THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Monday, February 22, 2010

The Restoration of Property, Part V: The Fourth Pillar

The fourth and final pillar of an economically just society is one that, as we have already seen, is omitted from every economic system in the world today: widespread direct ownership of the means of production, individually or in free association with others. Widespread ownership of the means of production is an absolute necessity if society is to survive economically, politically, and socially.

There are three reasons for this conclusion, all of which we will explain as briefly as possible. One, with respect to economics, as Louis Kelso and Mortimer Adler pointed out in The Capitalist Manifesto (New York: Random House, 1959), advancing technology (capital) is displacing human labor as the primary factor of production. Given that production equals income, the amount of income attributable to labor is declining relative to the amount of income attributable to capital.

The income attributable to labor and to capital goes by right of private property to the owners of labor and of capital, respectively. This results in a state of society in which most people own little or nothing in the way of capital. Lacking direct ownership of the primary means of production, most people have no natural means of generating an adequate and secure income as capital displaces their labor. This creates economic disequilibrium — instability — in society, resulting in a seemingly inevitable cycle of boom and bust.

Two, with respect to politics, an economically unstable society is inevitably a politically unstable society. When they understand that economic chaos can undermine and, ultimately, destroy their power — if not their lives and their property — the economic and political elite either join forces, or one takes over the other, and implements what the elite believes to be corrective measures, but which (as we have seen is the case with Keynesian economics) are based on erroneous beliefs and principles. The motive for these actions is rooted in the desire to maintain the wealth and power of the elite at acceptable levels. Consequently, the elite readily accedes to programs that promise (falsely) to redistribute the minimum of wealth necessary to restore economic equilibrium and retain current concentrations of ownership of the means of production relatively intact.

The result is that, in order to maintain their right to and rights of private property, those currently in power undermine their own position by destroying the meaning of private property, as we saw in the case of Henry Ford's dispute with the Dodge brothers. As Belloc pointed out, as the self-defeating effort to retain current levels of power in the face of economic reality continues, capitalism transforms itself into the Servile State, the Servile State transforms itself into socialism, and socialism implodes of its own faulty principles, returning to capitalism and starting the cycle all over again.

Three, the social order absolutely requires a stable economy and a strong juridical order: the rule of law. A stable economy only results from widespread direct ownership of the means of production, while the rule of law declines rapidly when economic conditions destabilize. As Belloc pointed out, "to control the production of wealth is to control human life itself. To refuse man the opportunity for the production of wealth is to refuse him the opportunity for life; and, in general, the way in which the production of wealth is by law permitted is the only way in which the citizens can legally exist." (The Servile State, op. cit., 46.) Private property, whether in labor or in capital, links the human person in the closest possible manner to the productive process, and provides the only sound basis of and sound backing for the money supply, money being a derivative of production. The natural effects and activity of private property cannot be duplicated in any meaningful or material way by artificial State programs that rely on abolishing or unjustly inhibiting private property through redistribution of existing wealth, whether directly through taxation, or through manipulation of the money supply.

The necessity for a stable political and economic order to support the overall social order creates something of a paradox. As we saw in our previous discussion on the laws and characteristics of social justice, the constantly changing environment within which people carry out the business of daily life, that incredibly diverse interaction between individuals, groups, institutions, milieux, and so on, means that the social order itself can, in a sense, be described as "radically unstable." It is for this reason that the social order must have an absolutely solid economic and political foundation, or the social order will not be able to carry out its function of providing the environment for and, when necessary, assisting people to pursue happiness (acquire and develop virtue). Our relationships and specific milieux can then change radically, even from moment to moment, for our need for underlying order and security, rooted in our nature, would be met.

In other words, as long as we can exercise control over our own lives, individually or in free association with others, our specific relationships can be as many and as varied as we like. Secure in an economically and politically stable social order, we can change these relationships — as we must — from moment to moment without harm and even with great benefit to ourselves, other individuals, groups, and the common good as a whole as we acquire and develop virtue, thereby becoming more fully human.

Private property is custom made by human nature itself to provide a foundation for a sound economic order and a stable political order. This is why the right to be an owner — the right to property — is believed to be a natural right, and thus absolute, that is, inherent in every single human being. As Dr. Heinrich Rommen explained the implication of the universal prohibition against theft, "'Thou shalt not steal' presupposes the institution of private property as pertaining to the natural law." (The Natural Law. Indianapolis, Indiana: Liberty Fund, Inc., 1998, 59.)

Similarly, what an owner can do with what he or she owns — the rights of property — can be as many and as varied as our individual wants and needs and the demands of the common good. As long as we, by custom, tradition, or positive law do not define the exercise of property in any way that negates the underlying right to be an owner in the first place, we can tailor the specific rights of property in our society to optimize the benefits we receive — the "fruits of ownership" — under specific social conditions. The right to be an owner pertains to the natural law, but, as Rommen continues,
. . . not, for example, the feudal property arrangements of the Middle Ages or the modern capitalist system. Since the natural law lays down general norms only, it is the function of the positive law to undertake the concrete, detailed regulation of real and personal property and to prescribe the formalities for conveyance of ownership. (Ibid.)
Here, then, is the reason why widespread direct ownership of the means of production is so important, and why we include expanded capital ownership as the critical "fourth pillar" of an economically just society. Private property is not the thing owned, but the natural right to be an owner, and the socially determined bundle of specific rights that define how owners can use what they own.

The right to be an owner is thus a part of human nature itself, an essential aspect of the dignity of the human person. When individuals, groups, or society as a whole prevent or inhibit any person or class of persons from exercising the right to be an owner and shut off or inhibit access to the means of acquiring and possessing private property, especially in the means of production, without just cause and without following due process, human dignity is offended at the deepest and most profound level.

The fact that the right to be an owner is part of the natural law is, in and of itself, sufficient to insist that every man, woman, and child have democratic access to the means of acquiring and possessing private property. We need no other justification. Even if the powers-that-be reject the natural law, however, there are overwhelming and irresistible "practical" reasons for implementing a program of expanded capital ownership at the earliest opportunity — and for creating the opportunity through acts of social justice if that opportunity does not occur naturally or in a timely manner.

This is because of two essential rights of property: income and control. These may be defined in different ways for different societies, depending on the wants and needs of the people who have joined together to form that society, specific conditions, and the demands of the common good. None of this changes the fact that the rights of private property in any society must include the effective right to enjoy the income generated by what is owned, and — even more critical — the right to control that which is owned. As Louis Kelso pointed out,
It may be helpful to take note of what the concept "property" means in law and economics. It is an aggregate of the rights, powers and privileges, recognized by the laws of the nation, which an individual may possess with respect to various objects. Property is not the object owned, but the sum total of the "rights" which an individual may "own" in such an object. These in general include the rights of (1) possessing, (2) excluding others, (3) disposing or transferring, (4) using, (5) enjoying the fruits, profits, product or increase, and (6) of destroying or injuring, if the owner so desires. In a civilized society, these rights are only as effective as the laws which provide for their enforcement. The English common law, adopted into the fabric of American law, recognizes that the rights of property are subject to the limitations that

(1) things owned may not be so used as to injure others or the property of others, and

(2) that they may not be used in ways contrary to the general welfare of the people as a whole. From this definition of private property, a purely functional and practical understanding of the nature of property becomes clear.

Property in everyday life, is the right of control. (Louis O. Kelso, "Karl Marx: The Almost Capitalist," American Bar Association Journal, March 1957.)
Belloc believed that the restoration of private property in our society is made difficult by the fact that people's attention has been diverted away from the importance of control over one's own life, to exaggerating the need for security, with security of income taking precedence. Of course, as Belloc did not fail to point out, the best and surest income security comes from direct ownership — control — of the means of production.

Still, many people have become convinced that, as long as the State "guarantees" an adequate level of income — regardless of the source — all will be well. Of course, the State can only guarantee a basic income for all by making serious inroads on private property, thereby undermining — attacking, really — essential human dignity. In today's society, however, only income (Keynesian "effective demand") matters, not the production that, per Say's Law of Markets, necessarily equals income.

A focus exclusively on income is the problem that Belloc sees with, e.g., Major Douglas's "social credit" scheme (The Restoration of Property, op. cit., 9). Everything becomes secondary to the need to redistribute purchasing power, including our natural rights to life, liberty, property, and, especially, the "pursuit of happiness." This last is redefined to mean not the acquisition and development of virtue as the primary duty in our ongoing task of becoming more fully human, but solely an adequate provision for humanity's material needs: security of income. Security of income becomes the sole end of society and of State policy, even if the cost is the effective surrender of those natural rights that define us as persons, thereby rendering us slaves.

What humanity requires, however, is not a narrow focus on purchasing power as the solution to society's economic and political ills. Keeping in mind that Douglas, in point of fact, redefined private property in such a way as to abolish it, Belloc explains,
Such schemes (notably the chief one, the Douglas Scheme) do not directly advance, nor are directly connected with the idea of property. They are only connected with the idea of income. They propose, especially the Douglas Scheme of credit, to restore purchasing power to the destitute masses of society ruined by industrial capitalism.

That is exactly what a good distribution of property would also do; but a credit scheme could, in theory at least, do the thing at once and universally, while the restoration of property is unlikely to be achieved, and must, however successful, be a long business, spread over at least a couple of generations. Further, no restoration of property could be universal applying to the whole of society equally. (Ibid.)
We disagree with Belloc that the restoration of property can be neither universal nor accomplished with speed and facility. Very much the contrary, as this blog series will presently demonstrate. Nevertheless, we find ourselves in full agreement with Belloc's belief that we must not allow ourselves to be diverted from the ultimate goal of restoring private property by being expedient and focusing all our efforts (or even most of them) on increasing individual income directly. Legitimate and secure income results from ownership of the means of production, whether that ownership is of labor or capital (ideally of both). Schemes that focus on income to the exclusion of all else necessarily undermine private property to one degree or another. They thereby end up being self-defeating if the goal is to respect human dignity and reestablish economic freedom. This is consistent with the operation of social justice, in which the object is not to force the desired end result, but to make it possible to attain the desired end naturally. As Belloc states,
The object of those who think as I do in this matter is not to restore purchasing power but to restore economic freedom. It is true that there cannot be economic freedom without purchasing power and it is true that economic freedom varies in some degree directly with purchasing power; but it is not true that purchasing power is equivalent to economic freedom. A manager at $5000 a year who may get the sack at the caprice of his master has plenty of purchasing power, but he has not economic freedom. (Ibid., 9-10.)
The problem that we will address in the rest of this blog series is how to overcome the debilitating effect of these erroneous assumptions — especially the crippling mis-definition of money and credit and the breaking of the direct private property link between money and production — and carry out a program that will restore private property in the most efficient and just manner possible.