Alternative Economic Archetype for the 21st Century—the Post-Competitive Model

What might a post-competitive economy reorganized around growth and fair wages look like.   Let's imagine that Adam Smith way back in the 18th century had suggested that economies work best when they are cooperative rather than competitive. 

If private greed (self-interest)  is out, then what could be its replacement as the organizing principle for the global economy?  Cooperative self-interest is one possible solution to this problem.  Declining  incomes lead to slower growth and economic weakness and if this analysis is correct then it becomes in every stakeholder’s interest to maintain incomes and subsequently expand the market—in rich and poor countries alike.  Wealth disparities between advanced countries and poor are so great that slow growth in Western Europe may be worth more than double digit growth in incomes in sub-Saharan Africa.  Destroying high paying jobs in the United States without replacing incomes there weakens all companies even if it appears to be beneficial in the short-run to the country shifting production to save a few dollars to pass through to the bottom line.    

Since the end of the era of the great business trusts, governments have been in the business of breaking up or reducing business combinations that distort competition.  It is illegal almost to talk to competitors in quasi-social settings.  With each firm acting alone, as if its business decisions have no impact on the economy as a whole, the result is to amplify the unusual event that begins the downturn, turning what could be a short-lived retrenchment into a long-lasting recession or as in the early 1930’s a Great Depression. 

The question then is there a better way to coordinate strategies. 

The Presidential bully-pulpit no longer works with companies seeing themselves as citizens of the wider world.  Obama tried it tapping GE CEO Jeff Immelt to head a  business panel back in 2011 to boost jobs as the economy began to falter as the stimulus wound down.  Little came of this initiative because it ignored the problem that CEO’s answer not to the nation state where they sell their products, but to their shareholders alone.  But failure to see the woods from the trees can lead to the kind of bombastic statements of someone like Donald Trump who views the Presidency as a Kingship offering to impose by his own fiat massive tariffs directed a companies that move production overseas.
 
And finally the popularity of Bernie Sanders on the left and Donald Trump on the right should be sufficient warning to companies long used to doing as they please with workers and economies in their quest to maximize private worth to see the bigger picture that without individual worth there is no change of recovery.  It is not surprising then to me that there is a renewed interest in adopting universal basic incomes as a strategy to insure stability.  The unequal sharing of knowledge and the ability of firms to produce value without paying workers full value for their work, thus concentrating wealth in fewer and fewer people’s hands will ultimately reduce the ability of economies to maintain growth, but will also lead to social revolutions. Of course blow back from mechanization  is not new.  Luddites destroyed machines to stop the rapid industrialization of British industry that destroyed jobs and livelihoods.  Productivity is a double edged sword that can lead to periods of slow or even negative growth despite record levels of output per worker if the benefits are passed to the owners of the machine capital rather than human capital.
As the Economist in its June 4th, 2016 issue discusses in its special section on the history of “Universal basic incomes” report suggests that in light of the ability of outsourcing and automation of work to destroy useful activities the only way to sustain demand and maintain a healthy circular flow of funds is through some form of income redistribution. While living off the dole may be attractive to some, it is morally offensive and psychologically damaging to the majority of the population still able to find gainful employment and pay taxes to support the dispossessed of an economy.   The problem isn’t automation of manufacturing, but rather how to split the benefits of that mechanization in ways that encourage useful activities in the service sector and the government sector.  

At the turn of the 19th to the 20th century the larger share of the value-added from food went to the farmers.   Food products were sold closer to their bulk forms, but as agricultural productivity increased, employment declined and labor shifted towards manufacturing.  Farmers sold raw wheat grains to millers who sold to industrial size bakeries and break became a commodity.  As productivity increased in manufacturing labor shifted to services and more sub sectors stole the value-added as productivity increased again shifting labor towards other activities and the average hours worked declined from six days a week to five.   Today we are seeing more workers under employed leaving a financial hole in the circular flow. 

Thus to keep the world economy growing and more workers gaining from the global integration, then private business must take the lead to maximize growth and employment, not profits and shareholders interests.  Without private sector buy-in, then the entire edifice of globalization will collapse as protectionist walls are built without proper analysis of the consequences.  Unlike Donald Trump's mythical wall with Mexico keeping out Mexicans, protectionist walls have real consequences for the buyers and the sellers.  The last time they were raised was in the Great Depression and we all know what that turned out to be, the first stage of a World War that was the most destructive in human history in terms of lives lost and property destroyed.