Written by Carmine Gorga, The Somist Institute
A few days ago, we saw that the world needs a shift of attention from property rights to economic rights to redress many of our social, economic, political, and cultural ills from which we are all suffering today. That shift is not enough. Today, we will wade deeper into our condition.
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From Four Economic Rights to Four Economic Policies
Those who know Concordian economics at times ask me, “Why is Concordian economics not a common topic of discussion yet?”
There are many answers, many reasons. The last one I have found is this: I have not yet explicitly linked the four economic rights and responsibilities of Concordian economics to their corresponding economic policies.
Let me try to do this now. The primary aim is to link the economy of Wall Street to the economy of Main Street.
Four Economic Rights
There are four factors of (modern) production: 1. Land and natural resources; 2. Money or financial capital; 3. Labor; and 4. Physical capital, as tools that make any task easier to accomplish.
As there are four factors of production, so there are four necessary and sufficient economic rights in Concordian economics. The corresponding rights are:
- Right of access to land and natural resources;
- Right of access to national credit, an entity whose value We the People create and on the basis of which we create money;
- Right to the enjoyment of the fruits of our labor;
- Right of enjoyment of the fruits of our property, especially as specified in the tools of production (capital).
Each and every product of our agricultural, industrial, or commercial activity is a result of the amalgamation of these four economic rights.
Where do these rights come from? They are natural rights, which satisfy human needs; they come from our very nature as being human. We are not angels, therefore, we cannot do anything without land and natural resources; we cannot attempt any great socially constructive endeavor without money (conversely, let us think how much more difficult would life be without money); we cannot do anything without labor; we cannot do anything without tools, the result of our imagination and ingenuity. Without the enjoyment of these four rights, we cannot even bake our daily bread.
Of course, Jesus’ prayer to Our Father encloses the totality of Concordian economic policy. In addition to the call for the exercise of these four economic rights, in response to the Mosaic seven-year jubilee, there is in Concordian monetary policy also a call for the systematic cancellation of all debts every seven years.
Economic rights are explicitly the creators of property and implicitly they are the creators of property rights.
Rights Arise from Responsibilities
Being social human beings, we do not derive economic rights out of thin air but from a corresponding set of economic responsibilities:
- The responsibility to pay taxes on the land and natural resources that we keep under our exclusive personal control – because taxes on land reduce the price of land by reducing its hoarding and thus making larger portions of it available to a larger number of people;
- The responsibility to repay the loans that we receive through access to national credit – because repaying loans is not only a general responsibility, but fulfills the responsibility to restore the integrity of the pool of our national credit; repaying loans we also destroy money in circulation and thus we reduce the danger of inflation;
- The responsibility to perform tasks required in the performance of wealth creation – because we thus establish an equivalence between the value of performance and the value of compensation for tasks performed;
- The responsibility to respect the wealth of others – because that is the best legal assurance that our wealth will be respected.
The most important aggregation of property rights today is the ownership of tools – land, buildings, machinery, supplies, and indeed patent rights – that make our great agricultural, commercial, and industrial corporations operate.
National Policies to Recognize Rights and to Enforce Responsibilities
Fully expounded, the above economic rights and responsibilities give birth respectively to four full blown national economic policies in the fiscal, monetary, labor, and industrial realm. For reasons that become apparent in the process, let us take them in reverse order.
From the Respect of Other People’s Property to an Industrial Policy.
We do not have an industrial policy today. Everything goes. As a result we have the Pac Man approach to industrial policy whereby the winner takes all. Thus, we obtain corporations that are too big to fail. The practices of the Pac Man Economy give rise, not to internal harmonious growth, but to zombie corporations that are “too big to fail.” These ventures/vultures must be allowed to fail – if they fail. To have a harmonious national economic development, we must prohibit all external mergers and acquisitions; corporations should be free to grow as large as they can through internal growth. I like to call this the Brandeis Rule.
What we have been attempting to form as an industrial policy is a congeries of efforts spanning a great latitude of fields and institutions. Automatically, what we do in monetary policy affects our industrial, commercial, and agricultural activities – setting interest rates and determining the money supply unavoidably affects these activities. The panoply of agencies, from the Federal Trade Commission to the Interstate Commerce Commission, affect these activities. Even the determinations of the Food and Drug Administration have such an effect.
Dominating all these agencies, automatically, stands the power of the Ant-trust Division of the U.S. Department of Justice. This is the agency that has the final say on the nature and composition of our agricultural, commercial, and industrial activities. This is the agency that has the final say on which mergers and acquisitions stand and which are prohibited. For a comprehensive look at this power, let us notice that this is the agency that determines the destination of organizations to become or not to become “too-big-to-fail.”
“Too-big-to-fail” are organizations that are likely to be serially rescued by extraordinary infusions of money by the Federal Reserve System.
Trouble is, the Antitrust Division of the U.S. Department of Justice does not have a steady, objective policy impervious to external political and financial influence. Far from it. It is here that Concordian economics helps to provide a clear distinction between activities that ought to be permitted and policies that ought to be sternly prohibited.
To become clear and feasible, Concordian agricultural, commercial, and industrial policy ought to be applied progressively to the first, say, 100 largest corporations for one or two years and then be progressively enlarged to the next tranche and the next, until we reach the level of corporations that do business only within the limits of one state.
The largest corporations ought to be subjected to this policy: Internally, these corporations can grow as large as they can; external mergers and acquisitions ought to be prohibited in no uncertain terms. They should not buy other corporations, no matter how large or how small; they should not be allowed to be bought either. One or two years of observations will yield sufficient evidence whether this policy frees the great captains of our industry from looking outside their confines and looking behind their shoulders. They ought to look exclusively at the internal welfare of the organization.
Labor policy.
As we have no industrial policy in the modern world, so we have no labor policy. Again, a congeries of agencies deal with labor policies, but they pay no attention to what is essential for labor to prosper. Labor policies are restricted to external constraints rather than internal ones. Most attention is focused on two goals: We pursue policies of labor unionization and high wages.
Unions, while essential in today’s industrial organization, carry with them a considerable set of negative attitudes: feather bedding, resistance to mechanization, and political involvement are some of the characteristics that set them to work against “capital” rather than in collaboration with capital. Thus is the modern world split asunder.
The policy of high wages is involved in a mirage. Immediate benefits are destroyed by long-term negative effects: High wages invite competition, foreign and domestic, that destroys the goose that lays the golden egg. Work sites move to another region; they even move abroad. Workers stay put – now unemployed, without autonomous means of existence. In the meantime, once corporations raise prices, high temporary wages turn out to be a bane for people on a fixed income.
There is a much better labor policy, the policy of equity distribution. Wealth should be owned by the producers of wealth in accordance with the value of their contribution. Apart from favoring policies that enlarge the number of individual entrepreneurs, Employee Stock Ownership Plans (ESOPs) are ideal instruments to achieve this aim.
Union dues should no longer be tied to high wages but to the fair distribution of corporate equity.
Once the task of labor policy is shifted from the task of raising wages to the policy of equity distribution, an exceedingly bright future comes within our reach. The distribution of profits will be fair; the opprobrious policy of income distribution for top executives 200, even 300, times the wage of the average worker will become a sad memory of the past.
Even consumers can then be made an integral part of the corporation, by distributing a share of the profits of the organization in accordance with the amounts they have spent to purchase the product of the corporation. This is not wishful thinking. It has been practiced for generations by the Harvard Coop; it is steadily increasing under our very eyes. Consumers, after all, are an integral element of the web of relationships that keep the corporation afloat year round.
Once labor policy and economic growth are looked at this way, the introduction of robots will be welcomed. The ownership of robots will be apportioned fairly among those who create the robots.
Monetary policy.
The Federal Reserve System (the Fed) is instructed today to achieve two goals on which it has only an indirect power: control inflation and favor full employment of our national resources. Concordian economics maintains that the Fed has control only over the creation and distribution of money. Therefore, it assigns to the Fed three tasks: 1. Create money only for the creation of real wealth; 2. Distribute loans among individual entrepreneurs, corporations with ESOPs and/or Consumer Stock Ownership Plans (CSOPs), and among public agencies with taxing power; 3. Issue loans at cost.
NOTE: If the Fed stops financing the purchase of financial assets and confines itself to fostering the creation exclusively of real wealth, zombie corporations that have been killed by forces of the market will not be long with us. Free markets will indeed become free markets. The old ideal of economics will at last be a reality.
Concordian economics also calls all public and private creditors to systematically destroy debts every seven years. They will destroy only a bunch of zeros; their relative economic position will remain intact as before the jubilee.
Fiscal policy.
The complexity of the fiscal policy of today is due to an attempt to recover what has been legally granted to the oligopolists. Fiscal policy is considered after the operations of the economic process have been completed. What is not realized is that, by then, the play is over: Actors and even large part of the audience dissolve into the night; only kibitzers lounge in the isles hotly engaged in idle, wishful talk.
If instead we have a set of fair industrial, labor, and monetary policies that take care of a fair distribution of income and wealth while income and wealth are being created, then we realize the only fair tax is a tax on land and natural resources.
The complex implications of these policies become clearer when placed in the context, not of Keynes’ or Hayek’s writings, but the writings of four powerful American thinkers: Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso. Individually, their works do not stand; together they form a formidable fortress. The form an all-American economic policy.
Some Expected Effects
Among the many expected effects of Concordian economic policies three seem more important and urgent than others: The Federal Reserve System ought to shift its view from Wall Street to Main Street; if Main Street functions properly, Wall Street will prosper properly.
With these four economic policies functioning properly, all segment of the population will benefit fairly. MAGA People will no longer be the sacrificial lambs of the elites.
The roar for redistribution of wealth will be a noise of the past. Once Concordian economic policies are implemented, the distribution of income and wealth will have been achieved fairly and squarely. The affluent do not need to contribute one cent of their wealth to the exercise of economic rights and responsibilities.
A Brief Note on the Transition
Once new policies are instaurated, old practices will gradually adapt to the new environment and respectfully make room for new life.
Conclusion
The Covid-19 pandemic is remaking the world. The tools of Concordian economics are the result of the wisdom of the ages. They have never really been given a full chance to show what they can do. At best, they have been implemented piecemeal.
Now we have such a chance to put them in full display – and to pursue their goals fairly and squarely. Will we seize the opportunity?
Certainly changes of such magnitude as those advanced by Concordian economic policies cannot be implemented without thorough vetting. It is largely a mystery how do national discussions get started. Most often, they are initiated by a study group. Is there such a group on the horizon? The group can be public or private; official or unofficial.
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