More and more the evidence mounts, not that the recession is ending, but that policymakers and academics have no real understanding of money, credit, and banking. They appear to be adhering irrevocably to the unquestioned dogma that new capital formation cannot be financed except by using existing accumulations of savings. This is an assumption proved absolutely false by Dr. Harold G. Moulton in his 1935 monograph, The Formation of Capital.
Restricting the financing of new capital formation to existing accumulations of savings means that you need a very small, very rich elite. The rich in this scenario are the only ones who can afford to save, then invest their unconsumed income in new capital. This in turn presumably creates jobs for the rest of us . . . those of us who are not replaced by advancing technology or cheaper foreign labor, that is. From the point of view of efficiency (using the word as Walter Bagehot used it in his 1867 apology for plutocracy, The English Constitution), Keynes believed that the State should control the rate of return on investment and the rate of capital formation (i.e., "own").
This is because the State as the State doesn't consume in the same sense that a human being does. With effective State ownership, all income can be directed to political, instead of economic ends — that is, in meeting the needs of the State, not in satisfying human wants and needs. Everyone becomes a dependent of the government, or, as a 1925 U.S. Supreme Court decision expressed it in Pierce v. Society of Sisters, "mere creatures of the State."
We can see why Kelso and Adler subtitled their second book, "A Proposal to Free Economic Growth from the Slavery of Savings." Nevertheless, the Just Third Way continues to inch forward:
• The big news this week was the 305th consecutive monthly meeting of CESJ. A number of important items were discussed, among them the East St. Louis project, the book by Dr. Muhiuddin Khan Alamgir (Notes from a Prison: Bangladesh), and progress on various other publication projects.
• Dr. Alamgir was released from prison a short while back, where he was held for 22 months on false charges (effectively a political prisoner), and has been elected to the Bangladesh parliament. He will be visiting the United States in September and wants to meet with CESJ and present the situation in Bangladesh. Dr. Alamgir is a good friend of Father William Christensen, S.M., of the Institute for Integrated Rural Development (IIRD) in Bangladesh.
• Due to the economic downturn, the IIRD has experienced a serious drop in contributions, in the neighborhood of 54% from prior years. They report that they are stretched to the limit. Please visit their website and consider what you might be able to do to help.
• At this critical point in history, it is important that people also come together and brainstorm about how to get the ideas of CESJ and the Global Justice Movement out into the public eye. If you have an initiative you'd like to propose and carry through to completion, please go to the CESJ website and let us know what you're doing/want to do. We want to get students involved, especially in East St. Louis. Norman G. Kurland has been particularly effective on radio interviews, especially over the telephone.
• As of this morning, we have had visitors from 34 different countries and 41 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the UK, Brunei, Canada and Venezuela. People in Israel, Indonesia, Venezuela, Brazil, Argentina and spent the most average time on the blog. The most popular posting by far continues to be "What Caused the Economic Crisis," followed by the Keynesian paradox of thrift, and the letter to the Wall Street Journal on Caritas in Veritate, the news reports, the response to Dr. Michael Novak, and "What You Can Do to Address the Economic Crisis. With respect to the amount of time spent reading, the postings on the usury series, the "Reign of the British Currency School, and the Cobbett series appear to be the most popular.
Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we'll see that it gets into the next "issue." If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated anyway, so we'll see it before it goes up.
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