Tuesday, May 17, 2011

Finding the Right Negatives, Part IX: Escape from the Wage System

Guidelines for constructing this model for peace in the Middle East involve a radical departure from traditional approaches to industrial development. Neither capitalism nor socialism is adequate for building a successful economy for the Abraham Federation. Neither combines maximum justice with maximum efficiency. Both ignore the need for building economic sovereignty into each citizen. Both leave ownership and control of modern technology, natural resources and business enterprises to a ruling few.

(See writings of Louis O. Kelso, especially the principles of economic justice he developed with his co-author, the philosopher Mortimer J. Adler in chapter 5 of The Capitalist Manifesto, Random House, 1958. This book and other writings of Kelso can be downloaded free on the web site of the Kelso Institute for the Study of Economic Systems at www.kelsoinstitute.org. Other writings on Kelso's binary system of economics and his classic critique of Karl Marx's Das Kapital are available at the web site of the Center for Economic and Social Justice at www.cesj.org. Kelso, a lawyer-investment banker as well as a brilliant economic theorist, was also the inventor of practical ownership-broadening innovations such as the employee stock ownership plan or "ESOP." For an excellent textbook on Kelso's economic theory, see Ashford, Robert and Shakespeare, Rodney, Binary Economics: The New Paradigm, University Press of America, 1999.)

To avoid these dangers, the Abraham Federation would neither own property nor permit future monopolies over the ownership of the means of production. This principle alone would make "sovereignty" in the Abraham Federation uniquely distinct from any nation in history.

The Abraham Federation would recognize that sovereignty connotes power and only human beings, not abstract "collectives", can exercise power. The major issue to be addressed in a democratic world is which people will exercise what kinds of power, either directly, jointly in association with others, or by delegation.

On August 3, 1987 President Ronald Reagan received the report of the bipartisan Presidential Task Force on Project Economic Justice, which, among other recommendations, advocated expanded capital ownership as a new cornerstone for the future of US economic policy, domestically and globally. President Reagan then declared, "I've long believed one of the mainsprings of our own liberty has been the widespread ownership of property among our people and the expectation that anyone's child, even from the humblest of families, could grow up to own a business or corporation." Citing President Lincoln's Homestead Act as the historic precedent for the economic development proposals of Project Economic Justice, President Reagan observed, "A mightier guarantee of freedom is difficult to imagine."

In a society where all power is supposed to rest with the people, economic sovereignty must start at the individual and family level. Since, in the words of Daniel Webster, "power follows property," if political power is to reside in the people, property must be spread broadly. The best antidote to concentrated power and monopolies is to empower all citizens through decentralized ownership of all of society's enterprises. Only then can those who run government and other social institutions be held accountable to the people. Such an economically classless society would be comprised of highly autonomous, interdependent property owners, capable of associating with other "sovereign" individuals for their mutual interests. Genuine economic democratization serves as the ultimate check on the potential abuse of inherently concentrated state power, and on abuses by the majority against highly vulnerable minority groups and individuals.

What is common to all of today's economies are legal, financial and other institutional barriers that prevent the average worker and his family from escaping from the status of a worker-for-hire and becoming a capital owner. If he is lucky, a worker can get a job under a feudalistic "wage system." If he's not, he must turn to charity or welfare, an institutional form of charity. In any event, most workers live from hand-to-mouth. The non-owning worker is powerless and defenseless against advancing technology and those who control his jobs and income levels. His economic security remains vulnerable to labor-saving technology or workers in the global labor market who are willing to do the same work at lower wages.

Having no ownership stake in modern wealth-producing assets, most workers never gain access to the economic independence and entrepreneurial opportunities vital to a dynamic free market economy. Under such an exclusionary market system, the few are free to own and the many are free to work for them or go hungry.

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