A "CBS Moneywatch" story that appeared today on Yahoo! news is yet another "dog bites man" revelation. According to the article, "Marriage Chances Rise With Your Salary," a recent study by the Pew Research Center found that the percentage of Americans who are married is at an all-time low, and shows signs of dropping even further.
This is because real incomes have been falling. People in general — even the relatively large percentage which claims they want to be married — are leery of committing themselves. Marriage is an expensive proposition in an economy in which most people are constrained to rely on wages for their sole or predominant form of income. Children especially are a serious drain on finances when both common sense and the legal system inhibit or prevent them from contributing to the family by selling their labor, and they don't own capital to make up for the lack of wage income.
Thus, the fact that marriage is in decline is hardly surprising. As William Thomas Thornton pointed out in Over-Population and Its Remedy (1846) and again in A Plea for Peasant Proprietors (1848, 1874, 2011), only the very poor, those with nothing to lose, marry at the drop of a hat — or handkerchief, as obsolete slang put it. The moment someone has something to lose, it becomes a matter of greatest importance whom you marry and whether it will either maintain your condition in life or improve it. In uncertain economic times, marriage is often delayed or simply avoided altogether in favor of euphemistic "less formal arrangements" or (for those worried about ethics and morality) a chaste single life.
The story only cited statistics back to 1960 (72 percent married) and noted that, today, it is down to 51 percent. We have a hunch, though, that the decline — at least the reasons for it — began not in the 1960s, but in the 1890s. Why?
It was then that the Panic of 1893 and the ensuing Great Depression of 1893-1898 revealed serious flaws in the American economy. The opportunity for the majority of Americans to acquire capital had effectively disappeared with the end of the "free" land under the Homestead Act.
It is not that a majority of Americans were able to take advantage of the Act. Relatively speaking, few did — or could. That is not the important point here. It was the mere fact that the wage system had competition in the form of the opportunity to acquire landed capital on easy terms that kept wages high. Someone who was truly dissatisfied with wage employment could always go west and take land. As the land was taken, however, competition diminished, and wages began falling. This is consistent with the observations of William Cobbett in The Emigrant's Guide (1829, 2010) and Alexis de Tocqueville in Democracy in America (1835, 1840):
"I shall take for example that branch of productive industry which is still at the present day the most generally followed in France, and in almost all the countries of the world — I mean the cultivation of the soil. In France most of those who labor for hire in agriculture, are themselves owners of certain plots of ground, which just enable them to subsist without working for anyone else. When these laborers come to offer their services to a neighboring landowner or farmer, if he refuses them a certain rate of wages, they retire to their own small property and await another opportunity." (Alexis de Tocqueville, "Influence of Democracy on Wages," Democracy in America, Volume II.)
Widespread capital ownership — or the threat of it that would reduce the number of available workers — is sufficient incentive for employers to keep wages high enough to ensure that they have enough workers.
With the end of the "free" land under the Homestead Act, however, the proletarization of the American people accelerated, and the financial basis of domestic society (marriage) began to degenerate as labor began to decline in value relative to capital in the production process. The government tried to reverse or ameliorate the effects of lack of capital ownership by expanding welfare, labor legislation, and so on, but did not address the underlying cause of the problem: lack of access to the means of acquiring and possessing private property in capital, whether agricultural, commercial, or industrial: capital credit.
The proletarization of the average person is a necessary corollary to the wage system imposed by the concentration of capital ownership in both capitalism and socialism. This, in turn, is a consequence of the methods of corporate finance — or, at least, what people believe about methods of corporate finance. The reality is something very different.
Current belief about how new capital formation is financed is that consumption must be reduced or restricted in order to accumulate money savings before investing. Obviously, this requires that whoever is reducing consumption in order to save be able to cut consumption and save. Since capital is responsible for the bulk of production of marketable goods and services, and since the income from capital goes by natural right to the owner of the capital, under this assumption, as a general rule only those who already own capital have the capacity to own capital.
People who own no capital receive no capital income. As the value of labor declines relative to capital, people who rely on labor alone for their income do not receive enough from selling their labor to meet their needs. Spouses have to find wage system jobs, then take additional jobs, go into debt, or take State assistance in order to make ends meet.
To make matters worse, as technology advances and becomes increasingly expensive, only those owners of capital whose consumption expenses are negligible in comparison to their capital income can afford the new capital. Capital owners who use their capital income for consumption instead of reinvestment become, in the Keynesian phrase, "functionless investors," and must be eliminated from the economy. Keynes called this "the euthanasia of the rentier."
To try and ensure that non-owners receive enough income, socialism changes the definition of property from a natural right, to prudential matter. That is, in order to correct the abuses of capitalism and make certain that everybody presumably gets what he or she needs to live on, the State takes effective or outright ownership of capital and decides who gets what.
A good analysis of this process is found in Dr. Goetz Briefs's study, The Proletariat: A Challenge to Western Civilization, 1937. Like other students of Father Heinrich Pesch, S.J., members of the Königwinterkreis discussion group, Dr. Briefs recognized the critical importance of widespread capital ownership for maintaining essential human dignity. Unfortunately, Dr. Briefs — like almost everyone else — was unable to come up with a solution.
The solution, however, has been staring people in the face ever since the reinvention of commercial banking in the 16th century, and the invention of central banking toward the end of the 17th. The fact is, as Dr. Harold Moulton demonstrated in The Formation of Capital (1935), his alternative to the monetary and fiscal policy of the Keynesian New Deal, capital in a technologically advanced economy is not typically financed by cutting consumption and accumulating money savings.
Instead, what happens is that somebody who wants to finance new capital comes up with a feasible plan, and draws up a contract. This contract is called a "bill of exchange." The drawer either offers the contract to people who have what the drawer needs to form the new capital, or offers the contract to a commercial bank. Assuming that whoever is offered the contract accepts it, it becomes money. (This is why a contract offered to and accepted by anyone or anything that is not a bank is called a "merchant's" or "trade" acceptance, and a contract that is offered to and accepted by a bank is called a "banker's" acceptance.)
Bills of exchange are drawn on the "general creditworthiness" of the drawer. That means the ability of the drawer to make good on the promise in the contract when it falls due and is presented for redemption by the holder in due course. If a drawer is expected to produce marketable goods and services with the capital he or she finances by drawing bills of exchange, his or her credit is good and people accept the bills as money. (And, of course, if the drawer is not expected to produce marketable goods and services, his or her credit is bad, and no one accepts the bills.)
It is thus possible — even most efficient — to finance new capital formation out of what you can produce in the future, rather than what you withheld from consumption in the past. Financing for new capital can be linked directly to the present value of the expected future production, not whatever you managed to refrain from consuming.
Not only does this break the virtual monopoly that present owners of capital have on ownership of future capital, it also shows how people without savings or capital can become owners of capital. Taking advantage of this breakthrough in understanding, Louis Kelso invented the Employee Stock Ownership Plan and the whole theory of expanded capital ownership. This provided the basis for CESJ's Capital Homesteading proposal — which gets us to the whole point of this posting.
People are not getting married in part because they don't make enough money from wage income. As technology continues to advance and labor continues to fall in value relative to technology in the production process, even in many cases replacing labor completely, only two solutions are possible . . . and, of those two, only one is feasible.
Socialism can continue to advance, and governments can continue trying to even things out by redistributing existing wealth through the tax system or monetary and fiscal policy by inflating the currency. As the current global debt crisis has proved beyond a reasonable doubt, this doesn't work.
The alternative is to adopt Capital Homesteading as a genuinely Pro-Life economic agenda, as proposed in the book Supporting Life. Only in this way can people gain sufficient income to be able to marry if they so choose, and the institution of marriage removed from the social endangered species list.