In the previous posting on this subject, we looked at some fundamentals of money, credit, banking, and finance. And we do mean “some.” We covered key concepts, but not in any depth, primarily for informational purposes, not anything approaching a full explanation. It was, frankly, simply a way to get into the story of how politicians and economists shackled to conventional (and wrong) notions of money and credit have managed to derail reform programs to everyone’s detriment, probably because they were afraid to look stupid or endanger their status or income . . . with the latter probably taking precedence.
Anyway, a small error in the beginning, so Aristotle tells us in De Cœlo, can lead to great errors in the end. Nowhere is this more evident than with the uniquely social goods of money and credit. Few institutions are so basic to civilization, and yet few are so widely misunderstood. Take, for example, the Congressional debates in the early 1970s over “the Proprietary Fund for Puerto Rico” . . . which as we will see in future postings, was sabotaged by people too afraid to do the right thing.
The “Proprietary Fund” was an application of the principles of binary economics. Binary economics, as regular readers of this blog know, is a school of economics that puts the dignity of the human person and the needs of the individual at the center of economic activity. Binary economics is based on the three principles of economic justice presented in two books by Louis Kelso and Mortimer Adler, The Capitalist Manifesto (Louis O. Kelso and Mortimer J. Adler, The Capitalist Manifesto. New York: Random House, 1958.) and The New Capitalists. (Louis O. Kelso and Mortimer J. Adler, The New Capitalists. New York: Random House, 1961.) The three principles of economic justice are 1) Distribution, 2) Participation, and 3) Social Justice.” (The Capitalist Manifesto, op. cit., 66-86. Note that the page numbers cited are from the published hardback, not the e-book linked to above.)
The “Principle of Distribution” is that, just as the creation of new money must be tied directly through the institution of private property to the present value of existing and future marketable goods and services, everyone who participates in the production of wealth should receive a share of the production proportionate to the value of his or her input to production. (Ibid., 67.) This is simply the application of the requirements of “distributive justice” as defined by Aristotle (The Nichomachean Ethics, V.vi.) and Thomas Aquinas. (Summa Theologica, IIa IIae q. 61 a.2.) The consistency of binary economics with Aristotelian and Thomist philosophy is due to Adler, considered the greatest American Aristotelian of the twentieth Century. Adler specifically credited Kelso with the revolutionary breakthrough that provided the theoretical basis for binary economics. (The Capitalist Manifesto, op. cit., ix.)
The “Principle of Participation” is that everyone has a “natural right” to life. This necessarily means that everyone has a right to maintain and preserve his or her life by all legitimate means — especially the right to obtain subsistence by participating in the production of wealth, individually or in free association with others. A “natural right” is a right that human beings have simply because they are human, and which necessarily defines them as “persons.”
|Louis O. Kelso|
In other words, “natural rights” define us as human beings, as “natural persons.” We cannot be considered fully human or human at all if our natural rights are not secured and protected. The most important of the natural rights include (but are not limited to) life, liberty (free association), access to the means of acquiring and possessing private property (especially in the means of production), and the acquisition and development of virtue (the “pursuit of happiness”). (Aristotle, Ethics, op. cit., I.ii.) Pursuing happiness — acquiring and developing virtue — requires power. The most effective, even necessary means of empowerment is direct private ownership of the means of production. (Aristotle, The Politics, I.iv) Acquiring and developing virtue is important because virtue, from vir, “man,” signifies “human-ness.” By acquiring and developing virtue we become more fully human.
The role of “Social Justice” is that when our institutions become distorted or ineffective to the point that they no longer assist us in acquiring and developing virtue, we must organize, restructure our institutions, and bring these institutions back into reasonable conformity with the demands of the natural law. Kelso and Adler called this the “Principle of Limitation.” (The Capitalist Manifesto, op. cit., 68) This is because when one individual or a small group monopolizes ownership of the means of production, as in classic capitalism or socialism, the system must be reformed so that the amount of additional wealth that the monopolists can acquire is limited. In this way others can have equal opportunity to acquire and possess private property in the means of production. This conforms to the “laws and characteristics of social justice.” (See William J. Ferree, Introduction to Social Justice. Arlington, Virginia: Center for Economic and Social Justice, 1997.)
|Fr. William Ferree, S.M., PH.D.|
There is, of course, much more to this. What we have here, however, is enough to understand the principles underlying the proposal for the Proprietary Fund for Puerto Rico. Interested readers may want to go to Chapter 5 of The Capitalist Manifesto for a more in-depth treatment of the subject. (The Capitalist Manifesto, op. cit., 52-86.)
In the next posting on this subject we will start to look at some specifics of the Proprietary Fund.