While thinking about extensions of the ideas of Geoism in the thread “The conceptual GeoFlux currency”, I’ve come up with a system that I termed “auctionism”. In the meantime, I’ve continued thinking about it, and tried to specify it more clearly. Because in auctionism there is neither private nor public ownership of means of production, it’s neither a form of capitalism, or socialism, but a different kind of animal. One might classify it as form of “transcapitalism”.
What is auctionism?
The basic idea of auctionism is that there is no private ownership of means of production, but persons can buy or auction temporary usage rights of those means of production. Those usage rights need to be renewed periodically (say, every 5 years), otherwise they expire and are auctioned off again. It is possible that nobody has the usage rights for certain means of production, if the previous owner didn’t pay the usage fees, and nobody bothered to bid for those usage rights (in that case, anyone who is interested in that dormant piece of capital can initiate an auction for its usage rights at any time). Usage rights can be sold, but their expiry dates remains unchanged during that process. At the beginning of each period for a piece of capital (means of production), usage rights are auctioned off to the highest bidder. The proceeds wholly go to a public fund that is used to finance a universal basic income (or some other publicly useful expense). In the meantime, usage rights can be privately bought and sold, or auctioned off privately (in which case the auctioneer gets the whole proceeds).
Money and consumption goods are still in private hands in the system of auctionism. Ownership of usage rights of means of production imply the right to use and command that capital, and to receive the full profits of its use. Profit margins are unlikely to be very high in this system, because high profits imply that bidders for ownership rights would be willing to bid higher in auctions for those rights. Industries with low a priori profit margins will correlate with low bids, so that auctionism will equalise a posteriori profit margins, even in the absence of actual market competition!
- Auctionism is a system that could make taxes obsolete by using market (auctionism) mechanisms for determining the height of payments (winning bids for capital usage rights) into public expenses.
- Passive hoarding of capital in the hope to simply store and increase value is highly discouraged in this system. Instead, there are incentives to use any kind of means of production as effectively as possible.
- It’s still thinkable that monopolies will create high prices, but the bids for the usage rights of those monopoly corporations will be very high, so that the public gets compensated for those high prices.
- The last point is more speculative: Auctionism might create the right incentives to have capital managed by those who are most competent at managing it. If someone is unable to make good profits with a piece of capital, it’s not worth for that person to renew his usage rights for it. Instead, more competent managers (or at least those who deem themselves competent) will bid for usage rights for that piece of capital.
Is auctionism better than capitalism?
The system of auctionism might look like an incremental improvement (or at least change) of capitalism, but this change nevertheless makes the system of auctionism transcend the definition of capitalism, so that we are actually dealing with a new economic system. Governments should lose their ability to impose arbitrary taxes, and instead would depend on auction proceeds for their income. It’s worth exploring the possibility that auctionism might be a system with higher overall economic performance. Sure, auctionism will come with its own unique set of weaknesses and problems, and those will need to be addressed, probably by some form of smart regulation.
Hopes that auctionism strengthens meritocracy, reduces excessive inequality, handles externalities appropriately, and minimises rentierism might be justified or not. This thread is for exploring those possibilities, and analysing potential strengths and weaknesses of auctionism.
One might discuss the philosophical legitimation of auctionism, but the main legitimation should be that it works better for the economy and the people than alternative systems, if that turns out to be true. Philosophically well legitimated systems that lead to a bad economy lack complete philosophical legitimation, because proper economic systems are supposed to work nicely, otherwise they would cause economic hardship for people, which would undermine their overall philosophical legitimation, even if that system was fine in all other respects. That’s why it’s justified to focus on the expected performance of an economic system, and disregard most other philosophical aspects of it.
What do you think? Is auctionism the next logical step in the evolution of economic systems?