The Origin of the Nowan Economic System
The present Nowan state is result of the Revolution of 1922-
1924. The revolution reflected growing civil unrest that had had
its roots in several facts. First was the humiliation inflicted
upon Nowapan by the Japanese in the Pacific War of 1920-21. Only
the intervention of British and American naval forces had
prevented the destruction of the fleet and the loss of land. The
second factor was the festering resentment against the monarchy
and the wealthy landowners. A mere 0.5% of the population owned
95% of the land and extracted a good many priveleges from that
fact. Furthermore, members of the royalty paid no taxes. Thus
the lower classes payed an inordinate share of the taxes.
Thirdly, the economy was one of the worst examples of early
capitalism. Child labour, sweatshops and grinding poverty were
common over the entire nation. Unions were strictly illegal and
working people were without legal recourse in the face of abuse.
The Russian revolution provided the catalyst needed and a
number of small revolutionary parties sprung up. Ironically, it
was a young prince of the Ttera caste who would lead the
revolution when it finally began. Prince
Q�t'� had been studying in Petrograd when
the
revolution came. Unable to flee, he was a witness to both
successes and the failures of the early Soviet state. Upon his
return in December of 1921, he made a number of surreptitious
contacts to various cooperativist, marxist, and anarchist
parties. From these contacts was forged an unlikely alliance
that swept away the feudal, capitalist state.
The goals of these early revolutionaries varied widely. The
dominant group were the Cooperativists whose principles and goals
seemed to many, to be more in line with Nowan nature. But there
were those who struggled for the erasure of private property and
the development of production based on need rather than greed.
After prolonged discussion, a relatively cautious path was
undertaken that would eventually lead to the cooperativist state,
to the dismay and surprise of some and the satisfaction of
others.
Democracy in the Workplace
The key demands of the revolutionary workers, regardless of
their persuasion, were for democracy in the workplace, the
elimination of the vast inequalities in wealth, and for non-
exploitation of their labor. The cooperativist system has
guarunteed all three. In as much as it is possible, workers are
equal in the system. Decisions are made from the bottom up and
not the top down. New products are the result of group planning
and cooperation. Hiring and firing decisions are also made by
the group. That the worker should receive the full and fair
benefits of his/her own labor is a lynchpin of the system.Some
cooperatives go further in that all members, regardless of
position or role, receive the same wage.
The Freemarket as Consumer Democracy
In the early stages of post-revolutionary economic planning, a
more socialist economy was planned. The population as a whole
would own and decide what was to be produced. The central
problem of this and one which the other socialist economies
encountered, was that of who makes the final decisions.
It was well and good to say that production would serve the
masses, but someone still had to decide what was produced. How
many kinds of toothpaste were necessary? How many models of
automobiles? Which cosmetics? Which books should be published?
Which newspapers printed? When was an improvement necessary?
When it was really called for or because most people wanted it?
These were decisions which not even the most well meaning
committee could make. A national economy is simply too large to
plan. A population of millions, made up of a multitude of
ethnicities has an equal multitude of tastes. In the end, they
had to settle for the free market. Not because of any
efficiency, alleged or real, but rather because it was seen as
the most democratic method of letting a population choose what
was or was not a desireable product.
Cooperative Industry
The core of the Nowan economic system is the cooperative
industrial system. Individual companies are owned by the people
who work in and for them. They share equally in the
profits and the losses. All buildings and machinery are owned or
rented equally. Major decisions are made on a group basis and
minor ones are made by administrators elected by the workers by
secret ballot.
Co-ops may merge and often do. Some of them are now quite
large, even to the point of having thousands of members. That
feature so characteristic of 1980's American capitalism, the
hostile takeover, cannot occur because co-ops are essentially
democratic organizations.
The qualifications for new members are set by the individual
co-ops and vary greatly. Some require a new member to buy his or
her way in, others deduct a percentage of wages to pay for the
membership. Some simply offer the membership free, especially in
times of growing business or for gifted researchers for example.
Nepotism is a common feature of hiring practices. Although this
presents problems for outsiders, it also builds group solidarity
and cohesiveness. The society as a whole benefits because young
people often grow up knowing what they will be doing as adults.
Many co-ops run extensive apprenticeship programs for young
people. Apprentices are paid for their labor and often offered
memberships at the end of their training programs.
There are no stock markets or exchanges in Nowapan.
Companies cannot sell stock to raise funds. To do so would
threaten workplace democracy. Yet Nowan companies, like their
capitalist counterparts also face the need to raise funds for new
investments. Bonds are the most popular manner of doing so
although not the only method. Bonds may be issued by any coop
but only with the member's permission. Bonds are typically sold
in small values. Typically the buyer pays C300 and gets back
C400, usually at the end of 10 years.
The second most common method of raising capital, is the
voluntary pay cut. All or some of the workers may agree to a
voluntary cut in pay, with the resulting funds used as capital.
They are compensated for their pay cut from the resulting profits
up to the amount that they lost.
The third method, covered below in greater detail, comes in
the form of no-interest loans from the government.
Consumer Cooperatives
While this article has largely focused on Producer
Cooperatives, Consumer Cooperatives are the other side of the
picture in Nowapan. Many Producer Cooperatives sell their
products directly to the public in single company stores but more
popular and more common are stores which sell a large variety of
brands and merchandise. These are owned by consumers, usually
members of one local ward, district, or community, who buy
memberships. They elect a board of directors who run the
cooperative's day-to-day business and help select the brands of
merchandise to be stocked for sale. Consumer Cooperatives buy
perishable goods but non-perishable goods are not usually
purchased. Rather, the Producer Coops make them available for
sale in the stores and even pay the stores to stock their
merchandise. Members of Consumer Cooperatives usually get a
discount of their purchases although non-members are welcome to
shop in them as well.
Grocery stores and supermarkets are discussed more fully on
the Agriculture in Nowapan page.
Non-Cooperative Industry
Non-co-op industries take several forms in Nowapan. The first
and most common are the family owned and operated business. Many
farms, especially in the south, are family owned and operated.
Individual owned businesses also occur, filling many niches.
This is particularly common for men whose families have broken
up.
A third type is the non-profit business. Almost all of these
are public owned. Prominent examples include hospitals, the
public utilities and public education. The public utilities are
barred by law from making a profit. The expressed intention is
to avoid exploiting the workers employed in these industries.
Thus, the rates charged by the utilities are sufficient to pay
for operating costs and equipment upgrades, but any profit is
returned to the consumer in the form of rate-adjustments.
Land Ownership
One of the foundations of Nowan cooperativism is the ownership
of all land by the people in common. For all practical purposes,
anyone may rent any piece of land or any quantity, so long as he
or she can afford the rent. Leases are generally given for the
lifetime of the renter. In exchange, the renter must pay the
rent as it comes due and must maintain the land in such a way
that it does not lose value. Cooperative industries and
companies are granted leases just as any other would-be renter
and face the same responsibilities. All rents are paid to the
local District government and form the most important part of
their revenues.
All structures that are built on the land belong to the
cooperative or the family that has built them. Absentee
ownership is not allowed, a fact which discourages such land
speculation as would be possible under the Nowan system.
Leases are not inheritable, but those who are immediate
family members are given preference over outsiders. As a partial
deterrent to would be renters, new leases require compensation
for all buildings on the property. The amount to be negotiated
by old and new renters and under the supervision of an impartial
'umpire'.
In cities, population pressures routinely lead to multifamily
dwellings. This leads to a situation that closely resembles the
condominiums of the United States. The renter is at once renting
his share of land that the building stands on and also a member
of a co-op that holds that owns the building in common. It is
common for clans to cooperatively rent a given piece of land in
such circumstances.
Rents are set by a variety of factors that include the land's
profit potential, its suitability for the planned use, population
pressures and demand in the locale. Rents reflect the use of the
land. A family longhouse in the prime commercial district of
Mr� is not assessed commercial scale rents. Rather the
renter pays a rent in line with other home rent values in
Mr�. Similarly, local development does not drive up the
rent paid by a renter who inhabited the land before the
development. It may very well affect the rent paid by his
successor, although how much depends, as usual, upon its intended
use.
Where demand is heavy, there may be restrictions upon how
much land can be rented. This is usually accomplished by a rent
scale that increases with the amount of land held by any
individual or cooperative.
Farms constitute a special category of land rent. Crop
producing land is rented at a very low rate. Pasture land is
slightly higher as part of the so-called social engineering
plans. Fallow land is treated as producing land so long as it is
part of a regular rotation plan. Land held fallow for too long
is subject to much higher rent rates. These measures reduce both
food prices and the amount of land that a would be speculator
(either in crops or land) would accumulate. Also see the section
on Agriculture.
Natural Resources
Natural resources are seen as the common wealth of the Nowan
people. Co-ops that run mines or oilfields, do so under
contracts that guaruntee prices for the product. They
essentially lease the right to perform a service for the people
of Nowapan, i.e., extract minerals, oil, etc. The resource does
not become the property of the co-op when it leaves the ground.
It is impossible to speculate on natural resources the way that,
for example, oil futures are traded in the United States. A
national clearing house market is the outlet for all mineral
resources with provisos that prevent a would-be middleman cannot
purchase them solely for speculative purposes.
Taxation
The Nowan tax system is derived from the National Tax
Law (NTL) of 1929. This law replaced the surviving remnants
of the old Royal tax system as well as the temporary 10% Income
Tax put in place immediately after the Revolution. The central
idea behind the NTL is to tax consumption. People pay
according to how much they consume of the available resources.
There are a number of incentives in place to encourage investment
and the government has not attempted to halt all consumption
anymore than income tax systems want to halt all income. By
striking a careful balance, Nowapan has on the one hand, an
extraordinarily high rate of saving as well as enough personal
wealth to keep the economy growing strongly.
The Personal Consumption Tax (PCT) is determined by
taking the total amount of income and subtracting out how much
has been saved or invested. The exact details have varied over
the years but it usually allowed for the deduction of the costs
of education and of necessary medical care. The rate of taxation
varies from year to year as discussed below.
Some Consumption taxes are more specialized and occur at the
point of use. There are taxes on alcoholic beverages, tobacco
products and marijuana. Highways are largely paid for by a
combination of toll roads, fuel taxes and a vehicle tax paid on
all motorized and non-motorized vehicles. National Parks charge
a variety of fees for entrance and use. Airports charge aircraft
for landing and typically have toll entrances which charge users.
All public utilities have additional taxes, in part, to
discourage consumption, and in part, to pay for new capital
investment.
The most pervasive of the specialized Consumption taxes is
the Land Rent. Almost all land in Nowapan belongs to the
state. Those who live on or use the land pay a Land Rent based
upon the amount of land that they use or occupy. To prevent
hoarding, the Land Rent is progressive and steeply increases with
the quantity of land held. Private land owners are required to
pay an amount equal to 5% of the lands value per year.
Optionally, they may defer all Land Rents for a period of 20
years, at which time the land becomes state property. Then they
may remain on the land but must start paying land rents at the
standard level. Generally speaking, most retirees do not pay
rent on the lands that they live on or more commonly, live with
fellow clan members, either in Men's Houses or with new families.
This eases the financial burden upon them. Further, as many of
them are in wards that work towards self-suffiency in food
production, their costs for the necessities in life is further
reduced.
An additional tax is levied on large families. As of
1970, a tax was levied on each child over the planned limit of 1
per adult per family. The tax is progressive in that it
increases with each child. Nowapan wants growth, but they want
in a careful and controlled manner.
There is a Maxim um Consumption Tax as well. As noted
above, monies deposited or invested are not subject to taxation.
However, when they are withdrawn for Consumption purposes they
are considered taxable income. Any amount consumed which is over
20 times the annual minimum wage income is subject to 100% tax
penalties. This is rare but can occur when people use
accumulated wealth at a rapid rate.
Co-operatives pay a Subtraction Value Added Tax (S-
VAT) in place of the PCT. The S-VAT is figured by taking the
amount spent o n purchases of materials (b ut not labor or
research) and subtracting it from sales. The rate varies, but is
typically around 17%.
The government is required to keep what has been referred to
as a Semi-Balanced Budget. The government can spend more than it
takes in but is generally required to recover the amount within a
set period of time. That period varies with the purpose of the
deficit spending. To provide these extra funds, the government
sells bonds, most of which are purchased by Investment Banks.
Bonds are always sold at a fixed rate of return although there
are many types. Some, for example, are paid off in toto
after 10 years, others might be paid off in equal payments over 5
years. Repayment periods vary from 6 months to 20 years. None
pay a very large rate of return but all are considered very safe
investments. During peacetime, no more than 10 % of the
government's budget may come from bonds and it is strictly
forbidden to sell bonds to pay off other bonds.
The government is required to avoid selling bonds in most
instances and for this reason, adjusts the PCT and S-VAT rates
from year to year. The rate for the coming fiscal year, which
always begins in late March, is usually announced in January.
Acceptable reasons for issuing bonds include emergencies such as
natural disasters, wars, and Industrial Targeting (see below).
There is no equivalent to a Pensioner's or Social Security Tax. Nowans are responsible for their own funds and are required by law to place 10% of their income into various retirement programs. None of this is taxed until it is withdrawn for consumption nor may it be withdrawn until age 65. The Nowans' band type families make this more complicated than the above make it seem but generally, the ma.k�m and the y�.w�r divide all family income up equally and then invest it as they will.
There are a handful of temporary Earmarked Taxes. These
income based taxes are directed towards specific programs and
their funds may only be used for them. Earmarked Taxes must be
approved by a National Referendum and must have a lifetime not to
exceed 20 years. The best known one was the approved for the
Space Program in 1971 and subsequently renewed and expanded in
1991. Another, with a more sinister purpose and with a lifetime
of 5 years, was approved in 1952 to provide funding for Nowapan's
development of nuclear weapons. The Nowan constitution sets
strict limits on the total percentage that may be collected for
these types of taxes at any given time and as a result, their
number has remained small.
Provincial governments depend upon consumption taxes. The
percentage varies from province to province. If there is going
to be a budget shortfall, the provincial government borrows the
money from the National government and increases the consumption
tax until it is paid off.
District governments depend upon Land Rents for their income.
Budgetary shortfalls are met by borrowing from the provincial
government and the subsequent increase in land rents.
Financial Institutions
te.yem.nin Central Bank
The Central Bank is the repository and dispensor of
government funds. It prints the National Currency, sells bonds,
and pays government debts. The Central Bank has offices in every
province and most cities. It fullfils its roles for all sizes of
government offices.
te.yem.ng�r Investment Banks
Investment Banks are a special kind of financial institution
in Nowapan. These banks exist solely to provide financing to
industry and businesses. Funds to do this come from members of
the public who buy shares in the banks. Co-ops and businesses
are forbidden to buy shares on their own. IBs function somewhat
like a combination of a mutual fund and an IRA for their members.
Those funds are then used to buy Co-ops' bond issuances. Profits
from the bonds are distributed among the members in proportion to
the number of shares they held at the time the bonds are
purchased. If a member has quit the IB, the profits are
distributed amongst all members. There is no guaruntee of return
on the bonds. Co-operatives can and do fail and IB members are
not protected against losses. IBs usually specialize in one kind
of industry or another. Some are multi-industrial. An elected
board must approve large bond purchases. Co-op members must
approve large bond sales. Profits gained are not taxable until
withdrawal and then only those in excess of the maximum wage.
w�.yeng.sh�.ng�r Credit
Unions/Savings and Loans
These banks are the ones who serve the public at large. They
generally have three different kinds of accounts.
Retirement Accounts are those in which 10% of a worker's
wages are deposited. These funds may neither be loaned nor
withdrawn although the latter proviso changes when a worker
reaches retirement age.
Access Accounts are maintained by a depositor who needs to
use his funds in the short term. Funds may be withdrawn without
notice, either in cash or by means of personal checks.
Increasingly, electronic debit cards are replacing both of these
manners. The bank is allowed to charge a fee for its services
and this is based upon a percentage of the funds held in a
depositor's Access Account. Funds in Access Accounts are not
used to make loans to borrowers.
Investment Accounts are less readily accessed. Typically, it
takes 5 days notice to withdraw funds although an emergency need
can override that requirement. Funds in Investment Accounts are
used to provide no-interest loans to bank members. There are
strict rules in place to limit the amount that may be loaned to
any one person or co-operative. This is done to limit the bank's
liabilities. Under terms of the National Tax Law, funds
withdrawn from Investment Accounts are counted as income.
Both individuals and co-operatives may be members of a
W�yengsh�ng�r. Where co-operatives are
members, they offer a fourth kind of account, the Pension
Account. It is similar to both the Retirement Account and the
Access Account. Co-operatives deposit funds into a Pension
Account but cannot withdraw them. Rather, a percentage of the
funds are withdrawn each year and paid to the co-operative's
retirees as a supplement to their personal Retirement Accounts.
Research Institutes
Most co-ops do not undertake major research on their own.
Rather they maintain inhouse engineering committees who work to
transfer the ideas of scholars into workable forms. Those
scholars are generally affiliated with Research Institutes. The
institutes are highly competitive in their recruiting and
prestige is a vital factor in choices made by young scholars.
Many co-ops donate funds to the institutes, a factor which often
results in their being offered new technologies for development
or co-production.
Research Institutes take various forms in Nowapan. Many,
perhaps the majority, are directly affiliated with one or more
Co-ops and receive their profits directly from them. Others are
independents. They sell the fruits of their research directly to
co-ops who bid on the research. Finally, some are attached to
the major research universities and the transfer of their
technologies takes various forms. Some are made widely available
to all industries for the good of the nation. Others are sold to
raise funds for their universities. The government itself also
contributes funds to the institutes although there are often
limits on profits to be from the resulting technologies.
The Caste System
The caste system will not be dealt with in any depth here.
The only aspects of interest here are those in which the caste
system impinges on the economic system. As elsewhere in Nowan
life, it is pervasive. For the most part, any given industry, is
dominated by a single caste. Caste discrimination is illegal,
but still happens on occasion. It is not the main reason that
industries remain single caste. The real cause is that people
tend to follow in the footsteps of fathers, uncles and mothers
and go seek jobs they can expect to be suitable for them as well
as available.
Unemployment and Layoffs
It is an unfortunate truth that unemployment and layoffs are a
part of a market driven economy. That they exist in Nowapan is
also true. The system attempts to prevent layoffs in as much as
possible. If a reduction in labor costs is needed, the decision
is made by the workers of the co-op. This is always a last
resort. Since a part of a worker's wages are set as a
percentage of profits, the first adjustment made in a co-ops
labor costs is usually one of a self compensating nature. If
reduced wages have not helped enough, then reduced hours are the
next method tried. In the event that a layoff is required, some
sort of compensation is paid to those laid off. Different co-ops
have differing methods in deciding who goes and who stays. Some
rely on seniority, others on a lottery, others consider need.
All are required to attempt to place their workers with another
co-op if possible and solidarity between co-ops is relatively
high in this regard.
Inheritance
The abolition of inheritance was one of the first tools used
in Nowapan's war on the inequality of wealth. In 1924, it became
illegal to inherit anything other than personal property. In as
much as it was possible, all individuals come into the world as
tabulae rasae so far as economic potential is concerned.
Material
property is generally inheritable, but the need to pay rents,
again cuts down on the hoarding of such property. Provision is
made for the welfare of spouses and minor children, but generally
this is already taken care of through the deceased co-op's
pension fund.
The deceased person's excess funds are transferred to provincial
welfare funds and used to help those in need.
The Monetary System
The unit of currency is the credit (C), made up of 20 demi-
credits (dC). The C's full name is Labor Credit Unit
(w�.yeng.nq�). Through a complex and often
reviewed set of standards, every job, from housewife to Premier,
is defined in terms of the amount and quality of labor involved.
The base pay is set upon those standards. Wages are paid in
credits, usually deposited directly into the worker's Access
Account.
Industrial Targeting
Industrial targeting is a policy undertaken by the government
to promote the growth of certain industries in Nowapan. The
government will make available to qualified co-ops no interest
loans for the purpose of industrial developement. Nowapan is not
a planned economy in the sense that the government does not
specify production targets or goals. Industrial targeting
specifies technologies or industries that are felt to be weakly
or under developed for the overall well being of the economy.
The policy has its origins in similar policies of the pre-
revolutionary government which aggresively pushed the development
of the railroad system. Particularly noteworthy developments in
the revolutionary era, have included the following industries
(and the year that the program was began); textiles (1925), radio
(1925), shipbuilding (1926), steel (1928 and again in 1970),
aluminum (1931), automobiles (1933), commercial aircraft (1935),
munitions (1937), radar (1939), nuclear power (1952), titanium
(1962), space technology (1963), computers (1965), solar power
(1973), 'stealth' aircraft (1980), supercomputers (1984),
biogenetic engineering (1985), and
superconductors (1988).
There are no quotas, no required number of programs or
recipients. Once programs are considered mature, the
availability of loans is tapered off and finally curtailed. The
funding and the scope of the program vary with its importance. A
substantial investment was made in certain luxury items including
wine and silk production, during the 1920's, but that investment
pales when compared to the investment made in musk-ox wool and
cotton textiles, electrification, education, communications and
in transportation.
Progress as a Desirable Goal
Nowapan feels that progress is the key to providing ever
greater equality and comfort for its people. Progress must
however be managed and directed. Further, it must not disrupt
community and family. Progress is only of value when it helps
the nation.