Just Capitalism. How economy can be put back on track?


America has crossed the threshold into the 21st century as the most prosperous and powerful nation on the planet. Gazing toward the vast frontier of the global economy, we see a rapidly changing landscape shaped by forces beyond the control of any individual or nation. Space Age technology, global finance, global markets and transnational corporations are impelling us toward an uncertain future.

 

We as a nation have benefited from modern technology. It has contributed to our economic success in the world. It has lengthened our life spans and shrunk to fractions of a second the transmission of a message or billions of dollars across the planet. The global economy has brought the American consumer a year-round cornucopia of goods from every corner of the world. Competitive forces continue to drive down the price of personal computers, video recorders, and cellular phone systems, putting unimaginably powerful tools of information and communication in the hands of the average citizen. Choice abounds.

But Americans have also seen harbingers of troubles to come: the disappearance of entire sectors of labor as robots, artificial intelligence, and advanced office machines enter the work place. Globalization has encouraged the flight of jobs and capital to lower-wage regions of the world. Blue-collar workers and middle management alike have become targets for corporate downsizing. Today, six Ph.D. computer scientists from India can be hired over the Internet for the price of a comparable American. Thousands of jobs have been lost to a computer chip. Even in the midst of our prosperity most of us feel powerless to control our own futures or unable to find meaning in our current condition.

There is an economic fault line running throughout America and the world which today’s economic gurus seem unable to explain or remedy: the widening wealth and income gap between a tiny rich elite and multitudes of poor in every country (including the United States), and between developed and developing nations. Surrounded by global communications, the global economy, and our global environment, we cannot help but feel the tremors inside and outside our borders. With the growing economic imbalances come bloody conflicts, widespread starvation, international crime and corruption, depletion of the planet’s non-replenishable resources, unconscionable destruction of the environment and systematic suppression of human potential and life-enhancing technology.

Seeing through the chaos of our rapidly changing world, one post-scarcity visionary of the 20th Century, lawyer-economist Louis Kelso, understood the power of technology either to liberate or dehumanize people. Popularly known as the inventor of the employee stock ownership plan (ESOP), Kelso observed that modern capital tools and their phenomenal power to “do more with less” have offered people an escape from scarcity to shared abundance.

As a lawyer Kelso also saw that the design of our “invisible” institutional environment and social tools determines the quality of people’s relationship to technology. Intangibles, such as our laws and financial systems, determine which people will be included or excluded from sharing of access to equal economic opportunity, power and capital incomes.

Access to capital ownership, asserted Kelso, is as fundamental a human right as the right to the fruits of one’s labor. Furthermore, Kelso argued, the democratization of capital credit is the “social key” to universalizing access to future ownership of productive wealth, so that every person, as an owner, could eventually gain income independence through the profits from one’s capital.

 

Kelso’s Economics of Ownership and Justice

At the heart of what Kelso called “binary economics” is a simple but revolutionary proposition. Kelso stated that people could legitimately create economic value through two (thus binary) factors of production:

  • Labor (which Kelso defined as all forms of economic work by people, including manual, intellectual, creative, and entrepreneurial work, and so-called “human capital”), and
  • Capital (defined by Kelso as anything non-human contributing the production of marketable goods and services, including tools, machines, land, structures, system improvements, and patents).

Capital, in Kelsonian terms, does not merely “enhance” labor’s ability to produce economic goods. (It wasn’t Bill Gates’ labor that accounted for the increase in his wealth in one year’s time from $50 billion to $90 billion; his capital would have kept producing even if Bill Gates were in a coma.) According to Kelso, capital (increasingly the source of economic growth) should increasingly become the source of added property incomes for every person.

Author: CCD

Editorial Team

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