AIPOTU - UTOPIA REVISITED A Backward Glance In 1516 Sir Thomas More published Utopia, in which he explored from a legal, social, and political point of view, his notions of the "good society". More was neither the first nor the last to attempt to sketch out his view of the perfect social order. One of the earliest examples is found in Plato's Republic, essentially a formula for selecting the best political leadership. As will be recalled, his solution was government by Philosopher Kings , chosen in early youth for their combination of talent and equanimity, and specially educated for their future role as the ruling aristocracy (literally "rule of the good"). The Romans, more practical than theoretical, yet admirers of things Greek -- and especially of Greek philosophy, tried monarchy, republicanism, limited dictatorship (initially only during wartime), and eventually totalitarian imperialism before the curtain fell on their act. The Egyptians, less experimental than either Greeks or Romans, stuck to theocratic monarchy, achieving perhaps the longest lasting form of government in history. But there was little equity or idealism in the government of Egypt. One of the more thoughtful utopian writings was Erehwon , written and published by Samuel Butler in 1872. Erehwon is, of course, Nowhere in mirror-writing, hence -- going back to More's earlier effort -- the title for the present paper. Among the first to attempt practical implementation of an ideal society were some of the Dutch and German settlers of the New World, perhaps motivated by the evils of the rigid class-dominated societies they had left behind, and instructed by New Testament accounts of the brotherhood of the early Christian Church. Dutch Mennonites founded the first such society in Lewes, Delaware in 1663. In 1732 German pietists founded the Ephrata Community in Pennsylvania. Further pietistic communities were later founded in Harmony, Indiana and Economy, Pennsylvania. Other communitarian groups included New Harmony founded by the British industrialist Robert Owen in Indiana. The New Harmony experiment introduced the first kindergarten in America, the first trade school, the first free public library, and the first publicly supported school system. Charles Fourier a French social reformer had a particularly strong impact on American social experimentation, founding Brook Farm in Massachusetts. Between 1841 and 1859 some 28 Fourierist colonies were established in the U.S. The Oneida Community was initiated in New York by John Humphrey Noyes in 1849. Oneida carried cooperativism to an extreme, practicing "complex marriage" in which husbands and wives were shared in common. The Mormons adopted another form of marriage, polygyny, in which one man was married to several wives -- though the Mormons otherwise pursued the strictest form of traditional morality within the expanded family structure. The Mormons also introduced in Missouri, with somewhat greater success than most other communitarian societies, their own brand of cooperative living -- the United Order . The United Order was considerably expanded after the Saints arrived in Utah, where some cooperative settlements endured until very recently indeed -- and where Zion's Cooperative Mercantile Institution (ZCMI), the first department store in America, endures to this day as the leading department store chain in Utah. (though no longer a cooperative venture). A recent imaginative attempt at describing a modern Utopia, The Harrad Experiment ., was written, perhaps as a guide, during the alternative lifestyles/communitarian movement of students (and others) during the late sixties and early seventies. The breakdown in nearly all of these communities resulted from (a) extreme outside antipathy to some of the more notable social innovations which accompanied ideas of shared work and shared property, (b) the difficulty in getting all members to share work assignments fairly, (c) friction over equitable division of work product, and (d) above all, competition (economic as well as social) from outside the community [not at all the same as (a)]. An insightful play has been written about the Mormon experience in its Orderville colony which traces the abandonment of the United Order movement to the unwillingness of the Orderville boys to wear homemade breeches once factory pants became available in neighboring towns -- being convinced that the "homemades" disadvantaged them in dating the local lasses. Scientific Socialism Bearing in mind these well-intentioned, but essentially "folk" movements, and convinced that other than the bloody, revolutionary, Bolshevik variety of "scientific socialism" was possible, the Big Guns of the British Fabian movement continued the search for answers to the ideal society. Britain had achieved functional democracy after the Reform Act of 1857 introduced essentially universal suffrage. But the U.K. was still characterized on the economic side by what Dickens called its "two societies". In the quest to win elections, the Liberal Party and the more socially conscious wing of the Tory Party alternated in pushing forward factory safety standards, a ban on child labor, limitations on the types of work permitted to female labor, free schooling, legalization of Labor Unions (leading to the formation of the Labor Party which eventually almost drove the Liberals out of business), and unemployment compensation (or the "dole"). The Fabian movement, which favored implementation of socialism through gradual reform instead of revolution, placed emphasis on economic solutions to social problems, believing that nationalization of basic industries to control the "commanding heights" of the economy, would provide the necessary levers to achieve social and economic equity. Bertrand Russell went so far as to advocate a "social wage", i.e. a minimum money payment made by the government to put every subject, without further qualification, in a position to make a decision whether to work or devote himself to a life of scholarship and contemplation. That must have been an attractive thought in an era when most scientific and philosophical contributions were made by members of the British "Leisure Class". Russell naturally thought that it would be widely recognized that few would be equipped, or choose, not to work. Following WW II, the Socialist Government of Clement Atlee achieved virtually all the objectives of the Fabians: nationalization of the coal,. steel, and transportation industries, as well as the so-called Bevan Plan, which provided free medical care and public housing. With the introduction of school leavers benefit , which has been found in practice kept large numbers of British teenagers off the job market, we have come mighty close to Russell's concept of the "social wage", finding his arguments less compelling in fact than in theory -- as indeed are many of the arguments of early Fabians about other aspects of liberal socialism. And with the deterioration of state social services in Britain, growing waiting lists for necessary surgery, and the opting out of the system by large numbers of young doctors, the success of the Bevan approach to social welfare seems doomed as a result of impairment of the "efficiency discipline" resulting from government interference with market forces. Contemporary Problems -- Too Much Emphasis on Social Equity? The socialist paradise endured somewhat longer than Hitler's Thousand Year Reich -- which lasted only thirteen years. But by the late '70s the UK was suffering from "the English disease" -- characterized by economic stagnation alternating with intervals of agonizingly slow growth. The German miracle was over, though Germany continued to have the strongest growth record among the Western European nations. Even French "indicative planning" was no longer demonstrating the success it displayed during the post-war recovery and well into the sixties. The Netherlands and Sweden were experiencing labor problems, and distinctly slower growth, if not stagnation. The United States, which many, following the end of WW II had thought would be a hard currency country for ever, and which a noted French author had asserted in a book called Le Defi Americain would be taking over the world as a result of its system of professional managers and an overvalued American dollar which enabled American businesses to buy up European companies at below local market, was now suffering seemingly perpetual major balance of payments deficits as a result of the emergence of Japan as the world's most efficient competitor and second largest economy. So quickly can market forces turn around. On the other hand, sometimes market forces work exceedingly slowly. It took almost twenty years for the American automobile industry to destroy itself, despite all the market signals it was getting that it was doing things wrong. And the J-curve representing how American imports were expected to moderate and exports improve as a result of the 50 per cent fall in the value of the U.S. dollar has taken longer by almost two decades than anyone expected. Slow though they may be, however, the mills of economic forces grind exceedingly fine. The principles of supply and demand and the competition of efficient production eventually will out. The U.S. automobile industry appears once more to be on its feet and American exports appear at last to be responding to the stimulus of lower prices -- though the cartelistic nature of the Japanese keiretsu system of vertically integrated banking/production/wholesale distribution/retail outlet services still presents problems. Failure of Marxism to Understand the Basis of Value and Price Karl Marx, who died ten years before the analytical studies of Karl Menger and Eugen Bohm-Bawerk resolved the questions of value and price, accepted without question -- as did many of the Classical economists before him -- the notion that the quantity of Labor embodied in a product was the ultimate source of its value. In consequence, Marxist theory considered the difference between the cost of this labor, plus raw materials, and what was realized in the sale of a good to be a measure of Capitalist exploitation. So Communism (and to a large extent Socialism) was stuck with a defective theory of value which provided no guidance with respect to the efficient allocation of manpower or materials, which operates with no regard to the contribution of the entrepreneur, or relation to a competitive price structure to ration goods according to consumer preferences. Allocational decisions in socialist societies are thus customarily made by committees whose qualification for membership is political reliability, not economic acumen. As a result, Marxist economies have been characterized by chronic inefficiency, a matter General Secretary Gorbachev and Mr. Deng Xiao Ping struggled to correct. Menger and his Marginalist School followers, Bohm-Bawerk and Stanley Jevons, identified the true source of profit as the difference between the objective cost of the last unit of labor productively employed (which fixes wages for all comparable workers), the marginal unit of capital utilized (which fixes the interest rate, or cost of capital), and the marginal unit of land (resources) employed (which determines the cost of all inputs of such resources), and the subjective value ascribed to the finished good or service by the last purchaser interested in buying it (which fixes the price of each given product). Some years later Edward Chamberlain of Harvard and Joan Robinson of Cambridge University independently came up with the explanation for why trade marked products of virtually similar nature could be advertised and sold at somewhat different prices -- a concept they called Product Differentiation -- a nuance which had escaped Menger, Bohm-Bawerk, and Jevons. Nevertheless, the great contribution of the Marginalists was to show that a Free Market Economy is a positive sum game in which there are no losers: both buyers and sellers benefit from the exchange (otherwise no exchange would take place). Productive efficiency is reflected in the relative profit position of a producer, all but the marginal producer and purchaser experiencing either cash profits or a psychological "consumer surplus" -- the difference between what one was subjectively prepared to pay and he lesser amount most of us are actually compelled to pay by the intersections of aggregate supply and demand. I It turns out that by allowing supply and demand to determine the values of the factors of production (wages, rents, and interest payments) as well as the prices of final products in a free market, the resulting prices constitute a highly useful index of the relative efficiency with which the economy is functioning, while simultaneously providing an essential guide to investors and lenders as to where additional units of scarce capital will most efficiently be employed. Unconstrained market forces thus result in the most efficient allocation of productive resources as well as optimal distribution of final products to maximize consumer utilities. Regrettably, the so-called seven marginal conditions are often not met and in consequence markets are often not "unconstrained" -- even in non-Marxist societies. As in Marxist economies, the managers of earlier "folk communitarianism" often decided what to produce and how to distribute it by management committee, whose criterion for membership was religious commitment, substituting for party loyalty, rather than business acumen. This is why so many utopian societies could not compete when outside free world markets began to impinge. In the Social Democracies of Western Europe (and the equivalent, if differently denominated Great Society of the United States), political decisions regarding socially desired minimum wages, the level of social security payments, unemployment compensation, and other social welfare programs gradually introduced into the system over a period of years, began imposing more and more costly burdens which indirectly raised factor prices and thus production costs. Eventually, voters began to recognize the inefficiencies of Social Democracy and began returning conservative parties to power. In France, Italy, Scandinavia, and Britain we have begun to observe the "re-privatization" of industry in an attempt to regain market pricing, market efficiency, and regained competitiveness. Even in the USSR and China, efforts are belatedly underway to introduce market pricing in limited sectors of the economy. Of course, such Western terms as "profits" and "bankruptcy" could not be used. And Soviet economists such as Yevgeny Friedman worked overtime to develop the necessary new terminology and new approaches to setting wages and measuring the efficiency of productive units, paralleling the western concepts of marginal cost and marginal productivity (of each of the three factors of production), and marginal price -- the seven marginal conditions. During the period of perestroika, preceding the fall of the Soviet Union, bankruptcy came to be called "essential retraining of personnel" and "redeployment of resources". This was as it should be. Economics, properly understood, is the science of efficient decision making -- of trade offs to achieve maximum efficiency among a selection of diverse products or social objectives. The vocabulary used to describe these processes is of relatively little importance. The Polish-born University of Chicago socialist economist Oscar Lange anticipated these problems of socialism, devoting his life to devising a market-driven socialism which would preserve allocational and operational efficiencies of market forces, combined with socialist planning. He was invited back to Poland after WW II to become Poland's Minister of the Economy. But in those days of Stalinism, the Polish government found no room for his ideas and he soon resigned in discouragement. Today we are seeing a new birth of appreciation for Western (better described as economically universal ) techniques of economic analysis. At its best, Economics is an essentially value-free analytical system, applicable in Capitalist, Socialist, Communist, Mixed, or Religious Communitarian societies. It has taken some time for Marxism to discover that their founding theorist missed the boat of Marginalist thinking. No one should lose time pointing fingers at the Soviet's need to rewrite their economic dictionary. The important thing is that they awakened to the facts. And we should be no more concerned over their calling bankruptcy "needed redeployment of resources" than we are over their calling a one hoss shay a droshky. A Remaining Task for Communist Theorists Harvard Sociology Professor Thomas McClelland, based on a study of children, has put forward the view that the scarcest factor of production is entrepreneurial skill. If American, Japanese, or indeed any society, is to prosper, it must find ways of drawing forth and encouraging this scarce talent. The days of people envying the riches of great achievers in commerce and industry have no place in an era where we willingly accord huge incomes to the best golf, and tennis players, to outstanding football quarterbacks, hockey players, and TV and Hollywood actors. The successful entrepreneur contributes so much in the way of added productivity and efficiency-generated profits (from which are derived salaries, government revenues to pay for social services and defense, as well as dividends and interest payments to investors, not to mention the retirement funds of unions and others -- or "consumer surpluses" to the benefit of all purchasers of their product, that their gains are but a pale reflection of their contribution to social utility. The contribution of the An Wangs', Stephen Jobs', Bill Gates', Edward Lands' and Ross Perots' is so huge that it bears no comparison to the few tenths of a per cent of their company profits which go directly into their own pockets. And though, in absolute terms, this makes them very rich individuals, it is little enough reward to draw forth these exceptional talents. (Bernard Shaw's theoretical belief that the captains of industry would be as willing to play for matchsticks as well as for shillings was proved wrong as a generation and a half of British entrepreneurs took off for Canada, Australia, New Zealand, and the United States, only to be induced to return by world-level salaries proffered during the "privatization" program of Margaret Thatcher). As Communism at has at last recognized that the Classical tri-partite division of the factors of production into Land, Labor, and Capital is in a way as defective as Marx's unreflective acceptance of labor as the sole basis of value: that the scarce input "entrepreneurial talent" is equally essential to make the wheels of industry revolve, the world may finally be on its way towards the "convergence" Political Scientists have been erroneously predicting fora quarter century. Neither permitting bankruptcy of inefficient industries, not adopting a price structure akin to that of the West will be sufficient to cure the "Communist disease". China and Russia (and Cuba Nicaragua, Zaire, Ethiopia, and the rest of the Marxist world), must learn to husband, reward, and advance scarce entrepreneurial talent before their systems can engender new industries and new products, matching resources and techniques with the needs and preferences of consumers. The great Neo-Classical economist Alfred Marshall identified this as the fourth factor of production. But he did not insist on this powerful insight, and the profession has continued to march to the tri-partite drumbeat of Land, Labor, and Capital. It is altogether too bad that this Marshallian concept of the fourth input, "entrepreneurial skill", was not picked up a hundred years ago. Had this been made a standard element in economic analysis, even Marxists by now might have realized that managerial skill contributes as much to economic efficiency as labor and capital, reducing some of the effort wasted on class warfare and permitting a more decisive battle to be waged against the meretricious attractions of communism in the Third World. With both China and the USSR re-examining western economic theory, it might still not be too late to pick up on Marshall's idea and run with it. The late Otto Eckstein, a brilliant Harvard Professor of Economics, founder of DRI , and member of the Council of Economic Advisors while still in his early thirties, taught his graduate classes that economists must concern themselves not only with the pure theory of how goods are produced and distributed, but with the social criteria which guide the economic process. He introduced his classes to a list of socio-economic objectives which, he suggested, must be considered in any type of society. Among these objectives are Efficient Resource Allocation -- which the Classicalists considered the task of economics par excellence ; Sustained High Growth (a vital factor in achieving social equity since it is far easier to reallocate income from a growing pie where everyone's income is increasing than to redivide a pie of fixed size); Full Employment (labor and factory output not realized today can never be recovered. After chronic inefficiency ("the Communist disease"), lost labor and output is the worst loss an economy can suffer: Price Stability (inflation is, after all, a vicious, hidden tax of the most regressive sort); Balance of Payments Equilibrium (a country can run deficits only so long as its trading partners are willing to hold its IOUs -- and as is becoming increasingly evident, time is running out on the US in this regard); Equitable Income Distribution (in the United States and Europe we may have been placing emphasis on this objective for too long, subordinating achievement of some other objectives to our long-term disadvantage); and National Defense . To this list I have added Preservation of a Desired National Life Style, which, in deference to Chamberlain and Robinson, I call Social Product Differentiation. So long as the price is knowingly paid after careful benefit/cost calculation, I see no reason why a nation shouldn't buy some Social Product Differentiation in terms of moderately less efficient output, just as an individual might prefer Kelloggs to Post Toasties or a Ford to a Chevrolet. (Thus a Communist or Socialist society might use the same techniques to achieve an efficiently producing economy as a Capitalist economy, yet devote the taxes collected (or, indeed, all profits) for different social ends that those of a Capitalist society. On the other hand, even a market economy like the United States, might choose to devote a substantial portion of tax revenues to providing a "safety net" to protect its citizenry against a destructive fall from the ladder of upward mobility, while leaving in place sufficient incentives to draw out the maximum contribution which each individual member of society is capable. The same could be said of a more Utopian society. Contemporary Utopias - Necessary Assumptions Some look forward to a Millennial era in which social and economic equity will reign, as well as political equality. A few envision a period preceding the Millennium proper in which decent, well-motivated individuals may seek to achieve a righteous society in which such conditions may prevail. As for the Mormon version of the just society, Brigham Young is quoted as saying, "If we (the LDS people) want to achieve a Celestial Society, we must build it ourselves." Perhaps in the light of some of the experiences and issues discussed above one might anticipate how such a Society might operate on the economic side. At this point some assumptions are necessary: 1. We must assume that such a society would wish to operate in a reasonably efficient manner (Efficient Resource Allocation). 2. We should assume that we would wish to preserve incentives for individuals to participate actively on the economic as well as the political and social fronts (Full Employment) 3. We must assume that distribution of goods would be according to need, not according to greed (Equitable Income Distribution). 4. We would probably wish to assume Reasonable Stability in Prices and in the Balance of Payments (again assuming a continuation of world trade -- not an unreasonable assumption). 5. We might assume a continued, or even increased interest in Conservation of Natural Resources. 6. We might assume a continued interest in a certain diversity of National Life Styles (Social Product Differentiation). Continued Growth of the Economy and National Defense may or may not be admitted into futuristic goal setting, depending on one's preferences and confidence in the surrounding world. In truly Millennial conditions Defense might not be needed. In anything short of this, it undoubtedly would -- indeed it might have to be increased depending on the attitude of one's neighbors to the effort to build a Celestial Society in competition with Babylon. Growth is similarly problematic in such a society. In Millennial circumstances, society might choose to devote the time gained from increased productivity to pursue philosophical, artistic, or other leisure activities. In less than Millennial conditions, growth policy might be determined by competing nations, as with Defense. And one must always keep an eye out for a socially less-than-ideal reaction to increased leisure -- as with the betrayal of Bertrand Russell's notion of the social wage. Back to Goals Looking at the above not unreasonable assumptions, we find ourselves with essentially the same list of national policy objectives identified by Professor Eckstein. And it is the author's conviction that even in a Celestial Society we would be confronted with the task of reshuffling these objectives from time to time as social preferences change and as relative neglect of one goal in favor of another begins to prejudice the balance in the operation of the economy, i.e. too much equity for too long ineluctably affects efficiency of output; while too much price stability might at times result in unemployment -- while overmuch attention to full employment could result in inflation. An Overview of AIPOTU: Its Polity and Economy As long as society is composed of human beings -- good, less good, and some downright bad, we will need the discipline of market forces to achieve an efficiently operating economy, just as we need multiple political parties and regular elections to ensure functional democracy on the political side. The thought that men could operate in an idealistic communitarian society without the discipline of the market is, as we have seen, one of the three elements which eventuated in the failure of all previous attempts at utopian society. Israel may have achieved as close to the desirable balance as is possible in producing an economy which can appeal to the mixture of the good, the bad, and the indifferent in human nature. Unlike the Procrustean bed provided by the American communitarian societies of the early 19th Century, which required adherence by all true believers in a single, established discipline; or by the Socialists of Great Britain who compelled all miners, steel workers, and lorry drivers to work for the State, or not at all, Israel provides a menu of economic possibilities for all tastes, leading from the communitarian kibbutz where everything is owned in common, work assignments are made in rotation by a committee of elected Directors, dining is cafeteria style with some workers assigned kitchen detail, children live in common dormitories seeing parents only briefly in the morning and evening before dining with the other children, then going off to bed. And distribution of profit (if any) at the end of the year according to previously agreed upon formula. Alternatively, there are less communitarian organizations in which each family has its private quarters, dines en famille, and where private life is much as in most industrial societies. The next option is the cooperative farm, where land and equipment are owned in common, but farmed parcel by parcel by individuals. Seed is bought cooperatively, taking advantage of wholesale discounts, and crops are marketed in common to obtain maximum prices through knowledge, experience, and large-scale sales by expert representatives of the group. Machinery may be borrowed by appointment from the community machine center, or be individually owned, depending on the preference of cooperative members. Finally, Israel permits operations under completely Free Market conditions where land, factories, or businesses may be entirely privately owned and operated at the risk of the entrepreneur. Within this diverse system can be found communities much like the communitarian experiments in the 19th Century U.S., but with mechanisms for proving the commitment, acceptability, and capacity for group living of candidates prior to acceptance for full membership; groups not unlike the cooperative of United Raisin Growers of California whose only commitment is joint marketing; groups like the student members of the Harvard Coop -- whose interest is to buy goods at reduced prices, receiving a year-end dividend based on their scale of purchases; and outright capitalists like those we know and love best. One might thus envision the "ideal society" as not too different from that of a better run social democracy of today. A mistake made by most earlier idealistic utopian societies was a too radical departure from tried and proved economic principles and the discipline of the market, as with the mistaken practices which have hobbled "scientific" Marxist societies. Politics We might expect a utopian society to maintain a traditional one man, one vote mode. Alternatively, a more idealistic might introduce somewhat more political responsibility through adopting a multiple vote approach such as characterized British society until quite recently, with university graduates having an extra vote for their university candidate, giving extra weight to their broader outlook and informed world view. Similarly, large property owners and proprietors of businesses might be accorded an extra vote where they own property, or where their business is located, to give weight to their property interests. This is not the same as limiting voting to property owners, as in pre-Reform Act days, but it would provide a conservative offset to some of the excessive demands of the young, propertyless, and more populistically inclined, reducing the scale of budget deficits and social overspending which have characterized the era of the welfare society. Indeed, just such a system might well have been useful as South Africa began moving towards an integrated society, reducing fears of the White minority to possible radical actions of the Black majority . Had educated Blacks (and Whites) and Black (and White) property owners been given multiple votes, this could have introduced an element of stability which might make it easier for Whites to accept suffrage for the Black majority. As racial tensions increase in the United States (would our Aipotu be immune from ethnic distrust? It seems improbable given the duration of such distrust in the Balkans), there may well be applicability for such incentives to reasoned decision making in our idealistic society of the future. Education We might expect essentially free education in AIPOTU, not only at elementary and secondary level, but also for qualified university and professional students, though possibly with more rigorous admission standards to assure efficient use of national resources devoted to education. This would assure continued social mobility for the able, thus maximizing the contribution to society of those most benefitted by the good fortune of their genes and their own hard work. AIPOTU should thus work towards a multi-dimensional society, perhaps along the lines of the Israeli experience, taking into account that some marginal efficiency might be lost by providing communitarian and cooperative options, but agreeing that this would be a price worth paying in terms of desired Social Product Differentiation among the citizenry. Had the Mormons been supported by the good will of the United States Government and accorded access to Small Business Administration and Farm Home Administration loans (which, of course, did not exist in pioneer days) during their period of social experimentation instead of having had their properties expropriated as punishment for their insistence on living out of the American mainstream, the U.S. might have found itself anticipating the Israeli experience by a hundred years. Agriculture Aipotu would perhaps do as most European countries, adopting a system of "deficiency payments" to help small farmers remain in business, thus contribution to political and social stability, instead of setting overall high price supports which end up giving enormous, unneeded subsidies to corporate farms (and raising the price of U.S. foodstuffs to levels which take them off world markets, with the government again having to step in buy the crops and sell them below production cost to get rid of them to the Soviets). Manufacturing and Services Jobs With continued progress towards eliminating the "paper office", futher productivity gains from improved machinery, and extension of "as needed" inventory control from the factory floor to retail outlets, Aipotu workers will inevitably benefit from reduced work hours. Those who cannot work out of their homes -- as will probably prove possible for many service workers -- may find themselves economizing plant and equipment (as with twelve month schools) by working as round-the-clock shift workers on a three or four day week, four or six hour shift. Schedules and hours could be rotated, assigned by worker preference, or paid at a differential scale, depending on what was found most satisfactory to assure fully staffed round-the-clock operations. Taxes Aipotu would undoubtedly prefer a Value Added Tax plus a system of Stamp Taxes (shades of the Boston Tea Party) to encourage saving and investing as a way to promote renewal of its plants and factories while discouraging high consumption. Tax rebates at the border would also serve to promote exports, while a VAT system would minimize the machinery necessary to collect revenues. Stamp taxes would minimize fraud in its not-yet-and-never-to-be-perfect system by making every misuse of a personal cheque, or tampering with a deed or title a federal offense, as in Great Britain where it is a Crown offense to misuse any document bearing a Crown seal. This would reduce the cost of doing business for small businessmen for whom cheque fraud is a major cost, thus encouraging small business competitiveness and efficiency. For further comments on Aipotu taxes, see "The Constitution" below. Economic Controls Aipotu would avoid at all costs government attempts to control wages or prices, imports or exports, the exchange rate, or capital movements, leaving markets free to the fullest extent to determine the most efficient allocation of manpower and other factors inputs to the ends most desired by the citizenry, as indicated by their money votes in the marketplace. This is true economic democracy, paralleling universal suffrage at the ballot box. Social Welfare Aipotu would continue a broadly based system of Social Security, providing a "net" for those temporarily unemployed and retaining relocation and training grants for those requiring them. But it would introduce a "worthiness test", assuring that all those receiving grants were using them to support their families rather than leaving a wife just to render her eligible for Aid to Dependent Children. And recipients would be expected to report at 8:00 a.m. for work in a "Sump Industry" (a concept defined and discussed in the author in a separate paper) to earn his daily bread, thus avoiding in measure the demoralization which accompanies welfare dependency and the negative example set for the children of do-nothing welfare recipients who often become second, or third, generation welfare dependents from lack of a productive role model. Qualification for social assistance could be based on Milton Friedman's notion of a "negative income tax", it being understood that honesty in filling out one's income tax form, facing the known rigor and toughness of the Internal Revenue Service, is much more likely than similar honesty when being interviewed by the complacency of the average welfare worker. This approach would also increase GNP by releasing tens of thousands of welfare workers for productive employment. And, almost most importatly, Social Security contributions could be invested in the stock market -- or not -- in individually managed, company managed, or government managed accounts, according to the preferences of individuals. Planning Aipotu would abandon America's doctrinaire insistence on "no planning", taking up the Japanese/French notion of "indicative planning" by teams consisting of representatives from private industry, the public sector, and labor, who would set annual non-prescriptive targets based on estimated needs and available resources, channeling capital and labor to target industries. Advance knowledge of these targets, and assurance that resources would be available to validate them would increase business confidence, enhancing the probability of actually achieving the targets. In a world of uncertainty, this is probably as much as "planning" can achieve. Such "indicative" planning, not imposed by government fiat, but drawing on the informed inputs of the private sector, and academic and government technicians having advance knowledge of government budget intentions (affecting as much as a quarter of GNP) has had impressive results in France and Japan. It would be hoped that this would not only accelerate achievement of public and private objectives, but also avoid urgent "bail out" operations such as became necessary in the case of the Chrysler Corporation and the Savings and Loan catastrophe. While industry would be informed in advance of the consensus expectation for their sector, and resources would be assured to help achieve their objectives, neither industries or banks would ever be nationalized, realizing that if public management of any business or sector of the economy could be anticipated, this would remove a powerful incentive for close attention always to be paid to customer satisfaction and operational efficiency. The Central Bank Economists agree that the invention of money was a discovery as important in increasing efficiency in the exchange of goods and services as the discovery of fire or the invention of the wheel in terms of productive efficiency and human comfort.and satisfaction. The gross inefficiency of barter can be appreciated only by those who can remember the use of cigarettes as a medium of exchange following WW II, or who have visited Romania, where cigarette barter continued until recently because of the failure of the Communist government and early post-Communist governments to reasonably manage the money supply. So the last thing one would hope for in Aipotu is to tinker on grounds of "utopian doctrine" with any of the crude substitutes for a money economy which have characterized so much social experimentation in the past. Money is, as has been painfully learned, not an object: it is a concept. Nearly ninety per cent of the American money supply is neither paper bills, nor token coinage. It is electronic blips stored in computers, largely consisting of bank reserves on deposit in the Federal Reserve Bank, or FRB credits for commercial paper discounted with it by commercial banks. So Aipotu would find no reason for attempting to return to the gold standard, attractive as this might appear in theory to those who have observed the failings of governments to control the supply of bank money. In Aipotu it would be understood that a gold standard is too rigid for the vagaries of even Millennial life, accepting that control of the money supply as outlined below, would be adequate. Aipotu would, of course, experiment with the use of "plastic money" as an up-to-date partial substitute for paper money and token coinage (which require periodic replacement and which can be forged, stolen, and used for illegal transactions, e.g. for drug trafficking, prostitution, and money laundering abroad. This could be a simple step forward in the evolution of money, and the trail left by plastic transactions would provide a powerful incentive to honesty in Aipotu. A suitable smart card with enclosed computer chip could be placed in one's favorite Automatic Teller Machine whenever it required recharging (or this could, with a suitable home computer attachment, be accomplished over the phone), drawing down one's bank account, to be replenished monthly by automatic funds transfer from one's employer, virtually eliminating cheques and paper money. In time vending machines, news boxes, and telephone booths could be fitted with card-entry devices, requiring only the punching in of a Private Identity Code (PIN number) to validate a purchase, reducing if not eliminating the need for token money. Government issued "money cards" could also be programmed to serve as an all-purpose ID card to satisfy the need for a passport to travel abroad, could be validated as a driver's license, could serve as voter registration card, draft registration card/military service record, alien registration/border crossing card, and portable medical record for use by hospitals in event of emergency providing the name of one's personal doctor and prior treatment record. One's Aipotu card, with a suitable franchise fee paid to the government (a useful source of non-tax revenue) could also substitute for a Visa and/or Mastercard -- even bearing an appropriate logo in one corner. Smart cards cannot be used by anyone not knowing the PIN number of the owner. So any number of cards could be issued for convenience (yes, you can leave home without it. You could leave one in the office, one at home, and one in your club locker). If lost, or stolen, it would be a simple matter of canceling the old card requesting a replacement with a new PIN number. Aipotu would adopt Friedman's approach to money management, with one important modification: the Central Bank would increase the money supply by a moving average of the growth rate of the preceding five years (assuming Growth remains a national target), exceptions being possible where this appeared vital in the interest of solving either an unforeseen inflationary or unemployment problem, by a two thirds vote of the Board of Governors. Similarly, the Central Government would be constrained to present an annually balanced budget, subject to the same exceptions, where a deficit would have to be authorized by two thirds vote of the legislature. The Constitution and the Court System Aipotu's constitution would be a written one, as in the United States (many Brits, including the editors of The Economist are currently arguing that the constitution of the United Kingdom should be codified). Indeed, the American Constitution could well serve as a near model for that of Aipotu -- though unlike the United States, Aipotu would have two Supreme Courts, a court of Cassation, as in France, to serve as final arbiter for all civil and criminal cases, and a separate Constitutional Court to decide cases having bearing on interpretations of the Constitution. This would in essence fulfil the suggestion of former Chief Justice Warren Burger for extra judges to review and decide which cases the Supreme Court should hear. This would reduce the Court's case load by at least half. Congress could thus have a liberal court, deciding criminal and civil cases, and the President could have a conservative court, ruling on constitutional issues. The Mayor of Nauvoo, Illinois, and 1844 Presidential candidate Joseph Smith once said that the Constitution of the United States, with few changes, could serve as the Constitution for the Kingdom of God during the Millennium (than which one might expect no more perfect utopia). Pre-Civil War South Carolina Senator John Calhoun is credited with having made the only significant, purely American contribution to political theory -- the notion that simple majorities should not have the right to overrule the deeply held beliefs of "substantial minorities". Had this rule been observed, the Civil War might never have taken place, and given another twenty -- or forty -- years, many agree that slavery would probably have disappeared of its own accord, given the industrialization of the North and the mechanization of agriculture which would have made continued massive field labor too expensive. The destruction of Nauvoo and the death of Joseph Smith might not have occurred, and the "Utah War" been avoided, had American society accepted the wisdom of the Calhoun rule. Be this as it may, it was interesting to hear President Reagan in his Declaration of Economic Independence put forward the Calhounian notion that a Constitutional Amendment should be introduced requiring a two-thirds (or three fifth) majority for Congress to increase taxes. Someone said, "The power to tax is the power to destroy". And Congress, reacting to imperatives and the demand for increased social spending by economically irresponsible majorities, has always found it easier to tax and spend than to find programs to cut. Whatever one may think of Supply Siders , the Kennedy tax cuts of 1963 and the Reagan cuts of 1985 did make a difference in the performance of the economy. Aipotu's Constitution would also include a line item veto for its Chief Executive, a Balanced Budget provision (with a two thirds override clause in event of emergency), and a two-thirds (or three fifths) tax increase requirement. As for the court system, Aipotu would take full advantage of contemporary experience with Alternate Dispute Resolution Mechanisms, including the use of retired judges hired by the parties seeking justice. This would reduce court loads essentially to criminal matters. Indeed, to the extent possible, religious leaders would be incorporated in dispute resolution, as in pioneer days in Utah, where Mormon bishops handled disagreements among members of their wards, including disputes over water rights, debts, and interpretation of contracts. This would increase the sense of community and, hopefully, reduce the adversarial atmosphere of life in Apipotu. Towards Utopia, Erehwon, Aipotu Anyone contemplating the arrival of the Biblical Millennium, his own private utopia, or any variation thereof, should place close attention to these thoughts on Aipotu. Nicolai Lenin couldn't make Marx's society operate contrary to economic discipline, having had to introduce in desperation his quasi-capitalistic New Economic Policy to save the Revolution. His successors haven't been able to do better. The Chinese failed when they tried to substitute massive social coercion for the operation of market discipline. The idealistic communitarians, despite being among the most generously intended, couldn't do it. Even Brigham Young and his Latter-day Saints, while conquering the desert and being among the most successful colonizers in American history, couldn't do it. Jesus Christ, who recognized the power of Caesar and his coinage, would have had a hard time trying to direct a society without paying close attention to the operations of modern economic theory -- indeed, it to be doubted that he would have tried. The Israelis have confronted the issue directly, adapting the market to national priorities with notable (though not total) success. That is what has been suggested for Aipotu. Use the market to discipline the economy of the ideal society, then devote the resources raised by the government through taxing the efficiently ordered economy to advance the social objectives established by the (now more responsibly elected) representatives of its (more responsibly franchised) citizenry. This is probably as close to Utopia, Erehown, or Aipotu as humans can get. As Joseph Smith suggested, we're probably not that far from such polity today, if we only have the will to proceed towards it on a solid,, rational basis.