The title and what follows is from an email I received from Peter Hayes:
“How would you compare Capital Homesteading to limited government and Austrian economics?
“Broad based citizen ownership––The Just Third Way––is the best way compared to Monopoly Capitalism or Socialism/Communism.
“This plan was endorsed by Ronald Reagan and others on the left and right! Our founders wanted to create a classless society by having a nation of owners-farmers and merchants!”
Michael Greaney, of the Center for Economic and Social Justice (CESJ) answers:
“Of the three mainstream schools of economics, the Keynesian, Monetarist/Chicago, and Austrian, the Just Third Way as applied in Capital Homesteading is closest to the Austrian. The Just Third Way is based on the three principles of economic justice explained in Chapter 5 of The Capitalist Manifesto (1958), and applied in the four pillars of an economically just society. The three principles of economic justice are:
“1. Participation. Every person has the right to participate in the production of marketable goods and services both as an owner of labor and as an owner of capital.
“2. Distribution. Every person has the right to share in profits or suffer losses in direct proportion to the market-based relative value of his or her inputs to production.
“3. Harmony (formerly “Limitation”). This is the “feedback” or “social justice” principle. When participation and limitation are out of sync, people must organize to correct our institutions so that equal opportunity can be reestablished.
“The four pillars of an economically just society are:
“1. A limited economic role for the State,
“2. Free and open markets within a strict juridical framework as the best means of determining just wages, just prices and just profits,
“3. Restoration of the rights of private property, especially in corporate equity and other forms of business organization, and
“4. Widespread direct ownership of capital.
“Except for the emphasis on widespread capital ownership, none of this comes into conflict with the Austrian framework. The big area of difference — and the only one on which Austrian economists have commented — is the allegedly impracticability of financing widespread ownership. They generally have no problem with as many people as possible having the nominal liberty to own capital, but when it comes to how, they don’t understand the basic principles involved.
“This is because the Keynesians, Monetarists and Austrians all agree on one thing. They disagree, sometimes violently, on what to do about this one thing, but all insist that it is an absolute. That is the fixed belief that the only way to finance new capital formation is to cut consumption and save. Except in the case of extraordinary people, this necessarily restricts ownership of virtually all new capital to those who are already rich.
“As Dr. Harold Moulton, president of the Brookings Institution from 1916 to 1952 proved in The Formation of Capital (1935), however, this assumption, despite its widespread acceptance, is completely untrue. During the latter half of the 19th century, the rapid growth of the economy was financed not by cutting consumption, but by increasing production. (CESJ has a new edition out with a foreword written especially for it.)
“Modern commercial and central banking make it possible to turn the present value of future marketable goods and services into money that can be used to finance the formation of the capital that produces the marketable goods and services. Capital is thus inherently “self-financing,” as Kelso and Adler explained in their second book, The New Capitalists (1961). The subtitle of this second collaboration is profound: “A Proposal to Free Economic Growth from the Slavery of [Past] Savings.”
“Any Austrian economist who realizes that new capital can be financed using such “future savings” coming from increased production instead of past savings coming from reductions in consumption should have no problem with the Just Third Way. There may be some disagreements about semantics at first — e.g., widespread distortion of the understanding of “social justice” as a form of socialism confuses many people — but these can be ironed out with a little discussion. Social justice does not mean that the State provides for everyone’s needs, but that the State maintains a “level playing field” and polices abuses to ensure as far as possible equality of opportunity, not imposition of desired results.”
