In the
previous posting on this subject, we continued posting sections of our
recent CESJ position paper, “Universalizing
Capital Ownership.” As we said before,
of course, . Of course, if you want to
read the entire paper without waiting for the parts to be posted, just click on
the link.
As previously
noted, the paper suggests a number of things that can be done to ameliorate the
immediate situation and lay the groundwork for a just and effective recovery. Today’s portion focuses on “a new monetary
paradigm” based on the use of future savings (future increases in production)
instead of past savings (past reductions in consumption).
UNIVERSALIZING
CAPITAL OWNERSHIP
How Article 17 of the Universal Declaration of Human Rights Can Save the
Economy
April 17, 2020
Center for Economic and Social Justice (CESJ.org), April 17, 2020
Part III
A New Monetary Paradigm
 |
| Louis O. Kelso |
The principles applied in the
successful worker buyout of Mid South are based on a new monetary paradigm that
recognizes money as a unique “social tool.” Individuals and businesses can and
do create non-currency forms of money to facilitate their transactions,
including the production, distribution and purchase of goods and services.
However, it is within a sound system of central banking, local commercial and
cooperative banks, and capital credit insurance that the full social potential
of money can be realized. (See “A New
Look at Prices and Money.”)
ESOP inventor, financial lawyer and
universal citizen ownership theorist Louis O. Kelso observed that money is a
“yardstick,” i.e., a symbolic means for measuring “economic input, economic
outtake and the relative values of the real goods and services of the economic
world.” Money is not the physical things or services we need to
produce and consume, but it is an essential social tool for enabling every
person to measure value and engage in work, not only to provide for his or her
economic needs and wants, but also for the common good. It allows for personal
freedom to make sound family, educational, spiritual, health, social, and
political choices that promote economic liberation, prosperity, and personal
political independence for every human being.
 |
| R. Buckminster Fuller |
Along these lines, a stable and
uniform measure of monetary values for all economic transactions should be
adopted for all global currencies. (A 21st century alternative to a
monetary standard based on gold or a basket of commodities was proposed by
world design science architect Buckminster Fuller in his 1982 book Critical
Path. He conceived of a global monetary “yardstick” based on the price of
a kilowatt-hour, which would reflect the growing contribution of advanced green
energy technologies and infrastructure for lowering the cost of universally
available and dependable electricity throughout the planet.)
The key issue in this economic crisis
is not the lack of new money, but the lack of a global monetary system that
achieves equal opportunities for every person to acquire and own the most
advanced productive technologies, artificial intelligence, advanced
communications and energy systems, using capital credit repayable with future
profits. As new technologies replace the need for human labor in most facets of
the economy, the democratization of future capital ownership will gradually
reduce the need for government income assistance and redistribution.
Had previous stimulus packages been
designed to create new owners along with new capital formation, world economies
would have experienced sustainable and non-inflationary growth. More resources
would have been available to deal with disasters such as the COVID-19 pandemic,
not only in developed countries but in also in developing countries where
citizens are especially vulnerable to this threat.
Collateralized by capital credit
insurance, self-liquidating capital credit should, as a fundamental right, be
made available on an equal basis to all citizens. This would turn today’s
non-owners into economically independent owners of productive capital. Such
credit would finance the purchase of new or existing productive assets needed
by businesses. Future earnings on the shares would pay off the acquisition
loans — in other words, using “future savings” rather than “past savings” or
reductions of current consumption income to repay the capital credit.
Once the acquisition loans are repaid,
the asset-backed money created to purchase the capital would be canceled or
reused to finance new economic growth, thus avoiding both inflation and
deflation. The capital itself would continue to produce wealth and generate
consumption income for its new owners.
Each increment of new capital added
would pay for itself with its own future earnings. Consequently, normal market
forces would synchronize supply and effective demand for economic growth. This
would continue as long as the new capital assets provide a source of
capital-generated income for today’s non-owning citizens, particularly the poor
and others who do not have sufficient and secure incomes. In addition to
reducing the need for government redistribution of income, workers and other
current non-owners could help sustain economic growth, contribute to the tax
needs of all levels of government, and secure their own financial and political
independence by becoming owners of future increases in capital productiveness.
To achieve universal citizen access to
future capital ownership opportunities will require moving beyond the ESOP
mechanism, which is only one vehicle designed by Louis Kelso for corporate
employees to participate in financing new capital formation. A national policy
agenda, called in the U.S. the “Capital Homestead Act,”
would extend the same means of acquiring new capital assets to every person.
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