A Case For Economic Personalism

Personalism, a term that can be understood by every person as something that enables him or her to develop his or her fullest human potential to do the work they would love to do and can afford to do.


Words matter.

Fr. Sirico argues that “capitalism” is a morally sound system.  It is not, as reflected in the current monetary, tax, inheritance, and gift tax laws of all so-called capitalist nations. Since the beginning of what scholars call “the Industrial Revolution” (following the invention of the first practical steam engine in 1696) the economic systems of the world have radically concentrated the ownership of “capital” in a tiny élite.  As a result, today less than 0.1% of humans own more capital than over 90% of the total global population.

In 1958 Louis Kelso and Mortimer Adler authored a book to challenge The Communist Manifesto written 110 years earlier by Karl Marx and Frederick Engels.  As Marx and Engels declared, “The theory of the Communists may be summed up in a single sentence: Abolition of private property.” (Karl Marx and Friedrich Engels, The Communist Manifesto. London: Penguin Books, 1967, 96.)

Marx’s and Engels’s book offered a series of policies aimed at abolishing the monopolization of ownership, control, and property incomes over land, other natural resources, and labor-displacing technologies by those controlling the monetary and banking system of England and other industrial nations.  It is interesting to note that these private sector monopolists did not invent the term “capitalism.”  It was a term developed in the 1850s by the critics of monopolistic ownership who called themselves “socialists” and “communists.”

The first Kelso-Adler book was entitled The Capitalist Manifesto (New York: Random House, 1958).  In my opinion, this was a title that the book’s publisher approved to avoid a possible political attack by Senator Joe McCarthy and his anti-communist supporters on Capitol Hill.  Random House might have feared that Kelso’s truly revolutionary new paradigm of a “Just Third Way” political economy could be mistaken for socialism because it wasn’t classical capitalism.

This is because Kelso’s new paradigm challenged not only the exclusive “labor system” focus of labor unions and Keynesian policies shaping “full employment” goals under the “New Deal” of President Franklin Delano Roosevelt.  Kelso also challenged the use of the term “productivity” that academic economists use to attribute to “labor” all increases in the productiveness of modern industry resulting from continuing technological and system innovations within all modern economic systems.

Economists from all schools of economic thought have ignored the simple logic and relevance of Kelso’s moral paradigm  Neither did they take serious note of his success in structuring the financing of a worker-owned manufacturing company and a farmer-owned fertilizer company within the limits of then current financing law.

Kelso, as head of a highly successful San Francisco law firm, former university professor, and open-minded thinker, offered specific reforms to help the American economy grow faster without inflation.  This he did in a way that would potentially enable America and the world to democratize future ownership opportunities as a fundamental human right.

This Kelso was able to do despite the indifference or opposition of conventional economists.  To name two of the most prominent, Nobel Laureates Milton Friedman of the Chicago/Monetarist School and the Keynesian Paul Samuelson ridiculed Kelso’s ideas without bothering to challenge Kelso’s logic or principles.  (Friedman’s rather vacuous response can be found by following the link, while Samuelson’s appearance on a 60 Minutes segment tends to leave the objective viewer wondering if he actually knew what Kelso proposed.)

The second Kelso-Adler book was entitled The New Capitalists: A Proposal to Free Economic Growth from the Slavery of [Past] Savings (New York: Random House, 1961). It describes how central bank money and local bank capital credit policies can support the allocation by local banks of insured capital credit.  This would enable citizens without savings to purchase full dividend payout voting shares of well-managed companies repayable with the full stream of future profits.  All profits above the need to meet the bank loans would provide income from profits to meet their consumption needs.

The other side of a market economy

In his third book, Two-Factor Theory: The Economics of Reality (New York: Random House, 1967) Kelso, with his wife Patricia Hetter Kelso, moved away from the term “capitalism” to describe his new paradigm, which he later called “Binary Economics.”  Why?

Two reasons: first, the word ”capital” is the term used to describe ”things.”  This category includes land, natural resources, and human inventions of physical technologies, as well as marketing and productive systems, patents, and all other non-human inputs to the process of producing goods and services to be marketed for the overall consumption side of a global competitive and free market system.

Second, all human inputs to such a market economy are called “labor.” It should be obvious that in the “production” or “input” side of every economic system, both “capital” and “labor” inputs are necessary for production.  

Labor, the other side of a market economy, involves rewards for each owner’s personal contributions of his or her labor or capital to the labor-capital production input mix.  The most democratic way to determine fairness in the value of a person’s contributions of capital or labor to the production process is to assess the value of each of that person’s inputs within a free, democratic, competitive, and non-monopolistic market system.

In this way every participant “votes” (i.e., is free to make choices) on the “economic value” to him or her on what is offered by all interested parties in the market process. Every party in the economic process is free to vote or refuse to vote as a potential consumer of all goods or services available in the market.

Neither government (the only “social tool” or institution that is a natural monopoly) nor any other élite group should force citizens to agree to accept a monopolistic determination of the value of any inputs to production.  This applies to both labor inputs (“wage” and “salaries”) and capital inputs (“profits”) that any citizen contributes to the production side of the economic system.

Now, why did I go through this explanation of what attracted me to Kelso’s paradigm?  It’s to point out why I do not use the term “capitalism” to describe our opposition to “socialism”, “communism”, or “community ownership”.  These are terms that fail to describe or encompass the moral, political or economic importance of the human person, as opposed to ”social tools” that can concentrate power in any élite.

That is why I prefer “personalism” a term that can be understood by every person as something that enables him or her to develop his or her fullest human potential to do the work they would love to do and can afford to do.  By doing such “work of civilisation” without pay, people not only enhance their own dignity, but contribute indirectly to the whole of the common good.

Why do those of us in CESJ who do voluntary work for the future of sustainable life on planet Earth through “economic personalism” reject the word “capitalism”?  It’s simple. Since the word “capital” describes non-human “things”, then Fr. Sirico should use the term ”thing-ism” instead of “capitalism.” We hope he will consider supporting a new, more just system based on universal principles  of economic and social justice that will empower every person from the time of birth to the time of death to be surrounded by a family, friends and sounder institutions that enable him or her to become more fully human.

Norman Kurland - lawyer and economist. President of Center for Economic and Social Justice

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