This is a response from Norman Kurland of the Center for Economic and Social Justice on the blog of Dissenting Democrat “Jobs, Economic Fears—Not Love of Right—Fuel Workers’ Anger,” posted on June 6, 2010:
It’s time for labor unions to go for broke and transform themselves into ownership unions, reaching out to and organizing all propertyless citizens to promote a Capital Homestead Act (See paragraphs on ownership unions at http://www.cesj.org/homestead/summary-cha.htm)
Walter Reuther, who in the mid-1960s I served with as Director of Planning of the Citizens Crusade Against Poverty that Reuther headed, favored the democratization of ownership before he died in an airplane crash. The auto industry would have avoided the outsourcing to low-wage slave countries and the American economy would not have been in the mess we’re now in if the UAW and other unions were as visionary as Reuther, as reflected in these words:
“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. The Federal Reserve Board recently published data from which it is possible to estimate the degree of concentration in the ownership of publicly traded stock held by individuals and families as of December 1962. Preliminary analysis of these data indicates that, despite all the talk of a “people’s capitalism” in the United States, little more than one percent of all consumer units owned approximately 70 percent of all such stock. Fewer than 8 percent of all consumer units owned approximately 97 percent—which means, conversely, that the total direct ownership interest of more than 92 percent of America’s consumer units in the corporation-operated productive wealth of this country was approximately 3 percent. Profit sharing in a form that would help to correct this shocking maldistribution would be highly desirable for that reason alone. …
“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 as such cannot be said to have any inflationary impact upon costs and prices.” [Testimony before the Joint Economic Committee of Congress on the President’s Economic Report, February 20, 1967.]
Under laws promoting Reuther’s ownership vision America would have ended the wage slave system, closed the wealth and economic power gap, and would deliver more equal ownership opportunities and ownership power as a fundamental right of citizenship in every nation claiming to be democratic. It’s time to have a Just Third Way beyond the power-concentrating systems of both Capitalism and Socialism.
Under Capital Homesteading, unions could expand their role in a free market system by educating and expanding their membership to include all shareholders. Ownership unions would enhance the property rights of all shareholders by ensuring management accountability and protecting against unjust executive compensation schemes. If they remain open-minded, progressives and union members will have to acknowledge that the wage system is the cancer in the global economy.
Here, Saul Alinsky, a hero to President Obama, supplies the answer to wage feudalism:
“[T]he organized labor movement as it is constituted today is as much a concomitant of a capitalist economy as is capital. Organized labor is predicated upon the basic premise of collective bargaining between employers and employees. This premise can obtain only for an employer-employee type of society. If the labor movement is to maintain its own identity and security, it must of necessity protect that kind of society.” Radicals, on the other hand, “want to advance from the jungle of laissez-faire capitalism to a world worthy of the name of human civilization. They hope for a future where the means of economic production will be owned by all of the people instead of just a comparative handful. They feel that this minority control of production facilities is injurious to the large masses of people not only because of economic monopolies but because the political power inherent in this form of centralized economy does not augur for an ever expanding democratic way of life.” (Reveille for Radicals, Saul Alinsky, 1945)
Even Ronald Reagan supported Capital Homesteading for every citizen in the following excerpt from his July 20, 1974 speech before Young Americans for Freedom:
“Some years ago a top Ford official was showing the late Walter Reuther through the very automated plant in Cleveland, Ohio and he said to him jokingly, ‘Walter, you’ll have a hard time collecting union dues from these machines’ and Walter said, ‘you are going to have more trouble trying to sell automobiles to them.’ Both of them let it stop there. There was a logical answer to that . . . the owners of the machines could buy automobiles and if you increase the number of owners you increase the number of consumers.
“Over hundred years ago Abraham Lincoln signed the Homestead Act. There was wide distribution of land and they didn’t confiscate anyone’s privately owned land. . . . We need an industrial Homestead Act.”
As President in an August 3, 1987 speech made in receiving the unanimous report of the bipartisan Presidential Task Force on Project Economic Justice, which I served as deputy chairman along with representatives of the AFL-CIO, the Teamsters, the American Enterprise Institute, the U.S. Chamber of Commerce and other diverse leaders, Reagan re-affirmed his support for lifting the barriers to universal access to capital ownership, with these words:
“I can’t help but believe that in the future we will see in the United States and throughout the Western World an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.
“I’ve long believed one of the mainsprings of our own liberty has been the widespread ownership of property among our people and the expectation that anyone’s child, even from the humblest of families, could grow up to own a business or corporation.”
And in a talk he gave at the Gdansk Shipyard in Poland and quoted in the Wall Street Journal, September 17, 1990, Reagan said:
“[W]hat about the workers in those state monopolies that are being put up for sale? I am reminded of a technique for employee ownership that has worked well for many U.S. companies. It goes by various names, but the best known is ‘Employee Stock Ownership Program,’ or ESOP.”
And from an unpublished Reagan letter sent to New Orleans Times Picayune, based on note from John McClaughry, Senior Policy Advisor, to the Reagan-Bush Committee, October 31, 1980, Reagan wrote:
“Our Founding Fathers well understood that concentrated power is the enemy of liberty and the rights of man. They knew that the American experiment in individual liberty, free enterprise and republican self-government could succeed only if power were widely distributed. And since in any society social and political power flow from economic power, they saw that wealth and property would have to be widely distributed among the people of the country. The truth of this insight is immediately apparent. Could there be anything resembling a free enterprise economy, if wealth and property were concentrated in the hands of a few, while the great majority owned little more than the shirts on their backs?
“Could there be anything but widespread misery, where a privileged few controlled a nation’s wealth, while millions labored for a pittance, and millions more were desperate for want of employment?
“It should be clear to everyone that the nation’s steadfast policy should afford every American of working age a realistic opportunity to acquire the ownership and control of some meaningful form of property in a growing national economy.
“This is not to say that the government should confiscate from the ‘haves’ and bestow upon the ‘have-nots’, beyond the requirements of a compassionate welfare program to provide for those who cannot provide for themselves. Far from it. But it is to say that our duty is to foster a strong, vibrant wealth-producing economy which operates in such a way that new additions to wealth accrue to those who presently have little or no ownership stake in their country.”
The connection between freedom and capital ownership was part of the American Dream from its birth. On October 28, 1785, Thomas Jefferson wrote the following letter to James Madison, the Protestant Episcopal Bishop of Virginia, and the President of William and Mary College:
“I am conscious that an equal division of property is impracticable, but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property . . . . [I]t is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.”
Abraham Lincoln, in his campaign speech in New Haven on March 6, 1860, said:
“I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.” (From Complete Works of Abraham Lincoln, ed. by John G. Nicolay and John Hay, Vol. V, pp. 339-371, 360-361.)
And on June 20, 1776, Virginia adopted a Declaration of Rights written by George Mason, which opened with these words about property that Jefferson unfortunately (probably because of his ambivalence on slavery) left out of the Declaration of Independence:
“All men are by nature equally free and independent and have certain inherent rights, of which, when they enter into a state of society, they cannot, by any compact, deprive or divest their posterity; namely, the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.”
The Massachusetts Declaration of Rights adopted on October 25, 1780, supported Mason’s position on property by stating:
“All men are born free and equal, and have certain natural, essential, and unalienable rights; among which may be reckoned the right of enjoying and defending their lives and liberties; that of acquiring, possessing and protecting property; in fine, that of seeking and obtaining their safety and happiness.”
1980 Republican Conference Platform.
“The widespread distribution of private property ownership is the cornerstone of American liberty. Without it, neither our free enterprise system nor our republican form of government could long endure.” 1980 Republican National Convention, July 14, 1980, Detroit.
And here’s one from John D. Rockefeller III in his 1977 book The Second American Revolution:
“Taxation has its limitations as a method of achieving better economic distribution since for this purpose it is essentially remedial. We must also take a positive approach by finding new ways to spread ownership of future capital growth more broadly in our society. . . . [M]any of the deficiencies of our economic system could be alleviated if ways were found to broaden the ownership of the means of production.…This has happened in some companies [through ESOPs]. Successful approaches of this sort would pay dividends in terms of employee commitment and morale. And they would not deprive anyone of his present holdings since they are based on future growth.”
Finally, here’s a statement of December 11, 1972 by Senator Russell B. Long, when he first became champion of the Employee Stock Ownership Plan (ESOP). But for organized labor’s blind commitment to the wage system and fear of the implications of worker ownership, Long’s initiative would have turned Conrail (the successor to Penn Central when it became bankrupt) into a 100 percent worker-owned and -controlled railroad:
“There are but three political-economic roads from which we can choose….We could take the first course and further exacerbate the already concentrated ownership of productive capital in the American economy. Or we could join the rest of the world by taking the second path, that of nationalization. Or we can take the third road, establishing policies to diffuse capital ownership broadly, so that many individuals, particularly workers, can participate as owners of industrial capital.…The choice is ours. There is no way to avoid this decision. Non-action is a political decision in favor of continued, and indeed increased, concentrated ownership of productive capital.”
My final comment: When will some new leaders emerge from within organized labor with the moral and physical courage to transform the American economy into a just market system, where every citizen can become empowered and enriched through the restructuring of basic economic institutions to lift the barriers to equal ownership opportunity? Will those on the left and those on the right have the guts to come together on the Just Third Way, restoring genuine economic and social justice for every citizen?
In Peace, Prosperity and Freedom, only through Justice and Courage, Norm Kurland Center for Economic and Social Justice (www.cesj.org)
