Pragmatic Conventions For A Free Socialism (A Collection of Humble Suggestions)

Jason Stone
9 min readSep 18, 2021

The goal of free socialism is to eliminate unethical barriers to voluntary exchange in a way that provides access to capital without reliance on a small wealthy investor class, and in a way that better ensures that when an individual performs labor for another it is not due to threats to injure their person or property or fear of not having access to the basic resources necessary for survival. Many feel that a small number of private individuals owning most of the value of the natural resources denies the rest of society their natural inheritance, as a creature that is evolved to depend upon those resources, and the wealth that accumulates in increased land values due to a surrounding community’s activities. This is an unethical obstacle to voluntary exchange because it often leads to desperate individuals who live in fear of lack of basic resources and that have nothing to sell in the market but their labor. These desperate individuals are often taken advantage of by a small group of wealthy investors who are motivated to extract the most labor value they can for the least amount of pay. This advantage often leads to an investor being able to earn money from the labor of as many individuals as they have resources to fund. Through years of reinvested profits the wealth of the investors will tend to grow explosively compared to the wealth accumulated by the average worker that is only able to accumulate some fraction of their own labor value. This explosive difference in wealth can lead to nearly all aspects of a society being controlled by a small number of wealthy individuals.

1. A free socialism could through democratic voting at the local scale distribute the value of the natural resources to every individual through a land value and resource extraction tax. This tax could be reimagined as a form of inheritance that differs from typical tax based wealth redistribution schemes. Some countries that tend to not allow for private land ownership, such as Singapore and Hong Kong, are often noted for hosting very successful free markets in a way that demonstrates that not allowing private land ownership is unlikely to cause serious economic dysfunction.

2. These payments to each citizen could be used to create investment funds where the profits are distributed broadly thoughout the socitiey. This could be accomplished without outlawing traditional equity investing as some state managed socialist economies have attempted to do in the past — which has often led to dysfunction and authoritarianism. A free socialism could preserve the proven problem solving power, diversity, freedom, and efficiency of market arrangements while addressing the concerns of dispossession of natural resources, poverty, and the over dependence of most of society on a small wealthy investor class.

3. Regional democracies could elect a land value tax that is paid out to each individual equally or proportional to the distance each individual is from each rental site. Regional experiments in assessing land value may help to discover highly effective approaches.

4. Qualified voluntary-only citizen investment funds could be offered by private organizations where each participant would only be allowed to pay in up to their UBI, or alternatively, the highest UBI paid to any participant. Citizens could place their investments in any combination of qualified funds. This arrangement should produce a substantial source of funding where the profits are spread throughout the society. If most of the value of the natural resources were to collect in these funds and earn interest then in several decades they may contain enough capital to fund most of the need for finance within a society. With support from government, these funds could operate tax free with the expectation that they would eventually lead to a substantial reduction in poverty, crime, health problems, and the need for government social services that are funded by mandatory taxes. Competition between qualified funds might work to keep cost of capital competitive with other options and most of those seeking investment (including those with the best investment opportunities) might pursue funding from these sources in hopes of the added societal benefits for no additional cost of capital. Even if a particular mutual aid fund is not willing to finance an enterprise the members of the fund are still incentivized to encourage the enterprise to seek funding within the mutual aid fund system since the members of that fund also hope to receive general societal benefits from enterprises finding finance from mutual aid funds. Those offering investment from outside these funds might be forced to invest in lower quality investments on average and have less privately owned land from which to collect rents and extract natural resources. Over time, this might lead to the wealthy investor class growing very weak compared to the mutual aid funds.

5. A collection of regional funds might aggregate large amounts of capital for higher levels of finance — including sponsoring IPOs and large private equity investment.

6. Qualified mutual aid organizations could be allowed to participate in mutual aid funds. They may even be allowed to give donors investments in the mutual aid funds that are equal to a small fraction of the amount they donated (e.g. 1%). This could allow wealthy individuals to earn some return from their donations at interest rates that may not be easy to obtain with the outside the mutual aid funds. Operations could initially be funded by grants and other donations where low interest loans could eventually be taken out using these investments as collateral while the investments continue to grow. Regular loan payments could be collected from donations or drawn from investments when needed. Government services could be reduced in proportion to the success of the mutual aid organizations. Ongoing monitoring of the effectiveness of the mutual aid organizations and some ability to provide supplemental government aid in cases where the mutual aid funds are inadequate could help to avoid abandoning the most vulnerable to ineffective private programs while encouraging the formation of more innovative and efficient private mutual aid services. If mandatory taxes are collected to fund the mutual aid organizations then governments might allow the payer to direct the mandatory tax to the qualified mutual aid organization of their choice. If the citizen’s mandatory taxes are invested well, then mandatory taxes may substantially diminish in the future.

7. UBI’s given to children could be locked until adulthood (e.g. 18 years). There could be some requirement to place the UBI in a qualified fund of the parent’s choosing. If $3k/year were invested at 7%, at the age of 18 each child would have accumulated just over $112,000. This money could be used to back low interest school loans or low interest home loans where the installments could be taken out of the funds when needed while the investment continues to grow.

8. If a $3k/year UBI where invested at 7% interest for 50 years a husband and wife would each accumulate around $1,304,000. If they wished to spend some of their investment on major life expenses, they could take out low interest collateral backed loans that allow their investments to continue to grow while they make payments.

9. Having more wealth on average may lead to members of the community preferring to work as worker-owners in cooperatives where they have more decision making power and the right to share profits. Investors might be sold shares that promise some percent of (profits+wages)/(issued shares) that must be paid at regular intervals (e.g. 1% every 5 years). Promising regular payments in this way could compensate investors for allowing the worker-owners to maintain control of the board of directors and providing the worker-owners make flexible payments in a way that may cause fewer cashflow problems that fixed quarterly or annual payments. Existing investors could be included in determining the percentage, number of shares and repayment interval without being given control of the board in order to protect themselves from dilution. Worker-owners could also be offered recruitment bonuses if the investor will only invest if they are willing to add new worker-owners in order to align the worker-owner’s interest with growth.

10. Workplace democracies might find that mutual aid funds are especially willing to fund them and that they are desirable to receive funding from since they distribute collected profits broadly throughout the society in a way that aligns with socialist objectives.

11. Traditional forms of capitalist equity investing tend to distribute resources and decision making to a small fraction of the population who may often be far removed from important local information. Society’s whose average members tend to be better enabled to develop the economy, and more incentivized to do so, may function with greater collective intelligence than societies based on more traditional forms of capitalist equity investing.

12. Due to high levels of wealth accumulation becoming common the economy may shift towards more elaborate labor and more environmentally sustainable practices and materials since providing most individuals with a substantial increase in wealth may lead to a greater ability and willingness to pay for these costs. Communities with substantial affluence may engage in more socially focused practices where goods and services are part of a cultural dialog and a foundation for strong personal relationships that greatly enhance quality of life in ways that more generic and anonymously produced goods and services tend not to.

13. Eventually, many government services may become optional and the average individual may have more resources for purchasing private replacements. Even if a state no longer existed that offered tax benefits to mutual aid funds, the participants might choose to preserve these types of investment arrangements in order to better distribute profits and decision making in a way that may resist militant movements that seek to reinstate less voluntary forms of governance that engage in forceful wealth redistribution and other acts of aggression. Acknowledging that the land is inherited by all members of a society, distributing it as a UBI, investing one’s UBI in a mutual aid fund, and seeking finance from mutual aid funds might all be thought of as an “anti-tax”. Perhaps voluntary provisioning for public goods might sometimes be possible if the expected return to investors is high due to higher amounts of rent being collected from commercial uses and general economic development when the public good is provisioned in a region where the mutual aid fund heavily invests. Mutual aid funds might offer Dominant Assurance Contracts to the community with little or no fee to the funds should the contract be funded.

14. A functional Free Socialism of this type could enable a variety of alternative forms of voluntary exchange including voluntary only communist communities that deemphasize private wealth accumulation (e.g. Public Wealth Communism). A participant’s annual UBI and right to place it in a mutual aid fund could be transferred to a voluntary intentional community for as long as the member chooses to participate, substantially reducing the cost of free riding. Voluntary intentional communities could be explored more safely since those wishing to leave a community would still have access to their UBI and and any portion of their mutual aid fund investments that were not transferred to the community.

15. If a free socialism successfully alleviates poverty and distributes control over the workplace and other institutions within a society, then progressives may be willing to reduce federal regulations and allow local communities to have more control over their rule regimes. This could create a large marketplace of rule regimes where participants are able to easily relocate amongst a large number of options and tailor their community’s rules to their local conditions. This may lead to increased productivity, enthusiasm, and innovation. Communities may choose no minimum wage and very few mandatory safety regulations for workplace democracies and other enterprises where the workers can demonstrate that they possess wealth above a threshold that is deemed sufficient to protect them from coercive labor relations. Mandatory integration could be replaced with incentivization-only schemes where lower rents or special access to public goods could be offered to those enterprises that voluntarily integrate. An official registry could allow organizations that don’t choose to integrate to post a statement explaining the choice and could be used to build maps that clearly indicate to the community which enterprises have or have not chosen to integrate with a link to any statements about the decision. Improvements in environmental protection may occur since members of the community may engage in collective monitoring for abuse and charge penalties while encouraging the enterprises they finance to use environmentally friendly practices that help to preserve the value of the natural resources and help to make the communities they live in more pleasant.

Even if these humble suggestions are not practical, perhaps they will help to inspire a free socialism that is. Questions and comments are welcome.