CHAPTER 3: Social Decision Functions
FREEDOM
AND EQUALITY-TECHNICAL DEFINITIONS
We now turn to a
discussion of freedom and equality within a societal context. We consider how
decisions are made in a society which take into account individual tastes and
preferences but in which the decision does not necessarily result in every
individual having the outcome he most prefers. In an individual's private life
we assume he is free to pursue whatever course he most prefers. In social or public
life compromise may be necessary, and how these compromises are made has a lot
to do with how the values of freedom and equality are embedded in the social
decision making mechanisms. Also how much individual tastes and preferences,
individual values, if you will, are taken into account has
a lot to do with whether the society is repressive or expressive and to what
extent justice prevails.
The two arenas of social
decision making with which we are most concerned are the political and economic
arenas. In "Social Choice and Individual Values," Kenneth Arrow
states: "In a capitalist democracy there are essentially two methods by
which social choices can be made: voting, typically used to make 'political'
decisions, and the market mechanism, typically used to make economic decisions.
In the emerging democracies with mixed economic systems,
In social decision
making processes, the problem is the selection of one or more alternatives by
the society taking into account the preferences of the individual members of
society. The individual's freedom is expressed in his right to express his
preferences, to make choices about what decisions he, himself, prefers and to
have a say in the process of the actual selection. The agreement between the
individual and society is that he will abide by the actual alternative or
alternatives selected by society even though these are ones he may or may not
prefer.
In our discussion we
will attempt to formalize our thought processes to a considerable degree
compared to the foregoing discussion and build on an area of social thinking in
which considerable formal analysis has already taken place. The analysis will
be mathematical in some places although at an elementary level. We are thus
trying to bridge the gap between philosophical treatises which are vague in the
precision of their analyses and mathematical analyses which are devoid of
motivation and social impetus.
Let us say we have a
society composed of N individuals. We will refer to a specific individual as
the jth individual. We also consider a set
of options, O, containing a number of options, M. Let the particular options be
denoted by the set, O = (m1,m2,...mM), and let mi
be a variable denoting an option. We assume that each individual has a
corresponding set of options which, in general, may not be the same in quantity
or quality for each individual. In any particular instance an individual may
choose one or more options. An individual's freedom is a function of the
quantity and quality of options available to him. We define an individual's
utility as a measure of the satisfaction he derives from having chosen a
particular option. There will be a certain utility associated with each option
in the option set for each individual. For the purposes of the present
discussion we will use the terms "utility" and
"satisfaction" interchangably.
An individual's criteria
for making a choice or choices of the options available to him is based upon
his preferences considered over the available options. We define a preference
rating function, Pj(m), which represents
the jth individual's
preferences over the set, O = (m1,m2,...mM). In general, Pj(mx)
> Pj(my) means that the jth
individual prefers the option, mx, to the option, my.
We can represent an
individual's preference rating, in the most general terms, geometrically as in
Figure 1. We assume here that the option set is the same for each individual.
Figure 1
Preference Ratings of 3 Individuals
We note from Figure 1 the following:
P1(m4) > P1(m3)
> P1(m1) > P1(m6) > P1(m2)
> P1(m5)
P2(m4) > P2(m1)
> P2(m5) > P2(m3) > P2(m6)
> P2(m2)
P3(m2) > P3(m3)
> P3(m6) > P3(m5) > P3(m1)
> P3(m4)
This represents a complete ordering of
the preferences of these individuals. If N=3, so that the society in the
example is composed of three individuals, this would represent a complete
ordering of preferences over the whole society. We note that the ordering of
preferences does not contain as much information as the geometrical
representation which contains not only ordering information but also
information as to the relative intensity of preferences. For instance, again
referring to Figure 1, we see that for the second individual, m5 is
greatly preferred to m3i.e.there is a large gap between
the two options. Also m5 is greatly preferred to m6.
However, he is relatively indifferent between m3 and m6
(small gap between them). So the geometrical representation gives information
with regard not only to preference ordering but also with respect to preference
intensity. It is this complete specification that we refer to as a preference
rating. We also note in passing that it
is possible for two options to have exactly the same preference rating. In this
case, we say that an individual is indifferent with respect to the two options.
Because of the way that
the preference ratings can, without loss of generality, be represented
geometrically on a straight line, it can be shown that there is a unique
mapping from the set of rational numbers, x, (0≤x≤1), to the
preference rating. Therefore, Pj(mi) = ax + b, where a and b are integers and
0≤x≤1 for all i and j. Each option can be
assigned a rational number which represents the individual's preference rating
of that option and the set of numbers corresponding to the rating of each
option becomes the individual's preference rating of the option set. The
preference intensity between the two options, mx and my,
can be defined as follows:
Preference intensity = Pj(mx)
- Pj(my)
We assume in this
analysis that an individual's utility or satisfaction with an option is a
linear function of his preference rating. In reality this is not necessarily
the case since he might prefer an option that he has incomplete knowledge of
and find out later that it contained much less or greater utility than he had
initially imagined. To simplify our analysis we assume that complete knowledge
of the consequences of choosing a particular alternative is available to the
individual so that his utility has a direct correlation with his preference
rating. We speak of a utility rating as a complete specification of utilities
over all options. We may also speak of the utility of a particular option. We
have
Uj(mi) = cPj(mi) + d
for all i and j and c,d
integers
Therefore, there is a
unique one-to-one mapping between the rational integers, x,
(0≤x≤1), and the utility function so that
Uj(mi) = ex + f for 0≤x≤1 and e,f integers
It can be seen that the
most complete specification of both the preference ordering and the preference
intensity of two options can be made from the comparison of the two rational
numbers assigned to each option. If mx is preferred to my,
then Pj(mx) > Pj(my)
and the intensity is Pj(mx) - Pj(my).
Let us assume that we
have two options which are very close to being equally preferred, m1
and m2. Then as long as Pj(m1)
> Pj(m2), m1 is preferred to m2,
and the slightness of preference can be expressed to any level of perception by
increasing the number of places to the right of the
decimal point. For example, let
Pj(m1) = 100.49742
Pj(m2) = 100.49741
If a person is capable
of a higher level of discrimination, this might also be expressed, for example,
as
Pj(m1) = 100.497419254
Pj(m2) = 100.497414859
In the extreme case, Pj(m1) - Pj(m2)
approaches zero and we say that the jth
individual is indifferent between m1 and m2. If m1
is greatly preferred to m2, then Pj(m1)
- Pj(m2) is very large and can be expressed by a very large
rational number. In the extreme case, Pj(m1)
- Pj(m2) approaches infinity. In actual practise, the real axis could be divided into equal
segments each of which represents the minimum level of discrimination which a person is capable of
expressing.
Therefore, we conclude
that an individual can completely (and without loss of generality) express both
the amount of preference and the intensity of preference relative to any other
option over a set of options by assigning a rational number to each option.
This represents a complete and unique specification of preferences. If an
individual's preference ratings are to be used as inputs in a democratic voting
system, then all preference ratings must be given equal weight and power. This
constraint is sufficient to allow us to normalize the preference rating
function by choosing a = 1, b = 0, so that Pj(mi) = x for all i and j
and x is a rational integer, 0≤x≤1.
Let us address the
issue of interpersonal comparison of utility or satisfaction about which there
has been much controversy in the literature. Some individuals may derive more
satisfaction out of a certain result than others even though their preference rating for the options are exactly the same. For example,
Pi(mx) = Pj(mx)
but Ui(mx)
≠ Uj(mx)
This seems due to the
fact that some people are capable of taking greater satisfaction in the same
set of circumstances than others. It does not seem that this should be taken
into account when prescribing a rule for the combination of individual
preferences in order to arrive at a democratic social result. For instance, in
the selection of a candidate, the fact that individual i
will be happier if candidate A wins than individual j will be if candidate B
wins although
Pi(A) = Pj(B),
should not influence the results. To say otherwise would
be
tantamount to giving i a more
powerful vote or more consideration in
arriving at a result than j, which would be a transgression
of the democratic ideal of equality in that each individual should have the
same voting power and the same consideration regardless of whether he will
enjoy the results more or less than another individual.
Therefore, it seems
only fair to treat not only everyone's preferences the same in arriving at a
social decision but also to treat everyone's utility the same in assessing the
effects of the social decision. We do this by normalizing everyone's preference
and utility ratings to the same standard. This is a generalization of "one
man-one vote." Therefore, we assume the following:
e = f = 0 and
0≤Uj(mi)≤1
for all i and j
Furthermore, without loss of generality,
we can choose c = d = 1 so that preference ratings become identical with
utility ratings for any particular individual. Therefore,
0
≤ Pj(mi)
= Uj(mi) ≤ 1 for all i and j.
SOCIAL
DECISION MAKING FUNCTIONS
A social decision making function is a rule that transforms the data
represented by individual preferences in such a way as to choose an option or
options that represent the decision of society as a whole. For example, in a
democratic election governed by majority rule and assuming two candidates, the
input data are the individual votes, the social decision function is the rule
for determining the outcome by choosing the candidate with the most votes and
the social choice is the candidate with the most votes.
A general model for a social decision making process includes the
preference ratings of each individual as the input data, the social decision
making function and the utilities of the outcome for each individual as the
output data resulting from the social choice that was made. In terms of systems
engineering, the social decision making function transforms the input into the
output by narrowing down the input option set, O, into an output option set,
O'. The output option set may include one option from the input set or a
combination of options from the input set.
Let us denote the social decision making function by D. Then
D{P(O)} = U(O')
In this model there are many inputs
and many outputs as shown in Figure 2.
Figure 2
Social Decision Making Process
The social utility is
defined as the sum of the individual utilities:
N
U(O') = ∑Uj(O')
j=1
We can assess both the
input and the output of the social decision making function with respect to the
concepts of freedom and equality. At the input freedom is embodied in the
quantity and quality of options in the option set, O. Equality is embodied in
the principle of giving equal power and weight to each individual's preference
rating which is done by normalizing each rating. At the output individual
utility is a function of the outcomes which apply to that particular
individual. The social decision making function assigns a certain outcome to
each individual. How well that outcome "fits" the individual (in
accordance with his preference rating) determines the individual's utility. The
social utility is the sum of the individual utilities. The greater this is, the greater, it can be assumed, is the satisfaction
inherent in the society. Equality at the output must be assessed in terms of
the differences in individual utilities. The individual inequality can be
expressed as the difference between an individual's utility and the average
utility where
Obviously, the
most desirable result obtains when each individual's ideal is represented in
the option set and the decision is such that each individual receives his top
choice. In this situation, the outcome consists of many options rather than
one. Then
Ui = 1,
1<i<N
Total
Utility, TU = N
Average
Utility = AU = 1
Individual
inequality = II = 0
Average
inequality = AI = 0
This represents
the ideal situation which in some instances may be approached in practice.
However, in many practical situations the output option set, O', is constrained
so that not everyone may receive his first preference. For example, in a
political election for President, there is only one outcome which applies to
everyone.
HISTORY OF SOCIAL DECISION FUNCTIONS
The history of
social decision functions starts with the theory of elections studied by
Jean-Charles Borda (1733-1799) who wrote a paper in
1781 in which he recognized what has been called the voting paradox. For three
candidates A, B, and C and 21 voters, Borda showed,
for example, that, if 1 voter preferred A to B and B to C, 7 voters preferred A
to C and C to B, 7 preferred B to C and C to A, and 6 preferred C to B and B to
A, then by the method of casting 1 vote for one's favorite candidate, A would
win with 8 votes although the voters would prefer B or C to A by a majority of
13 to 8i.e.if just A and B or A and C were put to a vote, A would
lose. Borda proposed to remedy this defect by a
voting system or social decision function which assigned points to each
candidate dependent on their place in the ranking. Thus, we could assign a value
of 0 to last place, 1 to second place and 2 to first place. The winner of the
election then would be the one with the most points. In the above example, A
would have 16 points, B would have 21 and C would have 26.
Alternatively,
the points can be determined by having a series of elections taking two
candidates at a time. For instance, if the voters vote on A and B, the result
would be 8 votes for A and 13 for B. Voting on A and C would produce 8 more
votes for A and 13 for C. Voting between B and C would result in 8 votes for B
and 13 votes for C. The final tally then is 16 for A, 21 for B and 26 for C
which is exactly the same result as in the first method. Duncan Black, whose
history of the theory of elections we are synopsizing, had this to say about
the value of Borda's work: "Of this paper as a
whole we can say that it is short, clearly expressed and suggests the possible
lines of development that a theory of elections might take. A specific defect
is that it fails to distinguish between two separate lines of thought-the
criterion which it advocates explicitly and another criterion (that of Condorcet) of which, earlier, it had made implicit use. A
more important deficiency is that, to be satisfactory, a theory of elections
must give a real insight into the nature of group decisions; and Borda's paper cannot be said to do this. It is a good first
step towards a more significant type of theory, but no more than that."2 It should be noted that Borda's
method gives the same results either by pair-wise comparison (the candidates
are compared two at a time) or by overall comparison (all the candidates are
evaluated at one time).
The next
important historical figure is the Marquis de Condorcet,
(1743-1794), a French mathematician, philosopher, economicst
and social scientist who played a part in the French Revolution and ended up
dying in jail. The Condorcet criterion for
determining an election was for voters to vote on each pair of candidates. If
one candidate had a majority in each case, then he is declared the winner. The
problem is that this is not always the case, and this gives rise again to the
voting paradox. The voting paradox comes into play when there are more than two
voters and more than three alternatives. For example, let us assume there are
three voters and three alternatives. Voter 1 prefers A to B and B to C. Voter 2
prefers B to C and C to A. Voter 3 prefers C to A and A to B. Now if we put A
and B to the vote, A will get 2 votes and B, 1, with the result that A is the
winner. If B and C are put to the vote, B will get 2 votes and C, 1, and B will
be the winner. At this point, we can say that society prefers A to B and B to
C. Hence it is logical that society should prefer A to C and A should be the
overall winner. However, when A and C are put to the
vote, C gets 2 votes and A, 1, with the result that C is the winner. So society
prefers A to B, B to C and C to A. Therefore, we conclude that there is no
rational solution to the problem of picking a winner using this method. There
are ad hoc methods for resolving this difficulty. For instance, if there are N
voters and 3 alternatives and each wins once in the three pair-wise
comparisons, we could pick as the winner the one with the largest pair-wise
majority.
The next
contributor to the field was also a prominent Frenchman, the Marquis de Laplace (1749-1827) who by a very elegant argument ended up
with the same method of marks as Borda.
"Starting from slightly different premises he arrives at the same set of
marks as Borda."3
In his own work
Black seems to have followed a line of development which owes more to Condorcet than to Borda and
Brown's other
objection has to do with interpersonal comparisons. "Next the scheme
assumes the merit attributed by one elector to be exactly the same in kind as
that attributed by another. The difficulties of making interpersonal
comparisons of merit have already been examined by economists under a slightly
different guise, in connexions with making
interpersonal comparasons of utility. Just as we
would be reluctant to adopt an economic theory of this type, so we would be
unwilling to adopt a political theory which assumed the merit attributed by
voters to be measurable and the same in kind as between one voter and
another."6 The point here is that in a democratic system the
merit attributed by one elector should be considered the same in kind as that
attributed by another since each vote should be given equal weight and
consideration. To assert that some voters' votes are worthy of more
consideration because of their superior knowledge or intelligence is to
subscribe to an aristocratic system in which some votes count for more than
others. The same holds true for economics. Why should one person's utility be
given more consideration than another's? Why, indeed, unless some people are
deemed to be more important than others.
Black goes on
to write about the intellectual fervor that existed in the Age of Enlightenment
when the techniques of mathematics were enthusiastically brought to bear on
political and economic problems. "The second half of the eighteenth
century in
"The hope
had sprung up to carry the methods of rigorous and mathematical thought beyond
the physical and into the realms of the human sciences. But after a brilliant
start, its fate was to be misunderstood and forgotten."7 The interesting thing about these early researchers
is that they all had achieved distinction in other fields and were attempting
to apply mathematical techniques to societal problems.
Next come a series of English researchers the most important of
which is the Rev. C.L. Dodgson who under his pen
name, Lewis Carroll, wrote "
"This method would, I think, be absolutely
perfect, if only each elector wished to do all in his power to secure the
election of that candidate who
should be the
most generally acceptable, even if that candidate should
not be the one of his own choice: in this case he
would be careful to make the marks exactly represent his estimate of the
relative eligibility of all the candidates, even of those he least
desired to see elected; and the desired result would be secured.
But we
are not sufficiently unselfish and public-spirited to give any hope of this
result being attained. Each elector would feel that it was possible
for each other elector to assign the entire number of marks to
his favorite candidate, giving to all other candidates zero: and he would
conclude that, in order to give his own favorite candidate any chance of
success, he must do the same for him."8
Dodgson proposed a
method of voting which was a modified version of the method of marks. He then
went on to propose a method which was a modified version of the Condorcet method of pairwise
comparison. In the event of a cyclical majority this was to be resolved by
considering how many vote changes each alternative would require in order to
have a majority when paired with every other alternative. The one with the
least change required would then be declared the winner.
Basically, the
history of voting systems boils down to a competition between the method of Borda and Laplace and the method
of Condorcet. The advantages of the Borda method are that it always produces a winner and a
winner who is a justified winner. The disadvantages are that in some cases the
winner is not the same as would be produced by a simple majority rule even
though majority rule itself seems less than justified in certain cases, and the
system is unstable in that an insincere representation of one's true
preferences can sometimes be advantageous. The advantage of the Condorcet method is that it produces the same winner as
majority rule if there is a winner and the system is stablei.e.there
is no advantage in voting insincerely. The disadvantage to the Condorcet method is that sometimes the results are
intransitivei.e.there are cyclical majorities-A is preferred to B
which is preferred to C which is preferred to A etc.
Additionally,
it has been thought that the Borda criterion, what
Murakami calls a 'finite ranking rule' was arbitrary in that different winners
might be selected from the same input data depending on how the system was set
upi.e.how numbers were assigned to the various ranks.
"If a social decision-making rule is to be
evaluated according to an 'amount of information' it gathers,
a complete finite ranking rule is unquestionably the best rule. However, as we
have noted before, a finite ranking rule is marred by arbitrariness.
...The
point is that, whether we collect information fully or not, we have no absolute
principle for utilizing the information concerning individual decisions. For we
have no intrinsic principle for expressing numerically the ranks in each
individual's preference ranking. Neutrality demands that we treat all
alternatives in an equal manner. Symmetry demands that we treat all individuals
in an equal manner. However, no principle within the democratic framework seems
capable of telling us how to treat the ranks in individual orderings-of telling
us what rule is better in this respect..."9
Part of the
arbitrariness stems from the fact that the finite ranking rules only take
preference ordering and not preference intensity also into account. This is
remedied by the geometrical expression of preference ratings presented in this
book. A further difficulty is presented by the fact that there aren't two
non-arbitrary reference points with respect to which preferences are measured.
This situation will be further discussed and remedied a little later.
DEMOCRACY
First let us
consider an option set of 2 alternatives, A and B, such as is the case in an
American Presidential election, and a voting population of N voters. The social
decision function that is traditionally used is majority rule. That is each
voter casts one vote for one or the other candidate and the candidate with the
most votes, which necessarily constitutes a majority, wins. Let us consider an
example which casts doubt on the value of this system. Let us say that we have
three voters and the following set of preference ratings:
P1(A) = P2(A) = .6, P3(A) = .1
P1(B) = P2(B) = .5, P3(B) =
.9
In the single
vote, majority rule system, A would get 2 votes, and B would get one with the
result that A would be the winner. When we consider the total utility of each
candidate,
U(A) = .6 + .6 + .1 = 1.3
U(B) = .5 + .5 + .9 = 1.9
Therefore, the
selection of candidate B would result in a higher level of satisfaction among
the population as a whole. In general, whenever the majority candidate is not
greatly preferred to the other candidate by the majority and the minority
candidate is passionately preferred by the minority, it seems that the public
interest is not best served by the utilization of majority rule.
An example
given by the Rev. C.L. Dodgson (Lewis Carroll) is the following:
"Let
us suppose that there are eleven electors, and four candidates, a,b,c,d; and that each elector has
arranged in a column the names of the candidates, in the order of his
preference; and that the eleven columns stand thus:
a a a b b b b c c c d
c c c a a a a a a a a
d d d c c c c d d d c
b b b d d d d b b b b
Here a is considered best by three
of the electors, and second by all the rest. It seems clear that he ought to be
elected; and yet, by the above method, b would be the clear winner-a candidate
who is considered worst by seven of the electors!"10
In this example
each voter votes for his first choice and the one with the most votes wins.
Therefore, a gets 3 votes, b gets 4, c gets 3 and d, 1. In our terminology, the
above example can be represented as follows:
P1(a)>P1(c)>P1(d)>P1(b)
P2(a)>P2(c)>P2(d)>P2(b)
P3(a)>P3(c)>P3(d)>P3(b)
P4(b)>P4(a)>P4(c)>P4(d)
P5(b)>P5(a)>P5(c)>P5(d)
P6(b)>P6(a)>P6(c)>P6(d)
P8(c)>P8(a)>P8(d)>P8(b)
P9(c)>P9(a)>P9(d)>P9(b)
P10(c)>P10(a)>P10(d)>P10(b)
P11(d)>P11(a)>P11(c)>P11(b)
When we
consider more than two alternatives, we run into the same problem as pointed
out by Rev. Dodgson. In the following example the
winner has an absolute majority (over half the voters rank him first) although
it is doubtful if he should win.
b b b b b b a
a a a
a
a a a a a a c
c c d d
c c c d d d d d d c c
d d d c c c b b
b b b
"Here a is
considered best by nearly half the electors (one more vote would give him an
absolute majority), and never put lower than second by any; while b is put last
by five of the electors, and c and d by three each. There seems to be no
doubt that a ought to be elected; and yet, by the
above method, b would win."11
It can seen from these examples that, when there are more than two
alternatives, it is doubtful that the use of majority rule or an extension of
majority rule results in justice being served.
"Moreover, we may conceive a society where the minority prefers an
alternative much more ardently
than the majority prefers the contrary alternative. We
may well doubt that the majority principle still makes sense. It is worth while
trying to include preference intensity as an admissible element of individual
decisions, and also as a factor in social decision-making."12 When there are more than two alternatives,
preference intensity is automatically expressed by virtue of preference
ordering. However, it is not the most complete specification of preference
intensity. If majority rule is suspect as a democratic principle, what then should
replace it? It seems obvious that the Borda criterion
or some variation of the finite ranking rule or the related concept of
maximization of utilities. These criteria, in general, seem to promote the
general welfare better and result in more social justice while the Condorcet criterion and the extensions of majority rule
result more in the use of power by a decisive group whether a majority or a
minority in order to promote that group's interests at the expense of the other
segments of the population. "The proposed rule of social decision-making
is simply that all alternatives should be ordered according to the magnitudes
of 'social utility index' defined as a summation of all individuals' cardinal
utility indices."13
Returning to
the voting paradox, let us consider a few examples that would produce an
intransitive social decision. The first is as follows:
P1(A)=.9 P1(B)=.2 P1(C)=.1
P2(B)=.5 P2(C)=.4 P2(A)=.3
P3(C)=.9 P3(A)=.8 P3(B)=.1
By the
extension of majority voting, this social decision is intransitive. But, if we
compute the utilities, we have
P(A)=2.0
P(B)=0.8
P(C)=1.4
Therefore, if
we pick the alternative with the highest social utility, A would be the winner.
We can see that an intransitivity will never occur
when we maximize utilities. Not only that but the decision makes sense since
the second voter is relatively indifferent among all candidates, the first
voter strongly prefers A to both B and C and the third voter is relatively
indifferent between A and C but strongly prefers both of them to B. So it makes
sense for A to win.
Let us consider
another example:
P1(A)=.8 P1(B)=.5 P1(C)=.1
P2(A)=.1 P2(B)=.8 P2(C)=.2
P3(A)=.7 P3(B)=.6 P3(C)=.8
By the
principle of maximization of utilities, we have
P(A)=1.6
P(B)=1.9
P(C)=1.1
Again by the Condorcet criterion of pairwise
comparison, this example is intransitive. By the maximization of social utility
criterion B is the winner. Note that the first place preferences for all three
voters have the same ratings. However, the second voter strongly prefers B to
either A or C, the first voter does not strongly prefer A to B and the third
voter is relatively indifferent among all three candidates. Again the outcome
makes sense.
Another
intransitive example:
P1(A)=.3 P1(B)=.2 P1(C)=.1
P2(A)=.1 P2(B)=.9 P2(C)=.8
P3(A)=.5 P3(B)=.4 P3(C)=.9
P(A)=0.9
P(B)=1.5
P(C)=1.8
Here, by
maximization of social utility, the winner is C since the first voter is
relatively indifferent among all three, the second voter is relatively indifferent
between B and C but prefers both strongly to A, and the third voter prefers C
quite a bit more than either A or B.
We see that,
all other things being equal, a strong preference
intensity by one voter between two candidates will tend to elevate the
candidate more strongly preferred to the winning position. In each case more
complete information about the preference ratings has led to a logical solution
using the rule of maximization of social utility.
Kenneth J.
Arrow14 argues that a social decision function, or to use
his terminology a social welfare function, which satisfies five basic and
reasonable criteria does not exist. If in fact one does not exist, then there
is no reason to pursue the search for finding an optimal social decision
function and this whole area of inquiry has become a blind alley. We submit
here that Arrow made an error in one of his basic assumptions so that his
results concerning the non-existence of a social welfare function are invalid.
We will prove that there does exist a social welfare function which does
satisfy Arrow's criteria, and that that is the
maximization of social utility social decision function. This social decision
function also solves the impasse of the voting paradox.
Arrow's
Condition 1 that there are three alternatives such that there are no
restrictions on their ordering by the voting public is certainly satisfied. In
fact there are no restrictions whatsoever on the ordering of any of the
alternatives so that a much stronger condition is satisfied. Arrow's Condition
2 is the positive association of social and individual values. This means that,
if an individual elevates a certain candidate in his preference rating, all
else being equal, then the social decision should reflect this. The social
decision will at least not change adversely against the candidate who has been
so elevated. It may be indifferent to this change or it may change so as to
elevate that candidate in the social decision. The maximization of social
utility decision function clearly satisfies this criterion.
For the moment,
let us skip Arrow's Condition 3. We will come back to it later.
Arrow's
Condition 4 is called the condition of citizen's sovereignty. This means that
the social welfare function shall reflect the individual preference ratings and
only them and shall not have some built-in bias which favors one alternative
over another. This is clearly the case with the maximization of social utility
social decision function.
Condition 5 is
the condition of non-dictatorship. There shall not be an individual who
determines the outcome of the social decision regardless of the preferences of
the other voters. Clearly, the maximization of social utility social decision
function satisfies this criterion. In fact we have complete equality among all
voters in the determination of the outcome; neutrality, in that there is no
bias in favor of any particular alternative; monotonicity,
in that if an individual's preference regarding an alternative changes, the social
decision changes in the same direction; and symmetry, in that all voters are
treated in exactly the same manner.
According to Y.
Murakami, the following strongest versions of three desiderata may be regarded
as a sufficient condition for democracy: "A social decision is a democracy
if the function is neutral, strongly monotonic and symmetric. The condition
should be regarded as the maximum requirement."15 Therefore, the maximization of social utility
social decision function satisfies the strongest conditions required for
democracy.
The only other
consideration is Arrow's Condition 3, the independence of irrelevant
alternatives. What this condition demands is that the decision function not be
arbitrary in the sense that if candidates are added to or deleted from the
option set, this does not influence which of the candidates is selected as the
winner provided that the winner is not one of the candidates who is added or
deleted. "Suppose that an election is held, with a certain number of candidates
in the field, each individual filing his list of preferences, and then one of
the candidates dies. Surely the social choice should be made by taking each of
the individuals' preference lists, blotting out completely the dead candidate's
name, and considering only the orderings of the remaining names in going
through the procedure of determining the winner. That is, the choice to be made
among the set S of surviving candidates should be independent of the
preferences of individuals for candidates not in S. To assume otherwise would
be to make the result of the election dependent on the obvious accidental
circumstances of whether a candidate died before or after the day of
polling."16
Arrow seems to
think that a maximization of social utility approach violates his Condition 3
for two reasons:
1) That there are no grounds for
the interpersonal comparison of utilities;
2) That the assignment of utility
values necessarily is a function of the size of the option set and hence is
arbitrary.
Objection (1)
can be dismissed on the grounds that a democratic social decision function
should treat all the inputs and outputs equally and this requires that one
person's preferences and utilities not be given more consideration than anothers. Objection (2) depends on the way that utilities
are assigned. Quoting Arrow again: "Assume that for each
individual there is always one alternative which is preferred or indifferent to
all other conceivable alternatives and one to which all other alternatives are
preferred or indifferent. Then, for each individual, the utility
indicator can be defined uniquely among the previously defined class, which is
unique up to a linear transformation by assigning the utility 1 to the best
conceivable alternative and 0 to the worst conceivable alternative. The
assignment of values is designed to make individual utilities interpersonally
comparable."17
What Arrow is
assuming here is that the ideal best and worst alternatives are contained in
the actual option set, but then he goes on to cite an example in which this is
not true and uses the example to argue that there is arbitrariness involved in
the assignment of utilities. He continues: "It is not hard to see that the
suggested assignment of utilities is extremely unsatisfactory. Suppose there
are altogether three alternatives and three individuals. Let two of the
individuals have the utility 1 for the alternative x, .9 for y, and 0 for z;
and let the third individual have the utility 1 for y, .5 for x and 0 for z.
According to the above criterion, y is preferred to x. [by adding up the
utilities, we get 2.5 for x, 2.8 for y and 0 for z.] Clearly, z is a very
undesirable alternative since each regards it as worst. If z were blotted out
of existence, it should not make any difference to the final outcome; yet,
under the proposed rule for assigning utilities to alternatives, doing so would
cause the first two individuals to have utility 1 for x and 0 for y, while the
third individual has utility 0 for x and 1 for y, so that the ordering by sum
of utilities would cause x to be preferred to y."18
Arrow's problem
here is that he doesn't follow the assignment rule he, himself, suggests which
is to give utility 1 to the best conceivable alternative and 0 to the
worst conceivable alternative. If 1 is assigned to the best conceivable
alternative and 0 to the worst conceivable alternative, then all comparisons of
actual alternatives are with these two poles which remain fixed regardless of
the size of the option set and hence all ratings are non-arbitrary. Clearly, if
we assume the worst ideal, z, is in the set even though it may not be a viable
alternative, then the ratings for x and y do not change and the ratings lose
their arbitrariness. Therefore, if each individual assigns the values 0 and 1
to his worst and best conceivable ideals and adds them to the set for the
purpose of determining the ratings of the other options, even though these
ideals may not be actual options in the sense that they can be chosen, the
ratings assigned will not be arbitrary regardless of whether or not certain
alternatives are added to or deleted from the set.
If the positive
and negative ideals are not included in the set, there is a certain amount of
arbitrariness which is introduced as to where to position the most preferred
and least preferred candidates. If these candidates are positioned at 1 and 0,
respectively, and then one of them drops out of the race, it would be natural
to reposition the other candidates so that the second most or least preferred
is now positioned at 1 or 0 respectively. Also in the case in which a new
candidate enters the race, for example, who is more preferred to the candidates
already in it, if the former favorite was already positioned at 1, then all the
candidates would have to be readjusted. In order to make the preference ratings
non-arbitrary, each individual must include in the option set his positive and
negative ideal candidates and assign them values of 1 and 0 respectively. These
candidates may or may not be included in the set in actuality. They may or may
not even exist. However, their inclusion in the option set
guarantees that the preference ratings for the other candidates will be
non-arbitrary and not subject to change should a candidate or candidates drop
out of or drop into the race. The preference ratings hence become what is called in the literature "independent of irrelevant
alternatives."
As
Murakami states: "...the origin and unit of measurement of preference
intensity is, as we noted, arbitrary. As we choose the Fahrenheit system or the Centigrade system in
measuring temperature, so we have to determine the origin and unit of
measurement here. In other words, we have to select two 'base' alternatives,
such as freezing point and boiling point in the Centigrade system, for which
the magnitudes of utility are artificially fixed."19 Choosing the two fixed points as 'the best
conceivable alternative' and 'the worst conceivable alternative' is similar to picking the two fixed points in the
measurement of temperature as the boiling and freezing points of water.
Arrow's
confusion about this issue causes him to come to the conclusion that
arbitrariness is involved in the assignment of utilities. From this he
concludes that no social welfare function exists which satisfies his basic
conditions. :"The point is, in general, that the choice of two particular
alternatives to produce given utilities (say 0 and 1) is an arbitrary act, and
this arbitrariness is ultimately reflected in the failure of the implied social
welfare function to satisfy one of the conditions laid down."20 This is true if the values 0 and 1 are assigned to
non-ideal alternatives contained within the set instead of introducing within
the set the best and worst ideal alternatives and assigning them the values 1
and 0, repectively. There are important implications
to this question of the existence or non-existence of a theoretically sound
democratic voting system or social welfare function (which amount on an
abstract level to the same thing) since, if they are thought not to exist, then
systems which are unjust or discriminatory or imperfect in practice seem to be
more justified. However, if it can be shown that a theoretically optimal system
does exist, it makes continued justification of existing systems more
difficult, and it makes the implementation of the more advanced and principled
system only a matter of time.
It is
important, therefore, to lay down the rule for assigning utilities or
preference ratings very precisely as follows. Assign the value 1 to the best
conceivable alternative, the value 0 to the worst conceivable. Geometrically
visualize that part of the real axis extending from 0 to 1 and, for each
available option, place it on the axis according to its relative position betwen
the best and worst alternatives. Then assign to it a rational number according
to its placement as in Figure 3.
Figure 3
Now a problem
might arise if each individual chose their best and worst ideals according to
different criteria. For example, one voter's ideals might be so far removed
from the actual candidates as to cluster all preference ratings for the actual
candidates close together as in Figure 4.
Figure 4
Another voter
might identify his ideals more with the best and worst actual candidates so
that his preference rating might look like this:
Figure 5
Actual
candidates would be placed at 0 and 1. The problem here is that Figure 5's
voter's preferences would carry more weight than Figure 4's and hence Figure
4's voter's input would tend to be discounted. This can be remedied by giving
the voters instructions as to how to select their ideals. If each voter selects
his ideals according to the same criteria, then there is no problem. If we are
selecting a candidate for a representative, legislative body, our best ideal
should be one who would vote exactly as we would always, the worst ideal would
vote as we would never. For each actual candidate, we would have to judge what
percentage of the issues he would vote as we would. Then the preference ratings
would all have equal voting power and be non-arbitrary as long as voters voted
sincerely, that is, they did not misrepresent themselves.
If voters voted insincerely, that is they wished to maximize
the power of their vote by misrepresenting their true preferences, they would
apply a linear transformation to their preference rating to "blow it
up" so that their highest preference corresponded to a 1 and their lowest
to a 0. This would maximize the power of their vote without changing the
relative distance between alternatives. For example:
Figure 6
We obtain the
linear transformation by solving for a and b in the
following equation:
P(mi) = ax + b
We do this by
plugging in the new and old values of most preferred and least preferred
alternatives into the above equation.
1 = a(.9) + b
0 = a(.1) + b
a=1.25, b=-.125
We get the new
values for P(mi)
by solving for x in the above equation where x represents the old values. The
results are shown in Figure 7:
Figure 7
There would be
no risk involved in this type of misrepresentation as opposed to
misrepresentation involving changing the relative distances between options.If the voter changes the relative distances between
options putting, for instance, his favorite candidate near 1 and all others
near 0, he would be taking the chance that one of the other candidates for whom he actually had a higher preference
than what he represented and who would have won if he had not misrepresented
himself would not be elected, and
the actual elected candidate would be someone farther down his list. It would make sense to advise all voters to
maximize and hence equalize the power of their vote by applying the above
procedure. The final preference rating or utility assigned to each candidate
would not be arbitrary since the application of the linear transformation is a
non-arbitrary, rational procedure. If, for a particular voter, the candidate
added or deleted was his top or bottom -ranked candidate, then the ratings
assigned to his other candidates would change after the linear transformation
is applied. Therefore, the overall rankings of the election may be shifted and
the winner could even change. However, this change of outcome is rational and
non-arbitrary when seen in the light that each voter is trying to maximize the
effectiveness of his vote and the addition or deletion of his top or
bottom-ranked candidate gives him additional opportunities for doing so.
If we assume
that each voter votes sincerely, and that each voter picks his positive and
negative ideals according to the above procedure, the situation is much
simpler. Then the ratings don't change if candidates are added to or deleted
from the list and the overall ratings which are the result of the voting
process do not change. Then, clearly, Arrow's Condition 3 is satisfied.
If we assume
insincere voting with each voter maximizing the power of his vote according to
the above procedure, then we have to modify Arrow's Condition 3 to the
following: If for some individuals the alternative added or deleted represents
their top or bottom-ranked alternative, then the values assigned in the two
environments will not be the same and the social rankings and decision may not
be the same. However, if the alternative added or deleted does not represent a
bottom or top-ranked alternative for any individual voter, then the social
decision will be the same in each case. We can see that any change in outcome
due to a change in the option set is non-arbitrary and in fact derives from an
individual voter's wanting to make the most of his vote in any particular
environment.
Going back to
Arrow's example again where
P1(x) = P2(x) = 1, P3(x) =
.5
P1(y) = P2(y) = .9, P3(y) =
1
P1(z) = P2(z) = P3(z) = 0
Under sincere
voting the elimination of z would not change the other ratings since z would
still represent the negative ideal for each voter. Under insincere voting it makes
sense that, if z were eliminated, the ratings should change in order that each
voter maximize the power of his vote and also that the outcome should change.
We, therefore,
conclude that the assignment of preference ratings by each individual voter is
non-arbitrary and that the social decision when the maximization of utilities
rule is utilized, is non-arbitrary. Generalizing to M
alternatives and N voters, it can seen that the
maximization of utilities social decision function fulfills Arrow's and
Murakami's criteria and is strongly democratic.
The case of
insincere voting involving a block of voters acting in concert to effect a
change in the outcome by distorting not only the intensity of their preference
ratings but also the ordering of their preferences will not be considered here
except to note that for this to be effective complete a priori knowledge of the
actual preferences of the voters is required and also there is a risk to the
voters who engage in such a procedure that they will end up worse off than if
they would have voted sincerely if their knowledge and hence their calculations
are imprecise.
This conclusion
overturns Arrow's proof that no social decision function is possible which
fulfills his five conditions. As Murakami says: "Arrow
tried to establish that these five conditions are not consistent, or that a
social decision function satisfying these five conditions is not 'generally
possible.' In the first edition of his book, "Social Choice and
Individual Values," he presented a 'general possibility theorem' which
shows, in his own words, 'that, if no prior assumptions are made about the
nature of individual orderings, there is no method of voting which will remove
the paradox of voting.'"21 The voting
paradox has been solved by the following means:
1) requirement
of full information from each voter including preference intensities which can
best be represented geometrically;
2) requirement
that in a democratic system all preference ratings be treated similarly which
means that all geometrical expressions of preference rating be give the same
point of origin and length;
3) that
the two reference points of best ideal and worst ideal be included in the
option set.
In the final
analysis, the voting paradox has been solved by a more complete specification
of information from the voters.
Number 1
guarantees that the social decision will be based on complete information about
individual preferences. Number 2 resolves the controversy over interpersonal
comparison of utilities by pointing out that a democracy requires that the
inputs be treated equally. Number 3 makes individual preference ratings and
hence the social decision independent of irrelevant alternatives. Not only is
the complete specification of information important but also a social decision
function which utilizes all the information specified in
arriving at a decision.
Murakami
indicated that the voting paradox could be dissolved in this way. "As a
matter of fact, C. Hildreth presented a fairly plausible
example of such a rule on the assumption that every individual behaves
according to an expected utility hypothesis, and he proved that his example
satisfies Condition 1', 2, 3', 4 and 5. His rule includes, among other things,
a trick for determining base alternatives for each individual utility index.
This implies that an arbitrary principle of numerical interpersonal comparison
is being adopted. As in the case of finite ranking rule, such arbitrariness is
inevitable in this latter-day version of Bentham-Edgeworth's
utility calculus."22 As we have shown
arbitrariness is not inevitable in such decision functions. Murakami
goes on to state that such a social decision function as Hildreth's
conceivably can avoid the voting paradox. He continues, "Hildreth's example established that formally the paradox of
social decision can be dissolved if every individual's decision includes not
only preference orders but also preference intensities. However, we have to
question, as before, the workability of such a social decision-making rule or,
in other words, how a society could be informed of every individual's cardinal
utility index. We may now pose two questions. In the first place, we may wonder
whether every individual has the introspective ability to measure his own
preference intensity in numerical terms. Secondly, we may wonder-even if every
individual were capable of so measuring introspectively-how a society could
obtain access to the numerical values of these individual cardinal utility
indices."23 We have shown that by portraying the preference
rating graphically, simplification of the process of assigning preference
ratings is assured. As far as society obtaining this information, it could
obtain it in the same way it obtains it now, by having people go to a voting
booth and filling out a ballot, or people could input the information using
their home computer and telecommunicate it to a central data bank.
Finally, we
consider an example involving a voting on four candidates by three voters.
Figure 8 shows the preference ratings for the individual voters both in graphic
and in matrix form as well as the social utilities for the four candidates.
Figure 8
SOCIAL DECISION INVOLVING MULTIPLE OPTIONS
In the election
of a legislative body, we want to elect a number of candidates not just one.
From a theoretical point of view, we can view the process as a selection of m'
options out of an option set of M options where m'<M. In the US House of
Representatives, for example, the process is carried out by choosing one
representative from each geographical area where the districts are defined
according to population so that the population as a whole does not vote on the
candidates as a whole. The population is segmented into districts and each
district elects one representative to represent that district. Does this make
sense? To the extent that that representative represents the interests of his
particular district, it does make sense. But to the extent that the legislative
body is in the business of deciding national policy which represents the
population as a whole, it doesn't.
The same holds
true for the US Senate where each state is represented by two Senators. It
makes sense if the function of the Senators is to act purely in the interests
of the state they represent. If their purpose is to represent and decide policy
for the nation as a whole, the election process does not make sense. The
individual would be better served by a process in which he had a say in the
election of all the representatives in the body than he is in having a say just
in the election of one representative whose vote is then combined with many
others in arriving at a social conclusion or result.
What makes more
sense, empowers each individual to a greater extent, and results in a greater
consensus among voters in the election of a national legislative body
representing all citizens is a process whereby all citizens vote on all
candidates and the social decision function selects m' out of the M total
candidates to fill the seats. In this way each representative represents all
the people although certain representatives will tend to be more closely
aligned with certain segments of the population (i.e.those segments
that strongly prefer that representative as expressed by their preference
rating) and other representatives will be more closely aligned with other
segments of the population. Presumably, geographical interests will be
represented by candidates most closely aligned with certain geographical areasi.e.candidates
from certain areas presumably will be more highly preferred by people living in
those areas. Even now certain Representatives or Senators specialize in certain
areas and represent national constituencies in those areas even though most of
the people they represent will never get a chance to vote for them. For
instance, Claude Pepper represents senior citizens on a national basis and not
just those in his
Since it would
be a prodigious task to ask each voter to familiarize himself with the
credentials of several hundred candidates, sampling techniques similar to
polling could be used so that each voter might just be asked to express his
preferences over a moderate number of candidates, and then these results could
be integrated to get the overall results as if each voter had expressed
preferences over each candidate. The results could be made accurate to a
predetermined small probability of error using sampling techniques. The result
would be that much more information will have been used in determining the
results than is used in present-day systems in which tremendous quantities of
information are not even collected or considered in determining the results.
Using statistical techniques, it could be determined just how much information
would be needed to reach a predetermined probability of error, and this
information could be collected in the most expeditious manner. Even if the
effort made on the part of the voting populace were exactly the same or even
quite a bit less than that exerted today, the results would be more greatly
accurate than in present-day systems.
Let us consider
the general problem. Each voter expresses a preference rating over the total of
M candidates. m' are to be selected to represent the
population. We assume that the utility of m' candidates for each individual
voter is equal to the sum of the utilities of each candidate in the set. For
example, the utility of the candidate subset (A,B,C)
for the jth voter is
Uj(A,B,C) = Uj(A) + Uj(B) + Uj(C)
We can
normalize this by dividing by the number of candidates in the subset.
Similarly, the
social utility of any candidate subset would be equal to the sum of the social
utilities of each candidate in the subset. Therefore, the social decision
function for selecting m' out of M candidates would be: Compute the social
utility of each subset of m' candidates. The subset that has the highest social
utility is elected. Because of the nature of the social decision function we
are considering (the maximization of social utility),
we can simplify the above rule to the following: select the m' candidates with
the top m' social utility ratings.
The problem
from a statistical point of view is this: how many individuals have to rate a
particular candidate before that candidate's overall utility rating is known
within a predetermined error margin as if the candidate had been rated by the
entire population. Assuming the independence of irrelevant alternatives, the
social utility information on each candidate can be merged to get a composite
preference rating on all the candidates by the population as a whole. A legislative
body so constituted would represent the population as a whole and hence there
would be no need for more than one legislative body unless there was a desire
for a second body to provide a check on the first as is the case in the present
becameral
How does this
compare with proportional representation? Proportional representation is a
system in which representatives are selected by political parties in accordance
with the percentage of votes cast for that party in a general election. For
example, if 30% of the votes are cast for party A, party A
gets 30% of the seats in the legislative body. In this way even fairly small
minorities can be represented in the legislature. This system goes beyond the
geographically based systems and applies to the voting population as a whole.
The problem here is that there is no expression of preferences over the various
parties or various candidates, and it is assumed that each representative
selected by each party totally represents the voters that voted for that party.
This is assuming a lot of intra-party cohesiveness. The advantage of this
system is that even a small minority has some representation. In the system
represented by the maximization of social utility, the case may arise that a
certain minority may derive very little or no utility from the elected
representatives, and thus might be effectively disenfranchised. This can be
corrected by adopting a variation of the maximum social utility social decision
function. We could decide in advance that every voter should at least derive a
minimum amount of utility out of the election process so that the amended rule
would be: maximize social utility subject to the restriction that the resulting
individual utility for any voter may not be less than a certain predetermined
amount. Let us call this the minimum individual utility. This introduces a
certain measure of equality in the outcome that will also result in a
diminution of overall social utility. It will also serve to deter any voting
bloc that might use its collective power to secure an outcome more advantageous
to itself that would also decrease the utility of some minority.The
higher we raise the minimum individual utility, the more equality will exist in
the distribution of outcomes and the less will be the overall social utility.
We pose the
question: Is it worth a diminution of overall social utility so that there can
be a minimum guaranteed individual utility for each individual? The answer is
probably yes if the overall social utility does not have to decline by too much
in order to raise the utility levels of the worst-off segment of the
population. Therefore, we might adopt an even more sophisticated criterion:
maximize social utility subject to the constraint that the minimum individual
utility is a preset amount, ∂, provided that the total utility added to
those individuals supported at this level not be ß
times more than the total utility subtracted from the other individuals. If the
limit is exceeded, then systematically reduce the minimum individual utility
until the limit is met.
This rule
imposes a reduction in welfare on the better off individuals in order to help
the less fortunate while at the same time recognizing that there is a trade-off
which in some cases may not be worth it if the better-off individuals' utility
is decreased by a very large amount in order to secure a very low level of
utility for a small minority in each particular voting process. In such cases
it probably is better to take care of the minority whose utility is below
minimal standards outside of the voting process itself. This can be done by
guaranteeing certain rights to all which in effect represents certain minimal
standards. These rights cannot be voted away in a voting process by the
majority. They precede and transcend any voting process and guarantee a certain
safety net below which no one is allowed to fall. These rights may be both
political and economic.
EXTENSION TO ECONOMICS
The method of
maximizing utility which has been applied to political systems can just as well
be applied to economic systems. The concept of democracy has meaning not only
in a political sense but in an economic sense as well. We can speak of economic
democracy as a system in which all citizens are free to enter the marketplace
and the workplace and all have an equal share of the power to determine what
goes on there. If political democracy is represented by the phrase "one
man-one vote," then economic democracy can be represented by the phrase,
"one man-one share of the decision making power regarding work and the
distribution of goods and services." We visualize a system in which each
person's input is considered equally as in a direct political democracy. We do
not consider either a collectivist system in which the economic decisions are
made by an elite group on behalf of the entire citizenry or even a
representative system in which elected officials make the economic decisions
but rather the economic equivalent of direct democracy, that is direct
participation by each individual in determining both his work choices and his
consumption choices. In such a system there would not only be more equality
than in the capitalist system but more freedom as well. There would be more equality
since economic power would be shared equally and the ownership of wealth and
power would not put one in the position to set wages and determine what was to
be produced and consumed. It would be more free in the
sense that the decisions for each individual about his work and his consumption
patterns would be made by him and not for him by market forces beyond his
control or by a political body. There would be a jobs market not a labor
market. The worker would be empowered to choose his work patterns by making
demands on the jobs market rather than being at the behest of employers. Jobs
would be available on demand just as, in the consumption market, goods and
services are available on demand. It would be a demand economy in which the
individual worker would be empowered finally to make the demands. These choices and decisions made by each
individual would be treated equally in arriving at an overall social decision
rather than unequally based upon economic power which is a function of wealth
(which is very unequally distributed) as is presently the case in capitalist
systems.
We envision a
system in which the outcome for each individual in terms of his work and his
consumption is individually tailored to that individual's needs by that
individual himself. It is not decided for him by forces beyond him whether
those forces are bureaucratic or market forces. Let us be clear that in the
so-called free market economy, the choices that one has are limited and shaped
by the people who have economic power so that the individual is presented with
a set of choices whether they be in terms of job opportunities or in terms of
consumable items that he has no direct control over. He has the illusion of
freedom simply because he has a range of choices; however, he has not been
consulted in determining the set of choices with which he is presented. If
there are no job opportunities in the field in which he is most interested,
then that individual is not free. If the things he wishes to consume are not
available although the market is glutted with items in which he is not
interested, then that individual is not free.
This situation
of unfreedom is evident in the
Thus market
forces conspire to eliminate true excellence and true freedom of choice from
the marketplace and give us instead trivia-trivia which is readily marketed and
trivia for which a mass market can be created through mass advertising. In
Norman Corwin's book, "Trivializing America," which had to be special
ordered by the way because the book store's shelves were filled with trivia,
there is a chapter, "Songs Unheard, Films Unseen," which lists some
fifty films, all of them excellent, all of them virtually unknown according to
the results of a survey of approximately half a million people. According to
Corwin, "...most of these films gather dust in the vaults, and have been
followed into those dim chambers by at least as many more fine documentaries
produced since the 50 were made. A few of them were shown on television, but
only eight...were shown in theaters, and then very sparsely. And that is
particularly sad in these cruel times, because more often than any other
vehicle, the documentary film is inspired by compassion, or energized by a
crusading sense of justice. In a time as callous and cynical as the 80's, it is
heartening to realize that at least one medium cares-about the handicapped, about the rights of minorities, about
underprivileged children, endangered animals, drug addiction, pollution, the
environment, victims of all kinds of predation. One can only watch with awed
admiration the performance of documentarians who lavish time, energy and funds, sometimes
cashing in their insurance policies or borrowing money to complete their films,
sometimes risking health and even life, to do work which they hope will
accomplish some good through disclosure, interpretation, argument or just plain
truth-seeking."24
Meanwhile,
while these films go unseen, we are offered the likes of "Rambo" and
"Commando," filled to the brim with violence, for our edification.
While films of compassion and quality are passed over, films of violence and
terror are ubiquitous. As Corwin points out, this does not mean that there is a
conspiracy involved in all of this, but there certainly is a willingness to
purvey profitable trash on the part of film producers as opposed to creating
films which have some integrity and redeeming social value. Let's face
it-critics from other societies who talk about American decadence are not all
wet. And it is a decadence created for profit and purveyed to mass audiences
for their emulation.
The subject of
applying social decision functions to economics is known in the literature as
welfare economics. According to Murakami, "Welfare economics may be
defined as an analysis of social decision in a society where each individual is
a consumer. By a consumer we mean an individual who makes his decision
concerning only his own expenditure plans. As an expenditure plan is composed
of the quantities of commodities to be purchased and consumed, each plan can be
expressed as a point in a finite-dimensional Euclidean space, where each
dimension represents a quantity of each commodity."25 Not only consumption but work must be included in
an individual's preference rating. The preference rating should be over all
work-consumption states relevant to the individual.
The totality of
all individual consumption-work states comprises the possible social states.Whereas we assume that it's only relevant for an
individual to express preferences over his own individual state, Arrow assumes
each individual expresses preferences over all other individuals' states as
well. "In the present study the objects of choice are social states. The
most precise definition of a social state would be a complete description of
the amount of each type of commodity in the hands of each individual, the
amount of labor to be supplied by each individual, the amount of each
productive resource invested in each type of productive activity, and the amounts
of various types of collective activity, such as municipal services, diplomacy
and its continuation by other means, and the erection of statues to famous men.
It is assumed that each individual in the community has a definite ordering of
all conceivable social states, in terms of their desirability to him. It is not
assumed here that an individual's attitiude toward
different social states is determined exclusively by the commodity bundles
which accrue to his lot under each. It is simply assumed that the individual
orders all social states by whatever standards he deems relevant."26
In the economic
democracy we envision, the input from each person is considered to be a
preference rating, Pj(w,g),
over a number of hypothetical economic states where w represents possible work
states and g represents possible consumption states. For the most part these
states are personal in that they apply only to that specific individual.
However, allocation for and consumption of public resources such as parks, schools,
libraries, etc. can also be included. Each economic state consists of a
two-fold quantity: the amount, type and quality of work to be done by that
individual and a list of goods and services to be obtained in return. Note that
each individual's preference rating applies only to himself,
and the social decision function must integrate all this data and come up with
a solution which assigns a specific economic state to each individual as in
Figure 9.
Figure 9
Pj(wj,gj) represents the
preference rating of the jth individual
over all possible work-consumption states available to him. Uj(wj',gj')
represents the utility or satisfaction of the jth
individual with the specific state, (wj',gj') selected by
the social decision function.
There are many
possible social decision functions and many possible ways the efforts of each
individual in the workforce can be utilized to provide a variety of goods and
services. There are also a variety of ways that these goods and services can be
distributed. The social decision function must decide qualitatively and
quantitatively how much and what kind of labor each individual is to perform
and how much of each good and service is to be provided to each individual.
We consider the
application of the system of the maximization of social utility that we used in
the political sphere to the economic sphere. Let us assume that each individual
has a preference rating over each of his personal economic states. Let us assume
that each individual is indifferent to the economic states of other individuals
that do not affect him. For example, the consumption pattern and work pattern
of another individual should not concern him so long as that individual's
preferences are integrated into the overall solution by the social decision
function in the same way as everyone else'si.e.everyone's
"vote" has equal power and is considered equally by the social
decision function. Also, since the individual is presumed to have both private
and public needs, preference ratings can include items that are consumed
collectively. And there may be a trade-off between needs which could be
provided for either privately or publicly. For instance, it might be much more
economical to provide for a need publicly rather than privately and vice versa.
It might be better and more economical to build one nice community pool, say,
than to build a number of smaller private pools. Ultimately, this would be
decided by the mechanism itself, that is which solution
would maximize social utility.
Each individual
rates his personal economic states from highest to
lowest in accordance with the same techniques set out earlier. To simplify the
problem, let's set some limits. We assume there is a
maximum number of hours each individual may work in a given time frame, wmax,
and a minimum number, wmin. Additionally, we assume that there is a
minimum increment of time which might, for example, be one hour. Therefore,
there are wmax-wmin possible work quantities. Note that
an individual could get very specific about his work time in terms of how many
hours he works in a given day or week, starting and stopping times and type of
work. This individual tailoring of work programs is possible because of the
ability of computers to integrate large quantities of data and integrate
individually tailored programs into a consistent overall solution. The
organizational capabilities of computers when programmed correctly mean
increased freedom of choice, liberation and individual tailoring of work
programs. There can be many degrees of freedom and flexibility. It is up to the
social decision function to integrate the information rationally, effectively,
taking everyone's interests into account equally and in such a way as to maximize
social utility and promote happiness.
Let us assume
that there are M different types of goods and services. Let us further assume
that each good or service is divided into units. Let the number of units be
denoted by a variable, g. Then each individual must make out a list: gj
= (g1,g2,...,gM)j
which represents the amount of each type of good and service he desires.
Therefore, a personal economic state can be represented by sji = (wj,gj)i where wj = (w1,w2,...,wN)j
represents the work to be performed in its various dimensions. In general there are a number of possible
states for each individual (let us say R states), and it is assumed that each
individual has a preference rating over all the possible states. The
totality of possible personal economic states can be represented by sj
= (s1,s2,...,sR)j.
The preference rating for the jth
individual, then, would be denoted by Pj(s). Figure 10 illustrates a
possible preference rating over personal economic states.
Figure 10
Preference Rating, Pj(s), Over Personal
Economic States
0 and 1
represent the worst and best ideal states as perceived by each individual. It
might be assumed that an individual's most preferred states would be ones in
which he worked relatively less hours and consumed relatively more goods and
services. However, these desires will vary over a population. Some people may
desire to work longer hours because they love their work and yet are frugal in
their consumption. Some may wish to devote their time and energy to some extent
to the betterment of society and so might choose to work more and consume less.
Once an
individual's preferences have been defined, the problem of integrating all this
data and coming up with a social decision is exactly analogous to the political
problem. We wish to maximize the utility over society as a whole. There is a
constraint involved that wasn't present in the political case and that is that
the total work required be sufficient to produce the total amount of goods and
services needed by the society as a whole-no more and no less. But the
criterion that determined the total amount of work required as well as the
total amount of goods and services produced is based on the maximization of
social utility. The social decision function would consider all the possible
social economic statesi.e.all the possible work states,
and all the possible combinations of goods and services
states,
The overall social work-consumption state, Si = (Wi,Gi). For each possible
state, the social decision function would compute the social utility,
and select that state with the highest utility. If
there are many states that achieve the highest utilityi.e.the state
of highest utility is not unique, then the rule might be amended to be to
choose that state of highest utility with the least inequality. Arrow's five
conditions apply to the economic situation as well as to the political since
the situations are analogous. However, one more constraint is needed in
addition to Arrow's five. A situation of slavery may arise if the social
decision function decides on a state in which one or more individuals are doing
more work and receiving less goods and services than some other individuals.
Let's just consider two individuals, A and B.
wA >
wB
gA <
gB
This could come about if B
placed high value on receiving a lot and working very little and individual A
placed some value on working a lot and receiving very little.Then
the social decision function might decide on a state in which A worked more
than B and B received more than A which would be unfair although not all such
states would be unfair. To prevent this situation we add Condition 6 to Arrow's
original 5.
Condition
6: If there is a solution, S*, such
that
wA > wB and gA
< gB
and A's utility can be increased by decreasing wA
and/or increasing gA, then S* is not an acceptable solution.
If wA > wB and gA < gB,
then there is a transfer of wealth from A to B. This is not acceptable even if
it results in maximizing the overall utility if A would be better off working
less and/or consuming more. If, on the other hand, A would be worse off working
less and/or consuming more according to his own preference rating, then the
solution is acceptable. In this case A prefers to transfer wealth and would be
less happy if he could not do this. It represents a non-coercive transfer.
Instead of "from each according to his abilities," we have "from
each according to his preferences." We have made this kind of transfer of
wealth from the more able to the more needy possible,
but we have not made it mandatory. Similarly, it is up to the individual to
define his needs rather than have them defined for him, with the possibility
but not the certainty that all those needs will be met. There is no
intermediary such as "the state" to either decide how much an
individual should contribute or to define what a person's needs are for
them. However, each person is dealt with according to the same fairness
criterion. The more able cannot be made to be slaves to the less able, and the
less able cannot be made to be slaves to the more able.
In the case
that there is a voluntary transfer of wealth possible but no recipient
available, that is there are more willing producers than there are willing
consumers, it is not fair to decrease someone's happiness by forcing a transfer
of wealth upon him, by forcing him to consume. Put differently, a person's
opportunity to produce should not be denied to him. Therefore, we have
Condition 6'.
Condition 6': If there is a solution, S*, such that wA
> wB and
gA < gB and B's utility can be increased by increasing wB
and/or
decreasing gB, then S* is not an acceptable solution.
No individual
has the option of working less and consuming more thereby forcing another
individual to work more and consume less. Likewise, no individual has the
option of working more and consuming less thereby forcing another individual to
work less and consume more. However, symbiotic relationships in which one
individual works more and consumes less, either out of the goodness of his
heart or out of a fondness for work, and another individual works less and
consumes more, either out of disability or special consumption needs or sheer
preference, are admissible. Abuses are possible in terms of voluntary underwork (laziness) and overconsumption.
Presumably, these individuals who would only be abusing themselves and not
others, it is to be noted, would be candidates for counselling to help them achieve a better and healthier
balance between work and consumption.
This system
opens up possibilities for charitable giving by connecting up donors with
receivers, and, therefore, expedites the desire of those who wish to help those
less fortunate than themselves. It, therefore, is a social system which
encourages rather than frustrates or impedes individual morality. It allows for
those who wish to live according to Jesus' admonition, "Love your neighbor
as yourself," but it does not force people to live this way. Also these
decisions as to transfers of wealth between individuals are not arbitrary, are
not made by some bureaucrat or by someone in authority, but are made according
to the social decision function of maximization of social utility. There is no
room for abuse due to the arbitrariness of individuals in positions of power
because there are no individuals in positions of power. Instead of the
"invisible guiding hand" of Adam Smith, we have a rational guiding
hand which represents a market system in which the market operates in
accordance with ethically defined principles. Decisions are made in accordance
with the algorithm which embodies the principles of freedom, equality,
fairness, satisfaction and charity.
It should be
noted that the first recipients of voluntary giving should not be perfectly
capable people who tend to be somewhat lazy and overconsuming,
but rather people with bonafide special needs,
handicapped people, people who need to consume more and need to
work less. In some cases, individuals are incapable of working at all and have
consumption needs far above the average person. In the voting procedure, these
people with bonafide special needs could be
identified so that all voluntary transfers of wealth would go to them first.
Then if there were additional wealth to be transferred from workoholics
to lazoholics, that would take place after all special needs were met. If
all special needs were not met by voluntary transfers, then there should be a
"tax" that would allow for the satisfaction of special and communal
needs. What this means is that everyone would have to work a little harder
and/or consume a little less in order to provide for those members of society
who are poor, handicapped, diseased, elderly, children or incapacitated. This
could be done in such a way as to reduce the total utility by the least amount
or by reducing each individual's utility by an equal amount or by coming down
somewhere in between these criteria of equality and maximization of social
utility.
The idea of
guaranteeing everyone a certain minimal level of utility which then represents
a tax on the rest of the population is similar to the ideas discussed in
conjunction with proportional representation. Guaranteeing a minimum utility
for everyone and then maximizing the overall social utility with respect to
that constraint is analogous to proportional representation. Of course this
will reduce the overall social utility. So a similar criterion to the one
discussed under political systems might be invoked such as the following:
Let i be the minimal individual utility. Let S* be the maximal
social utility if there were no minimal individual guarantees. Let n be the
number of individuals falling below the minimal level. Let S** be the maximal
social utility when minimal individual guarantees are in effect. Then, if
qni < S*-S**
where
q is a number decided upon in advance, the corresponding tax and transfer would
be put into effect. If the above condition does not hold, then i would be incrementally reduced until the condition does
hold. In other words if the utility added to bring everyone up to a minimal
level (ni) results in more than a certain number (q)
times this utility being subtracted from the overall utility of the population,
then it is not considered to be worth it.
Alternatively,
the guarantee of certain minimum economic rights could be handled outside the
system altogether. A person would have a right to a basic level of food,
clothing, shelter and medical care guaranteed by the society. He would also
have a right to a job and an obligation to take a job if he could work. These
minimum guarantees would have to be provided for by a transfer of wealth or a
tax on the rest of the population. These minimum levels would be somewhat
arbitrary as would be the value of the quantity, q, above and, therefore, would
be subject to political debate and, ultimately, political decision.
Such a system as
this would work in industries with well-defined jobs and well-defined products,
mature industries so to speak, where the technology is well-known and readily
available. What about the creation of new industries, new products and new
inventions? People can be employed to pursue research into new and experimental
areas. And also individuals might pursue these activities in their spare time.
There might be incentives and subsidies provided to people who came up with
worthwhile inventions and innovative ideas. And task forces could be delegated
to solve problems which society had earmarked as needing to be solved.
Invention and innovation might also be encouraged by the provision of
"social venture capital"i.e.the provision of capital by
society to individuals with ideas for innovation and development deemed worthy
by society with the return on the investment jointly split between the
inventor-whose work results in a change for the better for society-and society
who provided the "capital" for the venture.
Just as in
political democracy there is "one man-one vote," in an economic
democracy there is "one man-one vote." The vote in the latter case is
a preference rating over a list of alternatives just as in the political
situation. The differences are that
1) the
solution is an individual solution that is tailored to each individual's
preferences;
2) the
alternatives voted upon represent different allocations of production and
consumption that apply only to the individual voter.
The
productivity of the entire society has to do with how well the social decision
function integrates the labor force so as to minimize the total work involved
to achieve any specified level of production. In the economic case the votes as
well as the content of the votes and the outcome or solution are all
individually based and apply to that particular individual only. In the
political case the votes are individually based but the alternatives as well as
the outcome may be collective and apply to a large number of individuals or
even the entire society. In the economic system we have been describing,
everyone would have the right to participate, the right to work, the right to
be compensated for that work. Everyone would be equal in terms of their input
(preference ratings). Not everyone would be equal in terms of their individual
wealth. Some people would work harder to create wealth for themselves. They
would be free to pursue that option, and there would be a direct correlation
between individual effort and the fruits accruing to the individual from that
effort. Some people might not be that interested in material wealth. They would
also have the option of not pursuing it and devoting their time and energy to
other pursuits, but the system would be open to their working just enough to
meet their needs and also to changes in lifestyle if and when they occur. There
would be a distribution of individual wealth that would span the economic
spectrum. But, the guarantee of minimal economic rights would put an end to
poverty. In fact the guarantee of minimal economic rights should be designed so
as to bring everyone at least up to the level of non-poverty. Also there would
be no unemployment since the necessary work would be distributed over the
entire population. This work might not be distributed equally, but that would
be in accordance with individual desires and preferences and not in accordance
with capitalistic market forces or political dictates. The market here is not a
market created for individuals by corporations in the interests of
corporations, but a market created for individuals by individuals in the
interests of individuals.
Everyone would
have equal access to the market place which would consist of the right to
choose over a wide variety of patterns of work and consumption. This,
ultimately, is the market-place, and represents the epitome of free choice in
the market-place. When a person can specify his preferences for work patterns
of his own design and desire rather than choosing from the jobs and work-styles
that happen to be available, then he is truly free. Similarly, when a person
can specify his consumption patterns out of his own mind rather than choosing
from the products made available by corporations and the items of consumption
can be individually tailored to his needs instead of standardized, then he is
truly free in his consumption-style. In present-day capitalism and communism,
the jobs available as well as the goods which are produced are decided upon by
the owners of the means of production and by the bureaucratic elite,
respectively, not by the people at large. The people are then brainwashed
through the propaganda of advertising to believe that the choices available to
them represent their ultimate desires rather than a limited assortment based on
what is advantageous to the people who do have the power to set up and decide
on the scope and content of available choices, the people who have economic
power, the people who own or manage the means of production.
The proposed system is really a synthesis
of free enterprise involving the law of supply and demand and a centrally
planned economy involving rational organization of the labor force instead of
the "invisible guiding hand" of Adam Smith. This system is centrally
organized in the sense that the decisions are made centrally, and, therefore,
economies of scale are realized, but the decision making capability does not
reside in a group of planners who make their decisions without consulting the
people in general but according to an algorithm-a rational guiding hand-which
fairly and impartially integrates the individual decisions of the entire
population. The decisions, themselves, are individually based and tailored
which represents the ultimate in decentralization. Decision making power is
evenly distributed over the entire population.
Demand is
created by individual consumers not with relation to desires which are
artificially molded by corporations through advertising, but with reference to
their own innate desires and needs. Supply is created based upon knowledge of
the cumulative demand and cumulative work force and is not based upon
speculation. Supply equals demand. There is no overproduction or
underproduction. There is no scarcity and no waste providing that natural
resources are sufficient for the demand. There are no failing businesses due to
misjudgment of the market and no lay-offs. Workers are transferred from one
area of production to another without discontinuity and as needs shift. There
is no generation of excessive surpluses again due to misjudgment of demand or
speculation. There would be nothing to speculate about as production would be
geared to a demand specified a priori. We would not have a situation as exists in
the
The law of supply
and demand is at work in the satisfaction of individual needs, but scarcity and
waste due to misjudgment of those needs is not a problem since those needs are
specified directly by each individual in advance. Social needs are then
determined by integrating or summing up individual needs. The allocation of
resources, labor, and production is determined by consumer demand. However,
prices do not fluctuate according to whether there is an under or over supply
since supply equals demand and this knowledge is available a priori from the
individual votes and not a posteriori from dollars spent in the marketplace.
Each individual has an economic situation
that he individually tailors to suit his own needs including the total amount
of time he works, how that time is distributed and the type and quantity of
non-standardized goods and services he consumes. Non-standardized or
individually-tailored consumer goods are possible because assembly lines can be
set up which are pre-programmed by computers to individually tailor each item.
The central planning is really an organization of the work force in the most
rational manneri.e.to generate the production of goods and services
demanded by consumers with the minimum amount of labor and in the most
efficient and equitable manner. Individual needs are taken into account. There
is no dictation as to work or consumption by a central planning group.
The negatives
of the law of supply and demand-miscalculation of demand resulting in over or
under supply which translates to huge surpluses and lost remuneration on the
part of the producers on the one hand or scarce supplies and over-priced goods
on the other-does not take place. The hardships caused by the free enterprise
system both to producers and consumers alike are eliminated. The benefits are
retained. Individual initiative is increased over the free enterprise system
due to the fact that there are no dead end jobs, no
economic exploitation of workers which dampens their initiative and people reap
benefits according to the efforts they are willing to put in. The rational
integration of work inputs guarantees that workers are involved in a
cooperative effort in which the sum is greater than its parts rather than
competitive efforts which result in the sum being less than its constituent
parts due to the grinding together of individual efforts which competition
produces. Therefore, on a strictly social level people are more in harmony with
each other. People are rewarded according to their work and according to their
contribution to society and not according to their economic position, not
according to the amount of capital and wealth they possess. The possession of
wealth does not confer economic power as no increase of decision making power
is conferred thereby. Wealth can only be used to acquire a higher standard of living, can only be expended in the marketplace. It cannot
be used to control the marketplace. There is room in this system for individual
creativity to be rewarded when some new invention or discovery which is
beneficial to society is generated by an individual. In fact a program of
incentives should be set up in order to unleash individual creativity, and
since we anticipate a reduction in the average work week due to the rational
organization of labor and increased automation, there will be ample time for
the creative expression of individuals in all spheres of life from scientific
to technological to craftsmanly to artistic to poetic
to spiritual. This would be the creative flowering and expression, the
unleashing of creative energy by the masses-relieved of drudgery and
exploitation and assured of basic social security-which Marx, Marcuse, Fromm and other great
philosophers have spoken of. And, yes, there should be societally
sponsored incentives and encouragement given to people who come up with
socially beneficial creations whether in the form of ideas or things or art.
These incentives might be in the form of economic inducements and/or
recognition.
This is
economic democracy. There is freedom and equality. Freedom to tailor
one's individual economic life to one's own needs. Freedom to
have a job. Freedom to live a decent life in
the case of one who is incapacitated. Economic rights oriented to the
basics of life rather than the luxuries-to the needs of the poor rather than
the needs of the rich or the strong who would be rich.
Economic rights rather than President Reagan's economic Bill of Rights which is
nothing more than a manifesto for the powerful and a denial of the validity of
the claims of the weak. In the proposed system, there is equality in that
everyone's input, needs and preferences are treated equally. No one can take
advantage of or exploit another either by means of relative advantage or power
or by means of superior intelligence. There is rationality in the sense that
the amount of work performed is exactly what is necessary (insofar as can be
determined) to produce the quantity and quality of goods and services required.
There are no failing businesses or unemployment because supply has exceeded
demand. There is no scarcity because demand has exceeded supply. Individual
responsibility and initiative is increased because everyone has an equal stake
in the system, everyone has the same economic power, no one stands over anyone,
the system is very responsive to
individually-determined needs both for work and consumption, and individual
incentives for outstanding performance and originality and creativity can be
built in. The stifling of individual creativity and talents will be eliminated
and the unleashing of individual energy and productivity will be facilitated.
With the
addition of the guarantee of certain minimal economic rights-the rights of at
least decent subsistence level food, clothing, shelter, medical care and education,
we have an economic system which is the equivalent of the political system of
proportional representation. It is somewhere between socialism (to each
according to his work) and communism (to each according to his needs). However,
the system contains the possibility of a voluntary transfer from the more able
to the less able, from the less needy to the more needy, which represents both
pure Christian charity ("Thou shalt love thy
neighbor as thyself") and pure communism ("from each according to his
abilities, to each according to his needs"). It is also conservative in
the sense that to the extent it promotes voluntarism, it reduces taxes. It does
show compassion in providing for at least basic human needs at a minimal level
for those who can't provide for themselves. It is conservative in that there
are no budget deficits, no surpluses (except those thought rationally
necessary), no programs that transfer wealth to people
who don't need it. There is also no exploitation of labor which is essentially
a transfer of wealth from people who work more to people who work less, nor is
there exploitation or manipulation of the consumer through advertising and the
creation of products not in the interest of the health and welfare of the
consumer.
It is important
that there are economic rights just as it is important that there are political
rights. They represent society's safety net, and they represent security in the
sense that they are guaranteed by the society and represent a committment by society to its citizens. A society without
rights but with an ill-defined safety net is toying with the peace of mind of
its citizens in that it may be capricious and insincere in its lack of
commitment to caring for its citizens. In the
Our system
contains opportunities and it contains guarantees and it contains
possibilities. It is possible to become rich through hard work and ingenuity,
but it is not possible to use wealth to control production, investment, the
marketplace or other people. It is possible to choose to be decently poor
without the fear of poverty, without being marginalized by virtue of being
forced into poverty. In present day capitalist society, there is a centrifugal
force which pushes people at the margins of society over the brink into extreme
states. To be marginal is to be vulnerable to those with power. In the society
we are proposing people at the margins would be supported and held inside the
bounds of decency not forced into poverty. Our system contains the possibility
of helping one's neighbor both as an individual and as a society. It contains
the possibility of symbiotic relationships between workoholics
and lazoholics. It contains provisions for the sick,
handicapped and people with special needs. It allows cooperation. It prevents
the exploitation which is inevitable in a competitive system while offering
incentives and rewards for innovation and accomplishment. It allows people to
determine and pursue their self-interest and their dreams while minimizing the
risks involved in a competitive system. It is a system that allows us to love
our neighbor instead of predestining us to endless competition with him.
The provision
of social insurance makes it unnecessary for each individual to have to pursue
wealth in order to provide for his own personal, private security program. In
the event of an emergency or catastrophe, he will be provided for so that each
individual does not have to amass a large nest-egg just for such a low
probability contingency. In this way resources are released for more productive
purposes and are utilized by society as a whole more effectively.
This system
represents a synthesis of capitalism and communism, individually-based decision
making power and central planning, Christian ethics and the pursuit of
self-interest, individualism and communalism, political and economic rights,
East and West. It embodies the principles of freedom, equality, fairness,
rationality and love. It is proposed in the spirit of resolving the conflict
between capitalism and communism, the
END CHAPTER 3