Unions, Inequality, And Faltering Middle-Class Wages

On August 29, 2012, Lawrence Mishel, a researcher at the Economic Policy Institute, reports key findings on jobs wages and living standards.

Between 1973 and 2011, the median worker’s real hourly compensation (which includes wages and benefits) rose just 10.7 percent. Most of this growth occurred in the late 1990s wage boom, and once the boom subsided by 2002 and 2003, real wages and compen­sation stagnated for most workers—college graduates and high school graduates alike. This has made the last decade a “lost decade” for wage growth. The last decade has also been characterized by increased wage inequality between workers at the top and those at the middle, and by the continued divergence between overall productivity and the wages or compensation of the typical worker.

A major factor driving these trends has been the ongoing erosion of unionization and the declining bargaining power of unions, along with the weakened ability of unions to set norms or labor standards that raise the wages of comparable nonunion workers. This preview of the forthcomingThe State of Working America, 12th Edition presents a detailed analysis of the impact of unionization on wages and benefits and on wage inequality.

America is blinded by limiting policies to CREATE JOBS rather than the inclusive policy objective of OWNERSHIP CREATION, which will result in real job growth. We need to focus on OWNERSHIP CREATION paid for out of the earnings of productive capital investment, the primary source of income for the wealthy

Instead we continue to focus on JOB CREATION, which is the opposite objective of technological innovation and invention as tectonic shifts in the technologies of production destroy jobs and degrade jobs. Thus, the earnings necessary to become self-sufficient and pay for one’s advanced education and to support a family in relative affluence are just not there for the American majority. Those seeking higher education and to purchase higher ticket consumer items within that majority have had to pursue such with borrowed moneys. And the reality is that with the human-intelligent “machine age” exponentially destroying good jobs, even for those with engineering and science degrees, the pay back will be decades if at all, and we will simply end up with a society of millions of educated unemployed if not bankrupted, dependent on government welfare, open and concealed. The solution is to consciously and purposely broaden private, individual ownership in future income-producing productive capital assets simultaneously with the growth of the economy.

 The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline. This is their ONLY salvation.

Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. 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.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through.

http://www.epi.org/publication/ib342-unions-inequality-faltering-middle-class/#.UEF2xLmTcII.facebook

 

 

KARL MARX: THE ALMOST CAPITALIST

This is an article written as a critique of Karl Marx’s Das Kapital by binary economist Louis Kelso and published by the American Bar Association Journal, March 1957.

England of the mid-nineteenth century, in the throes of the industrial revolution, was not a pleasant place to work. Anyone who entertains the contrary idea need merely consult the writings of the economists of that period, or its historians, or even its novelists, such as Dickens.

It was against a background of the disintegration of the agricultural economy of England, and the human chaos incident to the industrialization of production that Karl Marx set himself the task of improving the lot of the factory worker.

Beginnning slowly during the first seventy-five years of the eighteenth century and reaching a crescendo during the last quarter of that century and the first half of the nineteenth century, incalculable changes took place in the lives of laboring people. The transformation was initiated first by the intensification of the division of labor and later by the crowding of workers into hand or hand-and-machine factories. This phase was, in factory after factory, followed by the mechanization of progressively more of the manual tasks, shifting to animal power, then water power and wind power, and then to steam for basic motive power.

The resulting disorganization in the lives of the people affected was stupendous and frightful. Only the few who were quick to adapt themselves to the era of the machine were able to avoid the destruction–frequently successive destructions–of their means of livelihood through the radical changes resulting from rapid technical obsolescence of the methods of production. The impact of these swift transformations was more than could be safely digested and absorbed by the farm populations which began to turn to the industrial cities for their means of living.

The division and subdivision of tasks once calling for the most highly developed skills until the tasks could be performed in many instances by women and children provided the opportunity, and the indigence entailed in the shifting from an agricultural life to dependence upon the fluctuating employment in factories provided the inducement: thousands of parents exploited their children by forcing them into the factories. Wives neglected their families to become factory employees. The full fury of competition between man and machine, between merchants, between manufacturers and between nations was unleashed among people who had not the faintest idea of its implications. Methods by which producers could become reasonably informed about markets were almost wholly lacking. Laws against adulteration of products had not yet been enacted. Industrial safety codes and means of compensating the dependents of injured workmen were unknown. The sanitary conditions of factories in general were incredibly bad. An employer who worked the men, women and children in his factories only twelve hours a day was something of a public-spirited paternalist. Foreign trade brought the local supplier into competition with foreign producers he had never seen or heard of.

Newly born industrial enterprises and the people whose fortunes were tied to them, learned the nature of industrial production primarily by successive bitter experiences. Businesses ran through constantly recurring cycles of expansion, boom, over-production, liquidation and depression. Superimposed upon this disorganizing parade of booms and slumps were the disrupting effects of primitive money and credit systems providing mediums of exchange containing built-in erratic gyrations of their own. The money system of Great Britain, like that of other countries experiencing the industrial revolution, suffered not merely from irresponsible banking, inadequate knowledge, poorly designed regulatory laws and rampant exploitation of the opportunities for financial fraud, but also from the results of heavy importations of gold and silver–the monetary metals–from the New World.

Without analyzing here the causes, we need merely note that the problems of the workers fell upon deaf political ears in Britain and elsewhere as the industrial revolution progressed, until agonized suffering reached the notoriety of an unsuppressible public scandal. Even then, the factory owners, who could point proudly to the fact that for the first time in history, per capita increase in the output of goods and services was beginning to race ahead, had no basis in experience for knowing whether they could at once be humane in their labor relations and still maintain their positions in the unprecedented hurly burly of competition.

 


Marx’s Work…
The Cause of Injustice

Against this background, in which the mere outlines of industrial production under free enterprise were vaguely taking shape, Marx set himself the task of finding the cause of economic injustice. His masterpiece, Capital, draws and documents the picture of the industrial revolution from the standpoint of the industrial worker. He was the one primarily responsible for having attached the name “capitalism” to the theretofore unclassified economic system of Great Britain. Marx’s source materials, in addition to his own indefatigable personal studies of factory life, were the Reports of the Royal Commissioners on the Employment of Children and Young Persons in Trades and Manufacturers, the Reports of the Inspectors of Factories (who were appointed under the Factories Regulation Acts of 1859), the Reports form the Poor Law Inspectors on the Wages of Agricultural Labourers, the Reports of the Select Committee (of the House of Commons) on the Adulteration of Food, and other official documents, as well as the writings of the economists of his day.

Because of the dire suffering of the industrial workers, Marx, who knew the facts and knew how to describe them, made a powerful emotional case for economic reforms to improve the lot of the worker. Since the actual operation of the system, which he called “capitalistic” was as enormously beneficial to the segment–less than 10 per cent–of the population who owned the factories as it was destructively detrimental to most of the 90 per cent who worked in them, Marx could have led a revolt against the established order by pointing to this disparity alone. But he did not choose to do so. He made the most painstaking and ponderous effort to seek out the cause of the injustice.

At length, Marx rendered his verdict. The malefactor, the cause of all this limitless human misery, was the capitalist. His crime, felonious by all canons of human decency and fairness, was the unrecompensed piracy from the defenseless industrial workers of most of the wealth which they alone created. No plunder in history, said Marx, could compare with the enormity of the offense of the capitalist who, without working himself, appropriated the products of the worker, leaving the worker with only the minimum amount paid as “slave-wages” to keep him alive and to enable him to produce.

 


Marx and Capitalism…
They Almost Meet in the Dark

The root of all of the evil Marx surveyed was, he concluded, the private ownership of the means of production. The emotional case which he built in favor of a revolution to improve the position of the industrial worker was mountainous. The method of carrying out the revolution, he advocated, was for the workers to seize the government by force and then to use the state to expropriate the ownership of capital. Unfortunately, the moral truth of the massive case which Marx marshaled for improvement of the lot of the industrial worker was dwarfed by the magnitude of his error in assigning as the cause of the maldistribution of wealth, the private ownership of capital.

In the course of his investigation, Marx actually saw, but was prevented by this error from comprehending, the underlying principles of capitalism. Since there can be no doubt about Marx’s honest effort and fierce desire to find the key to a workable industrial economy, we are justified in venturing the speculation that had Marx understood the implications of the principles of capitalistic distribution which presented themselves to him as “appearances” only, he might have become a revolutionary capitalist instead of a revolutionary socialist.

Karl Marx, as he reflected upon the causes of economic injustice in the first century of capitalism, came to a conclusion as momentous as it was mistaken. The world was to suffer as much from the critical error of the decision as it had suffered to provoke Marx to make it. Had he not been blinded by a borrowed myth, Marx might well have proclaimed “People of the world, unite! Extend the benefits of capitalism to all mankind.” Instead, he exhorted the workers of the world to unite and “throw off the chains” of capitalism.

Had Marx chosen the capitalistic alternative rather than the socialistic one, the world would be a vastly different place in which to live today. Without the false and seductive promises of socialism, Russia, the nation built on Marxism, would be without the principal rhetorical weapon which it uses to seduce the minds of men.

Yet it is a fact that Marx actually considered the problems which should have led him to discover capitalism. But for three basic errors in reasoning, Marx might have been looked upon today as the apostle of capitalism rather than its detractor and tormentor.

The three mistakes that turned Marx away from capitalism rather than towards it, have made Marx the false prophet of the industrial worker. Together with the socialist writers who have followed in his footsteps, Marx deprived generations of workers from realizing that in capitalism–not in socialism–lies their hope for economic well-being, the good life, and political freedom.

 


Three Mistakes…
The Course of History Changes

The three errors which Marx made were these:

(1) His adoption of the labor theory of value which had previously been advanced by David Ricardo.

(2) His failure to understand that the private ownership of property, including capital instruments, is indispensable to political freedom; in short, his failure to understand the menace to human freedom of the ownership of the means of production by the state.

(3) His mistaking the wealth produced by capital for “surplus value”, i.e., value which he thought was created by labor and stolen from the laborer by the capitalist.

Let us examine each of these mistakes. In the course of doing this, we shall see in each case how closely Marx came to acknowledging the actual principles of capitalism. Yet in every case, having grasped the principles, he also rejected them because of his fundemental errors.

 


Error No. 1:
The Labor Theory of Value.

Except for the few wants which men can satisfy directly by things adequately supplied by nature, human labor, for untold ages, had been the primary source of the creation of wealth. Man, with his hands and his brain, has given value to raw materials found in nature by imparting to them qualities which render them able to satisfy his wants. Similarly, man has performed personal services for himself or for others which have also satisfied needs. Nothing is more obvious than that man must wrest his living from nature through the cleverness of his mind, the strength of his muscles and the skill of his body. Since, at the outset, then, man was the only acting force, the idea that all changes in nature’s raw materials were wrought by man alone was both obvious and indisputable. The labor theory of value–the idea that labor is the only agency capable of creating wealth, i.e., adding “value” to raw materials and performing services–must have been approximately correct in primitive times and, to a lesser degree, in pre-industrial economies.

But once men applied their intelligence to constructing tools and machines which were able to produce wealth, or at least to co-operate with human labor in the production of wealth, a basic change occurred, the significance of which was not at once fully appreciated. The fact that all economic value was not created by labor, but rather by labor and capital together, was obscured by the fact that, in the early stages of machine production, machines were usually “operated” by their owners. As a result, the services of the machine were indistinguishably commingled with those of the machine-owner and so there was yet no occasion for recognizing the separate economic functions of each.

The significance of the labor theory of value is more than academic. If labor is the source of all value created in the productive process, then labor has a valid moral claim to all wealth created through production. Then the only moral claim of the owner of capital is to have his capital restored to him,i.e., to get back the value of his capital with compensation for the effects of wear, tear and obsolescence. Honestly to reach his conclusion that the capitalist was thieving from the laborer, Marx had only to believe that labor did in fact create all economic value (i.e., the values added to raw materials found in nature).

But confronted with the fact that capital instruments were actually performing more and more of the functions which added value to raw materials and were even beginning to compete with labor in the performance of purely service activities, Marx could not prove the proposition that labor was the sole creator of value and he did not try. He merely asserted, again and again, that the proposition was historically true and that its truth was of very recent discovery. All commodities, including capital instruments, said Marx, “are only definite masses of congealed labour time” (Capital, Modern Library Edition, page 46, New York.)

“The recent scientific discovery that the products of labour, so far as they are values, are but material expressions of the human labour spent in their production, marks, indeed, an epoch in the history of the development of the human race, but by no means dissipates the mist through which the social character of labour appears to us to be an objective character of the products themselves.” (Ibid. page 85; italics added). Marx is here saying flatly what he elsewhere elaborates–that although capital instruments appear to create wealth, this is merely an illusion, and that there is some sort of mysterious “congealed labor” hidden in the capital instrument which enables it to give value to its products.

At this point Marx actually saw one of the basic principles of capitalism: that capital instruments do create wealth, just as labor does. But he rejected the idea as an “appearance” only and held doggedly to his belief that only labor could create wealth. By denying the obvious, that in an ever-increasing number of instances, the performance of particular production tasks may be carried out alternatively either by labor or capital instruments; and by asserting that regardless which method was used, the capital instruments owned by a “capitalist”, were in fact, “labour instruments”; and by concluding that whichever method was used, labor in fact created all the value, Marx put the capitalist in the unethical role of getting something for nothing.

Today we are not merely familiar with the phenomenon of machines to make machines, we are also acquainted with the trend to make automated machines with automated machines. Nevertheless, tracing the process backwards through several technological generations sooner or later brings one to the point where the predecessor of a particular machine was made by hand labor. Since Marx regarded human labor not only as an ingredient in an economic product, but as the only ingredient other than raw materials provided by nature, the problem of machines made largely by machines was a disconcerting one for him.

The value of a product, he said, is determined by the amount of labor time it contains. After a few technological generations of producing machines primarily by machines, what could be said of the machine which, although it contained almost no “value” in terms of man-hours and required very little assistance from labor in the form of an operator’s man-hours, turned out a vast quantity of products, all of which sold for very good prices?

Marx actually considered this problem. How could he square the labor theory of value with a machine containing very little “value” (in terms of man-hours of labor) which at the same time is operated with very few man-hours of labor, yet which produces a great amount of wealth? Confronted with this problem, Marx might have announced another of the basic principles of capitalism: that the productiveness, the “productivity”, of capital instruments, in comparison with that of labor (other than the top echelon of labor consisting of management and technical workers) is steadily rising. But here again Marx rejected the clearly discernible truth and supplemented it with a corollary to the labor theory of value.

In this case, he said, the machine, after yielding up what little “value” it contains, works gratuitously, just as the sun works ripening the corn in the field. Marx here came within a hair’s breadth of recognizing the increasing productivity of capital instruments in comparison with that of labor. Had he allowed himself to see the point, it is safe to assume that a man of Marx’s sincerity would have cried, “If capital instruments are the source of the increasing production of wealth in an industrial economy, the owners of capital instruments are rightly the persons who should receive the proceeds of the wealth so produced. Let us then set as our goal the greatest possible accumulation and perfection of capital instruments for the greater production of wealth. And let us so regulate our economy as to extend the opportunity of engaging in productionthrough the ownership of capital instruments to an ever increasing proportion of the population.”

Marx missed this critical point. Faced with the spectacle of the production of vast wealth through a large contributory effort by capital instruments and a negligible contribution by labor, Marx could merely say: “In modern industry man succeeded for the first time in making the product of his past labour work on a large scale gratuitously, like the forces of nature.” (Ibid, page 424). Thus did Marx substitute for objective analysis the dogma he had borrowed from Ricardo.

 


Error No. 2:
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 “property” means in law and economics. It is an aggregate of the rights, powers and privileges, recognized by the laws of the nation, which an individual may possess with respect to various objects. Property is not the object owned, but the sum total of the “rights” which an individual may “own” in such an object. These in general include the rights of (1) possessing, (2) excluding others, (3) disposing or transferring, (4) using, (5) enjoying the fruits, profits, product or increase, and (6) of destroying or injuring, if the owner so desires. In a civilized society, these rights are only as effective as the laws which provide for their enforcement. The English common law, adopted into the fabric of American law, recognizes that the rights of property are subject to the limitations that

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

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

Property in everyday life, is the right of control.

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

Property in Capital. In a capitalistic economy, private ownership in all other 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.

Of the three components of production land is the passive1source of almost all material things except those which come from the air and the sea, while labor and capital are the active factors of production. Labor and capital produce the goods and services of the economy, using raw materials obtained, for the most part, from land. Just as private property in land includes the right to all rents, the proceeds of sale of minerals and other elements or substances contained in land, private property in capital includes the right to the wealth produced by capital. The value added to iron ore by the capital instruments of a steel mill becomes the proeprty of the owners of the steel mill. So in the case of all other capital instruments.

Property in Labor. What is the relationship of the worker to the value which he creates through his work? It has been said that no one has ever questioned the right of a worker to the fruits of his labor. Actually, as was long ago recognized by John Locke and Jean Jacques Rousseau, the right of the worker to the value he creates is nothing more than the particular type of private property applicable to labor. Each worker, they said, has a right of private property in his capacity to produce wealth through his labor and in the value which he creates.

Marx and Property. Marx did not err in his understanding of the dependence of capitalism upon private property. In fact, the Communists, following Marx, appreciate this absolute dependence more than do non-Communists, many of whom, influenced by the conviction that Marx is full of errors, have falsely entertained the idea that this is one of them.

Marx, however mistaken he was in his program for achieving the economic changes he thought were needed, cannot be charged with having intended to worsen the economic and political condition of modern man. The facts of his life and character permit us little doubt that his intention was to eliminate suffering by substituting a fairer distribution of economic goods and services, and through this, a more equitable distribution of leisure and the opportunity to lead a good life. Marx was rightly, if also vehemently, critical of the exploitation of the many by the few.

Had Marx seen that the socialization of capital (i.e., its ownership by the state) would of necessity place the control of capital in the hands of those currently wielding political power, thereby unifying economic and political power, the two basic sources of social power, we can assume that Marx would not have advocated the destruction of private property in capital instruments. If the factory owners of the nineteenth century, having political influence but not unlimited political power, were in a position to exploit the workers, the bureaucrats of the twentieth century in a socialized state, possessing not only unlimited political power, but also unlimited economic power through ownership (i.e., control) of the instruments of production, are infinitely better equipped to exploit workers and other non-bureaucrats. What better proof of this than Russia and the Russian satellites?

 


The Communist Politician…
A True Tyranical Capitalist

It is the Communist politician who sees in Marxism the opportunity for personal power and wealth which Marx, if we may take him at his word, failed to perceive. The Communist politician perceives in Communism the personal advantage to himself which comes with the transfer of property (working control) in the means of production to the state, and the elevation of himself to a place in the management of the state. The Communist politician is thus able to epitomize in himself the kind of tyrannical capitalist Marx declaimed against, with the further opportunity for unlimited despotism that is inherent in the fusion of political power and economic power in the same hands.

Marx’s failure to perceive the political significance of private property has allowed his doctrine to furnish the most perfectly designed ruse for potential tyrants that has ever been devised. In the name of benefitting society as a whole, the actual control of the capital instruments and land is placed in the hands of those wielding political power!

Marx’s second great error prevented him from seeing that the ideal “classless society”, of which he dreamed, is not one in which a political group in power has the function of distributing wealth. It is rather the political economy in which the individualownership of property–particularly capital instruments–is spread over the entire population. Only such a broad distribution of private economic power can guarantee individual freedom and the power of the people as a whole to limit or turn out at will a political group in power.

Marx was actually on the verge of recognizing that so long as men are what they are, capitalism is the only possible classless society. His failure to do so derives from his failure to understand the political significance of private property. He consequently also failed to understand the political significance of state ownership in a socialist state. To concentrate control over the means of production in a political group is to establish that administration as a class–an all powerful class–and to remove all possibility, so long as such a group exercises its power fully and ruthlessly, to overthrow such despotism by means other than force.

Marx recognized that the men who were the owners of productive property also enjoyed “individuality”, leisure and opportunities for culture and education. (Ibid., page 581). This being so, it is nothing short of fantastic that he brought himself to these illogical conclusions: (1) Destroy private ownership of productive property. (2) Make all men workers. (3) Appropriate all wealth produced in excess of that required to sustain workers, and let it be distributed by the state as its political leaders see fit.

The political commissars, however, who employ Marx’s ideas for their own purposes–the exploitation of power and wealth which socialism offers to a ruling bureaucracy–are not so illogical. The destruction of private property in the means of production is their guarantee of self-perpetuation.

There is a Marxian tenet that the nature of a society is determined by the mode of production (whether agricultural or industrial), and the ownership of the means of production. It is sound. The conclusions here are within and consistent with this fundamental insight.

Thus the second great Marxian error caused Marx to seek in socialism what he could have found only in capitalism.

 


Error No. 3:
Mistaking the Wealth Created by Capital for Wealth Created by Labor and Stolen by the Capitalists.

Each of the three critical mistakes which Marx made in his study of capitalism arose from the fact that he began his analysis with a study of distribution rather than with a study of production. At the distributive end, something less than a tenth of the population, for the most part owners of land and capital, were faring infinitely better–receiving a proportionately greater share–than were the other nine tenths, whose only participation in economic activity was as workers or as recipients of public charity under the poor laws. The pattern of distribution was bad from whatever standpoint it might be judged. Those who were receiving the great share were the capitalists, the owners of the expanding industrial and commercial enterprises.

For Marx, capitalism was simply what he observed in the European world around him, and primarily in Great Britain. Since the distributive pattern was unsatisfactory, capitalists and capitalism, he concluded, must be at fault. Labor had “historically” been the source of all production of wealth, and the workers were now receiving a progressively smaller proportion of the proceeds of production. Down with capitalism!

Had Marx started with an objective analysis of production and a deeper insight into the property-freedom relation, he might well have concluded with a declaration of war against capitalists for hoarding capitalism.

Let us now examine once more the principles of capitalistic production that Marx might and should have used as a starting point. In an exchange economy, and particularly in an economy of freely competitive markets, each service and each commodity is valued for its peculiar ability to satisfy a certain desire of the consumer. Whether the service of commodity is produced by labor alone or by capital alone or by the co-operation of these two, is unimportant to the potential purchaser except as the method of production implants specific characteristics in the thing marketed. It is the finished product which is demanded by the purchaser, not the knowledge that it is produced in one way or another–a mere means by which the product was brought forth. Contrary to what some sentimentalists think, there is nothing sacred about the products of labor that is not equally sacred about the products of capital or those produced jointly by capital and labor.

To effect any change in the nature or position of material goods or to perform any kind of a service, material goods must be acted upon. Marx recognized this; but, because of his obsession with the labor theory of value, he contended that only labor could be credited with the value of material goods produced or services performed. “Useful labor” he said, “is an eternal necessity imposed by Nature without which there can be no material exchanged between man and Nature, and therefore no life.” (Ibid. page 50). To effect such changes in matter, or to perform such services, purely physical, i.e., mechanical means, must be used. With rare exceptions, pure thought is not economically compensable. Speech, writings, mechanical action–all these things performed by man, are capable of entering into economic transactions. The thought behind such speech, writings, mechanical action, is not by itself capable of entering into ordinary commerce.

Man as a non-scientific and non-managerial subsistence-laborer is, from the standpoint of economics (aside from his separate nature and position as the consumer), a primitive, low-horsepower engine, relatively clumsy and of brief durability, for the production of economic goods. Man the worker, except in the fields of science and management, has grown steadily less impressive since the onset of the industrial revolution. He can work eight, ten or twelve hours at a stretch and then must rest. His strength and speed of action are quite limited. He is subject to numerous ailments, often adversely affected by climate, temperamental and not infrequently lazy. He makes many mistakes. As a factor in the production of wealth, man is progressively less successful in competing with capital instruments, except, again, as a scientist or as manager.

It is not as a worker that man is master of the earth. It is as the intelligence behind all production and as the consumer–the reason for production and the destiny of the things produced–that he is supreme.

It may well be that confusion between man the worker and man the thinker–the source of all ideas and plans–contributed as much as any cause to Marx’s failure to recognize capital as a producer of wealth in the same sense that labor is. Mental activity enters into economic transactions primarily in two ways:

(1) the mental activity of the scientist and manager is responsible for the invention, development, improvement and production of capital instruments, and the supervision of productive activity of both laborers and capital instruments. Scientists and managers are in general the top echelon of labor –the professional level. Their services include entrepreneural activities, in which they provide the initiative in organizing the capital and labor to institute or expand particular business activities. A substantial portion of their services is rendered in improving the productivity of capital instruments, thus promoting the substitution of machines for men and otherwise reducing labor requirements, where to do so will reduce the costs of production and render the businesses in which they are engaged more effifient and competitively better. The steady improvements in capital instruments, systems of production, and organization of productive processes, are the results of the mental activity of the scientists and managers. Their ability to produce in these fields is the secret of their rising productiveness and the increased demand for their services.

(2) Mental activity enters into non-scientific work and non-managerial work in varying degrees. The intelligent direction by the worker of his own activities is incidental to the mechanical work performed by him. Labor is compensated for a particular type of service of a physical nature which could not be rendered in the absence of intelligent direction on the part of the worker himself.

Marx recognized that machines and men are competitors in the sense that scientists and and managers, in carrying out their function to produce goods and services in a competitive market, strive to eliminate labor costs and to improve upon hand methods of production. “The instrument of labour [meaning, of course, machines, the instruments of the capitalist] when it takes the form of a machine, immediately becomes a competitor of the workman himself.” (Ibid. page 470) In speaking of this competition, Marx comes as near as possible to recognizing that capital instruments are active forces in the production of wealth, performing an economic function of the same sort as labor, and frequently performing functions which can interchangeably be performed by either.2

Marx observes that in the case of the handcraft industries, “the workmen are parts of a living mechanism. In the factory we have a lifeless mechanism independent of the workman, who becomes its mere living appendage….By means of its conversion into an automaton, the instrument of labour confronts the labourer, during the labour process, in the shape of capital, of dead labour, which dominates and pumps dry living labour power. The separation of the intellectual powers of production from the manual labour and the conversion of those powers into the might of capital over labour, is, as we have already shown, finally completed by modern industry erected on the foundation of machinery. The special skill of each individual insignificant factory operative vanishes as an infinitesimal quantity before the science, the gigantic physical forces, and the mass of labour that are embodied in the factory mechanism and, together with that mechanism, constitute the power of the ‘master’.” (Ibid. page 462). It may well have been Marx’s failure to recognize that capital instruments in practice supplant not only physical forces, but intelligence, that deterred him from recognizing that capital “works” just as labor works.

Whether Marx could have closed his eyes to the facts of production in the now-dawning age of automation is an interesting speculation. Yet even in Marx’s own day it should have been possible for him to recognize that the scientists (engineers) in designing capital instruments build into these instruments the capability of performing operations which, if performed by labor, would require the application of brainwork. His obsession with the labor theory of value rendered him incapable of this insight.

But today, with the development of feed-back, self-correcting and self-programming machines, capable of automatically performing a sequence of logical operations, correcting their own errors as they perform their productive tasks, choosing from built-in instructions or characteristics their proper functions, it is likely that even Marx would have broken through his barrier-obsession that labor does all the work.

Human minds ultimately direct the production of goods and services. This is true of the functions of capital instruments as it is of workers. As a production process uses more and more capital instruments, more of the human mental control of the process of production is shifted away from workers to scientists (and their mechanical progeny) and to management. Thus the private ownership of labor is not, in action, essentially different from the private ownership of capital. Each involves the right of control of an active means of production, the right to take the fruits of such production, to produce where and when the owner desires, and to accept or reject conditions of production. The most significant difference is that the owner of capital instruments is not required to be personally present in the productive process; he produces, or in any event he may produce, vicariously. Mental activity as such is not the basis of the property rights of either labor or capital owners in wealth produced.

What difference would it have made to Marx’s theory of capitalistic economics if he had recognized both the power of labor and the power of capital instruments to create wealth? It would have made all possible difference.

If all wealth is created by labor, and if the total wealth created is in excess of that distributed to labor on the basis of the market value of labor, then the excess is “surplus value”. This surplus value, according to Marx, is something really stolen from labor by the capitalist. It is elementary that wealth belongs to him who creates it, and if only labor can create wealth and capital instruments cannot create wealth, then the owners of capital have no possible claim to a share in the proceeds of production. The most they could legitimately claim would be to have the value of their original capital, which has been partly or wholly consumed in the productive process, restored to them. In the socialist state, this “surplus value” is something that would belong to society as a whole, to be distributed as the administrators of the state decide.

In short, if labor is the only possible creator of wealth, then capital cannot be a creator of wealth, and there can be no legitimate return to capital other than a return of the original investment. The recognition by Marx of capital as one of the two active actors creating wealth would have exposed the falsity of his own basic theories. More than that, he would have been led inevitably to exactly the opposite conclusions. If labor is entitled to a return in the form of wages for wealth created by labor, then the owners of capital should be entitled to a return for the wealth created by capital.

Strange as it may seem, Marx recognized the technological trend and even acknowledged that it appeared to be the case that the net wealth remaining after payment for raw materials and labor was wealth created by capital. Yet he refused to believe this appearance, and simply asserted again and again that this excess was “surplus value”. With regard to the increasing productivity of capital, he noted that “every introduction of improved methods…works almost simultaneously on the new capital and on that already in action. Every advance in chemistry not only multiplies the number of useful materials and useful applications of those already known, thus extending with the growth of capital its sphere of investment…. Like the increased exploitation of natural wealth by the mere increase in the tension of labour power, science and technology give capital a power of expansion independent of the given magnitude of the capital actually functioning.” (Ibid. pages 663-664) With respect to the apparent production of wealth by capital instruments, Marx acknowledged that there appeared to be, as Sismondi had said, a “revenue which springs from capital “. But he refused, to the very end, to believe that it was the wealth created by capital–a possibility he saw but never understood or appreciated. To Marx, the wealth createdby capital remained “surplus value” to which the owners of capital had no claim–surplus value stolen by the owners of capital from the owners of labor.

 


Marx’s Three Errors…
A Fateful Near Miss

But for the basic and demonstrable errors in his theory of capitalism–the three errors discussed above–Marx would have reversed his views about capitalism and socialism. His writings leave no doubt that he was making an honest search for the truth about capitalism and the causes of maldistribution of wealth under capitalism. But it is also true that his writings leave no doubt that, had he caught and prevented himself from falling into his three foundational errors, he would have become as defiant in his espousal of capitalism as he erroneously was vehement in its denunciation.

If labor alone is a creator of wealth, there must be, as Marx and Engels said in the Communist Manifesto, equal liability of all to labor. But if capital is a creator of wealth, one may participate in the production of wealth either as an owner of labor or as an owner of capital. Similarly, if land is a source of wealth, one may participate in the production of wealth as an owners of land. But this basic capitalistic principle goes further. If, as we know, the productivity of capital is increasing in relation to that of non-managerial and non-scientific labor, and if the right to participate in the distribution of the proceeds of production follows from the fact of participation in production, the social justice which Marx sought lies in regulating the capitalistic economy so that there emerges an ever-increasing proportion of capitalists.

The uneasy ghost of Marx must suffer the torments of the damned at the truth glaring from the pages of history that one does not abolish property by transferring it to the state. To put an end to private property in capital and land by establishing the socialist state is to concentrate the vast aggregate of property rights in the wielders of political power. There is no mystery in the fact that through a literal application of the theories of the great seeker after social justice, the Communist countries have achieved the exact opposite of what was promised. Marx wailed over the plight of the helpless worker under the merciless lash of the powerful factory owner. What would he say of the plight of the worker before the inescapably crushing power of the dictator, the political clique, or the party which in fact (though never in name, since everything is always done in the name of “the people “) owns all factories, all instruments of production, all land, and fuses this power with political power ?

There can be only one answer. The safety, the security, the dignity of the individual which Marx sought in socialism can be found only under capitalism. The answer to the charge that ownership of capital instruments is too concentrated lies in the proper use of governmental regulation to reduce the concentration and to continuously broaden the privateownership of the means of production.

What Marx almost discovered was that both the benefits and the success of capitalism grow with the number of men who are capitalists. His error in failing to discover this truth was the most fateful near-miss in history.

 


ENDNOTES

1 Agricultural and timber land may be said to be an exception to this, since in growing crops and timber, agricultural and timber lands may be said to function in an active manner.

2 Note that by using the term “instruments of labor” to designate capital instruments owned by capitalists, Marx is again indulging the labor theory of value. By referring to capital instruments as “instruments of labour”, Marx makes it appear logical to attribute the productive efforts of capital to labor.

The Wall Street Journal (Again)

This was posted on August 29, 2012 on the Just Third Way Web site.

We figure that the Wall Street Journal either has a black list, or restricts the number of letters from a single individual they even bother to read. Possibly both. In any event, right after the editorial to which we responded on August 14, the Journal had another one on the European debt crisis. Not astonishingly, our analysis was similar. Even less astonishing, the Journal didn’t publish this letter, either.

Dear Sir:

The Eurozone’s problems are a direct result of being the first currency based on the principles of “Modern Monetary Theory.” Per Knapp’s “chartalism,” the money supply consists entirely of State-emitted bills of credit. A bill of credit is backed solely by the present value of future taxes, i.e., the “faith and credit” of the issuing government. As the productive capacity of the European economy erodes, the present value of future taxes declines.

Paradoxically, transforming the Euro from a debt-backed to an asset-backed currency is simple, although not easy:

• One, phase out central bank open market operations in government securities.

• Two, supply liquidity to the private sector to rebuild the tax base and spur economic growth by discounting and rediscounting qualified bills of exchange.

• Three, implement an aggressive program of expanded capital ownership financed by discounting bills of exchange collateralized with capital credit insurance, thereby increasing consumer demand naturally to sustain the economy and reducing the need for State assistance.

• Four, as tax revenues increase over costs, pay down the debt, eliminating debt-backed money from the economy, stabilizing the currency and providing a foundation for sound economic growth.

http://just3rdway.blogspot.com/2012/08/the-wall-street-journal-again.html

Five Reasons Ayn Rand Would Have Despised Paul Ryan

On August 15, 2012, Jason Sattler writes:

Paul Ryan may be backing away from his devotion to Ayn Rand, the woman who inspired him to enter politics. But there are some things that the 20th century’s most prominent prophet of selfishness would have probably appreciated about the Republican’s soon-to-be nominee for vice president.
In fourteen years in Washington D.C., Ryan only passed two bills—one naming a U.S. post office in his hometown, the other giving arrow makers a tax break. This abject uselessness on behalf of the American people is about as close as an elected official can get to “going Galt.” Being a star member of the most unproductive Congress in 65 years might also have impressed the author who saw the only purpose of government as protecting citizens from physical violence.
Rand might also admire Ryan’s desire to eventually zero out nearly every program that helps the poor and his desire to help rich people become richer with massive tax breaks. But there’s much about the Congressman from Wisconsin that she certainly would consider abhorrent. As Rand scholar Jennifer Burns said“If Mr. Ryan becomes the next vice president, it wouldn’t be her dream come true, but her nightmare.”
Here are five reasons why Ayn Rand would have quickly shrugged off Paul Ryan.
Jack Kemp was a favorite of Ronald Reagan. The ex-football star, Congressman, and 1996 running mate of Bob Dole, Kemp gave Paul Ryan his first job in politics as a speechwriter. A prime requirement of such a job would be the ability to praise the Gipper slavishly and constantly, something Ryan has been doing ever since. Ryan says that Republicans need to offer the kind of “boldness and clarity that Reagan offered in the 1980s.” Rand would disagree. She hated Reagan with a boldness and clarity that few liberals can match.
In 1976 she wrote, “I urge you, as emphatically as I can, not to support the candidacy of Ronald Reagan. I urge you not to work for or advocate his nomination, and not to vote for him. My reasons are as follows: Mr. Reagan is not a champion of capitalism, but a conservative in the worst sense of that word—i.e., an advocate of a mixed economy with government controls slanted in favor of business rather than labor.”
A “conservative in the worst sense of that word” may be the single finest phrase she ever wrote.
Paul Ryan is as anti-abortion rights as any modern politician can be. He authored the Protect Life Act, which would deny an abortion even to save the mother’s own life. Rand’s stand on abortion rights was equally firm in the opposite direction. In her book Of Living Death, Rand wrote, “Abortion is a moral right—which should be left to the sole discretion of the woman involved; morally, nothing other than her wish in the matter is to be considered.” The idea that a woman possesses ownership of her own body even after one of her eggs has been fertilized is certainly one concept of freedom that has not been transmitted to those on the right like Ryan, who publicize her philosophy.
In his first speech as Mitt Romney’s running mate, Paul Ryan, a practicing Catholic, said “Our rights come from nature and God, not from government.” He clearly hoped to soothe any doubters on the religious right who might worry that he is too influenced by Rand’s writings. A militant atheist, Rand believed the source of all rights came from simply existing. “The source of man’s rights is not divine law or congressional law, but the law of identity. A is A—and Man is Man,” she wrote. About faith, a fundamental aspect of Catholicism, Rand wrote: “Faith is the worst curse of mankind, as the exact antithesis and enemy of thought.” It isn’t hard to believe that Rand would consider Ryan to be a walking manifestation of that enemy.
Paul Ryan’s great grandfather started a company called Ryan Incorporated Central that has been contracting with the government for over a century. Ryan himself famously used his Social Security survivor’s benefits to pay for his college, which was easy to do considering that his father also left him a substantial share of his estate. And you’re well aware that since he began serving in Congress back in 1999, Paul Ryan has been enjoying government health care. Ayn Rand preached self-reliance and her heroes were always self-made—unlike Ryan and Romney, both of whom enjoyed extraordinary financial stability and connections coming out of college. These luxuries made Ryan insensitive to the troubles faced by typical Americans and the need for a safety net, which Ryan likes to call a “safety hammock.”
Some people are born on third base and think they hit a triple. Ryan is standing on third base wondering why the batboy is being so lazy. Not exactly a heroic stand.
For all her ranting about the limits of government and the need to be independent, Ayn Rand benefited from Medicare. After decades of smoking, she needed surgery for lung cancer. And where did she turn? The evil of collectivism. Her supporters argue that “she paid into [the Medicare system] her entire life. Why shouldn’t she accept the benefits?” I agree. But all the people under 55 who would get a vastly different version of Medicare under Ryan’s plan have paid their dues, too. Lao Tzu said, “Watch your character, for it becomes your destiny.” Whatever Ayn Rand’s beliefs or intentions, her character provided a real testament to the virtues of  government that promotes its citizens’ general welfare.

Via Norman Kurland at the Center for Economic and Social Justice (www.cesj.org), the following is a comment from one of the Center’s supporters.

Thanks for this “required reading”.  Since I despise Ayn Rand, who turned individual selfishness into a god, and since Ryan does not support her secularist atheism, does that make Paul Ryan a “good guy”?
 Ryan was chosen by Romney to give red meat to the Tea Party wolves.  He obviously never understood Ronald Reagan, but perhaps only because Reagan never stood up for his own beliefs and instead was a wimp for slavishly following Nancy’s concerns about his own political “career”.
Honest politicians rarely survive in American politics any more than do honest tyrants in inherited tyrannies.  Even Jefferson had slaves, as did General Grant throughout the Civil War.
Ideas should be judged on their own merits, not by the people who are afraid to back them.
Both of America’s major political parties are morally bankrupt.  Name one front-running politician in America who dares to even mention the word “justice”.
Long live the American Revolutionary Party, which I co-founded with Norm Kurland seven years ago to encourage moral people to think out of the box as the only means to pursue peace, prosperity, and freedom through the faith-based harmony of transcendent and compassionate justice.

 

 


U.S. Trustee Joins Objections To Solyndra's Bankruptcy Plan

On August 29, 2012, Reuters reports that the U.S. Trustee became the latest government agency to critize Solyndra LLC’s plan to repay its debts, saying the bankrupt solar panel maker should disclose whether it is favoring venture capital investors over creditors.

Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before seeking bankruptcy protection, filed a Chapter 11 reorganization plan on July 20, 2012.

The plan, filed in U.S. Bankruptcy Court in Wilmington, Deleware, provides for holders of allowed administrative expenses and priority claims to be paid in full, and assets of Solyndra will be vested in the Solyndra Residual Trust. Holders of Solyndra’s general unsecured claims, valued at $50 million to $120 million, are expected to recover from 2.5 percent to 6 percent, according to a disclosure statement filed with the plan.
The plan’s sponsors are identified as Argonaut Ventures I LLC and Madrone Partners LP. Argonaut Ventures is the investment arm of billionaire George Kaiser’s charitable organization. The Fremont company sought Chapter 11 protection in September 2011 just days before its offices were raided by the FBI seeking evidence of possible fraud. The company fired more than 1,000 workers.

With this reorganization plan where are the provision for employee ownership? There are none/

The government, through the stimulus program, has been giving taxpayer grants to companies with the goal of generating “employment.” For the most part these are not loans or loan guarantees, thus there is no provision for a first-position recoupment position. There is no employee ownership stipulation. The government should always require broadened ownership, in companies the financial assist, of the productive capital assets among the employees, who would pay back their acquisition of ownership out of the earnings of the investment.

While financial support from the government is the purpose of the stimulus program, the structure of the support should be in the form of insured loans as restructuring and investment capital. Such a financial mechanism should be put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich.

Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.

The companies receiving such financial support should always qualify as succeeding companies within a major industry with long-term productivity growth potential with the resulting benefit of promoting the diffusion of advanced technology into civilian industries. The loans should be used to modernize and build new superautomated and computerized robotic assemblies. Where necessary the monies should be used for supplemental retraining of labor workers to qualify them for the new jobs created. Most important, the profits from the investments should be fully paid out to new capitalists owners––the corporate employees. This should be a condition to receive the capital investment loans. The goal would be to create new capitalist owners simultaneously with the growth of the economy financed with government loan support. The profits would represent wealth created by public capital invested in such companies and industries.

The desired result would be to decrease, rather than increase, the existing concentration of productive capital ownership and thus economic power in the hands of a minority. The credit mechanisms supported by the government would not involve the expenditure of any tax money and would support profit-making operations for the primary purpose of earning dividends for the companies’ stockholders, including the newly created capitalist owners. Businesses supported by such credit mechanisms would have a profit motive and operate with the requirement for efficiency imposed by a market economy.

The goal would be to broaden the ownership of private corporations so as to make the interests of private industry more synonymous with the public interest and vice versa––while broadening private enterprise capitalism to include everyone in the society. Such policies and programs aimed at broadening productive capital ownership would foster extensive utilization of the most modern and efficient technological innovations and result in the revitalization of American free-enterprise capitalism mirrored in a strong growth-projected economy.

http://in.reuters.com/article/2012/08/29/solyndra-bankruptcy-trustee-idINL2E8JT53M20120829

 

Is Private Property In Capital "Catholic"?, VIII: What Is Social Justice?

On August 27, 2012 , Michael D. Greaney posted on The Just Third Way Web site:

As we saw in the previous posting in this series, the whole theory of social justice rests on the assumption that the common good, contrary to the claims of traditional philosophers, can be accessed directly by ordinary people, not just indirectly by people acting virtuously or the State passing good laws and people obeying them.

The difference between social justice and individual justice (aside from the fact that individual justice looks to individual good and social justice looks to the common good, i.e., humanity’s capacity to acquire and develop virtue) is that access to the common good, a network of institutions is not possible for individuals as individuals. It is only possible for individuals as members of groups, that is, of institutions or “corporate bodies,” also variously translated as “corporations,” “vocational groups,” and so on.

Membership in these groups, however, is only open to people who share equal political status. As Pius XI emphasized, these groups must be free (he says it seven times in one paragraph, § 87) — and that necessarily implies that they are based on contractual agreements between people of equal status. You can’t be free if you are not equal, and you can’t be equal if you are not free:

“Moreover, just as inhabitants of a town are wont to found associations with the widest diversity of purposes, which each is quite free to join or not, so those engaged in the same industry or profession will combine with one another into associations equally free for purposes connected in some manner with the pursuit of the calling itself. Since these free associations are clearly and lucidly explained by Our Predecessor of illustrious memory, We consider it enough to emphasize this one point: People are quite free not only to found such associations, which are a matter of private order and private right, but also in respect to them “freely to adopt the organization and the rules which they judge most appropriate to achieve their purpose.” The same freedom must be asserted for founding associations that go beyond the boundaries of individual callings. And may these free organizations, now flourishing and rejoicing in their salutary fruits, set before themselves the task of preparing the way, in conformity with the mind of Christian social teaching, for those larger and more important guilds, Industries and Professions, which We mentioned before, and make every possible effort to bring them to realization.”

The power to enter into contracts without coercion (which would not be contracts if coerced) depends on equality of political status, which in turn depends on the power vested in the owner of capital. You cannot ordinarily become a member of a group without some form of coercion if you do not own capital, and you cannot carry out an act of social justice unless you are a member of a group. Thus, social justice depends on free association/contract, and free association/contract ordinarily depend on capital ownership.

The philosophical/theological basis for equality of political status in civil society is along the same lines. Every human being has an “analogously complete” capacity to acquire and develop virtue — this defines us as human, and every human being is as fully human, and is human in the same way as every other human.

As we may have noted once or twice before, we acquire and develop virtue by exercising our natural rights within the limits of the common good — ordinarily we may not use our rights — our power/ability for doing — in a way that harms other individuals, groups, or the common good itself. The exercise of rights necessarily implies political equality within the common good, for everyone is equally human, and therefore necessarily has the same rights as everyone else. No one is above the law.

Then she came back and said she didn’t understand a word of it. We cannot change things now. Equality is based on the liberalism of John Locke, Adam Smith and other fiends. The United States was founded as a result of the illegal overthrow of the British Crown by an anti-Catholic Masonic-Jewish conspiracy. End the Fed. Free silver (and no doubt Willy). The Apocalypse is coming. Afterwards property will be abolished and we will have the civilization of love envisioned by John Paul II.

We gave up.

http://just3rdway.blogspot.com/2012/08/is-private-property-in-capital-catholic_27.html

HEY, AMERICA: Check Out How 90 Percent Of Us Have Gotten Shafted Over The Past 30 Years…

On August 22, 2012, Henry Blodget writes in the Business Insider that income inequality is arguably the most important economic story in this country right now.

With all of America’s income gains now going to the richest 10 percent of Americans–and especially the richest 1 percent–the middle class is strapped.

And since the middle class provides most of the spending in the economy (rich people can only buy so many cars, houses, and vacations), this means that the growth of most companies has stalled.

The Economic Policy Institute has put together an amazing interactive chart that shows how this inequality has developed over the past 30 years.

In the past 30 years, 96 percent of the growth of average incomes in this country have gone to the richest 10 percent of the country. And in the past 10 years, the incomes of the other 90% have declined.

The next question, of course, is what has caused the shift of the past 30 yearsas well as what can be done to reverse it. The cause is likely a number of factors, from globalization (the entry of 3 billion low-cost laborers into the workforce) to tax policy to technology. And there’s no easy and quick solution.

But you’d certainly have to be a member of the top 10 percent to think that the trend over the past 30 years is okay. You’d also have to be pretty short-sighted. Because if that trend continues, and if you’re in the top 10 percent because you own or work for a company that serves the other 90 percent, demand for your products will soon be going down.

Henry Blodget does a respectable job of defining the end result of the rigged American financial system that is so structured to favor those who are already wealthy, at the expense of the under-capitalized or capital-less American majority. Blodget refers to his misguided solution at http://www.businessinsider.com/how-to-fix-the-economy-in-one-simple-chart-2012-8

Yet this is another shallow article on how to fix the economy with the focus on JOB CREATION rather than OWNERSHIP CREATION. While Henry Blodget recognizes that without a source of income people cannot pay for the consumption of products and services, he limits his solution to JOB CREATION and wage charity. He provides charts showing that consumers are strapped or broke because most of the income gains in the past 30 years have gone to the top 10 percent (and especially the top 1 percent) but fails to connect that this income is the rightful property of the owners (no matter how few) of the non-human factor of production––productive capital––the result of tectonic shifts in the technologies of production that is evident in human-intelligent machines, superautomation, robotics, digital computerized oeprations, etc. embodied in various business corporations, LLC, partnerships, etc.
Blodget attributes income inequality to globalization (cheaper labor overseas), a decline in the minimum wage, the decline of private-sector unions, changes in the tax code (tax cuts for the highest earners) and excessive compensation for senior executives of business corporations, all of which is couched in references to jobs and employment. He fails to address the connection of globalization and tax code cuts to the ownership of  inome-producing productive capital assets generated through the organization of business corporations and other for-profit entities.
Blodget argues that business corporations are paying very little to their rank-and-file employees, but does not address the reality that cheap global labor and the non-human means of production are forcing down the value of labor in the United States (and globally). Instead, he argues paying workers more for less work and more than the free market values that would otherwise operate in a market economy.
Blodget acknowledges that a lot of Americans don’t even have jobs (with more unemployment on the horizon) but fails to attribute the role of production cost efficiencies (cheap labor and “machines”) that increasingly eliminate the need for labor, both non- and skilled, and as well, educated labor.
On the plus side, Blodget advocates creating a sustainable economic recovery to get the private-sector cranking, not the public sector. But his solution is to “persuade American corporations (and their owners) to hire more employees and pay them more, thus giving these employees (American consumers) more spending money. In other words, we should take some of those surplus corporate profits and invest them in Americans.”
Blodget fails to call this approach what it is, that is, income redistribution, because the so-called “surplus corporate profits” are the earnings of the owners of those business corporations and if we are to uphold the principal of private property rights, rightly belong to those owners.
Blodget argues that “we instill a new value system in our companies, one in which employees–American workers–are treated as a constituency that is as important as the two other corporate constituencies that everyone already agrees are important––shareholders and customers.”
This is cockymania talk.
The REAL SOLUTION is to finance future economic growth of American business corporations by empowering EVERY American to acquire private, individual ownership in the eonomy’s future income-producing productive capital assets. Rather than the Federal Reserve providing money to banks for non-productive lending, Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. Thus, capital investment loans should be made to EVERY American with payback provided by the future earnings of the investments. This would free economic grwoth from the slavery of “past” savings. The Federal Reserve should stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The monies would be strictly allocated for investment in the economic growth of the economy, and taking advantage of the Capital Homestead Account investment monies would be voluntary on the part of business corporations with the stipulation that the stockholders would receive the full-dividend payouts of the earnings and when the loan is repaid, continue to benefit from the full-dividend income stream.
Such a solution does not require redistribution or hoping that business corporations will increase their labor costs by  paying higher wages and salaries otherwise not supported by free market competition. Such polities will simultaneously grow America’s productive capacity and provide people with income to buy the products and services produced, restoring the necessary balance between production and consumption.
The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded capital ownership opportunities for all Americans. Such policies will increase corporate profits because Americans will end up with more spending money, which in turn, will increase profits and more money to spend by consumers on the products and services produced.

Why this approach?
Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “Then what?”

Of course, to reach this twin goal will require “investment.” The term “invest” sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and degraded in terms of wage and salary levels. Until a Romney or Obama address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, superautomation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American’s life.

As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work [ownership]”

For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a “middle class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).

At the same time tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to “machines” of technology making things, The combination of cheap global labor costs and lower long-term invested “machine” costs has forced the value of labor downward and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.

But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority. Companies will continue to globalized in search of “customers” with money or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.

Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.

Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are customers to create demand.  This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not depended on taxpayer redistribution and national debt to sustain welfare support, open or concealed.

Blodget needs to reassess his focus on JOB CREATION and embrace the goal of universal CAPITAL OWNERSHIP. These ideas need to reach the Business Insider readership and the national media if we are to bring about the necessary paradigm shift necessary to put America on the path to prosperity, opportunity, and economic justice.

Please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

http://www.businessinsider.com/income-inequality-2012-8

When a 401(k) Is Locked In The Freezer

On August 25, 2912, Gretchen Morgenson writes in The New York Times that everyone with a 501(k) knows that bad investments and high fees can threaten their retirement. But what if the company that sponsors your plan goes bankrupt?

As the employees of one small company have learned, it can wreak financial havoc. They’ve gone nearly four years without access to their retirement savings.

It isn’t supposed to be this way. When a company collapses, the assets of its 401(k) are to be transferred to account holders — promptly.

 

http://www.nytimes.com/2012/08/26/business/401-k-woes-when-a-company-goes-bankrupt-fair-game.html?_r=1&smid=fb-share

China Eagerly Buying Up American Assets [To Own America]

Gerry Lopez, left, CEO of AMC, joins Zhang Lin, Vice President of Wanda, at a ceremony to mark the acquisition of the U.S. cinema chain. (Ng Han Guan / Associated Press / August 24, 2012)

On August 25, 2012, David Pierson and Don Lee write in the Los Angeles Times that Chinese firms see bargains in the U.S., as well as opportunities for technological gain and  expanded reach.

…the Chinese see a prime opportunity to rummage through the bargain bins of rich countries to gain technological know-how and international reach.

They’re also hedging against rising costs and uncertainties inside China. The world’s second-largest economy is struggling with its slowest growth rate since the financial crisis in 2008.

“The Chinese growth model is changing fundamentally,” said Thilo Hanemann, research director for the New York-based Rhodium Group, which tracks Chinese direct investment.

“Chinese companies need to escape the profit squeeze in low-end manufacturing and move up and down the value chain. Expanding investment in developed economies is an essential part of that,” Hanemann said.

Although China has tight capital controls, that nation’s government officials want companies to go after new technologies and diversify their markets.

“The Chinese government has given an implicit green light to reach overseas to secure assets that will help Chinese businesses thrive in the long term,” said David Wolf, the Beijing-based head of the Wolf Group Asia consulting firm.

That’s worrying some Washington officials, who fear that the United States is selling off valuable assets to the Chinese, ultimately at the expense of American jobs.

One of the leading impediments then — and now — is the suspicion that Chinese companies act on behalf of China’sCommunist Party rulers, rather than shareholders. State-run firms represent about 90 percent of Chinese outbound investment, according to the Heritage Foundation.

China contends that this investment has kept American companies alive and created thousands of U.S. jobs. Chinese President Hu Jintao said as much during a visit to the U.S. last year when he toured Wanxiang’s existing Illinois facility and met with other Chinese companies that had U.S. operations.

Across other industries, Chinese corporations are buying into American companies for their prowess in branding, marketing and research capabilities.

Compared with Japan and other economic powers, China’s foreign investment is still relatively modest. With global holdings estimated at $364 billion, China is on par with Ireland or Sweden, according to the research firm Rhodium Group.

Due to the stupidity of our national leadership, academia, and media, Americans have and continue to facilitate foreign interests in BUYING America in the name of JOB CREATION. The Times authors never use the term OWNERSHIP but rather BUY assets, which should be defined as everything other than labor that is a productive component in the creation of products and services––aka productive capital or capital––embodied in innovation, invention, human-intelligent machines, superautomation, robotics, digital computerized operations, and other prowess in branding, marketing and research capabilities. This non-human factor of production is the essence of wealth building.

Instead America is focus on JOB CREATION while the real job creation engine is economic growth embodied in the tectonic shifts in the technologies of production. It American assets and future growth projections are seen as profitable investment ventures by foreign interests then WHY NOT  for Americans?

The REAL SOLUTION is to finance future economic growth of American business corporations by empowering EVERY American to acquire private, individual ownership in the eonomy’s future income-producing productive capital assets. Rather than the Federal Reserve providing money to banks for non-productive lending, Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. Thus, capital investment loans should be made to EVERY American with payback provided by the future earnings of the investments. This would free economic grwoth from the slavery of “past” savings. The Federal Reserve should stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The monies would be strictly allocated for investment in the economic growth of the economy, and taking advantage of the Capital Homestead Account investment monies would be voluntary on the part of business corporations with the stipulation that the stockholders would receive the full-dividend payouts of the earnings and when the loan is repaid, continue to benefit from the full-dividend income stream.
Such a solution does not require redistribution or hoping that business corporations will increase their labor costs by  paying higher wages and salaries otherwise not supported by free market competition. Such polities will simultaneously grow America’s productive capacity and provide people with income to buy the products and services produced, restoring the necessary balance between production and consumption.
The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded capital ownership opportunities for all Americans. Such policies will increase corporate profits because Americans will end up with more spending money, which in turn, will increase profits and more money to spend by consumers on the products and services produced.

Why this approach?
Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “Then what?”

Of course, to reach this twin goal will require “investment.” The term “invest” sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and degraded in terms of wage and salary levels. Until a Romney or Obama address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, superautomation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American’s life.

As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work [ownership]”

For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a “middle class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).

At the same time tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to “machines” of technology making things, The combination of cheap global labor costs and lower long-term invested “machine” costs has forced the value of labor downward and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.

But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority. Companies will continue to globalized in search of “customers” with money or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.

Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.

Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are customers to create demand.  This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not depended on taxpayer redistribution and national debt to sustain welfare support, open or concealed.

America’s leaders, academia and  media need to reassess their focus on JOB CREATION and embrace the goal of universal CAPITAL OWNERSHIP if we are to bring about the necessary paradigm shift necessary to put America on the path to prosperity, opportunity, and economic justice.

Please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

http://www.latimes.com/business/la-fi-china-us-investing-20120825,0,4780772.story?page=1

America’s Descent Into Poverty

On August 24, 2012, Craig Roberts writes on paulcraigroberts.org that the United States has collapsed economically, socially, politically, legally, constitutionally, and environmentally.

Economically, America has descended into poverty. As Peter Edelman says, “Low-wage work is pandemic.” Today in “freedom and democracy” America, “the world’s only superpower,” one fourth of the work force is employed in jobs that pay less than $22,000, the poverty line for a family of four. Some of these lowly-paid persons are young college graduates, burdened by education loans, who share housing with three or four others in the same desperate situation. Other of these persons are single parents only one medical problem or lost job away from homelessness.

Others might be Ph.D.s teaching at universities as adjunct professors for $10,000 per year or less. Education is still touted as the way out of poverty, but increasingly is a path into poverty or intoenlistments into the military services.

This is on a projectory to get far worse with tens of millions of Americans facing unemployment and underemployment due to cheap global labor and tectonic shifts in the technologies of production that are destroying jobs and degrading jobs in terms of wage and salary levels, forcing American to subsist at poverty or near-poverty levels.

Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class (with temporary low taxable capital earnings at 15 percent made permanent, thus preserving exactly those provisions of the tax code most responsible for millionaires paying tax rates considerably lower than those with a fraction of the income) and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “Then what?”

Of course, to reach this twin goal will require “investment.” The term “invest” sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and degraded in terms of wage and salary levels. Until a Romney or Obama address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, superautomation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American’s life.

As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work”

For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a “middle class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).

At the same time tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to “machines” of technology making things, The combination of cheap global labor costs and lower long-term invested “machine” costs has forced the value of labor downward and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.

But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority. Companies will continue to globalized in search of “customers” with money or simply fail as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.

Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.

Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are customers to create demand.  This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not depended on taxpayer redistribution and national debt to sustain welfare support, open or concealed.

http://www.paulcraigroberts.org/2012/08/24/americas-descent-poverty-paul-craig-roberts/#.UDlAql5cNyM.facebook