In the
previous posting on this subject, we noted that what appeared to be a call
by Pope Francis to institute a “living wage” arrangement as an expedient for
workers performing essential tasks during the Covid-19 lockdowns somehow got
twisted into an endorsement of the Universal Basic Income as a permanent
solution to the world’s economic woes.
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| Leo XIII: the non-owner is a virtual slave |
We decided
(that’s “we” as in “us here,” not “we” as in “you and I” necessarily) that what
Pope Francis probably meant by his remarks was nothing more than the standard
Catholic social teaching. That is, when
justice is satisfied in regard to wages but something is still lacking,
employers should pay workers more out of charity to enable them to meet common
domestic needs adequately . . . but that is not a solution.
Rather, paying
people more than a genuine market-determined rate of compensation is an
expedient on the way to empowering workers with capital ownership to get them
out of the wage system. This would mean
helping workers develop as persons, no longer as dependents on an employer, but
as owners and thus equals (recall the parable of the talents?). According
to Pope Leo XIII, workers would thereby be emancipated from “a yoke little
better than that of slavery itself.” (Rerum Novarum, § 3.) As Pope Pius XI reiterated,
The redemption of the
non-owning workers — this is the goal that Our Predecessor declared must
necessarily be sought. And the point is the more emphatically to be asserted
and more insistently repeated because the commands of the Pontiff, salutary as
they are, have not infrequently been consigned to oblivion either because they
were deliberately suppressed by silence or thought impracticable although they
both can and ought to be put into effect. And these commands have not lost
their force and wisdom for our time because that “pauperism” which Leo XIII
beheld in all its horror is less widespread. Certainly the condition of the
workers has been improved and made more equitable especially in the more
civilized and wealthy countries where the workers can no longer be considered
universally overwhelmed with misery and lacking the necessities of life. But
since manufacturing and industry have so rapidly pervaded and occupied
countless regions, not only in the countries called new, but also in the realms
of the Far East that have been civilized from antiquity, the number of the
non-owning working poor has increased enormously and their groans cry to God
from the earth. Added to them is the huge army of rural wage workers, pushed to
the lowest level of existence and deprived of all hope of ever acquiring “some
property in land,” and, therefore, permanently bound to the status of
non-owning worker unless suitable and effective remedies are applied. (Quadragesimo Anno, § 59.)
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| Pius XI: Seek the redemption of non-owners |
And the remedy
for non-ownership of capital? Obviously,
the remedy for non-ownership of capital is not socialism (the abolition of
ownership of capital) or capitalism (the limitation of ownership of capital),
but widespread capital ownership: the Just Third Way of Economic Personalism,
if you will. Thus, what is needed is not
the Universal Basic Income or the Universal Basic Wage, but Universal Basic
Ownership.
The problem is
how to do it. If we redefine “ownership”
to include redistribution of what already belongs to someone else, then we
destroy private property and make “ownership” meaningless. If we redefine “private property” as applying
only to what has been produced by labor, then we destroy private property by
limiting it only to people who can labor.
If we redefine “private property” as only coming out of “past savings” (i.e.,
out of what has been produced by labor or is financed by past reductions in
consumption), then we destroy private property by limiting it only to people
who can save.
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| Aristotle: It's only logical |
In other words (those of Aristotle . . . sort of),
by assuming as a matter of course that people can only own what they have
produced with their own labor or financed by restricting consumption, we are locked
into the “lose-lose” paradigm based on a universe consisting of “A”
(capitalism) and “Not A” (socialism).
That is, in a universe defined as containing only that which has been
produced by labor or financed out of past savings, whatever is not capitalism
is socialism, and whatever is not socialism is capitalism. A prospect that pleases the simple, but not
the eye or the intellect.
That being the
case, papal statements concerning the necessity of widespread capital ownership
can only be “prudential matter” (i.e., “suggestions”), while comments about
the need to increase wages and benefits are absolute commands.
Of course, all of
this changes if it can be shown that new capital formation can be financed any
other way than past savings. The
universe then consists of “A” (that which exists) and “Not A” (that which is
reasonably expected to exist). That is,
in a universe defined as containing that which has been produced by labor,
financed out of past savings, or by any other means, there can be capitalism,
socialism, and Something Else.
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| It is logical to live long and prosper through ownership. |
And in the Just
Third Way of Economic Personalism, we define that “something else” as future
savings. Of course, we further define “future
savings” as the monetization of future increases in production to finance new
capital formation instead of limiting financing to past decreases in
consumption.
That changes
everything. If it can be proved
that there is an alternative to past savings in financing new capital formation
— not that the alternative is good, bad, indifferent, or anything else, just
that it exists — then the entire “there is only capitalism or
socialism” paradigm immediately falls apart.
It is important
to note we don’t have to prove that financing with something other than past
savings is better or even worse than financing with past savings. We only have to show that it is
possible. Period.
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| Harold G. Moulton: future savings exist |
Fortunately, we
don’t even have to develop our own proof.
That was done for us by Dr. Harold G. Moulton, president of the
Brookings Institution from 1928 to 1952, in his 1935 book, The
Formation of Capital. To counter
what he considered unsound Keynesian theory implemented in the New Deal in the
1930s, Moulton presented the historical and scientific case for financing new
capital formation with “future savings” (our term, not Moulton’s): future
increases in production instead of past decreases in consumption.
Unfortunately,
Moulton did not make the moral case for financing new capital formation
with future savings instead of past savings.
Nor did he present a moral and financially feasible method of
implementing the program of expanded capital ownership recommended in the
social encyclicals.
That was left for
Louis Kelso and Mortimer Adler in their two collaborations, The Capitalist Manifesto
(1958) and The New
Capitalists (1961). The latter
has the significant subtitle, “A Proposal to Free Economic Growth From the
Slavery of Savings.” Kelso and Adler did
not mean that economic growth could be financed without savings. Rather, they envisioned a system in which future
savings could be put to work for people instead of people working for savings.
To be brief,
Kelso and Adler made the moral case for expanded capital ownership in The
Capitalist Manifesto, and presented a practical means of applying that
morality — and of turning papal teachings into reality — in The New
Capitalists. In brief, let anyone who qualifies (and make as many people qualify as possible by collateralizing with capital credit insurance) purchase or finance new capital on credit and pay for the capital using the profits of the capital itself. So, yes, by all means
institute a living wage system or even Universal Basic Income as a temporary emergency measure, but move to the
living ownership system or UBO — Universal Basic Ownership — as soon as possible . . . and it’s possible right
now. . . .
#30#
