In the previous posting on this subject, we opined as to what would be an effective program to foster production by as many people as possible, thereby bringing economic activity back into balance as far as humanly possible? What is needed is a restoration of Say’s Law of Markets, turning every consumer into a producer, and every producer into a consumer so that “supply generates its own demand, and demand generates its own supply.”
The principles of the Just Third Way, distilled from the binary economics of Louis Kelso and Mortimer Adler combined with the act of social justice as analyzed by William Ferree in a synergistic program called the Just Third Way of Economic Personalism would seem to fit the bill.
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| "I wish I'd said that." |
We begin with the three principles of economic justice:
· Participative Justice, or the input principle, “from each according to his productive contributions through his labor and capital,” to paraphrase Marx and Engels in The Communist Manifesto very broadly.
· Distributive Justice, or the out-take principle, “to each according to his labor and capital contributions” (again to paraphrase), and
· Social Justice, or the feedback and corrective principle that repairs the institutional environment whenever anyone is denied equal opportunity to contribute to production through his labor and/or capital, or from receiving his just due according to his contributions.
To these three principles of economic justice we add the four pillars of an economically just society:
• A limited economic role for the State,
• Free and open markets as the best means of determining just wages, just prices, and just profits,
• Restoration of the rights of private property, especially in corporate equity, and (the “fatal omission” in all the major schools of economic thought),
• Widespread direct ownership of the means of production, individually or in free association with others.
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| "I want Economic Personalism for YOU!" |
Economic personalism is a Just Third Way comprehensive national economic strategy for empowering every American citizen, including the poorest of the poor, with the means to acquire, control and enjoy the fruits of productive corporate assets. It is not sufficient simply to foster production — it must be production in which everyone can participate as owners of both labor and capital.
Naturally we cannot give even an adequate summary of the proposal here. As it relates to the issues covered in this posting, however, economic personalism involves major restructuring of the tax system and central bank policies to lift unjust artificial barriers to more equitable distribution of future corporate capital and faster growth rates of private sector investment. The result would be to shift primary national income maintenance policies from inflationary wage and unproductive income redistribution expedients, to market-based ownership sharing and dividend incomes.
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| "Restore my 'law' ... please." |
The central bank would distinguish between “sound” and “unsound” uses of credit naturally, through the structuring of the system itself. The central bank would provide interest-free (but not “cost-free”) reserves by rediscounting eligible loans extended by commercial banks. One of the eligibility requirements for rediscounting would be that the loans are made in such a way as to enable every American to become an owner of a viable accumulation of new income-producing assets. This would reduce America’s dependency on existing accumulations of savings, corporate retained earnings, or foreign government wealth funds advantaged by America’s growing trade imbalances.
Thus, the central bank would supply sufficient money and credit through local banks to meet the liquidity and broadened ownership needs of an expanding market-disciplined economy. Loans, of course, would be subject to appropriate feasibility standards administered by the banks, and limited only by the goal of maintaining a stable value for the currency. Unsound uses of credit, such as the speculative credit that created sub-prime home mortgages and the global financial meltdown, would be financed from the accumulations of the wealthy who can afford the risks.
To ensure adequate oversight of the system, each citizen would receive a single, lifetime, non-transferable voting share in the central bank. This would ensure that the directors and administrators of the system are broadly representative of all groups affected by central bank policy, and that power over future money creation is spread widely among all citizens.
Economic personalism’s central focus is the democratization of capital (productive) credit. By universalizing citizen access to direct capital ownership through access to interest-free (but not cost-free) productive credit, it would close the power and opportunity gap between today's haves and have-nots, without taking away property from today's owners.
There is much more, of course, but the lesson is clear. There is only one way to get out from under the colossal burden of debt faced by the United States and the rest of the world: produce — and produce in a way in which everyone shares in the process both through ownership of labor and ownership of capital. You can’t redistribute by printing money forever. At some point the bill comes due. Devaluing the currency is not going to make the problem go away. The United States not only should, but must adopt economic personalism for every citizen as soon as possible.
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