Monday, August 22, 2011


Living within the Washington, DC Beltway, one tends to forget that there is a real world out there. The idea permeates these environs that The Government can do anything, solve any problem, so on, so forth. The humor of Ronald Reagan, another Midwestern boy, falls flat among people who tend to deify themselves even more than do the slavish mobs that lionize them in this hothouse atmosphere.

As a case in point, there is the unquestioned faith in the disproved "Currency Principle," the bane of "the dismal science" (and the reason economics is called "the dismal science") since congealed into economic orthodoxy with the widespread acceptance of Malthusian theory, and the enshrining of past savings as the sole determinant of the future. As regular readers of this blog are aware, the Reverend Thomas Malthus's projections about food production and other marketable goods and services were predicated on the disproved assumption that economic development can only be financed by cutting consumption and accumulating money savings, rather than monetizing the present value of future marketable goods and services. If you go back and re-read some of our postings over the years, you'll realize that accepting the "slavery of past savings" demonstrates a complete misunderstanding of money, credit, banking, finance, and the natural right of private property — which inevitably leads to redefining life and liberty (freedom of association/contract), thereby providing a solid foundation for the Culture of Death.

Let's face facts. Unless the United States — and the world — can get its economic house in order, we're looking at a major crackup very soon. (Yeah, I know — you thought it had already happened. Just wait.) You can't keep dividing up a shrinking pie. Keynesian delusions to the contrary, you can't consume without producing. Neither can you continue to redistribute what some produce for the benefit of non-producers. It leads to demands for population control and a few other things, like war.

Education, however, is only one (albeit extremely important) aspect of the Just Third Way. The main emphasis is on promoting structural change in the system, such as the Capital Homestead Act, that would empower every child, woman, and man with (as George Mason put it in the Virginia Declaration of Rights) the means of acquiring and possessing private property. The Founding Fathers and Abraham Lincoln's 1862 Homestead Act concentrated on land. There's nothing wrong with that, but Capital Homesteading extends the concept to all forms of productive assets, not just land. The land frontier was, after all, limited, and was effectively closed by 1893 when the first Great Depression hit.

We believe that Frederick Jackson Turner was right in the thesis of the paper he delivered at the Columbian Exposition in Chicago in 1893. The end of "free" land in America means the eventual end of democracy. That is, unless you can replace the limited land frontier with the effectively unlimited commercial and industrial frontier, and ensure that everybody has a chance to own a meaningful capital stake and derive direct benefits therefrom.

Nor should this be limited to America. Capital Homesteading must be implemented in every country in the world if we want to avoid the sort of economic and political antics we see increasing on every side. This was the subject of CESJ's two papal audiences, and the seminar for heads of religious orders we gave at the Vatican on the role of private property in economic and social development.

The moral rebirth of society is essential — but as long as people are bound by the slavery of past savings, and kept propertyless by disproved assumptions about money, credit, banking, and finance, they will be continue to be trapped in what Pope Leo XIII described in Rerum Novarum (1891) as "a yoke little better than that of slavery itself." They will be subject to the whims of their masters, many (if not all) of which have an agenda at odds with the Culture of Life. If our political and academic leaders say you must sacrifice others to obtain a higher wage and benefits package, increased welfare payments or a secure government job, then so be it — as long as you insist on operating within the current paradigm.

The answer to getting out of the current paradigm is to end reliance on past savings as the only source of financing for new capital formation, and to use advanced techniques of finance to make as many people as possible owners of capital as well as labor. Since, as Daniel Webster observed (and Benjamin Watkins Leigh concurred), "power naturally and necessarily follows property," this is the best way to overcome the Culture of Death.

Dr. Harold G. Moulton, president of the Brookings Institution from 1916 to 1952, showed how new capital could be financed without first requiring cuts in consumption in his alternative to the Keynesian New Deal, The Formation of Capital (1935). The past savings assumption, as Keynes admitted in The Economic Consequences of the Peace (1919), restricts ownership of most new capital to the already wealthy, and keeps the rest of us poor or dependent on a private elite or the State.

Louis Kelso and Mortimer Adler refined Moulton's work in their two collaborations, The Capitalist Manifesto (1958) and The New Capitalists (1961) by adding that all new capital financed without reliance on existing accumulations of savings — even for collateral (which can be replaced with capital credit insurance and reinsurance) — should be broadly owned. CESJ's Capital Homesteading proposal takes the process even further by presenting a package of reforms that has the potential, as R. Buckminster Fuller put it, "to make the world work for 100% of humanity in the shortest possible time through spontaneous cooperation and without ecological offense or the disadvantage of anyone."

What can you do?

First, go to the CESJ website and read. It's easy — and it's free. Many of the books in the bookstore are also available at no cost in .pdf.

Second, support organizations like CESJ — we're a 501(c)(3), so it's tax deductible. That's a little ironic for an organization that advocates sweeping tax reform, including ending virtually all personal deductions — and getting real about the personal exemption, raising it to, say, $30,000 for a non-dependent and $20,000 for a dependent. We're being practical, though. We have to work within the existing system until we can change it, and, if the existing system says it's tax deductible, we're going to take advantage of it.

Third, join the Coalition for Capital Homesteading. Don't cost nothin'.

Fourth, start opening doors to prime movers. Capital Homesteading is a great idea . . . but not if the people who will have to lead the effort in Congress don't know about it. Help set up a meeting for Norman Kurland on Capitol Hill with your Representative or Senators. Most legislators don't take e-mails from anyone except constituents, so you, not we, have to do it.

Fifth, if the spirit moves you, search out opportunities to spread out ownership of capital within the current system. True, there aren't many, and they usually rely on past savings (although we've worked out one way around that, if the conditions are right), but they do exist. Check out the website for Equity Expansion International, Inc.

Sixth, volunteer for CESJ.

That's all I can think of at the moment. Doubtless I'll think of more when it comes down to the wire for the news items that get posted every Friday on this blog. Especially if someone sends in an item or two about efforts to advance the Just Third Way and the goal of Capital Homesteading by 2012.


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