Louis O. Kelso
and Patricia Hetter Kelso estimates of the relative real inputs to production in
the American economy of Labor (Physical and Intellectual) and Capital over time
assuming reasonably competitive markets. So ingrained is the “ethic” of the
“Labor Theory of Value” that they thought it best to refer to Capital Owners as
“Capital Workers” in keeping with their understanding that Capital instruments
do “Work” - as surely as the most diligent human surrogate worker – and that
indeed the observable trend is for Capital Instruments to do ever more of the
Worlds “Work”. The reflexive prevalent attitude of equating “Economic” man with
Essential Human Values including the whole vast array of values around the “Work
Ethic” all contribute to camouflage and maintain the fundamental miss-match
between the way goods and services are produced and distributed and particularly
their trends projected into the future. Cybernetic contributions (now almost
exponential) are only adding to the much longer Historical trend. Represents US
Economy but applies to World trending. H.H.C.
concentration of capital ownership in the U.S. over time. The same general
pattern applies to virtually all economies of and the World Economy as a whole –
Plutocratic ownership and control of the real means of production. With “The
Labor Theory of Value” it only worsens. H.H.C. - Below Quotes @
"Practical men, who believe themselves to be quite
exempt from any intellectual influences, are usually the slaves of some defunct
economist ... It is ideas, not vested interests, which are dangerous for good or
Theory - 1936
"We are being afflicted with a new disease of
which some readers may not have heard the name but of which they will hear a
great deal in the years to come - namely technological unemployment"
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
All of these plans are discussed and diagramed in
more detail in Democracy and Economic Power: Extending the ESOP
Revolution through Binary Economics.
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
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.
His non-conformist "capitalism" might be compared to the
G. K. Chesterton
in which ownership is distributed to as many people as possible within the
economy. Kelso developed the idea of
to explain the need for expanded capital ownership in light of industrial
production and the dominance of capital instead of labor.
In 1956 Louis Kelso invented the Employee Stock Ownership Plan (ESOP)
to put his ideas into practice. In 1958 he collaborated with the philosopher
Mortimer Adler to write The Capitalist
Manifesto that is considered the primary source of his economic theories.
Kelso and Adler followed this book with The New Capitalists (Random House,
New York: 1961). Both books are readable online from the Kelso Institute.
Louis O. Kelso had significant discussions concerning a
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
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.
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
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,
The Economic Foundation of Freedom, The American Prospect:
Insights into Our Next 100 Years, Houghton Mifflin Company, Boston:
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
Wealth and Poverty, The Great Ideas Today, Encyclopœdia Britannica,
Inc., Chicago: 1982.
The Right to Be Productive, The Financial Planner, August and
Tax Reform Is Not the Answer, Chief Executive, Spring, 1983.
How We Can Achieve Lifetime Employment, Chief Executive, Autumn,
Damning Binary Economics With Faint Praise, Workplace Democracy,
Leveraged Buyouts Good and Bad, Management Review, November,
The Great Savings Snafu, Business and Society Review, Winter,
Why Owner-Workers Are Winners, The New York Times, January 29,
Why I Invented the ESOP LBO, Leaders, October/November/December,
Don't Meddle With ESOPs, The Journal of Commerce, October 2,
Looking in a Marxist Mirror, The Journal of Commerce, January 11,
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,
The World According to Kelso, by Steven Hayward, Inland Business,
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,
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.
But on one side were the lions with all the weapons, and on the other
the Christians with all the blood. That's not a level playing field.
That's a slaughter. And so is putting people into the economy without
equipping them with capital, while equipping a tiny handful of people
with hundreds and thousands of times more than they can use."
A. H. Raskin, an authority on labor whose articles and editorials ran
in The New York Times for more than four decades, died yesterday at his
home in Manhattan. He was 82.
The cause of death was cancer, said his wife, Marge.
Mr. Raskin served The Times as a reporter, editorial writer and as
assistant editor of the editorial page.
Informative but never strident or accusatory, Mr. Raskin was noted
both for the thoroughness of his research and for the clarity with which
he presented his findings, even when they concerned complex economic
issues that many readers might find arcane. Some said they believed he
was especially searching when writing about inflation. A Remembered
On one occasion, Mr. Raskin explained why. In 1924, he said, while
his family was living in Seattle, his father, Henry Raskin, a fur
trader, decided to spend some time in Russia so that he could buy
Siberian furs. Thus, the Raskin family temporarily relocated in Berlin
to await visas. When they reached that city, an American dollar was
worth 1,000 German marks. A few months later, with postwar Germany
suffering under runaway inflation and badgered by its World War I
enemies to pay reparations, the Raskins found that a dollar could fetch
4.2 trillion marks. The family never forgot it.
"Never in my later career as a labor writer and analyst," he said,
"could I accept with equanimity the notion that 'a little inflation can
be a good thing.' "
Mr. Raskin covered, among other things, the travails of desperate
people who sought work during the Great Depression and, after World War
II, the emergence of labor unions and leaders who had the strength and
sophistication to make the American labor movement a formidable force.
He also described some of labor's darkest problems. In 1952 his
articles about wrongdoers encouraged the American Federation of Labor to
set up a special antiracketeering committee. For his work in this period
he won the George Polk Memorial Award, a Page One Award from the
Newspaper Guild and an award from the Society of Silurians, a group of
professional journalists. A Quip From Hoffa
But not everyone was always pleased by what he wrote. James R.
Hoffa, the head of the International Brotherhood of Teamsters, told him,
"Abe, you're going to scratch yourself on your typewriter one day and
die of blood poisoning."
John B. Oakes, editor of The Times's editorial page from 1961
through 1976, recalled that in his editorial writing Mr. Raskin dealt
with everything affecting labor in the broadest sense, as well as with a
wide range of international and domestic affairs. Mr. Raskin, he said,
was the first person he had asked to join his staff as his deputy. He
was, Mr. Oakes said yesterday, not only The Times's expert but also a
nationally recognized voice in the field of labor and industrial
Mr. Raskin's ability as a reporter to coax stories out of his
sources was legend. Stanley Levey, a colleague who also wrote about
labor for The Times, called Mr. Raskin "one of the most amazing
telephone manipulators since Alexander Graham Bell." Born in Canada
Abraham Henry Raskin was born on April 26, 1911, in Edmonton,
Alberta. After the Berlin adventure, he settled with his family in New
York, where he received his secondary-school education at Townsend
Harris Hall. In 1927 he entered City College and majored in education
and government. He became interested in journalism and edited the
student newspaper, yearbook and literary magazine. He was elected
president of his senior class and was graduated, Phi Beta Kappa, in the
class of 1931.
He remained at City College for a time doing graduate work, mostly
because he was unconvinced that any jobs were available, at least jobs
that he might want. He furthered his interest in journalism by working
as a campus correspondent for The New York Times.
In March of 1934 he joined The Times as a reporter. He was
assigned to cover unemployment and the work-relief agencies set up by
the Government to see the nation through the Depression. His editors
took note of his aggressiveness, and his first byline did not come
easily. But almost from the start copy editors noted that Mr. Raskin was
usually very accurate, seldom made the same mistake twice and produced
copy that required almost no editing. A rarity among reporters of his
generation, he even typed well.
In 1940 he filed an exclusive account of David Dubinsky's being
assaulted by Joseph S. Fay at a convention of the American Federation of
Labor in New Orleans. Mr. Raskin did not see the assault, but his
sources within the labor movement were such that he received an accurate
account of it. At the time, Mr. Dubinsky was head of the International
Ladies Garment Workers Union; Mr. Fay ran the Union of Operating
Engineers. Mr. Dubinsky had said some things about labor racketeers that
Mr. Fay thought uncharitable. Mr. Raskin's article made page 1 of The
Times. In 1977 he wrote with Mr. Dubinsky a memoir called "David
Dubinsky: A Life With Labor."
In World War II, Mr. Raskin served as chief of the industrial
services division of the Pentagon, a job in which there was one
In April 1944 President Franklin D. Roosevelt was vexed with
Sewell Avery, who was president and chairman of Montgomery Ward, the
retail merchandising corporation. Mr. Roosevelt wanted Mr. Avery to make
peace with a union, as ordered by the War Labor Board.
When Mr. Avery proved intractible, two soldiers under Mr. Raskin's
command appeared at his Chicago office and picked him up, still in his
chair, and removed him. The Government seized all of Montgomery Ward's
offices, held them briefly, then returned them to the company.
In 1946 Mr. Raskin was discharged from the Army with the rank of
After returning to The Times he also acted as a consultant to
President Harry S. Truman on universal training, a program the President
proposed that would have organized a citizen reserve to reinforce
professional armed forces. The plan, which called not for drafting young
men but for training them as civilians, was never adopted by Congress.
In those same postwar years, Mr. Raskin also helped organize the Defense
Department's Division of Industrial Relations. Assessing a Newspaper
In 1961 he joined the editorial board of The Times and three years
later became assistant editor of the editorial page. One of his most
notable performances in the 1960's was his lengthy account of the
114-day New York newspaper strike of 1962-63, which appeared in the news
pages of The Times in its first issue after the strike ended.
The effort was a journalistic tour de force that provided New
Yorkers with a candid appraisal of what the strike had been all about.
And although it was critical, in some respects, of some Times
executives, it was printed without editorial deletions of sensitive
Soon after it was printed, the chief negotiator for The Times
resigned. The article was hailed by, among others, James A. Wechsler,
who wrote in The New York Post:
"It was a remarkable exercise in many ways -- but perhaps most
remarkable because it suggested that not all virtue was on one side in
the long struggle and that, in the view of men who had lived through the
long days and nights," The Times's management negotiator "had not been a
Mr. Raskin retired from The Times in 1977 but continued to write.
For a time, he served as editor of The Journal of International Labor
Affairs, published by the Department of Labor. In the autumn of 1990 he
had a stroke. A Change in Vocation
He endured the disabilites that followed with a determination to
overcome them, but speech remained difficult if not impossible. In
September 1992 the Op-Ed page of The Times carried excerpts from a piece
he had written for Martha's Vineyard magazine.
He wrote: "I now realize that my vocation in life has changed. Now
I represent the one million Americans who cannot speak for themselves.
My plight and theirs are one: to inform the public that those of us who
have lost the ability to invent fluent phrases or sentences have not
lost the ability to think. We retain the skill to communicate our
thoughts and feelings, whether through writing, picture boards,
pantomine or facial expression. We can still speak! We hope that you
will listen with your ears, with your eyes and always with your heart."
In addition to his wife, Marge, Mr. Raskin is survived by two
children from his earlier marriage to Rose Samrock, who died in 1989.
They are a son, Donald, and a daughter, Jane Brown. He is also survived
by a brother, Bernard Raskin; three stepchildren, Mary Lou Frankel, Jill
Isaacs and Geoffrey Campe; three grandchildren, David Raskin, Carolyn
Raskin and Sarah Verneuille, and two great-grandchildren.
A service will be held at 11:30 tomorrow morning at the Frank E.
Campbell Funeral Home at 81st Street and Madison Avenue in Manhattan.
Correction: December 24, 1993, Friday
Because of an editing error, an obituary yesterday about A. H.
Raskin, an authority on labor whose articles and editorials ran in The
New York Times for more than four decades, misstated his source of
information about an assault by Joseph S. Fay on the garment union
leader David Dubinsky at a 1940 convention in New Orleans. Mr. Raskin
was present and witnessed the attack.