, and their honesty questionable. The external consequences of our actions are difficult to comprehend. It is hard for us to see beyond our own personal interests and the interests of those close to us.

What economic system could be designed to maximize the progress of morality among an ignorant and naturally immoral and selfish society? That is the question we want to answer. The system must be as robust and adaptable as the government that we derived in other posts, otherwise it would cease to exist and fail in its purpose. It must be prepared for many different scenarios, managing many different wills with different levels of moral quality.

Transactions

Every transaction that can occur involves at least three wills: the will of the producer or seller, the will of the consumer or buyer, and the wills of the external observers, including the rest of society and the government. The principal goal of all economic policy should be to incentivize all wills to align with morality. No other goal can be morally justified unless it supports this principal goal. As before, we will analyze several scenarios to determine what policies must be put in place or avoided. For now, we will primarily consider the wills of the producer and consumer.

Scenario #1: The producer and consumer are good. When both the producer and consumer are good, they should be as free as possible to carry out transactions as they please, with minimal interference or resistance from the government or other people. Therefore, the government should have the duty and power to protect such transactions and prevent unwanted external interference. The limitations of this free market will be determined by the policies that must be implemented to deal with the more troublesome scenarios.

Scenario #2: The producer is evil and the consumer is good. If both the producer and the consumer have a complete understanding of the transaction, but one has evil intentions and the other good, they might not be able to agree and the transaction will not occur. A good person would never want to perform a transaction that results in a net evil for society. There is no need for the government to prohibit transactions that won’t occur.

Evil is less united than good (see my essays on morality), and thus a certain evil person might be willing to carry out a transaction that increases net goodness but benefits the evil individual personally in some way. But because the transaction results in a net increase in goodness, it does not need to be prohibited or controlled. The net increase in goodness outweighs the small benefit to evil.

An evil producer will make unguided decisions which can sometimes result in a net benefit for goodness, especially if good people are the target consumers. The key to making this work well is ensuring that the good consumers have a good understanding of the transaction and its consequences. The role of the government in this case is to require the complete and honest disclosure of relevant information from the producer or seller about the product or service they are selling. In other words, a consumer has a right to know what they are buying.

If the consumer needs what is being sold, they ought to be able to buy it from an alternative seller, so another role of government should be to incentivize competition and break up monopolies in every niche of the market. The government should not have power to force consumers to buy from a particular producer. If a consumer is given all the necessary information about a product or service and still agrees to buy, it is because they believe it will result in a net benefit for morality. The evil producer would want to avoid this, and might not sell if they knew the consumer’s good intentions. In this case, it is good to not require full disclosure from the consumer about what they intend to do with the product.

Scenario #3: The producer is good and the consumer is evil. In this case, the producer is creating a product or service for righteous purposes, but the consumer wants to use it for evil purposes. We determined in scenario #2 that we will not require the consumer to reveal their intentions. Such a policy would be useless in a competitive market anyway, because if a good producer won’t sell, the consumer can always just find another seller with a more evil inclination, thus giving evil a double benefit. An evil consumer could also simply lie about their intentions. However, the best predictor of future behavior is current behavior, so a background check on a consumer could help clarify their true intentions. For the purchase of any items that could be particularly dangerous in the hands of an evil person, a background check should be required.

Scenario #4: The producer and consumer are evil. The fact that these transactions are between evil and evil does not mean that they hurt the progress of morality, since evil actions have a self-destructive nature. Therefore, these transactions need not be avoided unless it can be determined that they will in fact hurt morality in general. One example is human trafficking, in which the product being sold is an individual whose freedom is being taken away. Such transactions should be prohibited. Another example is weapons trafficking, which provides evil with excessive power to defend itself and cause harm to good societies. Sales of weapons should be recorded and carried out according to proper protocol.

The role of government in the economy is to protect the right of the people to make transactions with one another, to require full disclosure from the producers, and to incentivize competition and break up monopolies. As part of the government’s primary role of protecting the freedom of individuals, it must strive to prevent and punish transactions such as human-trafficking in which the producers or consumers inhibit the free will of individuals. Purchases of dangerous items such as weapons should be monitored and should always require background checks. Black market arms trading should be prohibited and punishable by law.

Business organizations

The principal goal of every organization should be to support the progress of morality. No other goal that goes contrary to this noble purpose is justifiable. A company will probably have a secondary goal, such as painting houses very well, or selling the best food, but the purpose behind the secondary goal is mainly to make the world a better place. It follows that every company should be organized in a way that mirrors the optimal organization of government that I derived in A Prepared Constitution.

Every company with sufficient manpower should have a separation between those who make the rules, those who assess how well the rules are followed, and those who enforce the rules. These are analogous to the legislative, judicial, and executive branches of government. Any company that puts all these powers into the hands of one or few individuals, or fails to establish effective checks and balances, will undoubtedly suffer from internal abuses of power.

The fundamental rules and organization of a company should be well described in a document similar to a constitution. The foundational documents that define a company should be changeable, but only when there is widespread support for change among all the members of the company.

Employees should be able to petition leadership and voice their opinions and concerns without fear of retribution. Employees have a right to protection from unfair dismissal from the company. This should not be the decision of one person, but should be approved by the company collectively, following the proper protocol. The judicial branch of the company leadership should decide whether or not the individual in question has failed to follow the rules. Only with a guilty verdict can the employee be rightfully removed from the company, unless the employee voices a desire to be dismissed immediately.

No member of the company should be exempt from the possibility of dismissal. Since the executive is usually the one who carries out the dismissal, removal of the executive in the case of bad behavior should be carried out by the company equivalent of a legislature, similar to the impeachment of a president.

The population of a company is usually small enough that the employees can effectively represent themselves, so elections of representatives are not necessary. Some very large companies, however, may benefit from elected representatives to avoid the cost of requiring every employee to be involved in company decisions. This is similar to a union, except these representatives are part of the company legislature, analogous to the House of Representatives. 

When a company becomes large enough that it plays a role in the everyday lives of a large portion of a nation, then it is a duty of the national government to ensure that the power of that company is properly checked.

Ownership

Can someone own a whole company? What does it mean to own something? To own something means that you have every right to do with it as you please, within the limits of the law, while no one else has any right to it except as permitted by you. I have compared a company to a country throughout this essay, so ownership of a company can be considered analogous to ownership of a country. But who owns a country?

Technically, the United States Federal Government has sovereignty over all the territory of the United States. This means our government has the sole power and responsibility to manage its territories, and no other government has any right to do so. In that sense, we could say that our government owns this country. However, we know that it does not own each part of the country in any other sense. My property is owned by me, not the government, and yet, the government can rightfully confiscate my property from me if they so choose, as if I am only the steward of the property rather than the real owner.

This happens because the government exists. As soon as a society creates a government to make collective decisions, the government obtains sovereignty over the whole society. When the government decides to take your land, it is a societal decision that is justified by your inclusion in the society. If you really want your property to belong to you alone, then you have to remove yourself from the society that currently has claim on you.

A company works the same way. The company belongs to the entity that has power over it. The decision-maker, or government of the company, is what owns the company, or rather has stewardship over it. The government of the parent nation maintains ultimate ownership. Only the government of the company should have the power to sell it, or the government of the nation if it is determined to be for the collective good. A company should not be sold to a foreign entity without approval from the national government. 

A company should be able to accept loans, which can take the form of stocks. These should not bestow ownership, but only claim on repayment and potential profits.

Profits

A well-developed company will usually make a profit. This profit should be shared among all the members of the company who depend upon it. In a society of self-interested, mostly ignorant individuals, people will not work for nothing, especially if they are free to move to another company.

How much of the profit should go to each employee? Should it be an agreed-upon portion of the profit? Should it be an agreed-upon fixed amount of money? Both have their pros and cons. A fixed portion of the profit would allow the employees to share in the company’s successes and limit the ability of leadership to keep a large portion for themselves. However, it would also leave everyone in the company poor in times of low profits. A fixed monetary amount would provide financial stability but would also limit the employee’s chance to benefit financially from the company’s success, thus lowering their incentive to do good work for the company. I do not know the optimal answer to this question, so I would leave it to the company and employee to come to an agreement on salary.

Welfare

Undoubtedly, there will be individuals in the society that will have difficulty obtaining profitable employment, either temporarily or permanently. These individuals are still free agents with moral potential, and thus morality cannot justify their abandonment. As long as they desire to do what is right, or as long as there is any possibility they will eventually desire to do what is right, morality requires that they receive what they need to survive and improve their situation. In this economic system, profit does not outweigh morality.

In a good society, people will freely and willingly take care of each other. Private organizations and generous donations will make sure the poor are properly cared for. But in a less good society, the government has a duty to step in and fill the void of care. All forms of welfare should have the goal of helping individuals reach a state of self-reliance, whenever possible, otherwise these measures could actually exacerbate the problems by incentivizing poverty.

Conclusion

The best economic system is the one that best promotes the progress of morality in a society. The economic system that I have described here closely resembles the system that exists in the United States today, with some minor differences in operation and major differences in the concepts of ownership, stewardship, and company government. The similarities are due to the nature of human behavior, which gradually tends towards the morally optimum way of doing things, as described in my essays on morality. The process of moral refinement is accelerated by the nearly ideal structure of our government.

This economic system assumes the presence of a well-organized government that is structured according to what was outlined in A Prepared Constitution. It would be unlikely to succeed without that firm political foundation. The principal reason for this is the government’s apparent ownership of the society, which is extremely dangerous if the government is easily corruptible. In the case of an easily corruptible government, a society has more pressing issues to worry about than how to best organize their economy.