Reform #4: State

Ferenc Gräff |


The reforms previously introduced aimed to construct a solid political and fiscal union upon enlightened ideological foundations (see Enlightened Europism), creating strong frames for the Republic of the United Europe (or RUE) to introduce a fair and just social system by redefining the role and authority of the state. The capitalist state – mainly in the global West – is led by democratically elected representatives, governments, or presidents, who serve terms; however, they are not the state. The state is a legal entity that functions to serve the collective interests of its members (i.e. the citizens), shielding the poor and vulnerable from the wealthy and powerful by providing vital public services and equality before the law. Regrettably, the capitalist state and its leaders deliberately ignore their duties to serve general well-being, protecting the interests of wealthy individuals and enterprises instead. Therefore, the ideology of capitalist selfishness must be abolished when designing the social system of the united Europe, replacing it with enlightened ideas that help to reconfigure the means of state.



Today, almost all nation-states construct their economies along the principles of capitalism, in which mass production, steady consumption, ever-increasing economic growth, and the cruel pursuit of self-interest are the key features of success. Capitalism’s negative impact on the society and environment prove that it is not only wasteful and unsustainable, but socially destructive as well. Despite the obvious shortcomings, there are many, who promote the idea of less market-related government regulation, seeking to unleash a laissez-faire stateless capitalism. Opposed to them, there are many – growing in numbers by the day –, who would like to have more regulations and government control over economic planning and policy – often and wrongly labelled as communists.

The argument comes down to the core question of the state’s role as the collective acting entity of the public. When the state was still small and managed by the monarch, the common people had absolutely no protection against the wealthy elite of landlords and clergy. Since the tyranny of the aristocracy and clergy has been overthrown in the French Revolution, the democratic state has gradually expanded and was entrusted with more tasks and responsibilities. By today, the state has become an apparatus, which operates the society by legislation within a certain territory, providing security (e.g. military, police), health care (e.g. hospitals, doctors, nurses), pension, benefits, transportation, and other public services to its people. The state is vital and beneficial for the overwhelming majority of the society, as it is the common people that need the state to provide protection, not the wealthy that can buy enough power to ensure their own well-being.

Sadly, the state’s capacities and potential were abused and distorted numerous times before (e.g. extreme nationalism, Bolshevism), as it is misused today (capitalism). The capitalist state’s sole purpose is to serve the interests of enterprises and the wealthy in a form of representatives of companies and business circles approaching politicians, promising funds for their election campaigns and for personal gains regarding their private businesses; and in exchange, the politicians are expected to promote pro-enterprise legislation. The unelected wealthy do not operate only behind closed doors, setting government policies hand-in-hand with elected government officials, but also openly as honoured guests at the Davos Economic Forum and at the Munich Security Conference, as CEOs that dictate wages and working conditions, as property owners that set renting fees unilaterally, as shop owners that influence prices, etc., throwing only crumbles to the ordinary people. The wealthy and propertied are protected by the capitalist state that does nothing or very little to reduce the soft tyranny of the owners over the propertyless.

Due to the rapidly growing social inequality between some privileged and great many underprivileged, the reformation of the capitalist state is inevitable and necessary. The mindset behind the great achievements of 19th century classical liberals and social democrats, such as enhanced working conditions, regulated working hours, women’s rights, old-age pension, and unemployment benefit could be used as a base for further improvement. The legal protection against the wealthy and the extension of public services are the most important social duties of the enlightened Europe.

The noble task is no smaller than achieving real equality through the orderly redistribution of wealth, ensuring the reasonable flow of money from the wealthy to the poor. The alternative is private capital dismantling the institution of state, exposing the ordinary people to unregulated tyranny and true slavery, thus creating a world that is harsher than feudalism was. The enlightened state’s single aim is to achieve and maintain social equality through legislation. My theory materialises and translates into acts that focus on the topics of public ownership, housing crisis, profit-based salary, and Guaranteed Citizen’s Basic Income as solutions to the most pressing social issues in today’s Europe.



It is crucial that the European state – in co-operation with the member states – purchases major industries, utilities, and transportation systems from private enterprises, securing public ownership over strategic services. The expansion of extensive publicly financed state services is also pivotal, whilst launching projects on grand scale could benefit both the public and the economy. Such a project is the construction of homes to ease the ever-growing housing crisis, which exists as the result of property shortages, pumping up the prices to purchase or rent compared to stagnating salaries – especially in the big cities. Renting a property alone is simply unaffordable to the overwhelming majority of people, meaning that many are forced to rent a room in a bigger house, living with strangers and in small places. In addition, harsh conditions, such as high deposit, restriction of children and pets, additional costs, etc. make it impossible for one to find a place that can be called home. The situation is somewhat easier for couples, but not significantly. The alternative to renting is buying an own property, which requires long-term commitment from both parties both emotionally and financially, as they certainly have to take massive loans, paying it for the rest of their lives.

The only long-term solution to the housing crisis is the mass construction of state-owned homes, meaning an increase in supply, which results in a more affordable price and provides a better bargaining position for the tenant, improving the overall conditions for tenants. State ownership is crucial, because the governments can have a direct impact on the real estate sector by reducing renting fees. The system works excellently in Vienna, which is officially the most livable city in the world. In the capital of Austria, most flats belong to the state or to the city, whilst the city’s leadership is promoting a lifelong renting programme called Genossenschaft.

As long as the housing crisis is not addressed properly, the owner-tenant relationship is going to remain imbalanced, allowing the former to dictate the latter. As the process of fund allocation, launching projects, and construction takes many years, an intermediary solution is needed. Applying the proposed Berlin-model of rent freeze and rent cap as a base, my proposal goes further to imposing a temporary profit-maximum on renting fees for properties that are permanently occupied for living, declaring the profit-ceiling based on the real costs of the owner, leaving a marginal profit for the landlords. This would result in cheaper renting fees for the tenant, whilst it still generates a limited profit for the landlord. This might end in hysteria of the propertied, labelling the law as communist; however, let us not forget that the great majority of the people are propertyless, and their interests must be represented. Besides, the owners can still keep their properties and can still generate profit, but only moderately for the time being. In this case, the solidarity of the propertied is required in solving the housing crisis.

Yet another social challenge is to harmonise the complex relationship between employee and employer, protecting the former from the latter. The element I would like to focus on here is the salary. Collective salary categories related to professions and qualifications should be introduced, including a range of salary paid for certain jobs. In addition, all employees would be eligible for profit-shares paid out quarterly – based on the profit made by the enterprise in the last quarter. At least the fifth of the entire profit could be distributed amongst all employees equally (in accordance with the actual working time), regardless of position and salary. This new scheme would erase other bonuses, such as 13-14th month’s salaries, loyalty bonuses, performance bonuses, etc.; but could include an obligatory 20 hours overtime allowance per month (or all-in contracts for managers). The intention is to involve the employees in the success (or failure) of the enterprise they work for, motivating them to work harder and, occasionally, longer, should it be required.

The obligation of sharing the fifth of the profit could be seen as offensive and outrageous to the owners of enterprises, but they have to bear in mind that the tables are turning: the endless exploitation on every front line of life – waging war at home (owner-tenant), at work (owner-employee), and in the shops (owner-customer) – is not going to last forever. The urgency of the redistribution of wealth is more imminent than it might seem.

By recognising the people as de facto shareholders of the European state, the citizens of Europe should be eligible to receive a dividend from state-owned profits in the form of a regularly paid income – in money rather than service. Today’s very poplar idea of introducing a Universal Basic Income (or UBI) acknowledges that fact, but it does not go as far as it should be. In my view, eligibility must be tied to European citizenship, residency in one of the RUE member state and clean criminal record, whilst paid out equally regardless of nationality, country of residence, gender, salary, or occupation. Therefore, my theory intends to express the combination of basic income and the German expression of Bürgergeld (citizen money) completed by the guarantee from the European state; for this reason, henceforward, I am going to use the term of Guaranteed Citizen’s Basic Income (or GCBI).

The allowance is to be paid out individually in accordance with the category of age: 18-21 (I), 22-29 (II), 30-59 (III), 60+ (IV). Category I represents those, who want to continue their studies after finishing school, and those, who would like to start their lives as entering employment. The youth is the least supported age group, meaning that it is important to provide them a financial support that meets their relatively lower needs. Category II represents those, who have finished their studies, and about to enter employment, settle down, and start a family. I propose the transformation of the already existing traditional family support (e.g. tax reduction, discounts) into GCBI payments, guaranteeing at least the same amount as before. The support of families is absolutely imperative for many reasons (e.g. social, demographic, economic), meaning that the state must encourage couples to opt for starting a family. Category III represents the spine of the society and economy, as they are working, paying their contributions to the state, building a career, running the engine of economy, consuming, and raising children. They are also the majority of the society in numbers.

Category IV represents the pensioners, who studied, worked, paid their dues, raised children, and look forward to their well-deserved rest. In the current pension scheme, there is a discrimination in age and in the amount paid, as men are permitted only to retire later than women – in most countries –, and those, who previously earned high salaries can enjoy wealth, whereas those, who were underpaid suffer destitution. Yet another shortcoming of the current system is that in the event of death, the state keeps all contribution paid throughout an entire lifetime, leaving nothing to younger family members. Therefore, I propose the merge of the current pension system into the system of GCBI, meaning the abolishment of pension contribution deducted from the salaries and the introduction of an equal payment of a lower allowance from the age of 60 regardless of gender and salary, meaning that every individual is going to be able to save more during their active working age or to work part-time after reaching the age of 60.

It is extremely difficult to allocate exact amounts for each age category, because it depends on many factors (e.g. types of social expenses merged, living quality across member states, prices, synchronisation of wages, rate of inflation), but setting the ratio of expenses and share of population is a good start. The rate of adult population of the RUE is divided amongst the four categories roughly as 3-10-46-26%, whilst the rate of expense to each category of age could be distributed as 5-25-20-50% of the total available fund for social expenses.

The merge of major social expenses (e.g. unemployed benefit, traditional family support, old-age pension) of the member states into the common European GCBI system is going to simplify and make the social system more transparent, thus reducing the costs of bureaucracy significantly. Restructuring and merging completed by the introduction of capital tax on the wealthy can cover the expenses, even with the loss of pension contribution, which will not have to be paid anymore.

This income should be enough to cover the basic necessities of life, such as a modern shelter and healthy nutrition. In order to avoid laziness, more must not be granted, only achieved through diligent work. The intention is to offer a strong incentive and provide the liberty of choice to the people. For instance, women will not have to be forced to choose between a professional career and motherhood, the youth will not have to be forced to choose between earning money and studying, etc., as working part-time could provide a sufficient income to do both, thus helping to achieve full employment, economic growth, and social justice.



Generally speaking, the mindset of prioritising amoral economic interests has to change, placing environmental and human needs in the centre of focus. The state, driven by capitalist dogmas, is corrupt, exploitative, obsolete, and dysfunctional. The ultimate aim of the wealthy is to hijack the legislation through sponsoring political parties, and to dismantle the institution of state eventually, introducing an economic and social structure instead, in which the only simple law is the dynamics of supply and demand. The European Government must overcome the pressure, and protect the propertyless and underprivileged.

The enlightened state, which is neither capitalist nor communist, must act justly and decisively to reverse the ongoing social destruction, abolishing not only poverty, but making the burden of keeping up subsistence disappear. The result is a pioneer concept that enables all to pursue occupations that they do willingly and with pleasure, encouraging creativity and productivity, which would otherwise be lost in an everlasting drudgery, truly liberating one from under the captivity of monotone work.