One serious danger sign popped up today in the Wall Street Journal for anyone fortunate enough to have read Dr. Harold G. Moulton's 1935 classic The Formation of Capital. There were at least two articles complaining about the imposition of regulations that will make it harder for consumers to borrow beyond their means and so "stimulate" the economy. There was also a laudatory article reporting that some manufacturing companies and service industries were adding new capital in anticipation of an upswing in consumer demand. Two problems are immediately evident
One, of course, lending consumers even more money that they can't repay will do nothing to get us out of the hole we're in. Two, Moulton clearly proved that consumer demand does not increase in response to capital formation, but that capital formation increases in response to consumer demand. There must be a concurrent increase in both consumption and investment in order for economic growth to occur and be in any way sustainable. As it is, additional new capital formation at this time, without broadening the ownership of it to increase effective demand, is simply wasting precious resources to create excess capacity.
Surprisingly, America's latest economic bogeyman, China, seems to be doing more in that area than the United States — and people wonder at the trillions of dollars we owe to China:
• Corey Rosen of the National Center for Employee Ownership reports that Huawei, a global provider of telecommunications networks in China, with 95,000 workers, is now the second largest worker-owned company in the world. Ownership is restricted to the 61,000 Chinese employees, as the company says that legal issues make it difficult to allow ownership by non-Chinese. Corey states that worker ownership is quite common in China, although exact statistics are difficult to obtain.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.
• We recently received some unsolicited comments regarding the basis of the natural moral law used by the Just Third Way. Inevitably, questioners seem to reject the basis used by Aristotle, Aquinas, Maimonides, and Ibn Khaldûn (and Kelso and Adler), and — in consequence — fail to realize the significance of Aquinas' correction of Aristotle, and thus Pius XI's breakthrough in moral philosophy as analyzed by William Ferree. For the record, then, we use the "Intellect" (Nature) as the basis of the natural law, not "Will" (Revelation or personal opinion). It is possible to understand the economic justice principles of Binary Economics without the Thomist refinements of Aristotelian philosophy and natural law theory. We cannot, however, understand the social justice principles of the Just Third Way without Aquinas and Pius XI — or Ferree. Before offering a critique of either one, then, it would be well for prospective critics to read Chapter 5 of The Capitalist Manifesto and Introduction to Social Justice. For those interested in the basic principles of the natural moral law, a good place to start is Dr. Heinrich Rommen's book on the subject, The Natural Law, and from there explore the resources offered by the Center for the Study of the Great Ideas. All but Dr. Rommen's book are free, and even that should be available in many libraries.
• Speaking of the Center for the Study of the Great Ideas, we received an e-mail from Dr. Max Weismann, president of the CSGI, with some very positive comments responding to a statement by Norman Kurland that the war in Afghanistan — or anywhere else — is, at heart, a "war of ideas," and the best "weapons" to use are good ideas strong enough to force out and "conquer" the bad ideas.
• This past week Norman Kurland attended a seminar at the Atlas Foundation. Also in attendance was Dr. Norman Bailey, friend of CESJ and former chief economic advisor to the National Security Council under President Reagan. Norm (K) made a number of good contacts, and reinforced the addition of lowering barriers to expanded capital ownership to the traditional "Libertarian Triad" of a limited economic role for the State, free and open markets as the best determinant of just wages, just prices, and just profits, and restoration of the rights of private property.
• Norm's attendance at the Atlas function was arranged by Joe Recinos, who has returned briefly to this area following an extended business trip in Central America. Joe plans on another trip south very soon, and has committed himself to reconnecting with the family of the late Señor Alberto Martén Chavarría, renowned as the founder of Solidarism in Costa Rica, and who expressed support for Binary Economics and the principles of the Just Third Way.
• Norm also had a meeting this week with State Representative Anastasia Pittman of Oklahoma City, who brought Norm together with leaders from Native American and African American groups for a lively discussion on general Just Third Way principles and applications.
• Michael D. Greaney attended a function at his church, and took along some flyers publicizing current and future CESJ books. While the announcer forgot to mention the fact that the material was available, a number of people picked up the flyers, and two copies of Michael's book, In Defense of Human Dignity (2008) were sold. Please let us know if you would like to receive the flyers in .pdf to print out and distribute, and we can send them to you by e-mail.
• As of this morning, we have had visitors from 47 different countries and 42 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, Brazil, Poland and Australia. People in Egypt, Argentina, Venezuela, the United States, and Poland spent the most average time on the blog. The most popular posting is still the piece on "Le Armée Catholique et Royale" from the "Out of the Depths" series on French financial experiments. This is followed by the weekly "News from the Network," the "Prologue" from the "Out of the Depths" series, the "McChrystal Mania" piece, and the "Production is the Key" posting from the "Out of the Depths" series.