Capital Democratization

Abstract

Although principles underlying binary economics were first published in 1958 (Kelso and Adler), the many books and papers that discuss the subject, with the exception of Kane (2000) and Kurland (2001), do not utilize conventional economics language. To facilitate the teaching of binary economics in beginning and intermediate college courses in economics and business, the paper explains some major microeconomic and macroeconomic fundamentals of binary economics by utilizing conventional neo-classical economic models. It then compares the theoretical results reached in a non-binary economic environment to those that may be reached in a binary one. The most important result from the comparison is that, in a non-binary environment, the economy would employ less than full potential capital and thus generate less than optimum output, consumption, saving and investment. The authors hope the article will help the reader to (a) understand the binary principles and (b) analyze the 'binary promise' of greater growth based on a broader distribution of capital ownership.Conventional wisdom effectively treats capital (land, structures, machines, and the like) as though it were a kind of holy water that, sprinkled on or about labor, makes it more productive. Thus, if you have a thousand people working in a factory and you increase the design and power of the machinery so that one hundred men can now do what a thousand did before, conventional wisdom says, 'Voila! The productivity of the labor has gone up 900 percent!' I say 'hogwash.' All you've done is wipe out 90 percent of the jobs, and even the remaining ten percent are probably sitting around pushing buttons. What the economy needs is a way of legitimately getting capital ownership into the hands of the people who now don't have it." (Louis O. Kelso, 1982, www.kelsoinstitute.com)

Broadening the Right to Acquire Capital with the Earnings of Capital: the Missing Link to Sustainable Economic Recovery and Growth

“…The concept of independent productiveness does not negate the fact that both capital and labor are generally needed to complete specific kinds of work, or the fact that labor is needed to invent, design, create, install, operate, maintain, store, repair, manage, and finance 1 For an analysis of binary economics as a distinct paradigm, see Ashford (1996) and Ashford and Shakespeare (1999). For an analysis of binary economics in standard micro-and macro-economic terms see Ashford and Kantarelis (2008). For an explication of binary economics co-authored by its originator, Louis Kelso, see Kelso and Adler (1958), Kelso and Adler (1961), Kelso and Hetter (1967), and Kelso (1986, 1991).…”

Financial capital democratisation: recipes for growth and disaster

“…Building on the work of Kelso and Hetter (1986), several researchers, led by Robert Ashford, have advanced the idea of acquiring financial capital with the future earnings of financial capital; see Ashford (1998), Ashford and Shakespeare (1999), Ashford and Kantarelis (2008). Although the idea has never been implemented it is based on plausible assumptions and as such it shows promise for wealth creation and growth for all, especially in developed capital-intensive economies with well functioning financial markets.…”