In the
previous posting on this subject, we looked at the principles of economic
justice, 1) Participation, 2) Distribution, and 3) Social Justice. These, we believe, are the essential building
blocks of an economically just society.
Principles by
themselves, however, are not very useful.
They must be applied in order to become meaningful and useful. That is why an important part of the Just
Third Way are the guidelines for implementing the principles of economic
justice, the four pillars of a just market economy.
The Four Pillars of a Just Market Economy” of binary
economics and the Just Third Way are based on the same respect for human
dignity that lies at the heart of the natural law three principles of economic
justice. Being based on natural law principles, binary economics recognizes a
natural synergy, as opposed to an unavoidable trade-off, between economic
justice and efficiency within a global free
marketplace.
Rejecting laissez-faire assumptions and Keynesian
prescriptions, binary economics holds that a truly free and just global market
requires:
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| Leo XIII: "Man precedes the State" |
·
A limited economic
role for the State: “Man precedes the State,
and possesses, prior to the formation of any State, the right of providing for
the substance of his body.” (Rerum
Novarum, § 7.)
·
Free, open, and non-monopolistic markets within an understandable and fair system of laws as the most objective
and democratic means for determining just prices, just wages and just profits
(the residual after all goods or services are sold). “Let the working man and
the employer make free agreements, and in particular let them agree freely as
to the wages; nevertheless, there underlies a dictate of natural justice more imperious
and ancient than any bargain between man and man.” (Ibid., § 45.)
 |
| Kelso: "Property is the right of control." |
·
Restoration of private property, especially in corporate equity and other forms of business
organization. “Property” is not
the thing owned, but the natural, inalienable right to be an owner (i.e., “access” — the generic right of
dominion), and the socially determined and limited rights of ownership (i.e.,
“use” — the universal destination of all goods). The rights
of property include the enjoyment of the fruits or profits
of what is owned. As Kelso put it, “Property in everyday life, is the right of control”
(Louis O. Kelso, “Karl Marx: The Almost Capitalist,” American Bar Association Journal, March 1957; Belloc, An Essay on the Restoration of Property,
op. cit., 16-17. Cf. Rev. Matthew Habiger,
O.S.B., Ph.D., Papal Teachings on Private
Property, 1891-1981. Lanham, Maryland: University Press of America, 1990.) as
well as enjoyment of the income.
 |
| Yes, Pius XI noted that power follows property. |
As all the popes from Leo XIII through Francis have asserted,
people should control what is owned and enjoy the income it generates. They must own, not be owned. “A
working man’s little estate . . . should be as completely at his full disposal (In
context, “disposal” refers to control and enjoyment of the income.) as are the
wages he receives for his labor. But it
is precisely in such power of disposal that ownership obtains, whether the property consist of land or chattels.” (Rerum Novarum, § 5.)
· Widespread capital ownership, individually or in
free association with others. As Leo XIII said, “The law . . .
should favor ownership, and its policy should be to
induce as many as possible of the people to become owners.” (Ibid., § 46.)
Consistent with these “pillars,” it is possible to finance
expanded capital ownership for the currently propertyless by using
commercial bank loans, backed by future profits tied to future increases in
production, instead of using past reductions in consumption. This is available today for 100% worker-owned
companies under current U.S. law for Employee Stock Ownership Plans (ESOPs).
Social justice would promote laws to extend access to
bank-financed capital credit to all citizens as a fundamental human
right, like the right to vote. Thus,
everyone would be able to purchase capital by promising to pay for the capital once
it becomes profitable — assuming that the promise is good, and the capital
does, in fact, make a profit. To secure
the lender against the risk of loss if the capital is not profitable, the
borrower should also have collateral: other wealth to make good on the promise
or capital credit insurance and reinsurance.
To implement these reforms and restructure economic
institutions as structures of virtue rather than injustice,
CESJ’s proposed Capital Homestead Act would include commercial and industrial, as
well as agricultural, capital. The Act would be a green growth, equal
economic opportunity program that would shift an economy from reliance on
government to provide basic living, health, retirement, and other needs, to
economic empowerment of all citizens through new jobs and universal access to
capital ownership stakes in growing companies and new
technologies.
A Capital Homestead, Economic Democracy, or Economic Empowerment
Act — whatever name best suits the situation — would open up new opportunities
and sources for financing faster rates of non-inflationary private sector
growth. Capital Homesteading monetary
and tax reforms
offer a sustainable way to finance such national, regional, state or
provincial, and local needs as infrastructure, health, education, basic
research, and security, as well as a social safety net.
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