business capitalism economy equilibrium socialism

Pyramidal Equilibrium — from Top to All

Pyramidal Equilibrium — from Top to All

With no slightest doubts while we are living in 2020 that capitalism has failed and has totally crushed the middle class in society where this divergence between the rich and the poor has become so great that it is impossible to recover and it has become frightening for social security and will soon be more terrifying for the rich class setting on the top of the financial pyramid when the rebellion takes place against this system openly and in the streets. The crowds are aware of this gap and they have nothing to lose and they fully understand that at the first wave of recession or depression they will be the weakest point for capitalism to sacrifice and through them for government aid.

Less than 1% of population (0.8%) own 45% of the world’s wealth and less than 10% of people own 83%. Also note that 56% of people own less than 2% of the total wealth. This balloon has inflated a lot, and any moment may explode and the crowds at the bottom of this pyramid will be the ones who pierces this balloon in a very short time.

In the Communist Manifesto, Marx and Engels wrote, “The history of all hitherto existing society is the history of class struggles.” The results of the class struggles under capitalism are “determinism”, that is, transform to socialist system. It is not possible to predict what will happen in this struggle, the inevitable aspect of Marx that each proletariat will choose a system that meets its own interests and hence a non-capitalist system. The idea that the class struggles are steering the events of the world is historically inevitable and is common among philosophers and sociologists as demonstrated in many changes in the world.

Likewise, social determinism affirms that social interactions and structures alone determine the behavior of the individual, and it is possible that the individual’s socially determined actions are affected by the forces that control the flow of ideas such as social justice, the distribution of wealth, and the necessity of overturning the current financial hierarchy.

Social and historical determinism is inevitably heading towards chaos to modify the capitalist path. But going back to the first square by adopting the socialist economy directed by the state will not succeed and its well-known problems will appear immediately when the market loses the elements of free capitalism that stimulates self-growth according to market needs. Whoever does not have chances to win will lose interest in the game and the capital will simply been withdrawn which is the main engine of the market. The rules of the game should allow everyone to be the winner, even if relatively.

There are many success stories for both democratic and dictatorial governments in raising the standard of living for citizens and providing basic services free of charge for all, but they all failed to ensure that wealth is distributed to everyone fairly. Taxes alone cannot guarantee that even in ideal societies where corruption does not spread. Simply this is not the role of the government alone, the main role is limited to the private sector and the free market, and the government should only regulate and guarantee implementation and legislation.

The inevitable result will be two options for the richest people (the 10% layer) to face, either a balloon that is detonated by the 90% layer out of control in which both parties are losing amid the chaos of the hungry or a balloon that is vented by the 10% layer itself in a planned and controlled environment where the two parties are the winners.

To ensure the success of this recipe, the government’s revenue from taxes and fees should not be affected negatively so that governments do not oppose it and the equilibrium dies in its cradle. Also the torque and motivation for capital should not be affected (the 10% layer) since it is the most important layer of the market driving growth, development and enterprising investment, finally the 90% layer should be satisfied and remain as active player in this market game, and most importantly they should be profited.

The balloon venting mechanism begins by allocating a percentage not less than 13% and not exceeding 20% of the net profits of the companies and institutions (after paying the tax) so that these amounts are shared equally between the owners of the company and the employees working in it, where this percentage is re-injected directly into the market with new investments that are not related to the company and do not conflict with its interests. Owners & Employees will be shareholders in new company (Y) which is established by using this percentage of the profits in financing part of its capital. Here, the owners and employees will be similar and equal partners in this new company (Y) which is managed by others.

Crowdfunding is the password. Entrepreneurs, youth, and capital investors need to launch new projects (factories, companies, sustainable projects in all of its forms) and request crowdfunding to provide the capital they need after presenting the feasibility study and management staff experiences to investors. On the other side, the government is also building industrial, agricultural zones and development projects to submit them to crowdfunding annually so that all companies are forced to re-inject the 13% — 20% of their profits into new projects to finance them and own them according to their share in the financing. Here the government directs the market for projects it consider most appropriate for the people “Command Economy” and a specially sectors that are Labor Intensive. In the other hand, Startups and Entrepreneurs will direct the market to projects that are best suited to the needs of the market “Market Economy” according to its supply and demand. Crowdfunding can also be for existing companies seeking to raise their capital and attract investors to finance their expansion, deployment or to protect them from falling and to keep their employees and owners from losing their sources of income.

One year after starting the work of the new company (Y) that was collectively funded and when presenting the budget and calculating the net profit, this new company will allocate 13% — 20% of its net profits to inject it directly into the market in companies and factories under construction through same crowdfunding technique so that again half of this value is for the employees working in company (Y) and the other half is for the shareholders in this company (a large part of these new shareholders are the same employees in the companies who had previously invested in the new company “Y”!).

The biggest winner of this system is the rich class who will guarantee a compulsory investment of up to 10% of their profits in projects managed by others with an annual ROI and distributed risks in more than one basket, also this will establish a participatory system with employees who are with them equal partners in new companies to ensure to some extent a unity of destiny. Either all of us or none of us.

It is also considered a serious incentive system for employees that can be relied upon linking the incentive and the financial results of the company. It will also be a mechanism to ensure that the most fit employee remains concerned for the company’s interests who work to increase its profits and reduce operational and waste costs for it. It is expected that the employees themselves will be the auditors and supervisors of the performance of other employees and the company in general to ensure that their percentage of profits is not tampered with and that they will not lose the max investment opportunity at the end of the year.

On a purely pragmatic side for profit and loss and in the worst case scenario; sacrificing 10% of the wealth versus preserving 90% is a profitable clever deal in order to modify the current path of capitalism which is moving to dead end with a historical and social imperative that does not favor the top of the pyramid and leads to the unknown.

In the first year, the employee will have shares in only one new company, in the second year he will have shares in three companies and in the third year he will have shares in seven companies and so on according to the below table. And whatever the nominal value of the employee’s share in these companies is modest, it will be a fortune after ten years of work, when he calculates the annual profits that will accrue for him by these companies. Moreover 10% of the value of its profits is invested annually in other companies by multiple managements and all these shares continue to expand or decline according to the market and automatically generate annual profits sent to his bank account. As a shareholder, the employee has the right to request a review of the published budgets of any company, and in return he will bear any losses in the amount of his/her share in the company’s capital.

Workers and freelancers that are not affiliated to any company or institution and work daily for their interest will have an option in the beginning to allocate individually an amount of their annual profits to invest in crowdfunding at the end of the year in one of the companies to be part of the game until the governments link their income in an organized way with the country systems by imposing a certain percentage of 6.5% — 10% of their income to be reinvested in new projects through crowdfunding as they are business owners and employees at the same time.

The government shall apply the same mechanism to its employees in the public sector, with a difference that it deducts this amount from its budget for the benefit of public sector employees without obligating itself to set and inject a similar percentage in return for investment. There should be no competition between the government and the private sector in the free market and it should ensure neutrality and commitment as a guarantor and legislator.

Although the percentage of 13% — 20% is not sacred, but it is the guarantee percentage to contain the employees and workers and ensure that they remain an active players and interested in this game to lift them from the bottom of the pyramid to the middle of it. And it is the same percentage that can be deducted from the owners of the companies without affecting their motivation for progress and expansion while staying at the top of the pyramid. This mechanism may not guarantee an increase in the number of the rich people in the world, but it will inevitably revitalize the middle class in the pyramid and expand its base to become the prosperous majority and enjoy the luxury with fair limited wealth while keeping them interested in the game where everyone wins without having thoughts to detonate the balloon.

Those who will remain at the bottom of the pyramid at that time are the minority that does not seek to develop itself and does not want to engage in the game where its impact will be limited and does not pose any danger to this balloon.

The current conflict between the poor class (90% of the people) and the rich class (10% of The people at the top of the pyramid) with be reshaped to become between the minor poor class at the bottom of the pyramid and the major middle class in the middle of the pyramid.

The scale will remain tilted, the ropes will not be equal, but everyone will see justice done

Pyramidal Equilibrium — from Top to All was originally published in ILLUMINATION on Medium, where people are continuing the conversation by highlighting and responding to this story.

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