Monday, August 30, 2010

CESJ's Orientation in Brief

CESJ is a non-profit think tank organized under IRC 501(c)(3) to study the principles and application of the social doctrine of Pius XI as analyzed by Father William Ferree, S.M., Ph.D., "America's greatest social philosopher," and the principles of economic justice developed by Mortimer J. Adler and Louis O. Kelso. Based on a classic Aristotelian/Thomist natural law orientation, CESJ posits personalism — a positioning of the human person who, in the Judeo-Christian belief is made in God's image and likeness, at the center of things — as being the overriding philosophy, the Just Third Way as "political personalism," and "Capital Homesteading" as a possible application of "economic personalism."

The Just Third Way consists of the "Four Pillars of an Economically Just Society": 1) A limited economic role for the State. 2) Free and open markets as the best means of determining just wages, just prices, and just profits. 3) Restoration of the rights of private property, particularly in corporate equity, and (the "fatal omission" from mainstream economics and finance), 4) Widespread direct ownership of the means of production.

Economic activity is necessarily focused on the human person. For this reason CESJ concentrates on integrating the precepts of the natural moral law into the financial and economic system — the primary means by which humanity satisfies its material wants and needs, thereby supporting life — by tying people directly to the means of production, both labor and capital, through private property and exercise of liberty (free association). The three guiding principles of economic justice are 1) Distribution, 2) Participation, and 3) Harmony (formerly "Limitation").

As capital replaces labor as the predominant factor of production, it becomes essential that people acquire and possess capital so that they have the power to acquire and develop virtue and interact as full participants in the common good. Individual and social justice therefore both demand that artificial barriers to full participation in the common good be eliminated so that each person has an equal opportunity to become an owner of both labor and capital through access to capital credit, a uniquely "social good."

The most significant barrier to widespread direct ownership of capital is the dogmatic belief that only existing accumulations of savings can be used to finance new capital formation. On the contrary — the natural right of private property as applied in Say's Law of Markets and the real bills doctrine makes it clear that "money" is simply a symbol, a "derivative." Money is the means for conveying a private property right in the present value of existing and future marketable goods and services.

Because everyone has the natural right to participate in production by means of his or her labor and capital, everyone has the right to participate in the creation of "money" for productive purposes. Modern commercial banking backed up with a properly designed and implemented central banking system has the potential to open up capital ownership to all without the necessity of first saving, thereby (as Kelso and Adler phrased it in the subtitle of their second book, The New Capitalists), freeing economic growth from the slavery of [past] savings, particularly when the universal demand for collateral is replaced with capital credit insurance and reinsurance.

A program of expanded capital ownership called "Capital Homesteading," financed with "pure credit" has the potential to reorient the global economy to closer conformity with the precepts of the natural moral law and respect for human dignity. As Dr. Harold G. Moulton, first president of the Brookings Institution, explained in his landmark monograph The Formation of Capital (published in 1935 to present an alternative to the Keynesian New Deal), new money can be created for productive capital investment through expansion of bank credit by borrowers discounting eligible paper at commercial banks and rediscounting the paper at the Federal Reserve.

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2 comments:

Joshua said...

I don't think it is necessary to restrict your statement to Judeo-Christian. I don't see any reason why Buddhist, Hindu, or Chinese philosophers would not support binary economics for roughly the same reasons.

Michael D. Greaney said...

I don't see any reason either. Specifying the Judeo-Christian tradition was not meant to imply exclusivity, but one example. The only problem is that I have some familiarity with the Judeo-Christian paradigm and can at least speak from within it, while I only have secondhand knowledge of those other systems. As I pointed out in my book, "In Defense of Human Dignity," I necessarily take a Christian viewpoint, but invite others to contribute an analysis from their particular faith or philosophical traditions. (At the very least, it would mean that I'm not having to do ALL the writing.)