Early in the 20th century, Judge Peter S. Grosscup of the United States Circuit Court of Appeals, wrote a series of articles highlighting the threat of what he saw as the growing economic disenfranchisement of the average American. As one of Teddy Roosevelt's "Trust Busters," Judge Grosscup was well aware of the dangers that threatened the country, ultimately the world, from monopoly control over the means of production, which means, in the end, control over the means by which people sustain their lives and liberties.
Judge Grosscup advocated "peoplizing" the means of production, possibly by instituting federally-chartered corporations with the Congress providing oversight instead of the different state governments. Widespread ownership would be mandatory in order to stop the flow of investment from ownership of the means of production, to ownership of savings deposited in financial institutions and used by others to finance increasing concentrations of ownership of the means of production.
Unfortunately, beyond the general recommendation, Judge Grosscup had no further recommendations to make. This was prior to the establishment of the Federal Reserve System that (consistent with the "Real Bills" doctrine) would have the power to finance capital formation without first requiring people to put up non-existent savings. There was no practicable means, given the necessity of maintaining the rule of law and respect for the natural rights of mankind, for opening up democratic access to the means of financing acquisition and development of the means of production.
In 1958, however, Louis O. Kelso and Mortimer J. Adler co-authored a book with the misleading title, The Capitalist Manifesto. They followed this up in 1961 with The New Capitalists, another somewhat misleading title. The importance of the second book is not described in its main title, however, but in its subtitle: "A Proposal to Free Economic Growth from the Slavery of Savings." As described in the two books, it is not necessary to confiscate and redistribute wealth belonging to others in order for ordinary people to gain an adequate ownership stake in the means of production. By using the money creation powers of the Federal Reserve, it is possible to extend loans for financially feasible projects so that "the rest of us" could begin gaining income from ownership that would supplement and, eventually, replace income realized from selling labor.
Kelso and Adler's work is most familiar in the form of the Employee Stock Ownership Plan, or "ESOP." Their thought, however, extends far beyond this innovative, yet somewhat limited vehicle. The Center for Economic and Social Justice, "CESJ," has developed a proposal called "Capital Homesteading" that would open up the means to acquire and possess private property in the means of production to everyone.
The Capital Homestead Act is a comprehensive national economic strategy for empowering every American citizen, including the poorest of the poor, with the means to acquire, control and enjoy the fruits of productive corporate assets.
This long-range agenda involves major restructuring of our tax system and our Federal Reserve policies to lift unjust artificial barriers to more equitable distribution of future corporate capital and faster growth rates of private sector investment. It would shift primary national income maintenance policies from inflationary wage and unproductive income redistribution expedients to market-based ownership sharing and dividend incomes.
The Capital Homestead Act's central focus is the democratization of capital (productive) credit. By universalizing citizen access to direct capital ownership through access to interest-free productive credit, it would close the power and opportunity gap between today's haves and have-nots, without taking away property from today's owners.
The Capital Homestead Act is designed to:
1) Generate millions of new private sector jobs by lifting ownership-concentrating Federal Reserve credit barriers in order to accelerate private sector growth linked to expanded ownership opportunities, at a zero rate of inflation.
2) Radically overhaul and simplify the Federal tax system to eliminate budget deficits and ownership-concentrating tax barriers through a single rate tax on all individual incomes from all sources above basic subsistence levels. Its tax reforms would:
a) eliminate payroll taxes on working Americans and their employers;
b) integrate corporate and personal income taxes; and
c) exempt from taxation the basic incomes of all citizens up to a level that allows them to meet their own subsistence needs and living expenses, while providing "safety net" vouchers for the poor.
With the financial crises that seem to erupt every time the administration announces yet another glimpse of recovery, it might be time to take a look at something that might actually work, rather than continue to print money and sell equity that is spent for obligations incurred in the past instead of invested in the future.