Monday, October 20, 2008

Free Market Socialism

I've been pondering the differences between free-market capitalism and free-market socialism. For a long time I've been a proponent of the .org way of doing business, emphasizing a belief in re-investment in companies and communities rather than pure profit. I would point to credit unions and community markets as examples of this sort of business. I see no reason why we cannot have successful non-profit gyms, theatres, and even grocery stores should we put our mind to it.

One advantage of the not-for-profit is the lack of investor pressure. For instance, a .org style clothing manufacturer would not have market pressures beyond simply breaking even. All profits would go into reinvestment in the corporation, salaries, expansion, etc. Companies would grow, but their growth would be contained. Certainly competition could still occur as well, as this sort of business would still operate within the free market. Two non-profit or community grocery stores could still compete with one another.

Of course, the problem with this model is getting any investment in the first place. Also, operating against for-profit businesses would be difficult, as those would likely pay their executives far more and gaining talent for the non-profit sector (which is already difficult) wouldn't be easy.

Then again, I feel that these sort of community businesses could be a good way to keep money in our local communities. I'm living in a perpetual state of alarm at the lack of community or sense of place anymore. Nobody goes to local theatre, or shops at the local farmers market, or buys local musicians cd's or pays attention to local politics.

We have lost our sense of being part of a local community, and it is much easier to find reality in the local rather than the national scene, at least for most of us. Hmmmm....

2 comments:

Mag said...

The problem with a socialist model is it never works. The one thing missing from the not for profit model is the profit. Why do people start a business to begin with? Their incentive is profit. Incentive for creating wealth is an idividual force. Wealth is not a social force for the greater good. I don't start a business for the good of the community. I start a business to create wealth for myself and to provide a good or service the community wants or needs. I don't do so out of the kindness of my heart but I do so to respond to the laws of supply and demand. If there is a demand for a good or service and I have the ability to provide that good or service, then I will do so at a price the market will bear. That's how it works. Your model is how you wish it would work but not how it really works.

E.D. Kain said...

Mag,

Actually I agree with you. I've been thinking about the notion of free market socialism, that's all. I think there is a component of our society that benefits from these sorts of businesses, but I do not think as a model that they could supplant for-profit industry.