Wednesday, May 18, 2011

Finding the Right Negatives, Part X: Policy Pillars of a Free and Just Market Economy

The Abraham Federation would offer an economic and legal system based on (1) private property in the means of production, (2) free and competitive markets for determining just prices, just wages and just profits, and (3) a well-defined and limited economic role of the state. But the constitution and laws of the new nation would also be structured to (4) guarantee each citizen with an equal opportunity to become an owner of productive assets.

Each of these four basic pillars of a genuinely "free and just market system" is essential and interdependent for creating an environment for sustainable and balanced growth. They build moral values into the economic environment, without which free markets become unjust and unfree markets. Take one pillar away and the system will become unbalanced, vulnerable to corruption, monopolies and special privileges, and wasteful of human potential. By integrating these four policy objectives, the tax system and the money-creating powers of the state would be restructured so that every citizen has equal access to "social tools" (like a simple and just tax system ("Beyond ESOP: Steps Toward Tax Justice", The Tax Executive, April and July 1977. Available at www.cesj.org.), a stable asset-backed currency and an ownership-spreading productive credit system — "The Federal Reserve Discount Window", The Journal of Employee Ownership Law and Finance, National Center for Employee Ownership, Winter 1998, pp. 131-155) to acquire and accumulate enough productive assets to meet his or her living needs upon retirement.

In a national ownership-sharing program, citizens would become co-owners of land. In addition, they would accumulate and receive dividends and property incomes from direct equity ownership in new technologies, agribusinesses, industries, and rentable space and infrastructure built upon the land.

Full details of the economic program outlined in the Abraham Federation strategy are given in the report, Capital Homesteading for Every Citizen, prepared for the William H. Donner Foundation by the Center for Economic and Social Justice in December 2002. Free copies of the report (in PDF format) are available at http://www.cesj.org/homestead/donnersocialsecurity.pdf. Other writings on Capital Homesteading are also available at www.cesj.org. For a detailed model "parallel legal system" for broadening capital ownership, see A Proposed Law to Encourage the Democratization of Future Capital Ownership for Citizens of Costa Rica, prepared for the Costa Rican Minister of Planning under a USAID contract, July 17, 1989, available at www.cesj.org.

Moreover, by the systematic spreading and sharing of ownership power, one of the basic conditions for any future Holocausts and breeding grounds for terrorists alienation of large numbers of workers would gradually disappear.

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