The below “Statement of Shared Vision and Solidarity” was authored by the Center for Economic and Social Justice (www.cesj.org) and adopted early in January 2001 to bring together people from around the world to show solidarity and support for the goal of economic justice for every person and family. This Statement places special emphasis on the fundamental institution of the Family and its economic well-being, security and independence. To date, more than 7,000 people have signed the Statement, which is now being disseminated to a broader network of individuals and organizations.
As Pope Leo XIII in § 46 of Rerum Novarum observed: “We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”
Relevant to the solution for strengthening the quality of economic life for families, Pope Leo XIII stated in § 22 “The chief and most excellent rule for the right use of money . . . rests on the principle that it is one thing to have a right to the possession of money and another to have a right to use money as one wills. Private ownership, as we have seen, is the natural right of man, and to exercise that right, especially as members of society, is not only lawful, but absolutely necessary. “It is lawful,” says St. Thomas Aquinas, “for a man to hold private property; and it is also necessary for the carrying on of human existence.”
While expressed in broad terms, the “Statement of Shared Vision and Solidarity” focuses specifically on two critical institutions in need of fundamental reform: (1) the money (and credit) system and (2) private property (the right to, and the rights of). These institutions have become distorted to the point where they now create barriers for most people and families to participate fully and equally in the common good within a world where ever-advancing technologies and system innovations continue to displace many forms of work.
To democratize the economies and financial systems of the world, this Statement calls for the restoration and refinement of broader and more realistic definitions of “money.” It then calls for reforms to restore, and extend to all people, the historic rights of and effective means to enable every person to acquire private property rights in income-producing technologies and other productive assets.
Private property includes the right of an owner to profits, and to full governing powers and privileges over that which he or she owns. This Statement also recognizes that there are legitimate limitations on the exercise of private property, such that no person can use his or her property to harm others or their property, or to prevent others from acquiring or exercising property rights.
Current financial, monetary, corporate and tax laws have distorted the institution of private property, largely in response to the mistaken belief that only already accumulated incomes or “past savings” can be used to finance new capital formation. This erroneous belief confines future ownership of the bulk of newly added productive capital to an extremely small percentage of the world’s population. According to Forbes Magazine, the top 85 wealthiest individuals in the world own more than the bottom 3.5 billion. And in America the richest 0.1 percent of American already own more than the bottom 90 percent.
To address global poverty, rising levels of joblessness, and ever-increasing government income redistribution powers in today’s world, artificial and monopolistic barriers in current laws and institutions governing the financing of wealth-producing assets must be lifted to democratize rights of current and future shareholders of modern corporations. Such systemic changes ensure that capital ownership as a universal and fundamental human right will finally be realized.
The primary focus of the Statement, therefore, is on the unique social tool called “money,” how it is created and how it is and should be used.
Understanding Money
Money is not a physical factor of production. It should, however, be a reliable yardstick for measuring economic input, economic outtake, and the value of marketable goods and services as determined through honest transactions within a free, just and competitive market system.
In a truly free global market economy, all prices, labor costs, material costs, and profits (the residual on all sales minus costs) would be determined within a free and competitive market, open to all, with equal access to information and no one forced to buy or sell. Money provides a means for measuring obligations, rights, powers and privileges. Money is a system of symbols that many economists substitute for (and often confuse with) the physical sector and its productive enterprises, goods, and services.
Two things distort a proper understanding of money. One, many people, especially Keynesian economists, have lost sight of the fact that money is not an end or product in itself. Its adequacy as a “social tool” can only be measured by its effect on how real goods and services are produced and consumed, and by whom.
Two, money does not depreciate except in response to external influences, usually manipulation by the State or by those allowed by the State to define and control the volume and uses of money as allowed by the State. Money thereby provides a means whereby certain individuals can accumulate claims against others, the economy as a whole, or even many economies — even if the assets that should stand behind the money no longer exist. Money can be changed from an essential social tool, into a weapon and means of oppression or corruption, a false idol to be worshipped for its own stake.
Because money is a standard or measure of value, stability of the monetary standard is essential to a just economy. That is why money and currency units were once required to have stable value and be backed by assets.
What Went Wrong?
In 1948, the U.S. dollar, then defined as 1/35 of an ounce of gold, was declared by the Bretton Woods Conference to be the “reserve currency of the world” — the standard or “social yardstick” for measuring all other global currencies. Today, the U.S. dollar is no longer backed by any assets, nor is it defined in terms of any objective standard.
The U.S. dollar today is backed entirely by government debt from decades of government deficits caused by the reluctance of politicians to require taxpayers to cover the Federal Government’s growing spending costs. Encouraged by the U.S. Government , the Federal Reserve acquired overvalued “toxic” assets, using the Fed’s money creation powers to prop up housing prices following the 2007 crisis in worthless home mortgages and other speculative securities promoted by major Wall Street bankers and insurers.
Since then, the Federal Reserve has created trillions of dollars of additional government debt paper (marketed by Wall Street through the New York Fed) to protect major Wall Street investment and commercial banks and insurers (presumably “too big to fail”) from going bankrupt for making bad loans.
Other major countries in the world, unfortunately, follow the Federal Reserve’s and Wall Street’s) flagrant misuse of money. How money is mis-defined by most of today’s Keynesian economists explains why the richest 85 people in the world own more than the bottom 3.5 billion people; why the income, capital ownership, and economic power gaps continue to widen; and why so many people have been excluded from decent earning opportunities in a world physically and technologically capable of producing abundance for all.
How Can Economic Justice Be Restored?
The original definition of money must be restored and become popularly understood and promoted as a legitimate “social tool” to achieve economic justice, freedom, and prosperity for every person. Then, central banks and local commercial banks will be able to supply interest-free, asset-backed money for capital acquisition loans. These self-financing loans will enable every child, woman, and man to purchase newly issued, full-dividend payout equity shares representing new capital growth or transfers of existing productive capital assets of well-managed enterprises. Like tax treatment under current U.S. laws promoting Employee Stock Ownership Plans (ESOPs), dividends on company shares acquired through an ESOP are tax-deductible to the company and taxable when received by workers. Similar tax and equal capital credit allotments to each citizen to acquire new or transferred full-dividend payout shares through that citizen’s personal tax-exempt capital acquisition account at a local bank. This in turn will help stimulate non-inflationary and ecologically sound growth within a more just and more competitive free market economy.
Local commercial banks would be empowered by law to rediscount their expanded ownership loans at the central bank. This would provide each citizen with personal allotments of insured capital credit to purchase qualified, full-voting, full dividend payout shares. The process would not cost the new owner any out-of-pocket money or reduce current income. All reasonable bank costs (e.g., loan servicing and credit default risk insurance premiums) would be covered by discounts from the face value of the loans. Monetary, tax, and other reforms to the new capital financing system would enable new citizen-owners to repay the loans out of the full tax-deferred future stream of anticipated profits.
The current monopoly of economic power would in this way be shifted from government, Wall Street speculators, and money-controllers, and democratized into the hands of every citizen-owner. The wealthy would be encouraged to invest their surplus savings in highly speculative ventures, existing government debt, home ownership credit, non-profit educational and health organizations, and other charitable needs of a civilization restoring freedom and justice for all. By providing adequate capital credit to every child, woman, and man, collateralized with capital credit default insurance as a substitute for traditional forms of collateral, and reforming the tax system, the family can be restored as the fundamental social unit of society and the principal provider of human needs.
By creating a nation of citizen-owners in which every person and family would enjoy freedom and expanding economic security through equal future ownership opportunities, today’s overly intrusive Federal Government would not only again become a model for the world. It would also revive the Founders’ commitment to limited government powers and the significance of the original meaning of words in the Preamble of our Constitution:
“We the People of the United State, in order to form a more perfect union, establish Justice . . . .”
