As we saw in the
previous posting on this subject, the Great Depression of the 1930s
revealed serious problems in the U.S. economy, problems that were not really
addressed by the program of John Maynard Keynes, which really only made matters
much worse than they needed to have been.
Louis Kelso
invented the Employee Stock Ownership Plan (ESOP) to address these problems,
but the ESOP was itself an application of the principles Kelso had worked out
when he observed what was going on during the Great Depression. This was enacted into law in the 1970s.
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| Louis O. Kelso |
Contrary to
popular belief, adoption of the ESOP legislation was not an end in itself, but a
step along the way toward the goal of making every child, woman, and man on
Earth a capital owner. Neither was it a
beginning, but the result of years of effort on the part of Kelso and others to
make the “Expanded Ownership Revolution” a reality.
Nor did the initial
enabling legislation create the ESOP.
Kelso had installed the first ESOP in 1956 for the workers of Peninsula
Newspapers in Monterrey, California.
Several hundred other ESOPs had followed. What surprises non-Americans — and today,
many Americans — is that in the United States one of the last remaining
vestiges of the sovereignty of the human person under God is the fact that anyone
can do anything he or she likes as long as it is not illegal.
Integral to the Expanded
Ownership Revolution are the three principles of economic justice explained in The Capitalist Manifesto,(Louis O. Kelso
and Mortimer J. Adler, The Capitalist
Manifesto. New York: Random House,
1958.) the first book Kelso co-authored in 1958 with the Aristotelian “Great
Books” philosopher, Mortimer Jerome Adler (1902-2001). Their second book, The New Capitalists, (Louis O. Kelso and Mortimer J. Adler, The New Capitalists. New York: Random House, 1961.) had the provocative
subtitle, “A Proposal to Free Economic Growth from the Slavery of Savings.”
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| Mortimer J. Adler |
Kelso became
acquainted with Adler while taking one of Adler’s “Great Books” courses. Later, at a social event, Adler made a
comment that Kelso claimed was inconsistent with “the theory of capitalism.” Adler, as any good teacher should,
immediately challenged Kelso with the declaration, “There is no ‘theory of
capitalism’.”
Not one to hide
his light under a bushel, Kelso instantly shot back his response. “Yes, there is,” he retorted, “and I’ve
written it!”
Of course, what
Kelso defined as “capitalism” and that found its way into the title of both
books he co-authored with Adler was not what Chesterton and Belloc — or even
Karl Marx — would have called by that term.
To Kelso and Adler, a capitalist economy is one in which the non-human
factors of production predominate, displacing, even eliminating the need for
human labor.
As Chesterton
remarked, however, “If the use of capital means capitalism, then everything is capitalism.”
(G.K. Chesterton, The Outline of Sanity,
Collected Works, Vol. V. San
Francisco, California: Ignatius Press, 1987, 43.) Nor was Kelso completely comfortable with the
term — although using it in the titles of his books certainly helped the first
one make the New York Times
bestseller list in the wake of the McCarthy Hearings!
Eventually Kelso
settled on the term “binary economics” to underscore the importance of
distinguishing between the human and the non-human factors of production. Combining Kelso’s binary economics with the
social doctrine of Pius XI as analyzed by Father William Ferree in a personalist,
natural law-based synthesis above and beyond capitalism and socialism that the
Center for Economic and Social Justice (CESJ) calls “the Just Third Way.”
At the heart of binary
economics are the three principles of economic justice. Kelso and Adler presented these in Chapter 5
of The Capitalist Manifesto. CESJ has refined and developed these as
interconnected principles of an integrated system consistent with Catholic
social teaching. This was a possibility
Adler anticipated in his Preface to his and Kelso’s work when he mentioned Leo
XIII and Belloc and alluded to distributism. (Kelso and Adler, The Capitalist Manifesto, op. cit., xi.)
As in any
properly designed system, the three principles of economic justice work
together to support the system as a whole as well as fill particular functions. No system designed by human beings can be
perfect, of course, but the Kelso-Adler principles provide a framework that,
within the constraints of natural law, optimize the possibility for a just and
stable economic order.
At the same time,
if even one of the principles is missing, violated, or applied partially or
incorrectly, the system either fails to operate properly or implodes and does
not function at all. As refined and
clarified by CESJ, then, the essential building blocks of economic justice are:
· Participative
Justice,
· Distributive
Justice, and
· Social
Justice.
We will explain
these principles in the next posting on this subject.
#30#