"The
basic moral problem that faces man as he
moves into the age of automation, the age of
accelerating conquest of nature, is whether
he is really fit to live in an industrial
society; whether his institutions will
adjust rapidly enough; whether he will rivet
himself with an absurd institution like full
employment in the economic order when it is
not only unnecessary but unadministratable
in anything but a slave society; whether
freed from the necessity to devote his brain
and brawn to the production of goods and
services, he can address himself to the work
of civilization itself." (Louis O.
Kelso, 1964)
ESOP: Employee Stock
Ownership Plan. The ESOP is designed to
build capital ownership into employees of a
business in the course of efficiently
financing its growth or other worthwhile
corporate objectives, without touching
employee paychecks or savings. As to
employees, the ESOP is that
constitutionally-mandated missing link that
gives them access to credit to buy the
employer's capital stock and, without
personal risk or liability, to pay for it
from the pre-tax earnings of the assets
underlying that stock. In other words,
equalizing their access to capital credit
with that of the already rich.
MUCOP: Mutual Capital
Ownership Plan. This financing method is
intended to provide pooled ESOP financing
for a number of corporations while building
diversified portfolios of their stocks
individually for their employees.
CSOP: Consumer Stock
Ownership Plan. This technique is intended
for use by public utilities, banks,
insurance companies, and other businesses
where long-term relationships between the
producer and its customers are the rule.
Through the intelligent use of credit, it
builds capital ownership for customers while
providing unlimited low-cost financing for
growth of the corporation, thus raising the
power of the consumers to pay for their
purchases of goods and services while
raising the power of the corporation to
produce goods and services. It would
normally be used in conjunction with an ESOP
for employees.
GSOP: General Stock
Ownership Plan. The GSOP is designed to
build capital ownership into politically
designated classes of consumers within the
jurisdiction of the authorizing government -
state, local or federal.
ICOP: Individual Capital
Ownership Plan. A financing device intended
to create viable capital estates for
selected categories of individuals while
opening broad markets for equity financing
by corporations.
RECOP: Residential
Capital Ownership Plan. This financing plan,
in combination with commercially insured
credit financing, would enable home buyers
to purchase homes at less than 25 percent of
the out-of-pocket principal and interest
cost of similar transactions today, by
having their acquisitions treated by tax and
other relevant laws as capital assets,
rather than as consumer items as at present
COMCOP: Commercial
Capital Ownership Plan. Ownership of rental
structures, such as office and apartment
buildings, factories, mines, railroads,
hotels, resorts, etc., is a major source of
capital cash income. Today such structures
and real estate generally are owned by the
excessively wealthy (whose resulting income
is thereby sterilized for purposes of the
consumer economy and denied to those who
could use it if the financing had been
COMCOP structured), who use such
acquisitions not only to satisfy their
antisocial greed, but to wipe out their
income taxes. COMCOP would enable commercial
structure ownership legitimately to be
spread over large numbers of people where it
can raise their power to produce the incomes
they need to make them powerful and
self-supporting consumers, maintain their
lifestyles, and to diversify their holdings
in businesses in which they become employed
as capital workers.
PUBCOP: Public Capital
Ownership Plan. This plan is designed to
provide low-cost financing for capital
instruments used by public bodies of all
types - office buildings, streets and
sidewalks, parks, street lighting, schools,
universities, subways, waterworks, harbors,
etc. It permits broad individual ownership,
through facilities corporations, by great
numbers of people, while providing low-cost
capital facilities to be leased at market
rates to cities and other municipal
corporations, states, the federal
government, and other public bodies. PUBCOP
is another tool in the arsenal of binary
economics to assure that each individual can
become employed as a capital worker and that
governments do not acquire economic power
that should be diffused throughout the
citizenry. PUBCOP financing would employ the
dual functions of binary financing devices.
It would be a major means of eliminating the
cost of wasteful, inefficient, and
inadequate public employee pensions while
providing much greater economic security and
incomes, both before and after retirement,
to public employees and others.
All of these plans are
discussed and diagramed in more detail in
Democracy and Economic Power: Extending the
ESOP Revolution through Binary Economics.
All rights reserved under
International and Pan American
Copyright Conventions.
Library of Congress Catalog Card
Number:61-6562
Louis Kelso's
books, The
Capitalist Manifesto and
The
New Capitalists, are now
available to download in PDF form.
You will need the
Adobe Acrobat Reader to
view and print them.
The Capitalist Manifesto and
The New Capitalists
together comprise the first public statement
of Louis Kelso's seminal contribution to
political economics - a thesis Mortimer J.
Adler, the co-author, declared "the first
clear and systematic statement of the idea
of capitalism that has ever been presented
to the world."
Despite its Cold War
title, The Capitalist
Manifesto of 1958 is neither a
defense of traditional capitalism nor a
polemical call to revolution in the style of
The Communist
Manifesto of 1848. It is a
theoretical blueprint of the physical and
institutional structure of the western
private property, free market system
identified by Adam Smith and the classical
economists; repudiated by Karl Marx and the
socialists,
and pragmatically compromised by J. Maynard
Keynes. It presents specific proposals for
correcting and perfecting the present system
in the line of, and in the light of, its own
logic and principles. It invites men and
women of good will to set to work on the
task of building an economically just and
generally affluent society on the foundation
of a Capitalism redeemed of its historical
flaws.
Louis Kelso's vision of
Capitalism was, in Dr. Adler's description,
"the economically free and classless society
which supports political democracy and
which, above all, helps political democracy
to preserve the institutions of a free
society." To Dr. Adler's mind, this
conception was "the most revolutionary idea
of the century."
Ten years after his death
Louis Kelso is beginning to be recognized as
the originator of a genuinely new paradigm
in political economics. Although introduced
more than forty years ago, its concepts are
still virgin terrain because, despite their
osmotic influence in the United States,
western and eastern Europe, Russia and now
China, relatively few people are familiar
with them.
Make no mistake, Louis
Kelso's ideas are just as controversial
today as when he and Dr. Adler introduced
them in 1958. The Austrian economist
Schumpeter famously defined Capitalism as
"creative destruction." That is also the
effect of a new paradigm on its parent
discipline. Louis Kelso's new paradigm
targets, first of all, the conventional
premises of economics. But since those
premises are also embedded in western
political, economic and business
institutions, particularly the institutions
of finance, Louis Kelso's binary view
exposes the fallacies at their heart as
well.
In showing the obsolete
ideas at the root of key institutions - the
institutions that concentrate wealth and
frustrate the operating logic of the free
market - Louis Kelso changes the terms of
the age-old debate between Conservatives and
Liberals and Capital and Labor. And in doing
that, he moves to new and higher ground the
ideological issues that have made western
society a battleground ever since the
Industrial Revolution. To understand Louis
Kelso's binary paradigm is to look at the
economic and political world with new eyes,
from an exhilarating new perspective. The
social implications of this new view are
revolutionary in the best sense of that
word.
Louis Kelso was
fascinated by technology. He began his
investigation of the Great Depression with
painstaking research on the effects of
technological change on occupations,
industries and the macro-economy. While
still in law school, he published a
monograph on how the computer, hardly
invented then, would revolutionize the
practice of law. He eagerly looked forward
to the day when the computer would make
instantaneous world-wide communication
possible. Unfortunately he died a few years
before the Internet could make this a
reality for him.
Now as we enter the new
century and the new millennium, Louis
Kelso's binary economic paradigm is even
more important than when first introduced.
The demise of the Soviet Union has left the
western market economy free to dominate the
world on its own terms. Understanding market
forces and learning how to exploit them to
build stable industrial democracies that are
also Good Societies for everyone who lives
in them is our most urgent task. Louis Kelso
has given us the tools - both conceptual and
practical - to accomplish this task. He has
also inspired us with his generous vision of
the Good Society that advanced technology
still promises despite centuries of
misunderstanding and misuse.
In gratitude for
the life and work of Louis Kelso, and also
in honor of his co-author, the late Mortimer
J. Adler, whose encouragement and
collaboration made these books possible, the
Kelso Institute takes great pleasure in
electronically publishing both The Capitalist
Manifesto and
The New
Capitalists. In
so doing, we fulfill Louis Kelso's dearest
wish in life - that his ideas be made
accessible to those who will use them to
build institutions that advance civilization
and support individuals in realizing their
highest potential.
The
distributive dynamics of capitalism by Louis O
Kelso, self-published; 2nd edition (1956)
The
Capitalist Manifesto, by Louis O. Kelso and Mortimer
J. Adler, Random House, New York: 1958; reprinted
Greenwood Press, Westport, Connecticut: 1975. Also
published in French, Spanish, Greek and Japanese.
ISBN 0-8371-8210-7
The
New Capitalists: A Proposal to Free Economic Growth
from the Slavery of Savings, by Louis O. Kelso and
Mortimer J. Adler, Random House, New York: 1961;
reprinted Greenwood Press, Westport, Connecticut:
1975. Also published in Japanese.
ISBN 0-8371-8211-5
Two-Factor Theory: The Economics of Reality, by
Louis O. Kelso and Patricia Hetter, Random House,
New York: 1967; paperback edition, Vintage Books:
1968. (Originally published under the title How to
Turn 80 Million Workers into Capitalists on Borrowed
Money.) Also published in Spanish and German.
Democracy and Economic Power: Extending the ESOP
Revolution Through Binary Economics, by Louis O.
Kelso and Patricia Hetter Kelso, Ballinger
Publishing Co., Cambridge, Massachusetts: 1986;
reprinted by University Press of America, Lanham,
Maryland: 1991. Also available in Russian and
Chinese.
ISBN 0-8191-7909-4
WRITINGS BY LOUIS O. KELSO
Karl Marx: The Almost Capitalist, American Bar
Association Journal, March, 1957. [2]
Corporate Benevolence or Welfare Redistribution?,
The Business Lawyer, January, 1960.
Labor's Great Mistake: The Struggle for the Toil
State, American Bar Association Journal, February,
1960.
Welfare State - American Style, Challenge, The
Magazine of Economic Affairs, New York University,
October, 1963.
The
Case for the 100% Dividend Payout, Trends (published
by Georgeson & Co.), New York, December, 1963.
Poverty and Profits, by Hostetler, Kelso, Long,
Oates, the Editors, Harvard Business Review,
September-October, 1964.
Beyond Full Employment, Title News (the Journal of
the American Land Title Association), November,
1964.
Cooperatives and the Economic Power to Consume, The
Cooperative Accountant (published by the National
Society of Accountants for Cooperatives), Winter,
1964.
Why
Not Featherbedding?, Challenge, September-October
1966. (Reprinted in American Controversy: Readings
and Rhetoric, by Paul K. Dempsey and Ronald E.
McFarland, Scott, Foresman and Company, Glenview,
Illinois: 1968.)
The
Economic Foundation of Freedom, The American
Prospect: Insights into Our Next 100 Years, Houghton
Mifflin Company, Boston: 1977.
Labor's Untapped Wealth: An Address by Louis Kelso,
Air Line Pilot, October, 1984.
WRITINGS BY LOUIS O. KELSO AND PATRICIA HETTER KELSO
Uprooting World Poverty: A Job for Business,
Business Horizons, Fall, 1964. (Reprinted in
Mercurio, Anno VIII, No. 8, Rome, Italy, August,
1965; Far Eastern Economic Review, Vol. L, No. 1,
Hong Kong, October, 1965. Winner of the First Place
1964 McKinsey Award for Significant Business
Writing.)
Poverty's Other Exit, North Dakota Law Review,
January, 1965.
Equality of Economic Opportunity Through Capital
Ownership, Social Policies for America in the
Seventies, edited by Robert Theobald, Doubleday &
Co., New York: 1968. (Excerpts from this essay
reprinted in Current, April, 1968.)
Reparations and the Churches, Business Horizons,
December, 1969.
Invisible Violence of Corporate Finance, The
Washington Post, June 18, 1972.
Man
Without Property, Business and Society Review,
Summer, 1972.
Corporate Social Responsibility Without Corporate
Suicide, Challenge, July-August, 1973.
Employee Stock Ownership Plan, Business & Government
Insider Newsletter, July 30, August 6 and August 13,
1973.
Employee Stock Ownership Plans: A Micro-Application
of Macro-Economic Theory, The American University
Law Review, Spring, 1977.
The
Greatest Financial Planning Tool of All . . . Could
ESOP Save General Motors?, The Financial Planner,
November, 1981.
Sychophantasy in Economics: A Review of
George Gilder's
Wealth and Poverty, The Great Ideas Today,
Encyclopœdia Britannica, Inc., Chicago: 1982.
The
Right to Be Productive, The Financial Planner,
August and September, 1982.
Tax
Reform Is Not the Answer, Chief Executive, Spring,
1983.
How
We Can Achieve Lifetime Employment, Chief Executive,
Autumn, 1983.
Damning Binary Economics With Faint Praise,
Workplace Democracy, Summer, 1987.
Leveraged Buyouts Good and Bad, Management Review,
November, 1987.
The
Great Savings Snafu, Business and Society Review,
Winter, 1988.
Why
Owner-Workers Are Winners, The New York Times,
January 29, 1989.
Why
I Invented the ESOP LBO, Leaders,
October/November/December, 1989.
Don't Meddle With ESOPs, The Journal of Commerce,
October 2, 1989.
Looking in a Marxist Mirror, The Journal of
Commerce, January 11, 1991.
ALSO RECOMMENDED - BOOKS
Curing World Poverty: The New Role of Property,
edited by John H. Miller, C.S.C., S.T.D., Social
Justice Review, St. Louis: 1994.
Binary Economics: The New Paradigm, by Robert
Ashford and Rodney Shakespeare, University Press of
America, Lanham, Maryland: 1999.
ALSO RECOMMENDED - WRITINGS
The
ESOP According to Kelso, by Stuart Nixon, Air Line
Pilot, October, 1984.
The
World According to Kelso, by Steven Hayward, Inland
Business, April, 1987.
Louis Kelso, Capitalist, Bill Moyers: A World of
Ideas II, edited by Andie Tucher, Doubleday, New
York: 1990.
The
Binary Economics of Louis Kelso: The Promise of
Universal Capitalism, by Robert H. A. Ashford,
Rutgers Law Journal, Vol. 22, No. 1, Fall, 1990.
Louis Kelso's Binary Economy, by Robert Ashford, The
Journal of Socio-Economics, Vol. 25, No. 1, 1996.
Binary Economic Modes for the Privatization of
Public Assets, by Jerry N. Gauche, The Journal of
Socio-Economics, Vol. 27, No. 3, 1998.
A
New Market Paradigm for Sustainable Growth:
Financing Broader Capital Ownership with Louis
Kelso's Binary Economics, by Robert Ashford, Praxis:
The Fletcher Journal of Development Studies, Vol.
XIV, The Fletcher School of Law and Diplomacy,
Global Development and Environment Institute, Tufts
University, Medford, Massachusetts: 1998.
The
Theory of Productiveness: A Microeconomic and
Macroeconomic Analysis of Binary Growth and Output
in the Kelso System, by Stephen V. Kane, The Journal
of Socio-Economics, Vol. 29, No. 6, 2000.
The
Ultimate Management Team, by Chris Bayers, WIRED,
January, 2002.
Employee Ownership and Corporate Performance: A
Comprehensive Review of the Evidence, The Journal of
Employee Ownership Law and Finance, Vol. 14, No. 1,
National Center for Employee Ownership (NCEO),
Oakland, California: 2002.
Binary Economics, Fiduciary Duties, and Corporate
Social Responsibility: Comprehending Corporate
Wealth Maximization and Distribution for
Stockholders, Stakeholders, and Society, by Robert
Ashford, Tulane Law Review, Vol. 76, No. 5-6, June,
2002.
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