In this brief
series we’ve been looking at the contradictions in the Keynesian system that,
regardless how plausible Keynes’s approach may sound and how hard Academia and
the politicians push it, it is still a recipe for disaster. With all due respect to Rep. Tom Snozzi’s
good intentions, what he proposes — creating jobs to rebuild infrastructure —
is not only not the best thing to do, but is pretty much the worst.
Perhaps the best
way to explain is to take each of the points we raised yesterday, and contrast
them with the Just Third Way take on the same issue. For a more comprehensive presentation of the
Just Third Way, of course, it would be good to pay a visit to the website of the Center for Economic and Social
Justice (CESJ).
·
The
purpose of production is job creation.
No. As we said yesterday, this
violates Adam Smith’s first principle of economics, “Consumption is the sole
end and purpose of all production.”
Producing for any reason other than consumption promotes consumerism,
gives greed a plausible excuse, and, because it separates production and consumption, is a primary cause of “the business cycle.”
·
The only
way ordinary people can gain income is to have a wage system job. No. The
solution to advancing technology displacing labor is not to create artificial “make-work”
jobs, but to make those people who own only labor into owners of capital as
well, supplementing and sometimes replacing labor income with capital income.
 |
| Not the best way to work. |
·
Human
labor is the sole factor of production; capital at best only enhances the
productivity of labor. No. In the Just Third Way, we recognize that
human labor is one factor of production and — because of its link to the human
person who is the whole reason for production — the more important factor in
human terms. Nevertheless, capital (land
and technology), the other factor of production, given advancing technology, is
more immediate in economic terms, and is responsible for the bulk of production
in an advanced economy. Thus, in the
Just Third Way, human labor is more important but less immediate, while capital
is more immediate but less important.
Labor and capital, however, whatever the proportion of their immediate,
“physical” contribution to production, are both productive, and productive in
the same way.
These bad
assumptions led to changes in some fundamental concepts that really are not
subject to change, no matter how badly people want or think they need them to
change:
·
Liberty/Freedom
of Association and Contract. No, the
State cannot unilaterally change the terms of any contract, much less all of
them at will. Rather, “liberty” is a
right inherent in each human being that empowers people to enter into fair
contracts for any lawful purpose (i.e.,
“create money”).
·
Private
Property. No, the State cannot
redefine or abolish private property as it sees fit or finds expedient. The right to be an owner — the right to
private property — is a natural right inherent in every human being. The rights of an owner (what someone may do
with what he or she owns) are socially determined with an eye to the common
good, but may never legitimately be defined in any way that nullifies the
underlying right to be an owner in the first place.
 |
| All money is a contract, and all contracts are money. |
·
Money. Money is not a general claim against the
wealth of society issued by the State.
Money is anything that can be accepted in settlement of a debt: “all things
transferred in commerce.” All money is a
contract consisting of offer, acceptance, and consideration . . .
“consideration” meaning something of value that is worth something, not
government debt that might one day be worth something. Allowing the State to issue money backed by its own debt (or directly, as a debt) again separates production and consumption, making it impossible for Say's Law to function.
·
Human
Personality. Contrary to the odd
idea that the State creates persons, i.e., confers rights, each and every human
being who exists has rights by nature, and is thus automatically a “natural
person.” The State may define the exercise
of rights, but does not grant them, and can only take them away for just cause
and after due process.
·
Justice. The principle of justice is not “to each
according to his or her needs.” That is
the principle of charity. The principle
of justice is “to each according to his or her inputs.”
·
Money
Creation. The ideal in the Just
Third Way is that everyone who consumes also produces, and everyone who
produces also consumes. There will
always be special cases, of course, but they should be the exception rather
than the rule. Properly understood,
money is how one person exchanges what he or she produces, for what others
produce, thereby evening out production and consumption. When some produce without consuming, or
consume without producing — as happens when the State issues money backed with
its own debt instead of the private sector issuing money backed with assets — the system is thrown out of balance.
It really does
make sense to get away from a system that relies on overlooking fundamental
contradictions to run, and go with something a little more rational — such as
what we plan on looking at tomorrow.
#30#
