"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.
------------------------------------------------------------------------------------
