Economy of Delkora

The economy of Delkora is a highly-developed market socialist economy characterized by the predominance of various forms of social ownership of the means of production combined with the exchange of goods and services in a regulated market. Key industries such as energy and natural resources are fully publicly-owned, while in nearly every other industry various forms of social ownership, including public ownership, cooperatives, or communal ownership either predominate or at least constitute a major share of the industry. The country has a high standard of living due to an expansive welfare state, as well as low levels of income inequality. It consistently scores high on most quality of life indicators, scoring near the top of many measures of general happiness and subjective well-being. Delkora is a member of the Common Sphere.

History

Early History

Delkoran society began transitioning away from its nomadic roots around 1500 CE with the formation of agricultural communes known as the varden, which would be the primary social and economic institutions of Delkoran society for several centuries. The varden were characterized by communal ownership of property and egalitarian social roles. Historians often cite the varden as contributing to the early development of attitudes favoring economic democracy and decentralization. The most successful varden eventually developed into cities and towns that began to abandon their egalitarian founding principles. This transition resulted in the development of private property rights and the subsequent rise of an urban merchant class, although the varden would continue to be important in Delkoran culture and economics going forward.

Industrialization

Industrialization began in Delkora around the mid 1700’s. The introduction of the steam engine and innovations in iron making facilitated a rapid increase in worker productivity. Meanwhile, improvements in agricultural equipment helped contribute to major population growth. As a result of industrialization, the cities began to eclipse the varden as the primary drivers of the economy, prompting a transition of Delkoran society away from its agrarian roots. Attracted by the prospect of urban jobs, young people began relocating from the varden in large numbers starting around 1780, and by the turn of the century, most of the population lived in cities and towns.

Aside from the economic consequences of this shift, there were a number of political consequences that would impact Delkoran politics going forward. In particular, as the egalitarian culture of the varden declined as a political force, the country’s aristocracy, whose power and influence had been mostly limited to the cities, accrued a great deal more political power. Throughout the early 1800’s, the aristocracy increasingly sought to extend its influence over the varden, creating a tension in Delkoran society between its urban and rural elements.

The Brom Program

By 1850, the negative consequences of the rapid population growth enabled by the industrial revolution began to be felt as cities and towns became increasingly overpopulated, leading to poor living conditions and widespread poverty. This phenomenon was further exacerbated by the large influx of people into the cities in the aftermath of the Delkoran Civil War, which had ravaged much of the countryside. Additionally, lax workplace regulations permitted by Conservative governments throughout the 1850’s and 60’s led to horrific abuses as factory workers were subject to seven day workweeks, dangerous working conditions, starvation wages, and a proliferation of child labor.

Beginning in the 1860’s, urban industrial workers began organizing to demand reform, but were stymied by laws prohibiting the formation of unions. Nonetheless, various labor groups were formed during the decade, eventually uniting under an umbrella organization known as the United Workers’ Congress of Delkora, the predecessor of the National Labor Party. Throughout the 1870’s, the UWCD organized general strikes throughout the country, which were often met with violent suppression. Still, the labor movement was able to secure widespread support, resulting in the National Labor Party winning a majority in the Federal Parliament in the 1880 Federal Election.

Chancellor Jordlan Brom implemented a sweeping reform agenda posthumously termed the “Brom Program”, which explicitly protected the right of workers to organize and collectively bargain, implemented workplace reforms, and laid the foundation of the Delkoran welfare state by establishing unemployment insurance and a national pension program.

Economic Liberalization and Depression

Throughout the 1940’s, the Conservative government of Veidnar Albendor implemented a sweeping agenda of economic liberalization which included tax cuts, a reduction in social security spending, and a weakening of anti-competition laws that enabled the rise of near-monopolies in a number of important industries. The cumulative effect of these reforms was a major transfer of wealth to the top 10% of wage earners, with this group controlling an estimated 74% of the economy by the early 1950’s.

Additionally, the lack of competition enforcement enabled a dangerous accumulation of economic influence by the largest corporations and banks. The ultimate result of this was the Banking Crisis of 1953, caused by the default of a number of the country’s largest employers when a severe recession hit in the early 1950's, which in turn prompted a bank run that led to the insolvency of a number of major banks. By late 1953, the economy entered a severe depression, with unemployment eventually reaching as high as 25%.

New Kingdom Program

Implemented by the National Labor governments of Petris Elvensar and Gandymyr Feldengar throughout the 1960's and 70's, the New Kingdom Program marked the beginning of a fundamental transformation of the Delkoran economy, with a goal of pulling the country out of depression and initiating a peaceful transition away from private ownership in the economy to various forms of socialized ownership.

The first phase of the program was the introduction of a socialized capital market known as the National Common Fund. The federal government undertook a compulsory purchase of all privately held financial instruments and pooled the assets into the NCF, dividing them among numerous publicly-managed investment funds. The NCF effectively nationalized all capital in the country and enabled the government to begin gradually transitioning the economy toward worker self-management, with many of the firms within the investment funds purchased by the NCF subsequently converted into various forms of cooperatives over the next two decades.

The second phase of the New Kingdom Program consisted of a fundamental restructuring of government fiscal policy. Conservative-era regulations requiring balanced federal budgets were repealed and federal spending priorities changed significantly, leading to major cuts to military spending. Government intervention in the economy to stimulate aggregate demand and ensure low levels of unemployment became the new standard, replacing the laissez-faire policies of the preceding Conservative governments.

The third phase of the program, implemented starting in the mid 1960's, focused on the strengthening of worker’s rights and collective bargaining, requiring co-determination for all private companies over a certain size. Also implemented during this phase were various regulations limiting working hours, requiring paid leave, and requiring a minimum level of employee benefits. As part of the overall effort to expand worker ownership of the economy, laws were adopted promoting the formation of various kinds of worker and consumer cooperatives, as well as extending concepts of communal ownership into new areas of the economy.

The fourth and final phase of the program saw the rise of the modern Delkoran welfare state in the late 1960's and into the 1970's. A universal basic income was implemented in 1968, guaranteeing all citizens a monthly income calculated according to regional costs of living and financed primarily by profits from publicly-owned enterprises. The success of the UBI resulted in it eventually replacing many of the Kingdom’s older social security programs. The fourth phase of the New Kingdom Program also saw a major increase in healthcare and education spending, resulting in all citizens having access free at the point of use to all medically-necessary healthcare and to all levels of public education. Public housing was another top priority, and the construction of large-scale public housing projects in the major cities, combined with housing first policies, virtually eliminated chronic homelessness in Delkora by the late 1980’s.

Many of the core reforms embodied in the New Kingdom Program were embedded in the federal constitution by the Economic Rights Amendment of 1969 passed by the Feldengar government, which states that, “All Delkoran citizens shall have the right to a decent standard of living, including the right to housing, food and water, medical care, old age care, gainful employment, fair compensation for their labor, education, and recreation.” The amendment was intended to prevent a future Conservative government from undoing the New Kingdom reforms, as well as to ensure that the states could not circumvent them.

1983-Present

Chancellor Larz sar Vellarand came to power in 1983 as leader of Conservative-Agrarian coalition that had campaigned on reversing much of the New Kingdom Program, in particular the high levels of government ownership in the economy, worker self-management mandates, and above all the welfare state, which the Delkoran right argued was wasteful and unsustainable. Although Vellarand and his successor, Uldric Bekenheimer, achieved some small victories through regulatory changes and court battles, neither were able to muster the support necessary to fully dismantle the New Kingdom Program, repeatedly stymied by the Economic Rights Amendment and occasionally even moderate Conservatives within their own coalition, who recognized that many of the New Kingdom’s reforms had strong public support.

The New Kingdom was reaffirmed during the chancellorship of Emma Olymyr from 1994 to 2002, with Olymyr accelerating the transition toward worker self-management and reducing the share of the economy held by private enterprises, which had been allowed to grow under the previous Conservative governments. Her chancellorship is often cited as a pivotal moment for the Conservative Party, when a faction of pro-New Kingdom moderates in the Conservative Party known as the “New Conservatives” emerged as a major political force, challenging the more economically liberal establishment wing of the party. This, combined with the increasing unity of the Delkoran left culminating in the “traffic light coalition” negotiated by current Chancellor Adric Azengaard in 2014, has led political scientists to assert that the core principles of the Delkoran economy are becoming a point of consensus across the political spectrum.

Sectors

Primary

Agriculture, forestry, and mineral extraction collectively account for only about 1.5% of the Delkoran economy and employ about 3.2% of the workforce. A significant portion of agricultural output comes from the varden, whose production meets most of the country’s domestic food needs. Forestry is a major industry in the country, although it is subject to extensive environmental regulations that require replanting at replacement levels for all felling operations and prohibit felling in protected wilderness areas. As a result, Delkora is a net importer of wood products. Mineral extraction is similarly limited by environmental regulations and as a result, the country is a net importer of many raw materials. Coal mining has been banned in Delkora since 2003.

Secondary

Industry accounts for about 26% of the economy and employs about 24.7% of the workforce. Scholars typically cite the late 1990’s as the period in which the Delkoran economy began a trend toward deindustrialization as advancements in automation began rendering older, labor-intensive forms of manufacturing obsolete, prompting layoffs of many industrial workers. Nonetheless, the country continues to maintain a strong industrial base in the present day. The Garenfyor Peninsula in eastern Faurelia is one of the most important industrial areas of the country and is home to sprawling steel mills in cities like Fyodonor and Halmodryn.

Tertiary

Services account for about 73% of the economy and employ about 72.1% of the workforce. The largest categories within the service sector are financial services, retail, entertainment, and logistics. Tourism, especially environmental tourism, has also become a significant contributor to the economy, with Delkora being a popular destination for tourists from throughout Tyran.

Economic Organization

National Common Fund

The Delkoran government maintains a socialized capital market known as the National Common Fund that serves as the source of financing for most economic endeavors. Following passage of the National Common Fund Act of 1960, the federal government undertook a compulsory purchase of all privately-held financial instruments, which were then pooled into a National Common Fund comprised of numerous publicly-managed investment funds. Subsequent amendments to the NCFA decentralized the Fund, establishing state level common funds managed by each Delkoran state subject to federal regulations. While individuals can still start private enterprises, it is legally mandated that they be sold into the National Common Fund once they reach a certain size. Most firms sold into the common funds are subsequently reorganized as worker cooperatives, although certain firms deemed strategically important to the economy remain under public ownership.

Labor

Delkora has one of the highest union densities in Tyran, with over 87% of Delkoran workers registered as members of a labor union and 92% of workers covered by a collective bargaining agreement. Labor unions across different industries are united under the General Workers' Congress of Delkora, which helps to coordinate collective bargaining and activism. All public and private sector workers have a right to strike, although strike action on the part of certain categories of public workers deemed essential to public safety is subject to restrictions. Most forms of anti-strike action on the part employers, such as lockouts and hiring strikebreakers, are illegal. Additionally, federal law establishes one-tier co-determination for all companies over a certain size, starting at 25% of seats on the board of directors and increasing as the company expands.

Collectives and Communal Ownership

Various forms of collective ownership, including worker cooperatives, consumer cooperatives, and hybrid cooperatives constitute about 51% of the economy. Under Delkoran corporation law, all members of a cooperative each own a single nontransferable share of the cooperative, and shares can only be held by members of the cooperative. Cooperatives are governed by a board of instantly-revocable delegates comprised of members elected by a vote of all members of the cooperative. Communal ownership constitutes 3% of the economy, with the largest subset of this category being property owned by the varden.

Fiscal Policy

Penetration of foreign corporations into the Delkoran market is limited by numerous non-tariff barriers to entry resulting from the New Kingdom reforms of the 1960's and 70's and as a result, the country has had relatively low external debt since then. The largest categories of government spending include healthcare and education, followed by social security programs. A primary goal of government fiscal policy is large scale income redistribution to ensure low levels of income inequality. Accordingly, the Delkoran tax system is highly progressive, with personal rates ranging from 10% to 95%, while corporate taxes range from rates of around 15% applied to most small businesses, up to a 35% rate applied to the largest corporations. Progressive wealth and inheritance taxes are also in place. Additionally, a national VAT tax of 10% is applied to most purchases, with a lower rate of 5% applied to certain vital goods like food, medicine, and clothing. In recent decades, numerous pigovian taxes have been implemented, including a carbon tax and various taxes on the consumption of unhealthy foods and drugs. Delkoran states also have the authority to levy taxes, with most of their revenue drawn from land and property taxes.

Banking and Monetary Policy

The financial industry is entirely socialized, with all institutions either publicly-owned by the National Common Fund or organized as cooperatives. The national currency of Delkora is the veld, which operates according to a managed float regime relative to other Common Sphere currencies. The Central Bank of Delkora is responsible for conducting monetary policy and has a statutory responsibility to ensure price stability and keep unemployment low.

Welfare State

Delkora has long maintained an expansive and comprehensive welfare state that guarantees a minimum standard of living to all citizens. Key elements of this system include single-payer healthcare that is free at the point of use for all permanent residents, free public education from preschool through university, well-funded state pensions, and a universal basic income administered to all adult citizens that is calculated according to the cost of living for different areas of the country.

Trade

Delkora maintains a small trade surplus, with its main trading partners being the other Common Sphere countries. The economy is characterized by a high degree of technological innovation, contributing to highly-profitable export industries include automobiles, pharmaceuticals, renewable energy, and steel. Major import commodities include raw materials, foodstuffs, and textiles. Imports originating from outside the Common Sphere are subject to relatively high tariffs, with the exception of countries with which Delkora has negotiated bilateral trade agreements.