Discover millions of ebooks, audiobooks, and so much more with a free trial

Only $11.99/month after trial. Cancel anytime.

Mass Capitalism: A Blueprint for Economic Revival
Mass Capitalism: A Blueprint for Economic Revival
Mass Capitalism: A Blueprint for Economic Revival
Ebook284 pages7 hours

Mass Capitalism: A Blueprint for Economic Revival

Rating: 0 out of 5 stars

()

Read preview

About this ebook

Job security flew out the door decades ago—and now seems forever out of reach, thanks to the Great Recession. As much of our economy follows jobs to other countries, especially China, Americans must wonder what we will be left holding.
Can we retrieve what we have lost?
Apek Mulay knows we can. His book Mass Capitalism: A Blueprint for Economic Revival presents solutions to the economic problems threatening the survival of the US and global economies. Mass capitalism would help:
-- establish a balanced economy
-- eliminate unemployment
-- eliminate deficits and national debt
-- revive the US economy
-- establish a free-market economy.
A true free market—with minimal government intervention and lower taxes on individuals—calls for the majority shares of Fortune 500 companies to be owned by their employees, rather than outside investors.
LanguageEnglish
PublisherBookBaby
Release dateOct 1, 2014
ISBN9781940598505
Mass Capitalism: A Blueprint for Economic Revival

Related to Mass Capitalism

Related ebooks

Economics For You

View More

Related articles

Reviews for Mass Capitalism

Rating: 0 out of 5 stars
0 ratings

0 ratings0 reviews

What did you think?

Tap to rate

Review must be at least 10 words

    Book preview

    Mass Capitalism - Apek Mulay

    Standard

    Foreword

    This is a book basically about a major industry, the semiconductor industry, of which, regrettably, I don’t know much. However, the author, Apek Mulay, sees that industry as a mainspring of something he calls mass capitalism, which is somewhat more comprehensible and which he favors in contrast to the oligopolistic system (which the author calls monopoly capitalism) in place today that we are all unhappily familiar with.

    Further, Mr. Mulay speaks of his framework as embodying the precepts of noted Indian social thinker, the late Shrii Prabhat Ranjan Sarkar bearing the acronym of PROUT (Progressive Utilization Theory), which has an international following. Mr. Sarkar, over his career, authored a considerable repertoire of works aimed at enhancing social development, including Progressive Utilization Theory, the Law of Social Cycle, the Theory of Microvitum, and the Philosophy of Neohumanism. The principal feature of that system, touted in this book, is the idea of economic democracy, which is clearly a great complement to the political democracy that we all know. When we add economic democracy to political democracy, we get a broad-based stakeholder democracy, and that, in a nutshell, is the basis of the proposed plan.

    In essence, the book argues for a mass-based consumer-led growth that would keep markets in equilibrium at near or close to full employment with the revival of an industry that he hopes would rekindle America’s waning industrial base and innovation. Viewed thus, the project is a very familiar Keynesian one but with the added twist of minimal government regulation, since by a reverse of Say’s Law, demand will call forth its own supply.

    The book is arguing for many things that many current reformers are eager about: fair trade, instead of free trade, workers as major viii Mass Capitalism shareholders, employee-owned corporations, and markets where wage packages keep pace with productivity automatically.

    How realistic all this is politically, I am not sure (meaning how we get from here to there), but what is entirely unmistakable is the author’s broad societal development, which is very welcome, given the crony capitalism we have seen take over the US economy since about the eighties.

    The Sarkar system, of course, has never been tried anywhere, so it will be a novelty of sorts if actually attempted. Professor Ravi Batra is probably the best known advocate of that system, and he is a major economist with a global reputation and following. As such, I would place my bets on Ravi’s information, analysis, and advocacy in these matters.

    We are living through interesting, if tough, times, and Mr. Mulay’s work is one amongst the many, no doubt, that are trying to figure creative ways of getting us out of the long-drawn quagmire we are in today.

    I can only wish the attempt well.

    Rajani Kanth

    Visiting Fellow

    Harvard University

    Preface

    In 1960, my late teacher Shrii Prabhat Ranjan Sarkar offered a new idea called Progressive Utilization Theory, or PROUT, that suggested that economic democracy was a way to solve the problem of poverty around the world. Later, in 2003, in Common Sense Macroeconomics, Professor Ravi Batra called economic democracy the theory of mass capitalism because in a democratic setting majority shares of large firms would be in the hands of workers. My book is an attempt to apply these ideas to the revival of American manufacturing in general and the semiconductor industry in particular.

    Today, the US semiconductor industry is looking for new ways to overcome all the technological and economic barriers for sustaining its progress. Economic reforms that would help transform the present form of capitalism in the United States to a free-market enterprise system would also help in sustaining the scientific progress in this industry. Mass capitalism would ensure a robust growth in economic demand through higher consumer purchasing power. To ensure higher consumer purchasing power, mass capitalism recommends economic democracy in which wages of employees catch up with their productivity. 

    To ensure a free-market economy where capitalism works for the masses, mass capitalism believes that majority shares of Fortune 500 companies in the semiconductor industry should be owned by their employees, rather than by outside investors. Additionally, the number of shares held by any employee should be in proportion to his or her productive contribution to the company. This would ensure that employees who work hard towards the success of the company would get a fair compensation for their skills and diligence. In this way, mass capitalism guarantees robust growth in consumer purchasing power to generate higher consumer demand for electronic products. Thus, mass capitalism would make the high cost of investments very sustainable and would overcome the economic barriers.

    In 1965, Intel co-founder Gordon Moore, in Cramming more components onto integrated circuits in Electronics Magazine (April 19, 1965), made the observation that, in the history of computing hardware, the number of transistors on integrated circuits doubles approximately every two years. This law is now used in the semiconductor industry to guide long-term planning and to set targets for research and development.

    The capabilities (processing speed, memory capacity, sensors) of many digital electronic devices have been improving at roughly exponential rates and are, thereby, strongly linked to Moore’s law. This exponential technological improvement in the electronic devices has dramatically enhanced the impact of digital electronics in nearly every segment of the world economy. Indeed, Moore’s law has been behind the technological advancements and socio-economic developments in the late twentieth and early twenty-first centuries.

    Moore’s law has had an amazing run for the past several decades with an unmeasured economic impact on the US semiconductor industry. The progress of Moore’s law has even transformed the business model of the US semiconductor industry and continues to do so. However, now the immense problems of youth unemployment, huge capital investments, unsustainable trade and budget deficits, as well as manufacturing complexities, are contributing to the bankruptcy of economic wisdom and are making it difficult to sustain Moore’s law and its economic impact on the US semiconductor industry. There is, hence, an urgent need for new ideas to deal constructively with these business and economic issues affecting the survival of the US semiconductor industry. In this book, I have provided a solution for carving out a brilliant future for the US microelectronics and semiconductor industry by transforming capitalism from monopoly capitalism to a free-market enterprise system. The suggested solutions are resilient enough to solve the economic and business problems facing this industry.

    These suggested recommendations call for a radical change in the economic thinking of semiconductor industry professionals and business leaders. These recommendations challenge the stereotyped economic views, question the sustainability of existing modes of conducting microelectronics business, introduce new ideas that promote research and development (R & D), new business models, and better economic policies for the revival of the US semiconductor industry. Together, they constitute novel socio-technological and business-economic reforms towards a sustainable future of the microelectronics industry and its professionals.

    In this process of exposing the reader to an economic heresy, this book also introduces a new business model for the US semiconductor industry based on the Progressive Utilization Theory mentioned above. But let us remember that John Maynard Keynes was also a heretic and so was the father of modern economics, Adam Smith. The economic orthodoxy is repeatedly failing the operation of the US semiconductor industry and its ability to sustain Moore’s law. So let heresy get a chance for continued applicability of Moore’s law and the technological business-economic growth of the US semiconductor industry towards maintaining its global leadership.

    Chapter 1 exposes the reader to the crisis of capitalism because of monopoly capitalism and introduces the reader to some common-sense reforms through mass capitalism. Chapter 2 highlights the strategic importance of the US semiconductor industry to the US economy. Chapter 3 helps the reader understand the importance of the field of microelectronics economics involved in manufacturing advanced semiconductor products and the significance of retaining global leadership in this industry. Chapter 4 provides an in-depth analysis of the causes of the failure of the US economy based on its macroeconomic and trade policies. Chapter 5 deals with policies to mitigate the problems of counterfeit electronics, caused by the import of semiconductor systems from China by American companies based there. Chapter 6 then provides a detailed analysis of the impact of globalization on the US semiconductor industry.

    Chapter 7 evaluates the US manufacturing supply chain and its impact on business models in the US semiconductor industry. Chapter 8 offers solutions towards a revival of the US microelectronics industry and introduces a new business model for vibrant growth of this industry. Chapter 9 forecasts the near future of the US semiconductor industry by taking into consideration the recent geopolitical events around the world, explains the importance of a vibrant domestic economy, and presents the geopolitical dangers of too much reliance of the domestic economy on foreign investments.

    Chapter 10 offers solutions for sustaining Moore’s law to overcome the physical and economic limits of shrinking transistor dimensions in order to maintain the semiconductor industry’s innovation and to benefit from the business impact of Moore’s law. Chapter 11 provides socio-economic reforms for a brilliant future of the US semiconductor industry. The final Chapter 12 talks about national financial matters that would have an impact on the sustainability of the US microelectronics and semiconductor industry. It educates readers about the importance of the circulation of currency in the US economy for achieving a higher standard of living for all industry professionals

    Acknowledgments

    I owe my greatest intellectual debt to the great neohumanist Shrii Prabhat Ranjan Sarkar, whose monumental work on Progressive Utilization Theory (PROUT) lies at the heart of this book’s development. I am very thankful to Professor Ravi Batra for providing me constructive criticism and advice in the development of this book. The sections 6.1, 6.2, 7.1, and 8.1 are based on my co-authored articles published in Electronics.ca Publications and Truthout.org. I would like to extend my thanks to the New Delhi Prout Journal for their permission to let me use my article published in the August 2013 issue as section 11.1 in this book.

    I should also express my gratitude to Electronics.ca Publications, Truthout, SemiWiki, EBN, PROUT Globe, Prout Journal, Military & Aerospace Electronics, LinkedIn, SEMI and EDFA for publishing and circulating my articles on macroeconomics and giving me the recognition as a macroeconomist of the microelectronics industry.

    Above all, I am grateful to my mother who supported me in more ways that I can say.

    Chapter 1 - The Crisis of Capitalism

    Introduction

    Capital is nothing but consumable commodities in their potentiality. Intelligent people collect more capital than others in the form of consumable goods, but since this capital cannot be stored for long, people began to keep it in the form of money. This is how capitalism originated. In a free-market enterprise system, wages of the masses catch up with their productivity. This is how free markets ensure that economic demand catches up with the supply of goods in an economy ensuring a balanced economy. Capitalism encourages acquisition of material wealth, be it land, money, metal, or other property. This acquisition, when left unchecked, leads to huge economic disparity, which transforms free-market capitalism into monopoly capitalism; the accumulation of more and more wealth by any inappropriate means reaches a point of depriving other human beings of their basic requirements, which diminishes their consumer purchasing power. This chapter explains the difference between free-market capitalism and monopoly capitalism. It also introduces the reader to mass capitalism and provides an explanation about how mass capitalism would establish a free-market economic system with minimal government intervention and lead to a sustainable progress of Moore’s law in the US semiconductor industry.

    Free-market Capitalism in the United States Post–World War II

    World War II led to a total destruction of economies in Europe and Asia, and afterwards, the United States became the nexus of global capitalism, as war was not directly fought on US soil, thereby protecting its manufacturing sector. In fact, World War II played a big role in the revival of the US economy from the 1930s economic depression. The war helped Americans find employment in industries that catered to the building of armaments for US allies in Europe. As a result of World War II, only physical gold was used as a medium of exchange for international transactions, and the United States accumulated huge reserves of physical gold, selling munitions to its allies for fighting the war. This shows the importance of possessing physical gold reserves for any country in times of a global economic chaos from war or other disasters.

    After World War II, when Dwight D. Eisenhower took over the presidency, he continued the tax structure put in place by his predecessor, Franklin Delano Roosevelt, following the Great Depression of 1930. The important fact to remember is that, as a result of the progressive tax structure during the presidency of a Republican president, where the highest income earners paid a maximum tax rate of 92 percent, there was less hoarding of wealth and more investments in the economy. These investments led to a creation of more jobs and better macroeconomic growth. In addition, the Federal Reserve followed a monetary policy such that wages kept track with productivity. This led to a balanced economy where the supply of goods into the economy was able to catch up with economic demand for these goods. These economic policies led to a 4 percent year-over-year growth in the US gross domestic product (GDP) during the 1950s, called the golden era of free-market capitalism.

    A free market is a market economy in which the forces of supply and demand are free of intervention by a government, price-setting monopolies, or other authority. A free market contrasts with a controlled market or regulated market, in which government intervenes in supply and demand through non-market methods, such as laws creating barriers to market entry or directly setting prices. In a truly free market system, the intervention of the government in the economy is minimal. Because of its centralized economy, the free-market capitalism was possible in the US economy during the 1950s only with a progressive tax structure in which high wage earners paid the highest taxes. A progressive tax structure for a centralized economy forced the Fed to follow monetary policies such that workers’ wages caught up with their productivity. As explained in subsequent chapters, since the US dollar was tied to a gold exchange standard, the Fed was not able to run any deficits during the 1950s. There were no trade deficits, and neither were there any budget deficits due to progressive taxation. This is how the United States had a balanced economy during the 1950s.

    The Transformation of the US Economy from a Free-market System into Monopoly Capitalism

    The free-market system, where wages keep track with productivity, transformed into a monopoly system because of unenforced anti-trust laws leading to mergers and acquisitions. Post‒World War II, US-based multi-national corporations (MNCs) influenced free-trade agreements, like the General Agreement on Tariffs and Trade and, later, the World Trade Organization, pushing for treaties to lower or abolish trade barriers between member countries, whose economies were destroyed as a result of the world war. This led to offshoring of manufacturing jobs from the United States to low-wage countries resulting in trade deficits. This phenomenon is analyzed in great detail in subsequent chapters.

    In 1971, Congress passed FECA (Federal Election Campaign Act), under which corporations, unions, and individuals could contribute unlimited non-federal money, also known as soft money, to political parties for activities intended to influence state or local elections. This gave an opportunity for big money to influence US democratic elections resulting in the passage of laws that transformed its free-market economy into monopoly capitalism. As a result of monopoly capitalism, the trade deficits and budget deficits started to grow in the United States. Later chapters show how these policies not only resulted in a growing wage disparity in the United States but also affected the market value of the US dollar. The twin deficits forced the US dollar off the gold exchange standard. The monetary policies of the Fed have also resulted in a kind of financial conglomerate, whereby government officials aim to provide the social and legal framework within which monopoly capitalism can operate most effectively. This is how free-market capitalism has been transformed into monopoly capitalism.

    Mass Capitalism

    Mass capitalism is a panacea for the integrated progress of human society. It aims to bring about equilibrium and equipoise by totally restructuring economics towards a balanced economy. Only mass capitalism can usher in reforms towards a free-market economy to save the world from an economic depression because of monopoly capitalism. It will lead to a free-market economy whereby workers’ wages catch up with their productivity. Through the restructuring of economics, mass capitalism would make the supply chain more efficient through decentralization. Subsequent chapters explain how centralized supply chains followed by MNCs have resulted in twin (trade and budget) deficits. Decentralized supply chains lead to better cooperation between different business entities and lower possibilities of mergers and acquisitions between the entities in a supply chain. In this way, mass capitalism would lead to a wholesome decentralization of the economy.

    This economic decentralization would also lower income taxes on individuals and lead to robust growth of both regional and national economies. Under mass capitalism, the majority shares of Fortune 500 corporations would be held by their employees rather than outside investors. Since, employees would become majority shareholders of corporations, it would transform monopoly capitalism into mass capitalism. Such a free-market system, which is employee owned and operated, would naturally ensure that workers’ wages catch up with productivity. This would preserve the incentive to work hard because workers, as owners, would have a stake in the success of their businesses.

    Such employee-owned corporations would eliminate the problems of unemployment and would provide health insurance to their employees at competitive group insurance rates. In this way, the US government would not have to spend money for unemployment and insurance benefits of laid-off workers. This way, the budget deficits could be eliminated from the economy. Mass capitalism would also eliminate trade deficits by replacing free-trade policies with fair-trade policies. Most important, since the majority of employees (i.e., the masses) would become majority shareholders of corporations, such an economic system would minimize

    Enjoying the preview?
    Page 1 of 1