Reply #101: The law of supply and demand dictates the markets in most cases.

[Selatius]

In some cases, it may be preferable for the state to directly intervene, such as with the health care industry or power and so forth.

Tell me, what happens now when a firm fails to adequately maintain or upgrade capital in the face of competition? The income tax essentially serves as the agreement with society that whatever it is that you do in business affects society. As a result, society can exercise the authority to defend itself against your possible abuses by taxing a portion of your profits and using that revenue to regulate you and promote trade and the well-being of everybody else.

By taxation of income instead of a tax on capital or a tax on production, this avoids the problems of firm-specific capital that cannot be used by anyone else when we talk of taxes on capital.

What I'm essentially arguing for is the establishment of a national "public bank" fueled by government revenues derived from taxes. The national bank disburses funds to community branches. The national branch is relegated to simply disbursing funds to community branches in accordance to population size.

The community branches would disburse funds into the community for the specific purpose of organizing workers into worker cooperatives, expand existing cooperatives, and promote trade and commerce in general. Pre-existing firms, if they wish, can also choose to sell out to the public bank at fair market value, and the firms would then be reorganized and relaunched as worker co-ops. The point of this is that over time more and more workers will be absorbed into the co-op sector, and they would enjoy the fruits of their own labor. This means workers would now have a choice between the private sector and a new co-op sector.

These banks would operate according to the will of each respective community. This means their books must be open to the communities, and their budgetary meetings should be held in public so that input from the community can be gained. A budgetary meeting held for shareholders in a corporation operates in roughly the same fashion. The only difference is the shareholders are those who live in the community.

For large ventures or projects that may require the input of multiple communities, I have been debating the notion of setting up regional branches on top of community branches for region-wide projects like infrastructure investments like power plants or a new railroad line connecting two major cities.