Thesh wrote:People will loan out money because it pays back interest, and in socialism most of the money is in banks, not direct investment, so there is a hell of a lot more money to loan (also at 0% real interest, there is no artificial scarcity of money, anyway).
Okay, trying to understand this here.
- Individuals put their money in banks, presumably because it pays some interest.
- The bank lends that money to cooperatives expecting to make more interest so the bank can turn a profit (the cooperative pays back the loan plus interest from their profits).
- If the cooperative fails, the bank gets the money back from the cooperative's assets. If the cooperative doesn't have enough assets (which is very likely in the case of a start-up) they get that money from... who?
You said "banks and insurance companies take on the risk itself" (presumably insurance the bank is paying for?), which I think means they get the money from no one, right? The bank just eats the loss, or their insurance does. Seems to me, that just means they'll just need to charge higher interest rates to make sure they get their money back. You also said that "[the entrepreneur] can take on some of the risk if they want, but they don't have to", so if a bank wanted to charge a lower interest rate on the condition that you cosign against your personal wealth, that be allowed, right?
I think I might not be understanding the fundamental difference between what you're describing here and capitalism. Seems like there are two main differences:
1) All businesses must be cooperatives, owned equally by the workers.
2) All land is owned by "the community" and is rented rather than owned by businesses and private citizens.
Could you define what role the community plays in this system, apart from land ownership/taxation through rent? Are they the lawmakers as well? What levels of government exist in this system, and is there a level of government above the banks?
I was under the impression that you were thinking this system was meant to address some injustice; I'd been presuming that was wealth inequality. Is that the goal?
If so, I don't really see how that is addressed, exactly. Seems to me that a successful company will be making more money, therefore their workers will be making more money. Let that simmer for a century or so, and I imagine you could end up with great inequality, especially if individuals are not taxed directly, but are allowed to have personal wealth (just no land).
If not, what specific advantages does this system give?
Let me know if I'm misunderstanding something.