A
short time ago, someone “accused” CESJ of promoting capitalism as a moral
system, linking us with Father Robert A. Sirico of the Acton Institute. This was presumably due to the fact that both
capitalists and adherents of the Just Third Way support the institution of
private property . . . but that’s about as far as it goes, as today’s Guest
Blogger, Dr. Norman G. Kurland, president of the Center for Economic and Social
Justice (CESJ) explains in this slightly edited version of his response:
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| Norman G. Kurland |
IS CAPITALISM A MORAL SYSTEM?
CESJ’s Response to Fr. Robert A. Sirico
Norman G. Kurland
Words matter.
Fr. Sirico argues that “capitalism” is a
morally sound system. It is not, as reflected in the current monetary,
tax, inheritance, and gift tax laws of all so-called capitalist nations. Since
the beginning of what scholars call “the Industrial Revolution” (following the
invention of the first practical steam engine in 1696) the economic systems of
the world have radically concentrated the ownership of “capital” in a tiny élite. As a result, today less than 0.1% of humans
own more capital than over 90% of the total global population.
In 1958 Louis Kelso and Mortimer Adler
authored a book to challenge The Communist Manifesto written
110 years earlier by Karl Marx and Frederick Engels. As Marx and Engels declared, “The theory of
the Communists may be summed up in a single sentence: Abolition of private
property.” (Karl Marx and Friedrich Engels, The Communist Manifesto. London:
Penguin Books, 1967, 96.)
Marx’s and Engels’s book offered a series of
policies aimed at abolishing the monopolization of ownership, control, and
property incomes over land, other natural resources, and labor-displacing
technologies by those controlling the monetary and banking system of England
and other industrial nations. It is
interesting to note that these private sector monopolists did not invent the
term “capitalism.” It was a term developed
in the 1850s by the critics of monopolistic ownership who called themselves “socialists”
and “communists.”
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| Mortimer J. Adler |
The first Kelso-Adler book was entitled The Capitalist Manifesto (New York: Random House, 1958). In my opinion, this was a title that the book’s
publisher approved to avoid a possible political attack by Senator Joe McCarthy
and his anti-communist supporters on Capitol Hill. Random House might have feared that Kelso’s
truly revolutionary new paradigm of a “Just Third Way” political economy could
be mistaken for socialism because it wasn’t classical capitalism.
This is because Kelso’s new paradigm
challenged not only the exclusive “labor system” focus of labor unions and Keynesian
policies shaping “full employment” goals under the “New Deal” of President
Franklin Delano Roosevelt. Kelso also
challenged the use of the term “productivity” that academic economists use to
attribute to “labor” all increases in the productiveness of modern industry
resulting from continuing technological and system innovations within all
modern economic systems.
Economists from all schools of economic
thought have ignored the simple logic and relevance of Kelso’s moral paradigm Neither did they take serious note of his
success in structuring the financing of a worker-owned manufacturing company
and a farmer-owned fertilizer company within the limits of then current
financing law.
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| Louis O. Kelso |
Kelso, as head of a highly successful San
Francisco law firm, former university professor, and open-minded thinker,
offered specific reforms to help the American economy grow faster without
inflation. This he did in a way that
would potentially enable America and the world to democratize future ownership
opportunities as a fundamental human right.
This Kelso was able to do despite the indifference
or opposition of conventional economists. To name two of the most
prominent, Nobel Laureates Milton Friedman of the Chicago/Monetarist School and
the Keynesian Paul Samuelson ridiculed Kelso’s ideas without bothering to challenge
Kelso’s logic or principles. (Friedman’s
rather vacuous response can be found by following the link, while Samuelson’s appearance on a 60
Minutes segment tends to leave the objective viewer wondering if he
actually knew what Kelso proposed.)
The second Kelso-Adler book was
entitled The
New Capitalists: A Proposal to Free Economic Growth from the Slavery of [Past]
Savings (New York: Random House, 1961). It describes
how central bank money and local bank capital credit policies can support the
allocation by local banks of insured capital credit. This would enable citizens without savings to
purchase full dividend payout voting shares of well-managed companies repayable
with the full stream of future profits.
All profits above the need to meet the bank loans would provide income
from profits to meet their consumption needs.
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| Not quite, but at least it's not "labor v. capital" |
In his third book, Two-Factor Theory: The
Economics of Reality (New York: Random House, 1967) Kelso, with his
wife Patricia Hetter Kelso, moved away from the term “capitalism” to
describe his new paradigm, which he later called “Binary Economics.” Why?
Two reasons: first, the word ”capital” is
the term used to describe ”things.” This category includes land,
natural resources, and human inventions of physical technologies, as well as
marketing and productive systems, patents, and all other non-human inputs to
the process of producing goods and services to be marketed for the overall consumption
side of a global competitive and free market system.
Second, all human inputs to such a market economy
are called “labor.” It should be obvious that in the “production”
or “input” side of every economic system, both “capital” and “labor” inputs are
necessary for production.
Labor, the other side of a market economy,
involves rewards for each owner’s personal contributions of his or her labor or
capital to the labor-capital production input mix. The most democratic
way to determine fairness in the value of a person’s contributions of capital or
labor to the production process is to assess the value of each of that person’s
inputs within a free, democratic, competitive, and non-monopolistic market
system.
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| And to which all have equal access to opportunity and means. |
In this way every participant “votes” (i.e.,
is free to make choices) on the “economic value” to him or her on what is
offered by all interested parties in the market process. Every party in the economic
process is free to vote or refuse to vote as a potential consumer of all goods
or services available in the market.
Neither government (the only “social tool” or
institution that is a natural monopoly) nor any other élite group should
force citizens to agree to accept a monopolistic determination of the value of
any inputs to production. This applies
to both labor inputs (“wage” and “salaries”) and capital inputs (“profits”) that
any citizen contributes to the production side of the economic system.
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| Personalism, not capitalism or socialism. |
Now, why did I go through this explanation of
what attracted me to Kelso’s paradigm? It’s to point out why I do not use the term “capitalism”
to describe our opposition to “socialism”, “communism”, or “community ownership”. These are terms that fail to describe or
encompass the moral, political or economic importance of the human person, as
opposed to ”social tools” that can concentrate power in any élite.
That is why I prefer “personalism” a term
that can be understood by every person as something that enables him or her to
develop his or her fullest human potential to do the work they would love to do
and can afford to do. By doing such “work
of civilization” without pay, people not only enhance their own dignity, but
contribute indirectly to the whole of the common good.
Why do those of us in CESJ who do voluntary
work for the future of sustainable life on planet Earth through “economic personalism”
reject the word “capitalism”? It’s
simple. Since the word “capital” describes non-human “things”, then Fr. Sirico
should use the term ”thing-ism” instead of “capitalism.” We hope he
will consider supporting a new, more just system based on universal
principles of economic and social justice that will empower every person
from the time of birth to the time of death to be surrounded by a family, friends
and sounder institutions that enable him or her to become more fully human.
#30#
