The Just Third Way

محمد البارودى   في الأربعاء ٠٣ - فبراير - ٢٠١٠ ١٢:٠٠ صباحاً


 

 

 

How We Can Create Green Growth,

Widespread Prosperity and Global Peace

 

By Norman G. Kurland, Dawn K. Brohawn, and Michael D. Greaney

© 2008 Center for Economic and Social Justice

www.cesj.org

Contents

1. INTRODUCTION 1

2. A “SYSTEM FAILURE” IN GLOBAL SOCIETY 2

Addressing Environmental Damage … Effectively 3

Economic Globalization: A Boon or Disaster for Humanity? 4

Why isn’t Global Capitalism Working? 5

The First Challenge: Overcoming Bad Ideas 5

3. A NEW PARADIGM OF POLITICAL ECONOMY 6

Is There a “Just Third Way”? 6

Looking Beyond Socialism and Capitalism 7

4. DEFINING THE JUST THIRD WAY 8

The Architects of the Just Third Way: Kelso, Fuller, Ferree, and King 8

What is Justice? 9

Understanding Social Justice and Social Charity 9

Understanding Economic Justice 11

Kelso’s Economics of Ownership 12

The Three Basic Principles of Economic Justice 12

The Four Pillars of a Just Market Economy 13

Universal Access to Capital Ownership — The Moral Omission 14

Limited Economic Power of the State 14

Free Choice and Open Market Competition 15

Private Property in Productive Assets 16

Why is Private Property Essential to Justice? 16

4. RETHINKING THE FUNDAMENTALS 18

Access to New Money and Credit: A New Right of Citizenship 19

Beyond the Wage Systems of Smith, Marx and Keynes 20

The Transformation of Human Work 20

5. A BLUEPRINT FOR A SUSTAINABLE OWNERSHIP SOCIETY 21

Capital Homesteading: Tax, Credit and Other Macro-Economic Reforms 21

Reforming National Monetary Policy 21

Simplifying the Tax System 22

Linking Tax and Monetary Reforms to the Goal of Expanded Capital Ownership 24

Universal Health Care, Income Maintenance and Retirement Security 25

Combining Efficiency and Justice at the Enterprise Level 25

Justice-Based Management (JBM) 26

Components of JBM 27

Vehicles for Changing the System 28

Capital Homestead Accounts (CHAs) 28

Employee Stock Ownership Plans (ESOPs) 28

Community Investment Corporations/Citizens Land Cooperatives (CICs/CLCs) 29

Regional Natural Resources Banks (RNRBs) 29

Homeowners Equity Corporations (HECs) 29

Ownership Unions 30

6. PRACTICAL APPLICATIONS FOR SOLVING TODAY’S PROBLEMS 30

A Model for Sharing in Green Growth and Land Development: East St. Louis, Illinois 31

A Model for Economic Globalization: JBM Garments in Bangladesh 31

Models for Global Peace 32

Ending the War in Iraq: An Oil Share for Every Citizen 32

The Abraham Federation: A Shared Future for Palestinians and Israelis 32

7. CONCLUSION: PURSUING JUSTICE, NOT UTOPIA 33

The Just Third Way

How We Can Create Green Growth,

Widespread Prosperity and Global Peace

By Norman G. Kurland, Dawn K. Brohawn and Michael D. Greaney

© 2008 Center for Economic and Social Justice

 

 

www.cesj.org

 

We are called to be architects of the future, not its victims.

— R. Buckminster Fuller

1. Introduction

Humanity in the 21

earth’s gravity and left our footprints on the moon. We have created new agricultural and

manufacturing techniques that can feed and clothe billions using a fraction of the labor

once needed. We have connected every corner of the world via communications

technologies, allowing us to share a wealth of knowledge and information, promote

global commerce and exchange, and bring together diverse people and cultures in the

marketplace of ideas.

Yet we peer into an abyss, largely of our own making: the scourge of war threatening

to spread from countries to regions to the world . . . the horror of global terrorism and

weapons of mass destruction . . . a plague of global epidemics from HIV/AIDS and

malaria, to cancer and other illnesses born from a poisoned environment . . . the

seemingly insurmountable gap in economic power and ownership between the rich and

poor within all nations, and between rich and poor nations. Millions left starving,

homeless and with little hope for their futures. As a

st Century faces a conundrum: we have escaped the bonds ofChemical & Engineering News

“Special Report” posited in 1972,

Environmental degradation, affluence that is only an illusion for many, war,

the capital-labor conflict, a system that forces a man to fight for a job on an

environmentally destructive project, unresponsive institutions, and a consumer

who can’t afford to pay for the pollution control costs that will inevitably be

passed on to him. That is a good statement of the problem, which is inevitable

under one-factor economic theory.

2

Even within the richest and most powerful nations, many people are feeling

increasingly vulnerable to loss of jobs and income, and trapped by consumer debt. A vast

majority of citizens have become powerless wage slaves, workers who are now merely

disposable assets in the global economy.

At this crossroads in world civilization, we have to ask ourselves: are we missing

something? Is it time to rethink our paradigms, assumptions and systems? Are there

The Just Third Way — 2

fundamental principles that could guide us in restructuring the laws and institutions that

govern our lives, to bring about peace, prosperity and a healthy environment for every

person on the planet?

2. A “System Failure” in Global Society

Under every economic system operating today, most human beings suffer under a

common defect of both capitalism and socialism, and their various permutations. Simply

put: Most people own no share in the world’s productive capacity. Lacking ownership of

the means of production, they

others. As Jean-Baptiste Say pointed out nearly two centuries ago in a response to the

Reverend Thomas Malthus:

I have drawn a conclusion which appears to me evident, but the consequences

of which appear to have alarmed you. I had said — As no one can purchase

the produce of another except with his own produce, as the amount for which

we can buy is equal to that which we can produce, the more we can produce

the more we can purchase. From whence proceeds this other conclusion,

which you refuse to admit — That if certain commodities do not sell, it is

because others are not produced, and that it is the raising produce alone which

opens a market for the sale of produce.

cannot produce enough to purchase the productions of3

Most people on the planet have no legitimate ownership claim to, and have

insufficient means to purchase, what technology’s phenomenal productive capacity can

generate. On the other hand, the small minority of people who own and control most of

the productive instruments of society end up producing more than they can humanly

consume. As “Say’s Law of Markets” explains: “The power to produce overwhelms the

power to consume.”

4

Rising levels of consumer credit mask this imbalance somewhat by creating a

temporary burst of purchasing power within non-own" face="Times New Roman">

The Just Third Way — 3

accomplishing what should be their primary goal: preventing monopolistic

concentrations of capital.

7

Further hampering our ability to untangle and resolve today’s global problems is a

common tendency to confuse principles with expedients — constructing solutions based

on what the problem-solver judges to be politically acceptable given current

circumstances. By ignoring basic principles, many of today’s policy- and decisionmakers

fail to cure the root causes, and are left to address long-term or systemic problems

with stopgap measures and band-aids. Eventually expedients can create problems of their

own.

The viability and sustainability of solutions to global crises cannot be divorced from

the application of logically consistent and morally sound principle, regardless of any

expedients that may be necessary

this paper we will seek to define and apply sound logic and universal principles, in order

to offer effective, long-term and comprehensive solutions to current global crises.

in the short-term to move toward a desired change. In

Addressing Environmental Damage … Effectively

What happens in a world where the power to produce is rising rapidly due to

technological advances, but the power to consume marketable goods and services is

shrinking, or confined to a stagnant or shrinking consumer base? Producers are forced to

cut costs in order to make their goods and services affordable to more consumers. This

can result in substandard production processes and shoddy goods that harm the

environment, as price rather than quality determines whether a sale is made.

8

Damage to the environment, with its “hidden costs,” exacts a toll on the economy in

terms of rising health costs and other unforeseen consequences of poor stewardship of

our land and natural resources. But when the choice is between “the environment” and

being able to purchase what you need at a price you can afford, true costs of product"left">shape our opinions and condemn us to a

environmentally damaging system on all of us.

are is the way things have to be. Thisstatus quo that imposes an inhuman and

Economic Globalization: A Boon or Disaster for Humanity?

Conventional development frameworks are based on the “win-lose” assumption that

scarcity is inevitable and shared abundance is impossible. R. Buckminster Fuller, a postscarcity

thinker, architect, and engineer, rejected the conventional wisdom. He asserted,

“There is only one revolution tolerable to all men, all societies, all political systems:

Revolution by design and invention.”

10

Fuller’s deep understanding of the synergistic potential of advancing technology to

create universal prosperity, and of the continuing process of doing-more-with-less human

energies and natural resources, suggests to those seeking solutions to problems rooted in

economic injustices: “Don’t try to reform human nature. Reform the environment.”

11

And, as Fuller might put it, “redesign your tools.”

In contrast to Fuller’s optimistic approach to global development, there is widespread

hopelessness around the world. This pessimism has been fueled by the growing

awareness of a force greater than that of any nation state in the world — the force of

economic globalization. In his 1998 book,

Global Capitalism

globalization — driven by a financial elite with the power to shift billions of dollars

almost instantaneously from one country to another — is a reality and will not go away.

The subordination of most world political leaders to the controllers of money was

predictable at least a century ago when one of the world’s earliest financial capitalists,

Baron Mayer Anshel Rothschild, was quoted as saying, “Permit me to control the

issuance of a nation’s money and credit, and I care not who makes the laws.”

One World, Ready or Not: The Manic Logic of, best-selling author William Greider concludes that economic12

For most people, however, economic globalization means a growing gap between rich

and poor, technological alienation of the worker from the means of production, and the

phenomenon of “wage arbitrage.” It means an environment in which global corporations

and strategic alliances can force workers in high-cost wage markets to compete with

labor-saving tools and lower-paid foreign workers.

Even the United States, which has long enjoyed economic strength and stability, is

showing these effects of globalization. Along with an historically high trade imbalance

and a declining dollar, the U.S. continues to have one of the widest gaps between the

“haves” and “have-nots.”

ordinary workers. While unemployment has remained relatively low, there is an

accelerating displacement of workers by technology and cheaper foreign labor, resulting

in greater economic uncertainty and shakier retirement incomes for the average citizen.

13 American business has the widest pay gap between CEOs and

The Just Third Way — 5

Why isn’t Global Capitalism Working?

Most people in general, and academics in particular, can describe problems. They

flounder, however, when it comes to developing comprehensive solutions for countering

threats to regional and global peace, freedom and the rule of law. Many agree that

economic growth equitably shared is necessary for overcoming poverty — the taproot of

conflict, revolutions and war — within and among nations. Few, however, ask new

questions that could reveal

to significantly reduce poverty in a world capable of producing economic sufficiency for

every person.

If “ownership is a

World Bank President James Wolfensohn,

development experts failed to create nations of owners, from the bottom-up? What in the

current system of economic globalization produces an ever-widening and dangerous gap

in economic power and economic self-determination between haves and have-nots,

among nations and within all nations in the global marketplace?

Can free markets, free trade, private property, and limited government be compatible

with economic and social justice? What practical systemic changes could be introduced

to transform the globalization process into a blessing, especially for the poorest of the

poor in Iraq, Gaza, the West Bank, Afghanistan, Kashmir, Indonesia, the Philippines,

Chechnya and other breeding grounds of human hopelessness, group hatred, and the next

rounds of suicide terrorism?

systemic flaws in current development models that have failedsine qua non of sustainable development,” as expressed by former14 why have the strategies of Western

The First Challenge: Overcoming Bad Ideas

Our first hurdle is one of ideas, especially in the field of economics and other “soft

sciences,” which shape the “invisible social environment” that ultimately determines the

quality of life for each of us. This invisible environment consists of our laws, institutions

and “social props” that determine how we as individuals are connected to — or too

frequently are alienated from and possibly victimized by — the physical technologies and

structures that our scientists, inventors, architects and engineers create.

Today’s systems of capitalism and socialism, and their various permutations, share

the same fundamental flaw. The laws and institutions of these systems all concentrate

power and property in the hands of a few, whether in a private elite, or in the State and its

bureaucratic elite. Even in so-called “democratic capitalist” systems, access to the ballot

has no economic counterpart to empower the individual through equal access to the

common good. Underlying this flaw is a moral omission: the current economic paradigms

lack a defining principle of justice that is universal, inclusive and practical for guiding

development in the Age of Super-Technology.

This paper explores the idea of the “Just Third Way,” a new paradigm of political

economy centered on “Justice,” a universal value that is largely misunderstood in the

The Just Third Way — 6

modern world. The Just Third Way argues that all sovereignty within the social order

should begin with each human person, not social institutions or any elite. Underlying its

"left">plutocracy, an inherently unstable mix. The

editorialized that “there is in fact no third way.”

Washington Post on August 30, 1998

Is There a “Just Third Way”?

In contrast to the intellectual fuzziness now pervading high policy circles, this paper

asserts that

• Does not economically empower the people,

• Keeps economic and social power, especially over advanced technologies,

concentrated in the hands of an elite,

• Keeps most people in a status of servile dependency on the State or other

people,

• Lacks a coherent theory and principles of economic justice to guide policy

makers,

• Lacks a structured system for closing the gap between the rich and the poor

within the evolving global marketplace,

no so-called “third way” is a true third way or a “Just Third Way” if it:

The Just Third Way — 7

• Forces the environment to absorb costs that, if consumers had adequate

purchasing power, could be reflected in a just price for goods and services,

• Ignores the central role of such “social tools” as money, capital credit and

central banking in determining how all people can acquire access to assets and

economic power in the future, and

• Remains trapped by inherently bankrupt pay-as-you-go Social Security and

other income redistribution schemes, instead of encouraging asset-backed

systems to link future consumption incomes with future wealth production.

We

answers supplied by the right and left. It offers a new vision and alternative model of

development for countries of the world in which they can succeed to their fullest potential

within the framework of a global marketplace.

can, however, conceive of a “Just Third Way” that goes beyond the traditional

Looking Beyond Socialism and Capitalism

Power will always exist in society. If we accept Lord Action’s insight that “power

tends to corrupt and absolute power corrupts absolutely,” our best safeguard against the

corruptibility of concentrated power is

Webster was also correct that “power naturally and necessarily follows property,” then

democratizing ownership is essential for democratizing power.

In the economic world, property performs the same power-diffusion ">to decentralize

The Just Third Way — 8

power. Furthermore, if Daniel

4. Defining the Just Third Way

The “Just Third Way” is a free market system that economically empowers all

individuals and families through direct and effective ownership of the means of

production.

From the standpoint of moral philosophy, this new paradigm views healthy selfinterest

as a virtue (

common good). It views greed and envy, on the other hand, as vices, both destructive of a

moral and just society. In contrast to capitalism that institutionalizes greed (creating

monopolies and special privileges), or socialism that institutionalizes envy (through

coerced leveling and artificial barriers to creative initiatives), the “Just Third Way”

institutionalizes justice, tapping on the full creative potential of every human being.

i.e., where individual good is directed toward, or in harmony with, the

The Architects of the Just Third Way: Kelso, Fuller, Ferree, and King

The Just Third Way, understood as a holistic paradigm, synthesizes the binary

economic theories and principles of economic justice developed by the late lawyereconomist

Louis O. Kelso, the social justice principles developed by Pius XI and Rev.

William J. Ferree, the world design science concepts of R. Buckminster Fuller, and the

non-violent activism of the Rev. Martin Luther King, Jr.

The Just Third Way starts with the view that all dignity, sovereignty and rights within

the social order begin with the individual human being, not with institutions including,

and particularly, the State. As the Rev. Martin Luther King, Jr. stated:

Man is not made for the State; the State is made for man. To deprive man of

freedom is to relegate him to the status of a thing, rather than elevate him to

the status of a person. Man must never be treated as a means to the end of the

State, but always as an end within himself.

15

The Just Third Way is guided by, as King put it, “the conviction that the universe is

on the side of justice” and “ a deep faith in the future.”

paradigms —whether capitalist, socialist or mixed — are based on “win-lose”

assumptions that scarcity is inevitable and shared abundance is a fairy tale. Under such

assumptions, conflict is the natural outcome of our economic systems, and peace a

momentary lull between bloodshed and war. The mass of humanity is relegated to the

role of victims, pawns and tools, whose futures are largely dictated by the will of a tiny

elite.

In parallel with Buckminster Fuller’s concepts of synergy, “ephemeralization”

(“doing more with less”), and design science — and sharing Fuller’s win-win orientation

and acceptance of human nature — Louis Kelso provided within economics a theoretical

and moral framework for creating a truly classless society and world of universal

affluence where human potential could flower in a healthy environment. Kelso’s redesign

16 In contrast, today’s predominant

The Just Third Way — 9

of how we finance growth and development answered the inescapable question: “How do

we pay for it?”

Recognizing both the individual and social nature of human beings and the inherent

dignity of the human personality (the reason for which we create our social institutions),

the social philosopher Fr. William Ferree refined the concept of Social Justice, as defined

by Pope Pius XI in his revolutionary encyclical,

as historical creations of human society and civilization, institutions such as tax systems,

money, credit, corporations and property, can and must be reformed through “acts of

Social Justice” when they fail to support the dignity and empowerment of each person.

Quadragesimo Anno. Ferree asserted that17

All the seminal thinkers of the Just Third Way recognized that poverty and

powerlessness are an affront to human dignity and freedom. They all foresaw the impact

of technology, systems and environment on human development. And as systems

thinkers, they all understood the dangers of concentrated power, and sought to diffuse it

to all members of the community. Noting the deficiencies in the two governing

paradigms of capitalism and socialism, King called for a new synthesis:

[T]ruth is found neither in Marxism nor in traditional capitalism. Each

represents a partial truth. Historically capitalism failed to see the truth in

collective enterprise, and Marxism failed to see the truth in individual

enterprise. Nineteenth century capitalism failed to see that life is social and

Marxism failed and still fails to see that life is individual and personal. The

Kingdom of God is neither the thesis of individual enterprise nor the antithesis

of collective enterprise, but a synthesis which reconciles the truths of both.

18

What is Justice?

As Pope Paul VI reminded us, “If you want peace, work for justice.”

definitions of “justice” are as many and as varied as the people you ask. Before we can

apply its principles, we need to ask ourselves, what is “justice”? Here is a classical

definition of “justice” by Louis O. Kelso (the intellectual father of “the Just Third Way”)

and his co-author Mortimer J. Adler, the eminent Aristotelian philosopher:

Justice, in its most general formulation, imposes the following moral duties or

precepts upon men who are associated for the purposes of a common life: (1)

to act for the common good of all, not each for his own private interest

exclusively; (2) to avoid injuring one another; (3) to render to each man what

is rightfully his due; and (4) to deal fairly with one another in the exchange of

goods and in the distribution of wealth, position, status, rewards and

punishments.

19 Unfortunately,20

Understanding Social Justice and Social Charity

In his seminal work,

William Ferree, a co-founder of our religiously and spiritually pluralistic center,

The Act of Social Justice (1943), the late Marianist priest Father

The Just Third Way — 10

explained how Pius XI viewed the dignity of the human personality as the basis of any

sound theory of justice:

For Pope Pius XI [in his 1931 Encyclical,

the theory of justice is based squarely on the dignity of the human personality.

His position is that charity regulates our actions toward the human personality

itself, that

the Divine Perfections, and in the supernatural order shares those perfections.

The human personality, however, because it is a created personality, needs

certain “props” for the

human dignity, that include such things as property, relatives and friends,

freedom and responsibility, are all objects of justice. To attack a human

person in his personality

attack him by undermining the supports of his human dignity, as by robbery,

is a failure against justice.

Restructuring of the Social Order],Image of God which is the object of love because it mirrors forthrealization of its dignity. These “props” or supports ofitself, as by hatred, is a failure against charity; but to21

Ferree pinpointed Pius XI’s philosophical breakthrough in defining the “social”

virtues, particularly “social justice.” Preserving the classical concepts of “individual

justice” and other individual virtues that guide interactions

beings

between individual human, Ferree recognized a corresponding set of virtues in the “social” realm, guiding

how we as individuals should interact with our institutions and as members of society

discussing the basis of social justice, Ferree wrote:

The human community, as such, shows forth the perfections of God in ways

that are not open to individuals. This fact is very clearly stated in paragraph 30

of the Encyclical

“In a further sense it is society which affords the opportunity for the

development of all the individual and social gifts bestowed on human

nature. These natural gifts have a value surpassing the immediate

interests of the moment, for in society they reflect a Divine Perfection,

which would not be true were man to live alone.”

Society

creatures, is worthy of love: of a love directed not only towards the

individuals who compose the society, but also toward their union with each

other. This love is social charity.

Moreover, as society thus makes available to man the further perfection of his

potentialities of mirroring the Divine Perfection,

perfections, and hence is an object of the virtue of justice. This justice, Social

Justice, which is directed at the Common Good itself, requires that the society

be so organized as to be in fact a vehicle for human perfection.

. InDivini Redemptoris:itself, therefore, as thus revealing further the perfection of God in Hisit is also a support for these22

The Just Third Way — 11

These fundamental concepts of justice are embedded in the founding ideals of

America and the UN’s Universal Declaration of Human Rights, as well as in the moral

tenets of Judaism, Christianity, Islam, and other great spiritual traditions.

Understanding Economic Justice

If social justice consists of organizing with others to perfect social institutions, then

the pursuit of economic justice is an indispensable part of social justice. Principles of

economic justice deal with all institutions affecting the production, consumption and

distribution of economic goods and services. They deal with the more urgent, material

needs of human beings — in contrast to the higher spiritual, intellectual, cultural and

social needs that must be satisfied for the fullest development of every person. Since

institutions are artifacts created by human beings, all institutions are capable of being

transformed and perfected by human beings. Indeed, as Ferree reminds us, organizing

with others to transform and perfect our institutions is a continuing responsibility of each

of us, once we share a common vision and common principles of effective action.

Among all the writings on the subject of economic justice, the clearest set of

principles we have encountered is in a 1958 book,

by Louis O. Kelso and Mortimer J. Adler. While the book was a bestseller when

published, most scholars never got past its cover (undoubtedly because the word

“capitalist” had negative connotations in many academic circles at the time). Kelso and

Adler challenged basic assumptions of conventional paradigms of political economy.

Even more, they developed a simple yet profound theory of economic justice that sheds

new light on the impact of technology on human work and the development of modern

civilization. They described the political and moral flaws of national “full employment”

policies and how today’s global economic order creates an ever-expanding gap in

economic power, opportunity and incomes between a wealthy elite and propertyless

workers.

As a lawyer Kelso saw that the design of our “invisible” institutional environment

and social tools (especially methods of corporate finance) determines the quality of

people’s relationship to technology. Such intangible things as our laws and financial

systems determine which people will be included or excluded from access to economic

opportunity, power and capital incomes.

Access to capital ownership, Kelso argued, is as fundamental a human right as the

right to the fruits of one’s labor. Kelso demonstrated that the democratization of money

creation and capital credit is the “social key” to universalizing access to future ownership

of productive wealth (particularly in corporate equity). This social key could enable every

person, as an owner, eventually to gain income independence through the profits from

one’s capital.

The Capitalist Manifesto,23 coauthored

The Just Third Way — 12

Kelso’s Economics of Ownership

At the heart of what Kelso called “binary economics”

reality”

political and business leaders and academic economists assume that the mass of people

can only earn a living through their work, and where that is insufficient, through welfare

or charity. They, like most people, remain blind to the reality that accelerating

technological progress makes it possible, even necessary, to solve the income distribution

problems of our global economy through the widespread ownership of the labor-saving

technologies that Buckminster Fuller called “energy slaves.”

could legitimately create economic value through two (thus

manual, intellectual, creative, and entrepreneurial work, and so-called “human

capital”), and

production of marketable goods and services, including tools, machines, land,

structures and infrastructural improvements, management systems, and patents).

Kelso attributed most changes in the productive capacity of the world since the

beginning of the industrial revolution to technological improvements in our capital assets,

and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does

not “enhance” labor productivity,

makes many forms of labor unnecessary. Furthermore, according to Kelso, productive

capital is increasingly the source of the world’s economic growth and therefore should

become the source of added property incomes for all.

Kelso’s revolutionary insights helped him to solve an economic enigma: how

Say’s Law of Markets — rejected both by Marx and Keynes — could achieve

sustainable and balanced growth in a modern global economy. His legal background

enabled him to see how the structuring of basic laws and institutions creates a system

that either concentrates or decentralizes ownership and economic power, that

encourages participation by all or sets up barriers to participation. Kelso invented

“soft technologies” — including monetary and tax reforms, and financial tools like

the ESOP — for lifting up the world’s poor without pulling down the world’s rich or

damaging the environment.

24 or “the economics of25 is a simple but revolutionary proposition: Own or be owned. Today most26 Kelso asserted that peoplebinary) factors of production:Labor (which Kelso defined as all forms of economic work by people, includingCapital (which Kelso defined as anything non-human contributing to thei.e., labor’s ability to produce economic goods. It

The Three Basic Principles of Economic Justice

Kelso based his ideal market system on three essential and interdependent principles

of economic justice:

(1) Participation,

factors of production and if capital’s proportionate contributions are increasing relative to

the input principle. If both labor and capital are interdependent

The Just Third Way — 13

that of labor, then equality of opportunity demands that the right

to the means of acquiring and possessing property) must in justice be extended to all.

to property (and access

(2) Distribution,

distributed based on the value of what one contributes to production — one’s labor, one’s

capital, or both.

market under Kelso’s system becomes the most democratic and efficient means for

determining just prices, just wages and just profits. If both sales revenues and all labor

costs are set by globally competitive market forces, then profits — the revenues left over

after all labor costs and the costs of all suppliers of an enterprise are subtracted —

represent a market-based return to capital in the form of profits to be shared among all the

firm’s co-owners.

The principle of distribution for the virtue of charity (according to need) complements

the distributive principle for the virtue of justice (according to contribution). Charity,

however, should never be a substitute for justice. Without justice people will not be

motivated to produce enough wealth for themselves and to engage in charitable acts for

the needy, and the needy will never become self-sufficient.

the out-take principle. Property rights require that income beAssuming that capital ownership is spread broadly, the free and open

(3) Limitation,

Kelsonians call the principle of “Harmony” and others call “Restorative Justice” or

“Social Justice”). This principle, exercised through organized efforts to transform unjust

institutions, guides the restoration of balance between “participation” (input) and

“distribution” (out-take) when either principle is violated. For the sake of harmony,

personal freedom and equality of opportunity, the just social order puts limits on

monopolistic accumulations of capital and other abuses of property.

the feedback or, in moral terms, the anti-greed principle (which some

The Four Pillars of a Just Market Economy

Common to all economies of the world — whether capitalist, socialist or mixed — is

a set of premises and logical framework called the “wage system.” In general the wage

system assumes that the vast majority of people will earn their basic sustenance through

wages or welfare, while the bulk of productive capital will be owned and/or controlled by

a tiny elite or the State that employs the laboring masses.

All wage systems ignore one or more of what can be called the “Four Pillars,” the

essential principles for building a more just economy:

• Universal Access to Capital Ownership

• Limited Economic Power of the State

• Free Choice and Open Market Competition

• Private Property

The Moral Omission

The Just Third Way — 14

Leaving out any one of these pillars, particularly during a period of economic reform,

weakens the entire fabric of the economy and leads to eventual conflict or collapse.

Applying the Kelso-Adler theory of economic justice, the four pillars offer a policy

framework for transforming “wage systems” into “ownership systems.”

Universal Access to Capital Ownership — The Moral Omission

One of the most crucial problems that Marx addressed in his economic theories was

that ownership of productive assets — “capital” — was limited to the very few. As a

result, no technologically advanced market system could possibly produce sustainable

growth, since working people would have only their labor to sell in direct competition

with labor-displacing technology and a growing world population of workers willing to

work for lower wages.

Unfortunately, Marx’s solution to this mismatch between the rising productiveness of

technology and market-based consumption incomes was to abolish the institution of

private property in technologies, natural resources and all other forms of wealthproducing

assets, shifting power over capital assets from capitalists to state ownership

and control. This resulted in enormous concentrations of wealth and power in the hands

of whatever new elite gained control of the state.

The real problem that Marx faced, however, was not private ownership of productive

property, but systemic

Kelso proposed making every worker an owner of a growing property stake in incomeproducing

assets. This would achieve economic justice for all, make economic power

universally accessible and democratically accountable, and produce optimal rates of

market-determined growth based on a balance between the productive capacity of the

economy and the power of consumers to purchase what the market produced.

Only when society reforms its laws and economic institutions to address this “moral

omission” and lifts systemic barriers to equal citizen access to capital ownership

opportunities, will now-propertyless citizens support politically the three other essential

pillars of the Just Third Way, which free market, limited government theorists since

Adam Smith have been advocating with little political impact.

concentration of private ownership. Turning Marx “upside down,”

Limited Economic Power of the State

Limiting the economic power of the State ultimately involves the goal of shifting

ownership and control over production and income distribution from the State to the

people. To do this, the economic power of the State should be specifically limited to:

• Encouraging sustainable and life-enhancing growth and policing abuses within

the private sector, including environmental damage;

• Lifting barriers to equal ownership opportunities, especially by reforming the tax

system and money-creating powers of the central bank to generate widespread

The Just Third Way — 15

access to low-cost capital credit as the key to spreading ownership and economic

empowerment among all citizens and the full distribution of profits to repay the

credit;

• Preventing inflation and providing a stable, asset-backed currency for sustainable

development;

• Protecting property, enforcing contracts and settling disputes;

• Ending economic monopolies and special privileges, except for limited terms for

holders of patents, copyrights and other intellectual property rights;

licenses available for commercializing taxpayer-funded innovations;

• Encouraging democratic labor unions to become democratic ownership unions

that organize to turn all citizens into owners and promote economic justice in the

ownership, governance and management of all private-sector enterprises;

• Protecting the environment; and

• Providing social safety nets for human emergencies.

Within these limits the State would promote economic justice for all citizens.

Coincident with this objective would be the goal of reducing human conflict and waste

and erecting an institutional environment that would encourage people to increase

economic efficiency and create new wealth for themselves and the global marketplace.

Increased production would increase total revenues for legitimate public sector purposes,

reducing the need for income redistribution through confiscatory income taxes and social

welfare payments.

Supporting advanced research and breakthrough technologies, making royaltyfree

Free Choice and Open Market Competition

Artificial determinations of prices, wages and profits lead to inefficiencies in the use

of resources and scarcity for all but those who control the system. Those in power either

have too little information or wisdom to know what is right, or will set wages and prices

to suit their own advantage. Just prices, just wages, and just profits are best set in a free,

open, democratic and competitive marketplace, where consumer sovereignty reigns.

Assuming economic democratization in the future ownership of the means of production,

everyone’s economic choices or “votes” on prices and wages influence the setting of

economic values in the marketplace.

Establishing a free and open market would be accomplished by gradually eliminating

all special privileges and monopolies created by the State, reducing all subsidies except

for the most needy members of society, lifting barriers to free trade and free labor, and

ending all non-voluntary, artificial methods of determining prices, wages and profits.

The Just Third Way — 16

(Here we recognize that competition among enterprises is the most rational alternative to

monopoly, not something that negates cooperation within competing enterprises.) This

would result in

consumer, a worker and an owner.

Wealth distribution assumes wealth creation, and technological and systems

advances, according to recent studies, account for almost 90% of productivity growth in

the modern world.

distributed through widespread individual ownership of the means of production. The

technological sources of productive growth would then be automatically linked with the

ownership-based consumption incomes needed to purchase new wealth from the market.

Thus, Say’s Law of Markets — which both Marx and Keynes attempted to refute —

would become a practical reality for the first time since the Industrial Revolution began.

decentralizing economic choice and empowering each person as a27 Thus, balanced growth in a market economy depends on incomes

Private Property in Productive Assets

Given the exclusionary and monopolistic nature of capitalism as it evolved from the

beginning of the Industrial Revolution, Karl Marx and most socialists have never

understood the political significance of the institution of private property.

connection between widespread distribution of property and political democracy,

however, was evident to America’s founders. This understanding was reflected in the

1776

Independence

inalienable rights, the

Liberty,

which any just government is formed.

With the abolition of slavery and feudalism, the United States insured that no

American would ever again become the property of another. Through this and other

limitations on the rights of private property, a just government transcends the weaknesses

of a pure

its citizens to lift barriers to private property in the means of production, government

builds a permanent political constituency for a sustainable free market economy.

28 TheVirginia Declaration of Rights, the forerunner of America’s Declaration ofand Bill of Rights. Following John Locke’s triad of fundamental andVirginia Declaration of Rights declared that securing “Life,with the means of acquiring and possessing Property” is the highest purpose forlaissez-faire approach to ownership rights. However, by fulfilling its duty to all

Why is Private Property Essential to Justice?

Owners’ rights in private property are fundamental to any just economic order. In the

law, property is not the things that are owned. Property is the bundle of rights that

determines one’s relationship to things. (In the modern era, we recognize that property

owners cannot legitimately treat other persons as “things,” as in more dehumanizing

cultures including America’s own past.) Property secures personal choice, and is the key

safeguard of all other human rights. By destroying private property, justice is denied.

Private property is the individual’s link to the economic process in the same way that the

secret ballot is his link to the political process. When either is absent, the individual is

disconnected or “alienated” from the process.

The Just Third Way — 17

In his devastating critique of

with Marx’s description of the structural flaws and injustices inherent in a laissez-faire,

monopoly capitalistic system, found three fatal errors

according to Kelso, was “Marx’s failure to understand the political significance of

property”:

Before examining Marx’s second critical error, it may be helpful to take note

of what the concept of “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 that 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

Das Kapital29, Louis O. Kelso, who agreed completely30 in Marx’s analysis. One of these,control.31 [Emphasis added.]

Property in Land.

the acquisition of an original title to land from a sovereign is a political act,

and not the result of operations of the economy. If the original distribution of

land unduly favors any group or type or persons, it is a political defect and not

a defect in the operation of the economy as such. A capitalistic economy

assumes and recognizes the private ownership of land. It may, as under the

federal and state mining laws and federal homestead acts, encourage private

ownership of land by facilitating private purchasing of mining, timber,

agricultural, residential or recreational lands.

With respect to property in land, we need merely note that

Property in Capital.

articles of wealth is equal in importance to property in land. From the

standpoint of the distributive aspects of a capitalistic economy, property in

capital — the tools, machinery, equipment, plants, power systems, railroads,

trucks, tractors, factories, financial working capital and the like — is of

special significance. This is true because of the growing dependence of

production upon capital instruments.

In a capitalistic economy, private ownership in all other

The Just Third Way — 18

Of the three components of production land is the passive source of almost all

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By making productive credit available on a truly democratic basis, society could

move people toward economic self-sufficiency and independence. A broad dispersion of

wealth and power would serve as the ultimate check against abuse of power by the State

or by the majority against minorities or individual citizens.

Money and credit systems are critical institutions in developing principles and

methods for building a just market economy. Control over money and credit (

financial capital) largely determines who will own and control productive capital in the

future.

i.e.,

The Just Third Way — 19

Access to New Money and Credit: A New Right of Citizenship

33

When the subject of money and money creation comes up, we sometimes forget that

money is a man-made thing, and is morally neutral. Its goodness or badness depends

solely on how it is created and how it is used. Like the secret ballot in politics, money is a

uniquely “social good,” an invention of modern civilization, a means for measuring

economic values and enabling people to participate in a market economy.

Before we can transform our national and global economic systems, we need to have

a common understanding and working definition of money. Louis Kelso explained:

Money is not a part of the visible sector of the economy; people do not

consume money. Money is not a physical factor of production, but rather a

yardstick for measuring economic input, economic outtake and the relative

values of the real goods and services of the economic world. Money provides

a method of measuring obligations, rights, powers and privileges. It provides a

means whereby certain individuals can accumulate claims against others, or

against the economy as a whole, or against many economies. It is a system of

symbols that many economists substitute for the visible sector and its

productive enterprises, goods and services, thereby losing sight of the fact that

a monetary system is a part only of the invisible sector of the economy, and

that its adequacy can only be measured by its effect upon the visible sector.

34

Today money is created and credit extended in ways that keep the rich wealthy, and

the poor in their place. Consumer credit, for example, is available virtually to everyone,

while access to capital (or “productive”) credit is restricted to use by those who meet the

universal requirement for collateral,

most risky and highest cost credit, while the rich get the lowest-cost and least risky kind

of credit. It is more than an outworn truism that you need money to make money —

lenders will only extend capital credit to people who already have assets.

For example, let us look at the estimated $2 trillion of growth assets added each year

in the US public and private sectors, consisting of new technology, plant and equipment,

physical infrastructure and rentable space.

approximately $7,000 for every man, woman and child, these productive assets will be

financed in ways that add almost no new owners. If capital credit were to become as

universally accessible as the political ballot, capital assets could become a growing

source of independent capital incomes for all persons and their families.

What makes capital credit special is that by nature it is procreative or “selfliquidating.”

That is, capital credit is restricted to the purchase of assets that are expected

to pay for themselves out of the revenues generated from the capital project which it

financed, and thereafter these assets are expected to earn a continuing flow of profit for

whoever owns the assets. Capital credit is inherently counter-inflationary. Consumer

credit, on the other hand, does not generate its own repayment, and any repayment must

i.e., the rich. Thus, the poor and middle-class get the35 Amounting to a growth increment of

The Just Third Way — 20

come out of the user’s other resources. When used to any significant extent, consumer

credit greatly reduces the purchasing power of the user.

Beyond the Wage Systems of Smith, Marx and Keynes

The object of the Just Third Way is not higher wages or the redistribution of income.

The Just Third Way aims at restructuring the underlying

of participative and distributive justice by lifting institutional barriers that have

historically separated owners from non-owners.

preventing people from participating fully in the economic process as both workers and

owners. More people could then begin earning higher incomes from their own capital, as

well as from their labor, creating for the ordinary citizen what Michael Lind of the New

America Foundation calls a “Capital Wage,” as a supplement to the “Labor Wage” and

the “Welfare Wage.”

system, balancing the demands36 This involves removing the roadblocks37

The Just Third Way provides every person full access to the common good — a legal

system and the social means that will encourage all people to create their own new wealth

and share in profits broadly and equitably. The Just Third Way offers a just free market

system that economically empowers all individuals and families through the

democratization of money and credit for new production. Widespread citizen access to

money power would create universal access to direct ownership of income-producing

capital.

Within the economic process of a market economy, widespread dispersion of capital

ownership (and the powers of property) functions as the economic check against the

potential for corruption and abuse by the government and by corporate and financial

elites. Restoration of the full rights of property and extension of equal access to private

property to every individual, serves as the basis for economic democracy, the necessary

foundation for effective political democracy.

The Transformation of Human Work

In striving to “make every worker an owner,” the Just Third Way recognizes that by

nature

“work” has been stripped of much of its dignity, consigned only to that portion of human

endeavor dealing with “making a living.” In its larger context, however, work involves

physical, mental, entrepreneurial and spiritual forms of human activity, from manual

labor to meditation.

Within the paradigm of the Just Third Way, the highest form of work is not economic

labor, but unpaid “leisure work” — the work of building a civilization and improving the

social order, work that no machine can perform.

Throughout history, creative work has mainly been engaged in by individuals with

independent incomes, those who were supported by a patron or by someone else’s labor.

The Just Third Way provides a means whereby more people can engage in “leisure

every person is a worker. Under the wage system framework, the concept of

The Just Third Way — 21

work,” continue their lifetime learning and personal development, and be liberated from

wage slavery by an independent capital income produced by their own labor-displacing

“technology slaves.”

5. A Blueprint for a Sustainable Ownership Society

In the 1860s, Abraham Lincoln’s Homestead Act turned thousands of people into

owners of frontier land, the single most valuable productive asset at the time, by giving

them the opportunity to earn ownership of one hundred and sixty acres. The land itself

wasn’t just given away. Each homesteader had to develop the land and work it for five

years — the “quid pro quo.” He or she was then granted title.

However, in today’s world, ever-improving technology accounts for most of the

newly produced wealth. Thus, limiting everyone to ownership opportunities in finite land

and natural resources would merely result in a growing population dividing up a static

amount of wealth into ever-smaller pieces, ensuring poverty for themselves and their

descendants. There are, however, social technologies that can be used to democratize

individual ownership of a type of wealth that has no limits save human creativity and

ingenuity. We are referring here to ownership of new tools of production constantly

being added to the world’s expanding technological frontier.

Capital Homesteading: Tax, Credit and Other Macro-Economic Reforms

Louis Kelso invented the Employee Stock Ownership Plan (ESOP) for workers in the

corporate sector as a first step toward a Capital Homesteading plan for all citizens. For

the economic policies of government at any level to work for the greatest number of

people, such policies have to build a universal political constituency for free enterprise

growth. A Capital Homestead Act

principles of justice at both the macro- and micro-economic levels.

Components of a national Capital Homesteading program are interdependent,

supporting the total program like the legs of a tripod:

1) Reforming national monetary policy,

2) Simplifying the national tax, and

3) Linking tax and monetary reforms to the goal of expanded capital ownership.

38 promotes such a broadened constituency by applying

Reforming National Monetary Policy

Central banks were invented to create money. Speaking somewhat flippantly, the

economist Paul Samuelson calls central banks “legal counterfeiters.” They can create

good money linked to productive growth or bad money with no asset backing. Only the

latter is inflationary.

The Just Third Way — 22

Through Capital Homesteading reforms, economic growth would be freed from the

slavery of past savings (“old money”), while creating a domestic source of new assetbacked,

interest-free money and expanded bank credit to finance new capital repayable

out of “future savings.”

newly created wealth is universally accessible to every citizen, such newly created money

and credit would only be available through economic democratization vehicles,

administered through the competitive member banks of a well-regulated central banking

system.

The creation of such new money and credit under Capital Homesteading would be

non-inflationary and would simultaneously broaden purchasing power throughout the

economy. To accomplish this, a key reform under Capital Homesteading is a two-tiered

interest policy by the central bank that would sharply distinguish between productive and

non-productive uses of credit.

Under the first tier, future increase in the money supply (“new money”) would be

linked to actual growth of the economy’s productive assets, creating new owners of new

capital through widespread access to interest-free capital credit repayable with future

profits. The central bank would create (

adding their normal markup as service fees above the cost of money, thus establishing an

39 To ensure that ownership of future private-sector growth andi.e., “monetize”) interest-free credit, with lenders

unsubsidized

public with a currency backed by increasingly more efficient instruments of production,

real wealth-producing capital assets, rather than over $9.5 trillion of unsustainable

government debt.

The second tier would allow substantially higher interest rates for non-productive

purposes, for which “past savings” or “old money” would remain available. The central

bank would be restrained from future monetization of national deficits or encouraging

other forms of non-productive uses of credit, causing upper-tier credit to seek out already

accumulated savings at market rates.

Capital Homesteading would also provide through capital credit insurance a rational

way to deal with risk, as well as an additional check on the quality of loans being

supported by the central bank. Capital Homesteading would promote private-sector

insurance and reinsurance pools to offset the risk that the enterprises issuing new shares

on credit might fail to repay the loans. Such capital credit default insurance would

substitute for “collateral” demanded by most lenders to cover the risk of non-payment,

thus enabling the poor and others with few assets to overcome the collateralization barrier

that excludes poor people from access to productive credit.

minimal rate for financing technological growth. This would provide the

Simplifying the Tax System

Few Americans today would label the U.S. tax system as either simple or fair.

Americans believe that tax breaks are mainly benefiting the extremely wealthy. While the

top 5% of Americans account for more than half of all personal income tax revenues,

40 Many

The Just Third Way — 23

through advantageous arrangements wealthy taxpayers frequently are able to avoid

paying anything but a token amount of taxes on their capital incomes. The payroll tax and

sales and excise taxes take a much bigger share of disposable income from middle and

low income Americans than from wealthy Americans, according to the Institute on

Taxation and Economic Policy.

41

Meanwhile, our current approach to taxation continues to be justified under the

erroneous assumption that there is no other way than through supply-side tax incentives

to stimulate new investments and create jobs.

42

A just tax system would encourage accelerated rates of sustainable and life-enhancing

growth in wealth-producing assets, enable all citizens to become economically selfsufficient

in the process through growing “Capital Homestead” accumulations, and tax

every citizen’s consumption incomes above a decent living level, at a rate sufficient to

balance the government’s budget.

43

A more realistic and just tax today would be a single rate imposed on all directly

earned and so-called “unearned” incomes above a decent level needed to meet all one’s

basic living needs and savings for retirement. Thus, the burden of government would be

spread proportionately among all taxpayers earning more than the exemption levels. A

single tax rate would be administratively more efficient than a progressive or graduated

tax. Ideally, the single-rate tax on individuals would cover all government expenditures

each year, including welfare, defense, interest on the Federal debt, Social Security and

Medicare obligations, unemployment and all other current spending not covered by user

fees. Incomes exempted from taxes could also cover the cost of private-sector health

insurance premiums under universal comprehensive health care coverage. Health

vouchers would be supported through general revenues to enable the poor to choose

among private-sector providers under the single-rate tax system.

This will allow for the gradual or immediate elimination of regressive payroll taxes

on workers and companies, making the economy more competitive. And it would help

make government vastly more accountable and transparent to the electorate. If tied into a

vigorous national growth and expanded ownership strategy, one could easily imagine

future candidates for public office actually competing for votes on the basis of who could

offer the best government services at the lowest single rate. Each year’s single direct tax

rate could be adjusted up or down to provide sufficient revenues to avoid budget deficits

and even pay off government debt over time.

Taxes on property and capital improvements would be discouraged as impediments to

development. Inheritance, gift and wealth taxes would be redesigned to encourage

broadly-based ownership of large aggregates of existing wealth, rather than passing

monopolistic accumulations of wealth and economic power from one generation to the

next.

The Just Third Way — 24

Linking Tax and Monetary Reforms to the Goal of Expanded Capital Ownership

Capital Homesteading would raise as a goal of national economic policy, universal

participation in the ownership of capital resources, alongside full employment of labor

resources. These two goals would be, as the late Senator Hubert Humphrey put it, the

“twin pillars of our economy.”

economic institutions would be encouraged to upgrade their programs to maximize

ownership opportunities for all citizens

• restructuring Federal Reserve policy and Federal tax policy to favor ownershipexpanding

productive credit over non-productive and speculative credit;

• unharnessing the private sector to turn underutilized and wasted human and

technological potential into feasible “green growth” and renewable energy

technologies;

• spurring the economy to new heights by increasing entrepreneurial innovations

and productive private-sector jobs to compete with monopolistic enterprises;

• providing a long-term solution to the unsustainable debt crisis on Wall Street and

from $9.5 trillion in past Federal deficits and $74 trillion

deficits in Medicare and Social Security; and

• radically reducing the growing costs and dependency of citizens on governmentcreated

jobs and welfare.

• leaving more money in people’s pockets so that they can meet their own needs

without recourse to State aid or private charity as a result of taxing away income

people need to survive.

This paper assumes no increase in the current rate of new capital formation every year

($7,000

under the Capital Homestead Act. We calculate that an annual allocation of $7,000 of

capital credit to every Capital Homestead Account would finance a sustainable green

growth economy, and enable every citizen to become economically independent, within

two generations. A child born in 2008 would accumulate over $460,000 and receive after

taxes annual dividend incomes of close to $46,000 by the time he or she reached age 65.

In addition that citizen would receive nearly $1.6 million in after-tax dividends before

reaching 65 to supplement wage, salary and other incomes earned during those years.

44 Monetary and tax policy-makers and all public-sector45 by:46 projected futuresper capita) and full implementation of the tax and monetary reforms proposed47

These steps would restore the original meaning of “the American Dream” by enabling

every citizen from birth to death to enjoy property incomes, expanding economic

independence and property rights in a 21st Century Ownership Society.

The Just Third Way — 25

Universal Health Care, Income Maintenance and Retirement Security

The tax and monetary reforms proposed by the Capital Homestead Act would

effectively address economic defects in our currently fragmented and costly health care

system, and would enable all Americans to receive the care they need with minimal

public sector and bureaucratic control. The tax system, for example,

family from paying any income or payroll taxes on incomes below

cover their own basic living expenses. That family could then afford to pay premiums for

nationally standardized, comprehensive health care coverage offered by the private

sector, with no exclusions. Needy families would receive a health voucher to pay for the

same coverage. Capital credit would also be provided to health delivery systems and

mutual health insurance companies owned and governed jointly by health care providers

and subscribers.

would exempt a fourmember$100,000, to48

The basic elements of universal health coverage under Capital Homesteading would

include:

• Pooling of risk. “The Doctors’ Plan” developed by CESJ employs a basic

principle of insurance: Spread out risk by pooling the entire U.S. population in the

entire annual cost of health care, to determine the

individual.

• Health care coverage borne by the individual rather than the employer.

• Universal coverage with no exclusions.

• Standardized minimum insurance package.

• Required level of coverage.

• The means for citizens to choose and pay for their own health care providers

through personal exemptions, deductions, and deferrals to allow citizens to

accumulate a viable estate of income-generating capital assets.

• Payment of all entitlements and other government spending at present levels from

general revenues. This plan would eliminate the payroll tax on workers and

employers, make dividends deductible to corporations, and balance the budget by

substituting a single rate tax on non-exempt personal incomes from

per capita cost for everyall sources.

Combining Efficiency and Justice at the Enterprise Level

Work in most companies today follows the “scientific management” philosophy of

Frederick Winslow Taylor. Writing in 1911, Taylor proposed that systemizing efficiency

should be the primary focus of corporate managers. He declared, “In the past, man was

first. In the future, the system will be first.”

Unfortunately, Taylor’s system turned the worker into a disposable human tool, a

worker-for-hire, a wage serf. As satirized in the classic movie “Modern Times,” where

The Just Third Way — 26

Charlie Chaplin actually

dehumanized the worker and the culture of work, pitting workers against technology.

Taylor was also oblivious to another danger inherent in his system: it left ownership,

control and the distribution of profits in the hands of a small elite of managers, time-study

engineers and owners. His system offered once self-reliant workers higher wages in

exchange for their loyalty to what many consider a modern form of feudalism.

Most companies today still operate according to Taylor’s top-down vision of the

workplace. However, the advent of robotics, advanced informational systems, and the

globalization of production, marketing and distribution are forcing a basic shift in how

we view the role of the worker and the nature of the workplace.

becomes a mere cog in the assembly line, Taylor’s system

Justice-Based Management (JBM)

Because of global and technological change, companies are recognizing that their

survival and success will require changes in the way they “do business.” Increasingly,

they are seeking new, more flexible ways of rewarding and motivating their workers

while controlling costs and delivering ever-higher levels of value to their customers.

They are also realizing that these objectives are impeded by the adversarial nature of the

surrounding economic and cultural environment — a byproduct of Taylor’s philosophy

of work and the inherent instability of the wage system. Businesses are coming to see that

what is needed is a new way of thinking.

This new way of thinking would not reject the critical role of systems, but would

redesign systems to put people first. It would create a new management approach that rehumanizes

the workplace. It would shift power, responsibility and control over modern

tools and advanced organizational systems from the few to every person affected by the

process.

The new system would combine principles of equity (justice and ownership) with

principles of efficiency, to raise the performance of an enterprise and its workers to their

highest potential, in order to better serve their customers and other stakeholders. Instead

of tapping into the wisdom, knowledge and creativity of only a few, the new system

would recognize the advantages of drawing out and combining the wisdom, knowledge

and creativity of every worker.

Some of the most progressive private-sector firms have begun to implement

successful new approaches for motivating workers, improving productivity and quality,

facilitating change and maintaining continuity in their organization’s culture. One

comprehensive approach, developed by our Center for Economic and Social Justice

(CESJ, is called “Justice-Based "left">and as an owner, and to inspire all workers to work together to serve and maximize value

to their customers. JBM embodies two precepts of equity: (1) that people are entitled to a

proportionate share of what they helped to produce, both with their labor and their

productive assets; and (2) that all people are entitled to live in a culture that offers them

equality of dignity and opportunity, with equal access to the means of acquiring property

and power to secure their fundamental rights.

50 JBM was developed to bring synergy where there is now

Components of JBM

Justice-Based Management marries the quality, educational and participation aspects

of Total Quality Management

ownership concepts underlying employee stock ownership plans (ESOPs). JBM provides

a system of participatory structures and processes

of each person in the company. JBM also offers workers an opportunity to participate as

first-class shareholders in the company’s governance, equity growth, and in monthly and

annual profits on a profit center basis.

A JBM system typically incorporates an employee stock ownership plan (ESOP),

individual and team performance feedback (

sharing), ownership education and sharing of financial information, and structured

participatory management (including the right to vote one’s shares to elect

representatives to the company’s board of directors). JBM also reinforces within ongoing

information, communications and education programs, a broad understanding by all

employee-shareholders of the interdependency among every person, department, and

profit center in serving the customer and competing in the marketplace.

Experience has shown that within a true culture of ownership, workers become

empowered to make better decisions, discipline their own behavior, and work together

more effectively as a team.

owner, as well as a worker, JBM helps unite everyone’s self interest around the

company’s bottom-line and shared vision and values. As such democratically owned and

organized enterprises begin to multiply (encouraged by an institutional environment that

51 and Open Book Management,52 with the equity and53 for diffusing power down to the levele.g., frequent and formula-based cash profit54 Because each person contributes, risks and shares as an

The Just Third Way — 28

universalizes access to credit for capital ownership), a more free and just market system

can take root and thrive.

55

Vehicles for Changing the System

Based on the principles of binary economics and the free market, a number of privatesector

vehicles have been developed for implementing the transformation to a more just

economy. These include such innovations as Capital Homestead Accounts, Employee

Stock Ownership Plans or “ESOPs,” Community Investment Corporations, Regional

Natural Resources Banks, Homeowners’ Equity Corporations, and Ownership Unions.

Capital Homestead Accounts (CHAs)

56

The Capital Homestead Account (CHA) was developed to channel capital credit to

citizens for private-sector green growth and to create private property stakes and

ownership incomes for every person. Each citizen could establish from the time of birth a

tax-deferred CHA to provide him or her a dividend income for supplementing income

from other sources and to provide for retirement. The tax system would also eliminate the

traditional double taxation of corporate profits in ways that would maximize greater

savings and private-sector investments in new plant, equipment, infrastructure, rentable

space and other income-generating capital assets and would remove other features that

now discourage widespread ownership.

The discount windows of each of the 12 regional Federal Reserve banks would create

“new money” and authorize the extension of interest-free capital credit (including only

transaction costs and risk premiums) under Section 13 of the Federal Reserve Act.

Members banks would serve as “capital credit irrigators” for financing faster rates of

sustainable private-sector growth in each of the regions. The new money would be assetbacked

and channeled through bank-administered Capital Homestead Accounts in equal

allotments to enable every citizen to purchase new full-dividend payout shares issued to

finance the green growth assets. The loans would be privately insured by the pooling of

risk premiums and structured to be repaid wholly out of pre-tax profits expected to be

distributed on the new shares.

Employee Stock Ownership Plans (ESOPs)

57

Leveraged Employee Stock Ownership Plans (ESOPs) have changed the culture of

many businesses around the world, turning over 10 million US workers into shareholders

of 10,000 mostly successful companies. The ESOP channels money power to corporate

workers through self-liquidating capital credit, secured and repayable with the future

profits that these worker-owners help generate. Lower-cost credit through Capital

Homestead Accounts for workers and all members of their families would encourage

more companies to add ESOPs to finance their acquisitions and growth in national and

global markets.

The Just Third Way — 29

The ESOP has been enacted into over twenty US laws and is being used by over

10,000 companies in the United States, and increasingly in the United Kingdom and a

growing number of other countries. What makes it different from other ways for workers

to purchase ownership shares is that the ESOP enables many workers with little or no

assets to gain an equity stake and share profits in the company in which they work — the

workers pay for their shares out of future corporate profits, not by reducing their takehome

incomes.

58

Community Investment Corporations/Citizens Land Cooperatives (CICs/CLCs)

59

Community Investment Corporations (CICs) — also referred to as “Citizens Land

Cooperatives (CLCs)” — offer a “Just Third Way” for planning and building new

communities, or redeveloping low-income communities, under professional management

and with access to interest-free Federal Reserve financing. The CIC was designed as a

private-sector economic empowerment vehicle for all citizens who are permanent

residents in a defined area. It would replace typical land development corporations whose

“urban removal” schemes often force out low-income residents unable to afford rising

real estate costs associated with higher land values.

As a tax-deferred vehicle (similar to a leveraged employee stock ownership plan), the

CIC would be able to receive interest-free money through the central banking system in

order to purchase land, with the loans repaid by its land development and rental profits.

Every local citizen would automatically be a voting shareholder in this for-profit land

development corporation and would share in ownership incomes from land rentals,

natural resource extraction fees and infrastructure user fees. Land owned by government

could be transferred free to its citizens through their CICs/CLCs.

Regional Natural Resources Banks (RNRBs)

Similar to the CIC (or CLC) for community-based land planning and development, the

Regional Natural Resources Bank (RNRB) was designed to link citizens as owners to the

land and natural resources on a regional basis. Like the CIC/CLC, the RNRB would have

a representative board elected by citizen-shareholders for approving, financing and

maintaining infrastructure projects, approving construction contracts under competitive

bidding, and marketing to attract feasible new investment to the region. A proposal called

“The Katrina Plan” would employ a citizen-owned RNRB for financing reconstruction

of the hurricane-ravaged Gulf States region.

in Iraq: An Oil Share for Every Citizen”), an RNRB could also serve to build direct

ownership of the oil and other natural resources into every Iraqi citizen.

60 As mentioned below (see “Ending the War

Homeowners Equity Corporations (HECs)

61

A bold strategy to solve the home mortgage crisis — a crisis with serious

repercussions throughout the world — is an innovative “rent to own” vehicle called the

“Homeowners’ Equity Corporation” or “HEC.”

The Just Third Way — 30

A HEC is a for-profit stock corporation whose shareholders would be homeowners in

danger of foreclosure. HECs — and there should be many, to provide redundancy, lower

risk, and ensure competition in a community — would purchase distressed properties at

the current market value. HECs would obtain acquisition loans from commercial banks,

which in turn would discount the loans at the local Federal Reserve at a rate reflecting

transaction costs and a revised risk premium. The homes could then be leased at a

realistic market rate to their former owners or new tenants.

The tenant would earn shares in the HEC as lease payments were made, sufficient to

cover debt service, maintenance, and taxes. When the acquisition loan for a particular

property was fully paid, the tenant could exchange his or her HEC shares for title, or

continue as a tenant/shareholder at a reduced lease payment, sufficient to cover

maintenance and property taxes. Financing the purchase of properties through the

Federal Reserve System and its member banks would cost taxpayers nothing and would

be the first step in restoring a currency backed by hard assets instead of government debt.

This pioneering alternative may require some enabling legislation from Congress to give

it powers similar to those currently enjoyed by leveraged ESOPs.

Ownership Unions

62

An important goal of the Just Third Way is the transformation of

Labor Unions into

Ownership

membership has been steadily shrinking) to reach out to and represent all shareholders,

including worker-owners. An Ownership Union is designed to work collaboratively with

management to secure financing of advanced technologies and other new capital

investments through Capital Homestead Accounts for all citizens. It is intended to

represent a growing constituency of worker- and citizen-owners on governance rights

issues as well as to help lower all barriers to accelerated and sustainable rates of green

growth in a more democratically accountable corporate and financial sectors.

Ultimately, Ownership Unions will shift the source of worker incomes from inflationinducing

wage and benefit increases, to widespread distribution of growing profit and

equity incomes to worker- and citizen-owners. This will enable American companies to

become more cost-competitive in global markets and to reduce the outsourcing of jobs to

workers willing or forced to take lower wages.

Unions. This would expand the mission of unions (whose private-sector63

6. Practical Applications for Solving Today’s Problems

We have outlined above a new way of understanding major economic problems

confronting all societies. We have presented new policy reforms for ensuring that every

person has equal access to future ownership opportunities in green growth and wealth yet

to be created. Now we can examine some immediate applications of these ideas to

demonstrate practical ways to resolve our growing global crises.

The Just Third Way — 31

A Model for Sharing in Green Growth and Land Development: East St. Louis,

Illinois

The Metro East Citizens Land Cooperative (MECLC), in partnership with Equitech

International, LLC, and Equity Expansion International, Inc., is now seeking funding

from the Federal Government and State of Illinois to construct and demonstrate two

innovations of national significance: a demonstration model of 1) advanced renewable

energy systems that 2) will be owned by community residents as citizen-owners of a

Citizens Land Cooperative [based on CESJ’s Community Investment Corporation (CIC)

model described above].

energy expects to generate 2,300 new jobs in a community that is currently experiencing

31% poverty. The initiative is being led by interim chairman of the MECLC board Mayor

Alvin Parks of East St. Louis together with 10 other mayors of neighboring communities

bordering the Illinois side of the Mississippi River.

The renewable, waste-to-energy system being demonstrated is called an EMacrosystem.

This integrates two proven technologies: Solar Fuel Cell Regeneration and

Waste Steam Reforming. These technologies will be combined into a stand-alone,

emissions-free, premium power 7.5 megawatt power plant and manufacturing center,

which can remediate agricultural, industrial, medical and municipal waste streams. The

E-Macrosystem can also contribute emissions-free power to power grid systems or

remote locations where electricity is not available, and has marine applications. The

combination of a CIC/citizens land cooperative and the E-Macrosystem can be replicated

and exported for national and world-wide use.

64 This exciting national demonstration of advanced renewable

A Model for Economic Globalization: JBM Garments in Bangladesh

JBM Garments in Bangladesh is organizing as a company to be owned 80% by its

workers through a leveraged ESOP to compete with the sweatshops in South Asia.

Although the garment industry only became established in Bangladesh in the early

1980’s, it has grown to become the major export industry of the country, annually

accounting for 60-75% of the country’s total exports. Due to extensive poverty and

immense population in the country, the availability of low-cost labor has made the

garment industry a constantly growing concern.

The proposed JBM Garments Ltd., implementing a Justice-Based Management

operational system, would present a model for the country and for the international

community, that would demonstrate the economic viability of a factory owned by the

workers themselves, managed by highly qualified and experienced personnel and

operating with exemplary ethical standards of worker treatment and participation, quality

production, and marketing integrity.

This model will be helpful to the Bangladesh government and community in uplifting

the reputation among buyers and the general public in the importing countries, who are

more and more aware/informed of practices that exploit the workers who produce the

The Just Third Way — 32

garments. JBM Garments Ltd. would help to share its successful design with the industry

at large and assist in maintaining its vitality.

Models for Global Peace

There can be no peace without justice, and there can be no justice without economic

justice. This requires that every person be empowered with the means of acquiring and

possessing property (the economic equivalent of the political ballot), in order to

participate fully, as a worker and an owner. CESJ has developed a number of prototypes

for applying and delivering economic justice to the people of the world. These should be

studied by policy makers — and all people of good will — seeking viable and lasting

solutions.

One precedent on the scope of a “Marshall Plan” was the bipartisan Presidential Task

Force on Project Economic Justice under President Reagan. This commission developed

a strategic plan based on CESJ’s proposals for economic democratization to counter the

spread of Marxism in the 1980s throughout Central America and the Caribbean.

65

Project Economic Justice for the Middle East

offensive in the “War of Ideas” for countering violent extremism and recruitment of

suicide bombers.

could provide a model for a moral

Ending the War in Iraq: An Oil Share for Every Citizen

The CESJ Iraq Oil Plan would provide each Iraqi man, woman and child a single

lifetime, non-transferable ownership share in the nation’s oil resources and oil profits. It

differs from all other plans that have been proposed, such as the trickle-down sharing of

profits (but

Act, the “an oil share for every citizen” plan would economically emancipate all Iraqis. It

would give them a property stake to defend against terrorists, and would produce taxable

dividend incomes for every citizen. Increased incomes would help pay for the costs of a

limited government dependent on the people, rather than making citizens dependent on a

government with unlimited powers.

This plan would create a cost-free starting point for a free enterprise version of

economic democracy — the basis for a stable, corruption-resistant and highly

accountable political democracy. It would bring a speedy and honorable conclusion to the

advanced green technologies and a “Global Free Trade Zone” — could start in the West

Bank, Gaza and Jerusalem, and be adopted by all nations throughout the Middle East.

As a basic right of citizenship, all citizens would gain an ownership share in the land

and other natural resources through a Natural Resources Bank and have equal access to

capital credit to finance the growth of the economy. The unity reinforced by this shared

ownership strategy would bring stability and prosperity to this critical region of the

world. It would also demonstrate an alternative nation-building model for other conflictprone

regions of the world, including Afghanistan, on how the “Just Third Way” could

resolve group conflicts rooted in economic insufficiency.

7. Conclusion: Pursuing Justice, Not Utopia

Mankind will never achieve a “perfect” economic system where all drudgery is

eliminated and everyone is free to do the work they prefer. However, before the

opportunity passes, it becomes imperative for all economies of the world to implement

effective programs of expanded ownership of productive assets. The alternative is a

pendulum swing between capitalism and socialism, where any period of stability merely

serves as preparation for the next violent overthrow.

Many aspects of the Just Third Way will be determined by reforming tax and banking

laws that affect the process of democratizing productive credit. How this democratization

is brought about — the timing, priorities and procedures — are social issues best

discussed in an open and democratic fashion by people aspiring to build a free and just

future for themselves.

We have reached a rare moment in history. Having discarded the failed systems of

socialism and communism, many nations are now struggling to protect their citizens

against the loss of economic sovereignty under the Wall Street capitalist model of

economic globalization. Before the pendulum swings back to socialism, all nations of the

world have a chance to deliver for their citizens an economic revolution without victims,

a revolution of justice and hope. This positive global revolution would be consistent with

the unrealized ownership vision and ideals of America’s founding fathers and the ancient

principles of justice expressed in Islam, Christianity and Judaism.

As they search for a better future, the citizens of developing and transforming

economies — as well as those living in the developed countries — need an alternative to

the outmoded and dehumanizing systems of traditional socialism and capitalism. All

nations now have the power to create new property for the poor, without taking existing

property from the rich. Leaders who believe in Peace through Justice have in their reach a

new model for economic globalization. Guided by a true and just third way, we can meet

the challenge of R. Buckminster Fuller to:

The Just Third Way — 34

. . . make the world work for 100% of humanity, in the shortest possible time,

through spontaneous cooperation without ecological offense or disadvantage

of anyone.

68

Notes

1

R. Buckminster Fuller, Utopia or Oblivion: The Prospects for Humanity, Bantam Books, 1969.

2

Thomas T. Bradshaw, Chemical & Engineering News, February 21, 1972, p. 26.

3

Jean-Baptiste Say, Letters to Malthus, 1821.

4

Bradshaw, op. cit., p. 26.

5

Ibid., p. 31.

6

Ibid., p. 23.

7

Ibid., p. 26.

8

Ibid., p. 27.

9

Ibid.

10

Fuller, Utopia or Oblivion, op. cit.

11

Ibid.

12

Frederick Merton, The Rothschilds: A Family Portrait, Athenium, 1962.

13

Institute, in

Greaney, Economic Justice Media, 2004, pp. 197-199.

“Statistics on Wealth and Income Distribution,” excerpted with permission of the Shared CapitalismCapital Homesteading for Every Citizen, by Norman Kurland, Dawn Brohawn, and Michael

14

See endorsements for The Ownership Solution by Jeff Gates, Addison-Wesley, Reading, MA, 1998.

15

Martin Luther King, Jr., “Pilgrimage to Nonviolence,” Stride Toward Freedom, 1958.

16

Ibid.

17

foreword by Norman G. Kurland, J.D., Center for Economic and Social Justice and Social Justice Review,

1997. Free download at http://www.cesj.org/thirdway/socialjustice/introtosocialjustice.pdf.

William J. Ferree, S.M., Ph.D., “Introduction to Social Justice,” Paulist Press, 1948, republished with

18

Martin Luther King, Jr., op. cit..

19

World Day of Peace Message, January 1, 1972.

20

Louis O. Kelso and Mortimer J. Adler, The Capitalist Manifesto, Random House, 1958. p. 66.

21

Ferree, op. cit., Chapter III, “Introduction to Social Justice,” p. 24.

22

Ibid. at pp. 24-25.

23

Kelso and Adler, op. cit., n. 1.

24

1967; Robert Ashford and Rodney Shakespeare,

of America, 1999; and Norman Kurland, “A New Look at Money and Credit: The Kelsonian Binary Model

for Achieving Rapid Growth Without Inflation,”

215.

Louis O. Kelso and Patricia Hetter, Two-Factor Theory: The Economics of Reality, Random House,Binary Economics: The New Paradigm, University PressJournal of Socio-Economics, December 2001, pp. 495-

25

Ibid. Two-Factor Theory: The Economics of Reality.

26

Fuller, op. cit, pp. 150-2, 236.

27

and Policy Options,”

Solow, in K. J. Arrow, S. Karlin, and P. Suppes, eds.,

pp. 89-104, Stanford University Press, 1960. Also: Edward Denison, “Accounting for United States

Economic Growth: 1929-69,” Washington, DC: Brookings Institution, 1974, and

Economic Growth: The United States in the 1970s

John W. Kendrick, “Productivity Trends and Recent Slowdown: Historical Perspective, Causal Factors,Contemporary Economic Problems, 1979, American Enterprise Institute; also R. M.Mathematical Methods in the Social Sciences, 1959,Accounting for Slower, Washington, DC: Brookings Institution, 1979.

28

Louis O. Kelso, “Karl Marx: The Almost Capitalist,” American Bar Association Journal, March 1957.

29

Ibid.

30

previously advanced by David Ricardo” and (2) “his mistaking the wealth produced by capital for “surplus

value”, i.e., value he thought was created by labor and stolen from the laborer by the capitalist.” A postscarcity

philosopher whose views on the labor-displacing significance of technological change

The other two errors of Marx identified by Kelso were: (1) “his adoption of the labor theory of value

The Just Third Way — 35

complemented those of Kelso was R. Buckminster Fuller. See his

Humanity

Utopia or Oblivion: The Prospects for, New York: Bantam Books, 1969 and the web site of the Buckminster Fuller Institute at

http://www.bfi.org

.

31

Kelso, op. cit. “Karl Marx: The Almost Capitalist.”

32

Ibid.

33

Rapid Growth Without Inflation,”

Norman G. Kurland, “A New Look at Prices and Money: The Kelsonian Binary Model for AchievingThe Journal of Socio-Economics, 2001. Available at

http://www.cesj.org/binaryeconomics/price-money.html

.

34

Kelso and Hetter, op. cit., Two-Factor Theory: The Economics of Reality, p. 54.

35

Economic Report of the President, http://w3.access.gpo.gov/eop/

36

and Mortimer Adler’s profound book with the misleading title,

Random House, 1958). A further refinement of the specific principles can be found in

Poverty: The New Role of Property

The moral framework of the Just Third Way is discussed in greater detail in Chapter V of Louis KelsoThe Capitalist Manifesto (New York:Curing World(1994).

37

Journal,

“Are We Still a Middle-Class Nation?,” by Michael Lind of the New America Foundation, The AtlanticJanuary 20, 2004.

38

Homestead Act.” Ronald Reagan in a 1964 speech to Young Americans for Freedom picked up the label,

advocating expanded ownership reforms. CESJ continued to promote Kelso’s comprehensive legislative

reforms but in the 1990s began using the name “Capital Homestead Act.” CESJ considers this term more

appropriate for describing the world design science revolution of Buckminster Fuller and new forms of

technology in the 21

reforms for transforming any economy to one that conforms to the Just Third Way, see Norman Kurland,

Dawn Brohawn, and Michael Greaney,

2004. For a Just Third Way strategy of tax reform, see Norman G. Kurland’s article, “Beyond ESOP: Steps

Toward Tax Justice,”

New Role of Property

Social Justice, Washington, DC.

In the 1964 presidential elections, Louis Kelso and Walter Lawrence first coined the term “Industrialst Century. For a comprehensive blueprint of monetary, tax and other macroeconomicCapital Homesteading for Every Citizen, Economic Justice Media,The Tax Executive, April and July 1977; republished in Curing World Poverty: The, Social Justice Review, 1994; and other publications of the Center for Economic and

39

Discount Window,” Norman G. Kurland,

no.1, Winter 1998.

Ibid. at pp. 1-10, 43-64. Also see “A New Look at Prices and Money” at n. 33 and “The Federal ReserveThe Journal of Employee Ownership Law and Finance, vol. 10,

40

Third Way.” It was first conceived by the late lawyer-investment banker Louis O. Kelso in his two books

co-authored with the Aristotelian philosopher Mortimer J. Adler,

1958) and

The proposals in this article flow from a radical advance in political economy that some call “the JustThe Capitalist Manifesto (Random House,The New Capitalists: A Proposal for Freeing Economic Growth from the Slavery of Savings

(Random House, 1961). See also Robert Ashford and Rodney Shakespeare,

Paradigm

Role of Property

Binary Economics: The New(University Press of America, 1999) and John H. Miller, ed., Curing World Poverty: The New(Social Justice Review, 1994).

41

26, 2002, p. A29.

E.J. Dionne, Jr., “Low-Income Taxpayers: New Meat for the Right,” The Washington Post, November

42

assumption that past savings are required to form new capital. Absent the speculative influence of the stock

exchanges, capital gains are, in large measure, generated by corporations retaining earnings to finance new

investment. This, in theory, increases the value per share which, when the shares are sold, generates a

short- or long-term capital gain. This gain can then be used to finance additional new capital. To encourage

new capital formation, and presumably create jobs for non-owning workers, capital gains are traditionally

given favorable tax treatment — either a lower tax or no tax. Since the rich, by definition, control the vast

majority of directly held corporate equity and thus the source of capital gains, favorable tax treatment of

this source of income generates substantial tax breaks for the wealthy, thus exacerbating the wealth gap and

the rigid stratification of society into a small minority of capital owners and a large majority of capital-less

workers.

Under the current United States tax code, capital gains are given favorable treatment under the

43

Ibid.

The Just Third Way — 36

45

Ibid., pp. 28-32, 81-84.

46

$82 trillion for Medicare alone.

Recent unverified reports indicate that the present value of the projected deficit may have increased to

47

Ibid., pp. pp. 171-172. These projections have been raised from $3,000 to $7,000 of annual per capita

Capital Homestead credit allocations, to reflect the authors’ contention that

should be financed with newly created, 100% asset-backed money channeled through capital credit

democratization vehicles, starting with each citizen’s Capital Homestead Account.

all future private-sector growth

48

http://www.cesj.org/homestead/strategies/national/healthcare-exsummary.pdf.

See “The Doctors’ Plan,” Center for Economic and Social Justice, available atSee “A New Social Contract” in Capital Homesteading for Every Citizen, pp. 85-92. Additionalhttp://www.cesj.org.

51

Library at

For a comprehensive source on Total Quality Management, see the web site of the Free Managementhttp://www.managementhelp.org/quality/tqm/tqm.htm.

52

the web site of The Great Game of Business at

See Open Book Management: The Coming Business Revolution by John Case, HarperCollins, 1995; andwww.ggob.com.

53

web site

“Syntegration” has been applied within corporate reorganizations and for conflict resolution.

One participatory communications and planning protocol called “Team Syntegrity,” described on thewww.syntegritygroup.com, applies the managerial cybernetics of the late Dr. Stafford Beer.

54

Lanham, MD: Scarecrow Press, 1997.

See Journey to an Ownership Culture: Insights from the ESOP Community, Dawn K. Brohawn, ed.,

55

Management and ESOP within its successful program of poverty alleviation, launching a worker- [mainly

women-] owned garment factory to operate along JBM principles. The new enterprise, which will serve

U.S. and European markets, is designed to offer a viable alternative to the sweatshop model. Information

on the Bangladesh JBM garment factory is available at

In Bangladesh, the Institute of Integrated Rural Development (IIRD) is incorporating Justice-Based

http://www.globaljusticemovement.org/iird/iird_intro.htm

.

56

Kurland et al, Capital Homesteading for Every Citizen, op. cit., p. 36.

57

at

See “The Employee Stock Ownership Plan (ESOP),” Center for Economic and Social Justice, availablehttp://www.cesj.org/homestead/creditvehicles/cha-esop.htm.

58

In 1985 Mid-South became the world’s first 100% bank-financed, 100% worker buyout through an ESOP.

The value of Mid-South’s shares has risen from $1,033 at the time of the buyout, to $9,043 in 2007, a

growth of 875%.

A successful ESOP can be found at Mid-South Building Supply headquartered in Springfield, Virginia.

59

See “The Community "2" face="Times New Roman">See “The Homeowners’ Equity Corporation,” Center for Economic and Social Justice, available at

http://www.cesj.org/homestead/strategies/national/homeequitycorp.pdf

.

62

91.

Kurland et al, Capital Homesteading, op. cit., “Capital Homesteading and the Labor Movement,” pp. 89-

63

Chairman of the Citizens Crusade Against Poverty testified to that effect, and in support of democratizing

equity ownership, before the Joint Economic Committee of Congress on the President’s Economic Report,

February 20, 1967.

After learning of Louis Kelso’s ideas, Walter Reuther, President of the United Auto Workers and

64

Wyvetter Younge, the visionary leader who has worked over several decades to realize Bucky Fuller’s and

Louis Kelso’s vision for the citizens of East St. Louis and surrounding communities. Her bill has passed the

Illinois House of Representatives 114-0, and finally received co-sponsorship in the Illinois Senate. Rep.

State legislation to encourage CICs and CLCs has been introduced by Illinois State Representative

The Just Third Way — 37

Younge’s bill will be re-introduced in the upcoming session. See

CIC-IllHB4626.htm

http://www.cesj.org/legislation/Legis-.

65

Encouragement of Employee Stock Ownership Plans in Central America and the Caribbean

President and the Congress, October 1986.

See Presidential Task Force on Project Economic Justice, Highroad to Economic Justice: U.S., Report to the

66

See http://www.cesj.org/thirdway/paradigmpapers/iraq-nationbuilding.htm.

67

See http://www.cesj.org/homestead/strategies/regional-global/abrahamfederation-nk.html.

68

Fuller, op. cit.,Utopia or Oblivion.

The Just Third Way — 38

The Authors

Norman G. Kurland, J.D.

Norman G. Kurland is a lawyer-economist and President of the non-profit think tank, the

Center for Economic and Social Justice (CESJ). He is also Managing Director of Equity

Expansion International, Inc., a global investment banking and consulting group formed

to democratize access to capital ownership. As the political strategist for Louis O. Kelso,

father of the “Just Third Way,” Kurland orchestrated the first Employee Stock Ownership

Plan (ESOP) laws in the U.S., and implemented the first worker shareholders’ association

in the developing world (Alexandria Tire Company, Egypt). He was appointed by

President Ronald Reagan as deputy chairman of the 1986 bipartisan Presidential Task

Force on Project Economic Justice, which developed a regional economic

democratization strategy for Central America and the Caribbean. He received his Doctor

of Laws degree from the University of Chicago Law School in 1960.

Dawn K. Brohawn

Ms. Brohawn is a co-founder and the Director of Communications of the Center for

Economic and Social Justice. She has conceived and organized numerous CESJ seminars

and conferences including CESJ's international roundtables and the CESJ seminar

presented at the Vatican in 1991. Ms. Brohawn was a co-author and chief editor of

CESJ’s major policy book,

Solution for Saving Social Security

Owner

Project Economic Justice. She was a contributing author to and editorial advisor for

CESJ's

Culture

Association), a comprehensive guidebook for building an ownership culture by leading

experts and model companies in employee stock ownership and workplace participation.

She received her B.A. in English Honors in 1979 from Georgetown University.

Capital Homesteading for Every Citizen: A Just Free Market(2005). She was the editor of Every Worker an, which served as the orientation book for the 1986 Presidential Task Force onCuring World Poverty: The New Role of Property; and Journey to an Ownership(published in 1996 by Scarecrow Press in collaboration with the ESOP

Michael D. Greaney, C.P.A., M.B.A.

Michael D. Greaney is a Certified Public Accountant specializing in ESOP administration

who serves as CESJ’s volunteer Director of Research and member of the executive

committee. He has audited profit and non-profit organizations throughout the world with

the American Red Cross, Georgetown University Medical Center, and the U.S. Federal

Election Commission. Mr. Greaney wrote the ESOP Administration and Accounting

Manual for the first ESOP in a developing country. Mr. Greaney has authored numerous

articles on expanded ownership, money and credit, and social development. He was a coauthor

of CESJ’s 2004 book,

Market Solution for Saving Social Security

author and the associate editor of Curi

Capital Homesteading for Every Citizen: A Just Free(Economic Justice Media), and a contributingng World Poverty: The New Role of Property

(1994). Mr. Greaney received his B.B.A. in Accounting from the University of Notre

Dame in 1977 and his M.B.A. from the University of Evansville in 1979.

 

 

 

 

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