On December 14, David Howell writes on The Japan Times:
The opposite of alienation is belonging. The opposite of division is unity and solidarity.
So how do these admirable aims square with a world in which all the talk, at least in the West, is of increasingly disunited societies, legions of people feeling “left behind,” of widening inequality and of rage against “establishments” who are alleged to be doing better all the time while the rest are doing worse?
“Capitalism that works for everyone” has recently become a favorite slogan of Western leaders, including the British prime minister. But that plainly is not happening. On the contrary, while the system seems to work very well for various chief executives, high-rolling financiers and their friends, who pay themselves eye-watering salaries at hundreds of times the levels of average wages, for too many people and communities lower down the benefits of the capitalism are becoming hard to find.
In the United Kingdom, some top executive pay is running at about 400 times the average wage. In the United States, for some executives it is said to be about 1,000 times. The U.K. is particularly vulnerable to divisive tendencies and antagonisms with its history of class warfare and the fact that even today, two centuries or more after the original industrial revolution, too many towns and cities are struggling to raise standards, defeat poverty and improve their environments.
It has been estimated that while London and the surrounding southeast constitutes one of the richest area in Europe the U.K. still has several of the most deprived areas as well.
If the politicians mean what they say — always a big “if” — then something radical clearly needs to be done in the way of further spreading prosperity. The answer in the 20th century to the inequality concern used to be that booming capitalism would lift wages and salaries for all, which in turn would expand purchasing power and new industries in a comforting upward spiral. Karl Marx, it was contended, had been in error with his gloomy forecast that workers would be constantly oppressed and eventually rise up to destroy the capitalist system. Instead, it was confidently pointed out, the workers were getting richer and the benefits of capitalist wealth creation were trickling down to the masses.
But latterly the confidence has faltered. Something in the system does not seem to be working. At least a part cause of the mood of popular discontent and rejection of authority that is sweeping across both Europe and America is attributed to the fact that the trickle appears to have stopped working and the gap between the rich and the struggling classes below — the “just-about-managing” households and those in outright poverty — is yawning wider and wider. So is the apparent gap between richer and poorer communities.
Undoubtedly, some of the more lurid and ideologically driven descriptions of what is happening need a touch of perspective. It is obviously true that massive inequality is nothing very new. Eighteenth or 19th century dukes or industrial plutocrats might well have had annual incomes 5,000 times as high as the armies of people they employed on their many estates. And when it came to actual wealth there was no comparison at all because most workers had none, not even the house they lived in.
The difference between then and now is that what was hidden then is universally known, and discussed, now. Workers and their families need to look no further than their mobile phones or daily media coverage to see the full and glaring disparities between their own tight circumstances and the charmed lives of the super-rich, the celebrities, the soccer stars and above all the company bosses. Transparency rules, and makes comparisons not only odious but enraging.
In face of this tide of anger, indignation and division, vague assurances that capitalism works for all make zero impact. There have to be clear policies and measures to give substance to these aims.
The superficial solution, and one being heard now on all sides, is that ever higher taxes, especially on those in the upper income quartile, should be applied and the proceeds redistributed by the state through ever bigger welfare programs. But this always evolves into a vast process of discouraging wealth creation and penalizing entrepreneurship, leaving everyone poorer in socialized stagnation.
A far more promising method of making capitalism work for all was in fact put forward half a century ago by the American visionary Louis Kelso in California. He produced a stream of ideas for promoting wider capital ownership, for instance via employee share-ownership schemes. He argued that giving more and more workers a solid share in the capitalist economy would heal divisions between employers and employees, as well as reduce the constant pressure for higher wages. It would make people feel they were all in the system together — that they “belonged” instead of being left to struggle along outside.
But his biggest idea went further. He wanted millions of households and workers not just to own capital, but to benefit from the proceeds of new capital formation, rather than see all the future growth go to those already enriched, or to big funds and corporations. This would put a stop not just to social division and alienation but to the trend for the already rich to grow richer while the rest trailed behind, reliant only on salaries and wages, with growing inequality all round.
His ingenious scheme for making this possible, for creating a form of social capitalism that really did benefit all, went untried for many decades. The world had other worries. But now perhaps the time is ripe. The alternative could be a lot more alienation and populist anger, with demagogues taking over and democratic methods losing out. That led to disaster in the 20th century and we want no more of it in the 21st.
http://www.japantimes.co.jp/opinion/2016/12/13/commentary/world-commentary/capitalism-is-for-everyone/#.WFGGpaIrJUQ
Yes, as the author of this article states, capitalism’s benefits are hard to fine because the capitalism today should be properly labeled “Hoggism.” “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the wealth through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
Whenever an author cites, as in this article, executive pay running at about 400 to 1,000 times the average wage, they confuse the reader because most of executive pay is not in wages but in shares of stock whose valuation the executives are incentivized to increase, so that stockholders, including themselves can sell at a future date and benefit from the increased valuation minus the far lower valuation when they were given stock or purchased stock from their savings. People are getting rich not because of earnings through wages but because they are owners of wealth-creating, income-producing stock in the corporations dominating the economy.
The author is absolutely correct in stating that “something radically clearly needs to be done in the way of further spreading prosperity.” Otherwise, the gap between the wealthy capital ownership class and the struggling classes below––those “just about-managing” households and those in outright poverty––will wides exponentially.
The author states: “The superficial solution, and one being heard now on all sides, is that ever higher taxes, especially on those in the upper income quartile, should be applied and the proceeds redistributed by the state through ever bigger welfare programs. But this always evolves into a vast process of discouraging wealth creation and penalizing entrepreneurship, leaving everyone poorer in socialized stagnation.”
The author then credits binary economist Louis O. Kelso with the idea of significantly broadening individual ownership of wealth-creating, income-producing capital asset formation at it occurs in a growing economy. Louis Kelso was my mentor and partner in the economic advocacy firm I founded with him: Agenda 2000 Incorporated. During the late 1960s and throughout the 1970s, following university doctorate studies in economic development and urban and regional planning, I became a political economist and economic justice advocate. During that period I co-founded the advocacy consulting firm Agenda 2000 Incorporated with Louis Kelso and John W. Dyckman, Chairman of the Graduate School of Urban Planning at the University of California, Berkeley.
Louis Kelso was a leading corporate, tax and financial lawyer, and political economist based in San Francisco and 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 independently productive and the financial tools for democratizing capital ownership in a private property, market economy where most products are exponentially made by physical capital. For more reading visit www.kelsoinstitute.com and download free at http://www.cesj.org/resources/free-ebooks/.
As the author states, “…[Kelso’s] biggest idea went further. He wanted millions of households and workers not just to own capital, but to benefit from the proceeds of new capital formation, rather than see all the future growth go to those already enriched, or to big funds and corporations. This would put a stop not just to social division and alienation but to the trend for the already rich to grow richer while the rest trailed behind, reliant only on salaries and wages, with growing inequality all round.”
For how these ideas can be applied to reform the system with the end result being that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government, see Monetary Justice at http://capitalhomestead.org/page/monetary-justice and the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.
