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                                           (Originally aired: (08-19-87)

                                      LOUIS O. KELSO 

                                            (1913-1991 RIP)


                                      Lawyer / Economic Theorist

                                     Author (With Mortimer Adler):


                                       "The Capitalist Manifesto (1958)"

                                                  Investment Banker


The program can be viewed in its entirety by clicking the you tube link below:

   Louis O. Kelso # 2- Air date: 08-19-87



More about: LOUIS O. KELSO   

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"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)







What are the financing tools of binary economics?

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.

Unless otherwise noted, all material contained in this website Copyright © 2000 by Patricia Hetter Kelso. All rights reserved, domestic and international. Articles by guest authors are the product and property of the individual author. Contents may be downloaded, printed or reproduced only for non-commercial, non-profit, educational purposes.





Download Now »

© Copyright, 2000, by Patricia H. Kelso.

All rights reserved under International and Pan American Copyright Conventions.

Library of Congress Catalog Card Number:58-5268


Download Now »

© Copyright, 2000, by Patricia H. Kelso.

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.

Go to Download Page »

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.

Go to Download Page »

Unless otherwise noted, all material contained in this website Copyright © 2000 by Patricia Hetter Kelso. All rights reserved, domestic and international. Articles by guest authors are the product and property of the individual author. Contents may be downloaded, printed or reproduced only for non-commercial, non-profit, educational purposes.



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.  HHC    



Chart of 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.  HHC - Below Quotes

 @ www.kelsoinstitute.org


"Conventional wisdom says there is only one way to earn a living, and that's to work.

 Conventional wisdom effectively treats capital (land, structures, machines, and the like)

 as though it were a kind of holy water that, sprinkled on or about labor, makesit more

productive. Thus, if you have a thousand people working in a factory and you increase

the design and power of the machinery so that one hundred men can now do what a

thousand did before, conventional wisdom says, 'Voila! The productivity of the labor

has gone up 900 percent!' I say 'hogwash.' All you've done is wipe out 90 percent of

the jobs, and even the remaining ten percent are probably sitting around pushing

buttons. What the economy needs is a way of legitimately getting capitalownership  

into the hands of the people who now don't have it."

(Louis O. Kelso, Journal Asset Based Finance, 1982)


"The trouble with today's techniques of finance is that they're designed to make the

rich richer.  None are designed to make the poor richer. That's why the poor are poor.

Because they're not rich."

(Louis O. Kelso, San Francisco Examiner & Chronicle, 1978)


"The Roman arena was technically a level playing field. 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 morethan they can use."

(Louis O. Kelso, Bill Moyers: A World of Ideas, 1990)



                 Charles Handy

The Hungry Spirit: Beyond Capitalism -

The Quest for Purpose in the Modern World

Broadway Books N.Y., 1998 (pages (53-54)


Keynes, turning from economics to philosophy in his 1930 essay “Economic Possibilities for Our

 Grandchildren” foresaw it all:

“We are being afflicted with a new disease of which some readers may not yet have

 heard the name, but of which they will hear a great deal of in the years to come-

namely technological unemployment.  This means unemployment due to our

discovery of means of economizing the use of labor outrunning the pace at which we

 can find new uses of labor ….This means that the economic problem is not, if we look

 into the future, the permanent problem of the human race.”

Keynes goes on to say that once the economic problem is solved, mankind will be deprived of its

traditional purpose and will be faced with the real problem, which economics will have won: how to

 live wisely, agreeably and well. He doesn’t think that this will be welcomed by all.

“There is no country and no people, I think, who can look forward to the age of

abundance without dread” but ultimately When the accumulation of wealth is no longer

 of high social importance, there will be a great changes in the code of morals … we

 shall be able to assess the money motive at its true value.”  


Charles Handy citing the 1930 reference by Lord John Maynard Keynes projecting “Technological

 Unemployment”for the future world of his grandchildren.  That would be right about now as

technological advancement not only provides the possible means for Humanity’s collective

“Transcendence of Scarcity” but poses the problem to progressives by their commitment (along

with virtually all economic theorizing) to the “Labor Theory of Value” currently informing virtually

all National Economies on Planet Earth &  the International System as well.    HHC 


Louis O. Kelso (1913-1991) was a lawyer and economic thinker who sought to find

 way to preserve capitalism from the competition of communism as an alternative

 within the context of the early Cold War.


Louis O. Kelso

From Wikipedia, the free encyclopedia


Louis O. Kelso (1913-1991) was a lawyer and economic thinker who sought to find a way to preserve

 capitalism from the competition of communism as an alternative within the context of the early Cold


His non-conformist "capitalism" might be compared to the peoples' capitalism ideas of G. K.

 Chesterton in which ownership is distributed to as many people as possible within the economy.

 Kelso developed the idea of Binary Economics 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 Basic Income Guarantee with Russell B.

 Long and Daniel Patrick Moynihan.[1]

Kelso has inspired many economic thinkers including James S. Albus, Robert Ashford, and Norman


[edit] Publications

  • 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


  • 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.


  • 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.


  • 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.
  • 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.

[edit] Quote

"The Roman arena was technically a level playing field. 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."

--Louis O. Kelso in Bill Moyers: A World of Ideas, (1990)

[edit] External links



                                     Thursday October 1, 2009

                                 10:30 - 11:30 AM  / (NYC Time)

                 Channel 34 of the Time/Warner & Channel 82 of the RCN 
                       Cable Television Systems in Manhattan, New York.

The Program can now be viewed on the internet at time of cable casting at


                  NOTE: You must adjust viewing to reflect NYC time

                                          & click on channel 34 at site