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.

Wednesday, January 26, 2011

"Power Naturally and Necessarily Follows Property"

Although yesterday we concluded our short series on the connection between the propertyless condition and the "condition of dependency" — slavery — there is always something more to be said, especially if (as it turned out) people still have questions. This is only to be expected, for there is a serious and widespread lack of understanding about property (private or otherwise) in our society, and consequently widespread misunderstanding of other social institutions based on or derived from private property. These include such things as money and credit, banking, and political power.

It is this last that concerns us today. With all due respect to President Obama and his performance in last night's State of the Union address, he did not say one word about the importance of empowering people politically and economically through direct and sustainable ownership in the means of production, at least that we recall. Rather, the talk was all the need for job creation and for the nation to set aside bipartisan politics and start pulling together to achieve the president's goals.

We agree. There is a serious need to come together to reach a common goal . . . but the goal should be one on which people can agree, rather than on which they "agree to disagree" in order to achieve a superficial and meaningless — and ineffectual — consensus. Obama gave us a salutary and much-needed pep talk, but a State of the Union address is not supposed to be a pep talk. It is supposed to be a forum in which the president presents the current condition of the country and gives solid policy guidelines about what the administration intends to do, not vague promises about Keynesian "job creation" that will magically take place once the other side sees reason and does things his way.

Not that the Republicans have anything positive to offer, either, although they are on target with the need to control spending. What with the president being right about the need to come together, and the Republicans being right about the need to control spending, we have an instance, sadly not unique in history, of two rights making a wrong.

How's that?

As should come as no surprise to readers of this blog, we believe the goal of "job creation" for the sake of providing people with incomes instead of to provide producers with the human factor of production is wasteful as well as pointless and demeaning, to say nothing of being ineffective as a means of bringing about economic recovery from the Great Depression, Part III. "Job creation" is simply an expensive way to achieve redistribution, and helps reinforce the deplorable "entitlement mindset" that has grown up in the United States since the effective end of "free" land in the late 19th century. As F. Ray Marshall, U.S. Secretary of Labor under President Carter, is reported to have said, "There is no more complete rejection of a person than to give them a job you know and they know is useless." (Editorial note: change "a person" to "persons," and we agree 100%.)

The solution to this problem? Focus on production and wealth creation in which everyone can share equitably, participating in that wealth creation by contributing both labor and capital. In short, every citizen should have the effective and meaningful opportunity to become an owner of capital, just as each person is already presumed to own his or her labor. This might require some explanation.

In principle, at least in the United States and the British Commonwealth, every natural person (meaning every human being, man, woman, and child) has the natural rights to life, liberty, property, and the pursuit of happiness (i.e., the acquisition and development of virtue). In reality, trapped by what Louis Kelso and Mortimer Adler called "the slavery of [past] savings," most people are effectively cut off from ownership of a meaningful stake of income-generating assets: capital. Vide Kelso and Adler, The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings. New York: Random House, 1961.

Note that "savings" in this context refers to existing accumulations of wealth, by definition a monopoly of the rich. Kelso and Adler advocated a shift from past savings to "future savings" made available through the functioning of Say's Law of Markets (Jean-Baptiste Say, Letters to Malthus, 1821), and the application of Say's Law in the real bills doctrine explained by Adam Smith (The Wealth of Nations, 1776), Henry Thornton, (An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, 1802), and later, after the British Bank Charter Act of 1844, by John Fullarton (On the Regulation of the Currencies of the Bank of England, 1845), and by Kelso and Adler's primary source, Dr. Harold G. Moulton (The Formation of Capital, 1935).


At one time, there was a property qualification to vote. In the United States, this was removed from the Constitution in 1820 on the grounds that no free white male over the age of 21 should be prevented from voting simply because he did not own property in sufficient amount or at all. This was over the protests of such men as Benjamin Watkins Leigh of Virginia and Daniel Webster of Massachusetts. The position of these men and others was that, if non-property owners got the franchise, they would use their political power to take property away from those with property, and redistribute it to those without. As Leigh observed, "Power and property can be separated for a time, but divorced, never. For as soon as the pangs of separation are felt, property will take over power, or power will take over property." Webster concurred: "Power naturally and necessarily follows property."

Consequently, since the 1890s when the "free" land made available by Abraham Lincoln's 1862 Homestead Act effectively ran out (the program continued well into the 20th century, but affected rapidly decreasing numbers of people) and the predominant source of income for most people shifted from ownership of land, to a wage paid by an employer, the federal and state governments have passed increasing numbers of laws intended to redistribute existing wealth in an effort to make the distribution of wealth marginally equitable. As was only to be expected, this has increased government power enormously, as it has vested effective ownership of the means of production in the State. Ownership and control are the same in all codes of law; if you hold legal title to something, yet can only use it as and when I give permission, the law maintains that I, not you, am the owner. Unfortunately, while the social legislation was and remains necessary to keep society together after a fashion, it has done nothing to address the underlying problem: the propertyless condition of the great mass of people. They remain powerless, with the State necessarily stepping in and providing (or, more accurately, trying to provide) that of which the lack of ownership of the means of production has deprived most people.

Thus, Webster and Leigh, while correct, were doing the exact opposite of what they should have done. Rather than restrict the franchise to those who owned a meaningful stake of capital (into which category we can put land as well as technology), the effort should have been to make certain that the universal franchise was matched by universal opportunity to become an owner of capital. Socialism and the Welfare State try to make everyone an owner, but only achieve this by abolishing private property in the means of production, and substituting the State for private owners controlling their own lives with the power with which property vests them.

The State, however, cannot make everyone an owner by destroying ownership. The State can only legitimately provide a level playing field, that is, equality of opportunity, for everyone to be an owner, as Lincoln did with land in the 19th century. What is needed now is a "Capital Homestead Act," a concept discussed on the website of the Center for Economic and Social Justice ("CESJ").