Wednesday, November 3, 2010

Election Reflection

A curious fact came to light during our research on the development of money, credit, and banking theory, and its correlation to the "four pillars" of the Just Third Way. We haven't mentioned the four pillars in a posting for a while, so it might be useful to list them again. Besides, we're continually refining the language — not the basic principles expressed, just the way we say them — so it's good to go over them periodically in any event.

A limited economic role for the State. The State is not a supremely beneficent provider of all that is good. If it carries out the role for which it is designed and intended, the State produces no marketable good or service. It is a tool, nothing more — not a god, the representative of a god, or even the Supreme Owner of All It Surveys. Taxes are not an exercise of property on the part of the State, but a grant from the citizens to defray the legitimate costs of government.

Free and open markets within a strict juridical order as the best way to determine just wages, just prices, and just profits. Liberty — freedom of association — is a natural right. The most common way in which we exercise this right is by entering into contracts with others, thereby conveying private property rights freely among individuals and groups. The State by law, and society as a whole by custom and tradition may regulate the manner in which people associate, and make a prudential determination whether one thing or another should not be considered legal matter for contracts (i.e., a legitimate marketable good or service), but this prudence should not undermine the right of free association itself, e.g., by limiting who may or may not enter into certain types of contracts after attaining majority without just cause or due process. From the Just Third Way perspective, the most common violation of freedom of association is lack of democratic access to means of acquiring and possessing private property in the means of production: the money and credit system.

Restoration of the rights of private property, especially in corporate equity. It's the result of backwards reasoning, but the dogmatic belief that only existing accumulations of savings can be used to finance new capital formation has done more to erode, even abolish the ability to exercise the rights of private property, especially in corporate equity, than any other cause. Majority owners of corporations override the rights of minority owners as a matter of course, even as a matter of public policy. This has become so egregious that, in many people's eyes, if you do not own 51% of something, you cannot be said to own it at all. On the contrary. Private property being a natural right, and (as Louis Kelso pointed out, in common with every lawyer in history worth his or her salt) "property" consisting of control and the right to receive the income generated by what you own, an owner, even the smallest minority owner, has the right to receive all income attributable to his or her pro rata share of ownership.

Widespread direct ownership of the means of production. This is what all three mainstream schools of economics omit — and the minor schools assume it can't be done without in some way redefining what it means to "own." This is because virtually everyone assumes as a given that the only way to finance new capital formation is to cut consumption, accumulate money savings, and invest. On the contrary, as Dr. Harold Moulton proved in his 1935 treatise, The Formation of Capital, financing for new capital formation can be obtained through the expansion of commercial bank credit. Louis Kelso and Mortimer Adler added that all new capital financed in this way should be broadly and directly owned by as many people as possible. Thus, it is entire feasible to finance capital acquisition by those who currently lack savings without confiscation or redistribution of existing wealth.

Oh, that's right. You wanted the curious fact.

Now, we stress the fact that this might be a coincidence, with no actual correlation with reality. It just seems curious, that's all. That is, it seems as if the more concentrated ownership becomes, the more the agitation increases to extend the voting franchise . . . and the less effective the vote becomes. Case in point: it wasn't until the working classes in England were almost completely stripped of small ownership that electoral reform was accomplished and the vote extended to more people. (1832, 1867, and 1884). As concentration of ownership accelerated, so did agitation for female suffrage. Paradoxically, the closer suffrage came to being universal, the less it meant.

Is this because only an elite has the capacity to run things or vote meaningfully? We would contend not. Rather, as control over money and credit became concentrated more and more in the State, the State took over more and more control over people's lives. Benefits tend to accrue not to those who work hard, but to those who vote in people who will distribute more and greater benefits. Gradually the attitude has taken over that the State can do anything, and the more powerless you feel, the more you tend to rely on the State to provide for your needs.

The only solution, as far as we can see, is Capital Homesteading. Voting is pretty much meaningless without the property/power to back it up. Paradoxically, the more "power" people get from State-mandated or supported wage and welfare benefits, the more dependent they become — and the less real power they have. That it, the more people rely on the State, the less they rely on themselves, and the more dependent they become.

Thus we can see the obvious wisdom in the words of William Cobbett a relatively short time ago:

Freedom is not an empty sound; it is not an abstract idea; it is not a thing that nobody can feel. It means, — and it means nothing else, — the full and quiet enjoyment of your own property. If you have not this, if this be not well secured to you, you may call yourself what you will, but you are a slave. A History of the Protestant Reformation in England and Ireland, 1827, §456
Maybe Capital Homesteading by 2012 isn't such a bad or crazy idea after all.

#30#

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