On December 9, 2012, Paul Krugman, op-ed columnist, writes in The New York Times:
The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, whilewages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.
Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.
Why is this happening? As best as I can tell, there are two plausible explanations, both of which could be true to some extent. One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power. Think of these two stories as emphasizing robots on one side, robber barons on the other.
…one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.
In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.
I don’t know how much of the devaluation of labor either technology or monopoly explains, in part because there has been so little discussion of what’s going on. I think it’s fair to say that the shift of income from labor to capital has not yet made it into our national discourse.
As I said, this is a discussion that has barely begun — but it’s time to get started, before the robots and the robber barons turn our society into something unrecognizable.
The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital workers) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”
One of my favorite Kelso quotes is: “The low credibility of government and of all lesser institutions in America today is a consequence of our own increasingly hollow democracy. It is reflected in the rising domestic crime rate and the social and political alienation of people in all walks of life, except for the rich and their sycophants. The real collapse of American ideological leadership in the world can best be seen in the feebleness and confusion that characterizes American foreign policy. The handwriting on the wall is clear: America must rethink the meaning of democracy and set about within its borders to rationalize its economic policy into one that synchronizes the shift from labor intensive to capital intensive production, with universal capital ownership and the payment of the full wages of capital to capital owners, so to restore economic democracy to our economy. We should democratize our plutocratic capitalist economy before we preach democracy to others.”
With increasing punditry, scholars are now starting to write about the impact of the Second Industrial Revolution where tectonic shifts in the technologies of production are destroying and degrading jobs due to the shift from labor worker input to the non-human factor––human-intelligent machines, superautomation, robotics, digital computer operations, etc. Krugman would benefit immensely by paying attention to the volumes of writings now being generated, especially beginning with Louis O. Kelso. Kelso was the author of The Capitalist Manifesto (Random House 1958), The New Capitalists (Random House 1961), Two-Factor Theory: The Economics Of Reality (Random House, 1967), and later Democracy And Economic Power: Extending The ESOP Revolution Through Binary Economics (Ballinger Publishing Company, Cambridge, Massachusetts, 1986; reprinted University Press of America, Lanham Maryland, 1991). The first two books were co-authored with Mortimer J. Adler, President of the Institute for Philosophical Research, former professor of the Philosophy of Law at the University of Chicago, and author of The Idea Of Freedom. Kelso’s latter two books were co-authored by Patricia Hetter Kelso, his collaborator and wife since 1963. The four books present Kelso’s theory of binary economics (or the economics of reality), which describes labor and capital as interdependently productive and the financial tools for democratizing capital ownership in a private property, market economy where most products are exponentially made by physical capital. The first two books can be downloaded at no charge at http://www.cesj.org/cesjsitemap.html. For more reading visit www.kelsoinstitute.com.
Two recent articles that I have written pertaining to the necessity to broaden private, individual ownership of new FUTURE productive capital formation are “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” (http://foreconomicjustice.org/11/economic-justice/) and “The Absent Conversation: Who Should Own America? (http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html).
Krugman and others should also follow the Center for Economic and Social Justice at www.cesj.org and http://capitalhomestead.org/ support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
Sign the WhiteHouse.gov petition at https://petitions.whitehouse.gov/petition/reform-federal-reserve/PhY3Jswk
http://www.nytimes.com/2012/12/10/opinion/krugman-robots-and-robber-barons.html?_r=0
