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.

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.

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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.