As the previous chapter suggests, there could exist a society which some socialists would call socialist but which I would regard as both capitalist and free. Such a society would be produced by combining the socialist principle of worker control with radical decentralization and the market structure that such decentralization requires. There would be no central authority able to impose its will on the individual economic units. Coordination would be by exchange, trade, a market. Instead of firms, the normal form of organization would be workers’ cooperatives controlled by their workers.
As long as individuals are free to own property, produce, buy, and sell as they wish, the fact that most people choose to organize themselves into workers’ cooperatives is no more a limitation on the society’s freedom than is the fact that people in this country presently organize themselves into firms. It would, doubtless, be inconvenient for those who wanted things arranged differently—aspiring capitalists, for instance, who could find no work force because all the workers preferred to work for themselves. In exactly the same way, our present society is inconvenient for a socialist who wants to set up a factory as a workers’ cooperative but cannot find anyone to provide the factory. The right to trade only applies to a situation where the exchange is voluntary—on both sides.
I would have no objection to such a socialist society, beyond the opinion that its members were not acting in what I thought was their best interest. The socialists who advocate such institutions do object to our present society and would probably object even more to the completely capitalist society that I would like to see develop. They claim that the ownership of the means of production by capitalists instead of by workers is inherently unjust.
I think they are wrong. Even if they are right, there is no need for them to fight me or anyone else; there is an easier way to achieve their objective. If a society in which firms are owned by their workers is far more attractive than one in which they are owned by stockholders, let the workers buy the firms. If the workers cannot be convinced to spend their money, it is unlikely that they will be willing to spend their blood.
How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totaled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.
When you buy stock, you pay not only for the capital assets of the firm, buildings, machines, inventory, and the like, but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totaled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months’ worth of savings.
I do not expect any of this to happen. If workers wanted to be capitalists badly enough to pay that sort of price, many would have done so already. There are a few firms in which a large fraction of the stock is owned by the workers—Sears is the most prominent—but not many.
Nor is there any good reason why workers should want to be capitalists. Capitalism is a very productive system, but not very much of that product goes to the capitalists. In that same year of 1965 total compensation of all employees (public and private) was $391.9 billion, almost ten times the $44.5 billion that was the total profit after taxes of all corporations. (“After tax” is after corporate tax; the stockholders still have to pay income or capital gains taxes on those profits before they can spend them, just as the workers must pay income tax on their salaries.)