To realize the importance of the four economic rights examined below, one
has to place them in the context of the forces they have to oppose in order
to assert themselves. The opponents of rights are not some vague and
unidentifiable forces. The opponents of rights are the active forces of privilege.
[1]
The essential differentiation between rights and privileges is this: Rights unite; privileges divide.
A NATION DIVIDED BY PRIVILEGES
The dynamics of privilege become apparent in nearly every morning
newspaper. We know the headlines by rote: this group wants a tax reduction;
that group wants an increase in services. The dynamics are all there.
Privileges, since they are not due to us, are always acquired to the detriment
of other people. Hence the recurring struggle of wills. No issue is ever
settled. No one is ever secure about anything.
Based upon such quicksand, there are never enough resources to satisfy
the grab for privileges.
Hence, it takes force to extract privileges. But once the privilege is obtained,
its use fosters passivity: there is nothing to do but to enjoy the privilege
until the next challenger comes around. By then the will and the
strength of the user of privilege has generally been so enfeebled that surrender
is near. Yet the newly dispossessed will rise again.
A NATION UNITED BY RIGHTS
Rights unite us all. They make us all equal.
[2]
The magic of rights is this. Once
a right is asserted in one particular case, it is asserted for all. (It is the extension
of the application of rights that often is a horrendously slow process.)
The opposing political will must be broken. The opposing will is more
easily broken if the request is advanced in a reasonable fashion, hence the
success of nonviolent political movements and if the request makes it absolutely
clear that the privileged group is not going to be denied the exercise
of the right that is proposed. The right must be universal.
Once the opposing will is broken the right is exercised by all and it is exercised
actively. As opposed to privileges it takes a continuous act of the
will to exercise that right. The right then implies a duty.
FOUR ECONOMIC RIGHTS
As there are four factors of production, namely, land, financial capital,
labor and physical capital, so there must be four specific rights of access to
those factors otherwise, instead of being productive, as Pope John Paul II
points out, we will be marginalized.
[3]
Rooted in the natural law, these rights can be formulated as follows:
- the right to share in the bounties of nature,
- the right to share in the bounties of national credit,
- the right to own the fruits of one’s creation,
- the right to protect the fruits of one’s creation.
These four rights, once exercised in full, will renew the very roots of
our culture and our civilization. They will work from within existing structures
and might allow us to transform the provision of goods and services
from the brutal exercise it has lately become into a very spiritual enterprise,
as it inherently is.[4]
THE RESOURCES OF THE NATION ARE POTENTIALLY INFINITE
The resources of the nation are potentially infinite. The evidence that
this statement is true is overwhelming.
[5]
The issue therefore is not scarcity,
but greed justified by social disorganization. No one knows today what is
enough. Consequently one is compelled to accumulate more than one
needs. When one does that, one deprives other people of their due because
at any one moment resources are finite.
If the social organization is right, everyone knows what is enough.
What is enough is what one needs today. If the social organization is right,
one can assuredly implement the Gospel’s injunction: “Look at the birds of
the air... Consider the lilies of the field... O men of little faith...”
The issue then is one of social organization. If the resources of the nation
are potentially infinite, everyone has the right of access to them. They
are a common good.
But how can society enforce such a right? The issue is not only one of
will but also one of reality. Some solutions work, some do not. Some solutions
work in one society, at one time; some do not.
[6]
The solution that seems to be best applicable to the needs of the modern world lies in the use
of taxes on land and natural resources. They have to be generally higher
than they are today and taxes on buildings and other human activities have
to be correspondingly lower.
Owners who do not want to, or think they cannot afford to, pay justly
and fairly apportioned taxes on land and natural resources will not be dispossessed;
they will simply sell their property and enjoy the fruits of interest
on the money obtained in exchange for the transfer of their right of
ownership to more capable hands who will make, for instance, the weeds
and rubbish filled lots, in too many downtown areas today, bloom. These
taxes are effective because they tend to eliminate hoarding, thus opening
access to unused resources that ought to be used.
Let us briefly put the issue another way. We all have the duty to pay
taxes on our property of land and natural resources. We all have this duty
because most of the value of our land and natural resources comes first
from God or Nature, if you will and from the community thereafter. A rock
in Arizona is worth a pittance; a rock in Manhattan is worth lot. The difference
lies in what the community brings to the rock: sewer lines and telephones
lines, and on and on.
Correspondingly, we all have a right in this matter. We all have the right
to enforce the payment by all of a fair assessment of taxes on land and natural
resources because, if one does not pay his fair share of such taxes, all
others will have to make up the balance.
THE RIGHT OF ACCESS TO NATIONAL CREDIT
/
Either in a positive or negative way, we all contribute to the value of
national credit. Therefore, national credit is a common good par excellence.
It belongs to all of us.
National credit is a precious resource. From certain points of view it is
more precious than natural resources: misuse of natural resources reduces
their availability and increases their price. Misuse of national credit reduces
the availability and in creases the price of all goods and services. National
credit is mostly an untapped resource: what central banks tap is
mostly bank credit. Bank credit is created by the savings of a limited number
of people; national credit is created by us all.
The use of national credit constitutes one last frontier. We must not
mishandle it as we have mishandled so many other frontiers in the past.
Properly handled, the use of national credit will function like manna from
heaven. It will fuel our creative engines to make us satisfy our immediate
as well as our future needs. Properly used it will be just sufficient to our
needs. We will always have enough of it.
In-depth consideration of the potential use of national credit leads to
the formulation of three essential criteria for its proper use: 1) national
credit must be used only to issue loans that are necessary for the creation
of new wealth; 2) it must be issued at cost; 3 ) it must be issued to the benefit
of all.
The rationale for the first criterion is best seen in the negative. National
credit cannot be used to finance the purchase of consumer goods because
these goods do not generate the income necessary to repay the loan.
National credit cannot be used to finance the purchase of goods that are
to be hoarded. National credit cannot be used to finance the purchase of
government debt unless the debt is issued to create new wealth.
The rationale for the second criterion is easily specified. Interest rates
for credit to create new wealth must cover only the cost of administration
of the loan instruments and insurance of default risks.
The rationale for the third criterion is more complex. Some people are
inept at creating wealth; some do not care about it. We must all pursue our
destinies. And we must not become slaves of the creators of wealth in the
process. The application of this criterion, rather than a limitation, presents
us with a tremendous opportunity. It means that entrepreneurs have
to share the ownership of the wealth they create with all those who help
them create it: Employee Stock Ownership Plans (ESOPs) and cooperatives
are some of the ideal legal instruments that serve to achieve this aim.
[7]
THE RIGHT TO OWN THE WEALTH ONE CREATES
If men and women have an indisputable right to own common goods as
land and national credit, how much stronger is the right to own the wealth
one creates? That is the fundamental premise on which ESOPs and cooperatives
rest. They are legal instruments that allow a fair apportionment of
the right of ownership over the wealth that employees create in cooperation,
of course, with the owners of capital.
Employees are outside contractors. They offer their labor and receive
wages. They have no right to the wealth created by the corporation wealth
which includes consumer goods, goods to be hoarded and capital goods.
ESOPs and cooperatives change all that. Following an established set
of rules and regulations, they transform employees from contractors into
stockholders. From outsiders employees become insiders. Employees then
become much more efficient workers. Provided ESOPs and cooperatives
are not simply window dressing, legal arrangements to cajole the taxman,
but in fact do respect the whole person of the employee, they are mostly
successful. ESOPs multiplied during the Eighties.
The question is how can ESOPs and cooperatives be made tools of national
policy? The answer lies in seeing them not as concessions from existing
owners and managers to employees, but as means to give life to
universal rights. Three procedures might speed up the tempo of the assertion
of this right.
First, when the use of national credit is called upon to assist in the creation
of new wealth, the use of ESOPs and cooperatives must be made
mandatory. There will still be no compulsion in this practice because those
who did not want to extend the right of ownership to their employees
would be free to recur to existing, although more expensive, credit channels.
The second procedure for a speedy assertion of this right is to link any
grant of public money to the expansion of ownership of the resulting
wealth to all employees of corporations creating that wealth.
The third procedure is to link the vicissitudes of inflation and deflation
to the exercise of this right. We all more or less agree that during inflationary
periods asking for higher wages adds to the flames of inflation
just as during periods of deflation imposing lower wages adds to the ravages
of deflation. These negative spirals must be broken. They are generally broken
through the exercise of force or the (generally vain) promise of future
advantages. How much more reasonable is it to prevent the problems by
the use of fundamental rights?
THE RIGHT TO PROTECT WHAT ONE OWNS
Included in the right of ownership of wealth is the right to protect it
from outside incursions into its uses and enjoyment. As Pope Leo XIII
maintained, the right of property is “sacred and inviolable.”
[8]
The consequences
of this right have been mostly feared and resented by governments
and reformers alike. But it is proper and unavoidable. All justification for
that fear and resentment will be annihilated once the ownership of wealth
becomes not a privilege reserved for the few but a common right for all.
To this right corresponds a duty, the duty to respect other people’s
property. This set of rights and duties can assume a hundred different manifestations,
from trivial to momentous. Perhaps the application that is of
utmost importance today regards the buying corporations as if they were
“things” and not entities deeply affecting the lives of the people within and
without their direct area of influence. This practice produces uncountable
horrors.
The practice of corporate aggrandizement has deep roots in human nature.
An old example is how hermits became monks and monks created institutions
too large for their own good. So new religious orders were
created. And the process started anew again and again. We have had more
than a century of intense experience to prove that this practice creates
havoc in the economic realm. It must be stopped.
Only if we put a stop to this practice, will we protect our civilization
from the quick and the cunning. Thousands of years ago, we made a huge
stride forward when we decided that the murder of another person was
not a private affair. We will make a huge stride forward when we will realize
that the buying and selling of corporations is akin to industrial murder.
This practice cannot be tolerated. Captains of industry should not operate
in a business environment in which the fruits of the labor of many can be
gobbled up at the whim of any operator who, with the promise of quick results,
gains command of untold financial resources. Our time horizon has
to widen beyond the next accounting period; our horizon of concerns has
to expand beyond the production of goods and services. What we affect, in
the final analysis, is always the life of particular men and women.
Since the practice of buying and selling corporations is so ingrained,
we cannot hope to put an abrupt stop to it just as we cannot abruptly increase
taxes on land and natural resources to the desired level.
[9]
We must
start by imposing this prohibition on a limited number of the largest corporations
and gradually extend it to the smaller ones until it reaches a level
of reasonableness that is satisfactory to everyone, including lawyers and
investment bankers. But industrial murder must be stopped.
AN ORGANIC POLICY
These four rights form the backbone of an organic economic policy
that will gradually produce self-reinforcing benefits. The dissolution of the
power of privilege that ensues will, of course, require constant vigilance,
but it will proceed by its own internal dynamics and thus will direct the
whole gamut of problems affecting our world today on the way to a proper
solution. There are many ways of demonstrating the validity of this position.
The simplest is to expand upon the set of distinctions between rights
and privileges outlined at the outset of this discussion.
THE LARGER CONTEXT
In the beginning an attempt was made to place this discussion within
the historico-political context. These issues can also be studied from the
sociological, teleological and theological viewpoint. It is on this vast ground
that we will find the ultimate justification for the suggested policy.
Privileges are based on envy, use greed as the engine to set the social dynamics
in motion, are extracted through violence or the threat of violence
and foster sloth.
Rights are based on self-sufficiency, use self-reliance as the engine to
set the social dynamics in motion, are exercised through mutual respect
and foster the dignity of the person.
What did God — or Nature, or at the limit, our own will — put us on this
earth for?
NOTES
[1] The early colonists and those who freely followed them in an ever widening procession from every
corner of the world were propelled upon these shores by the same desire: to escape from he iron clasp
of privilege.
[2] To be equal does not mean to be identical. To be equal means that no one has privileges. To be equal
means that everyone has the same rights.
[3] See, e.g., Pope John Paul II, Encyclical Centesimus Annus (1991) 33. The Welfare State is blind to this
reality. Hence, it goes after the symptoms of poverty and compounds the difficulties by trying to establish
rights via entitlements. All that is wrong with this shortcut becomes evident only if it is realized
that entitlements are not rights. They are privileges masquerading under the cloak of rights.
[4] Is not growing wheat a glorious spiritual exercise? Is not making bread a glorious spiritual exercise?
Is not sharing information a glorious spiritual exercise? No. Michelangelo, Rembrandt and Van
Gough were not the only human beings blessed with the ability to give so much to all of us. The old
lady who sweeps the floor gives us just as much every day. Without her services we would either be
compelled to sweep the floor ourselves — God forbid — and so deprive ourselves of the enjoyment of
Michelangelo, Rembrandt and Van Gough. Or we would be living in a pile of dirt.
[5] Not only is Einstein’s formula for the conversion of mass into energy assuring us that a grain of sand
does indeed contain all he energy that we will ever need. Not only is the sun’s energy falling on a small
patch of the Sahara desert capable of producing all the energy that we will ever need. Both Israel and
Saudi Arabia, as the few positive headlines of this exasperating century shout, are making the desert
bloom. Saudi Arabia has become a net exporter of wheat!
[6] In ancient Israel, the solutions that gave access to natural resources to all were essentially two. For
the short run, all the uncollected staples belonged to the poor. They had free access to them. For the
long run, the institution of the Jubilee was supposed to take care of the fundamental issues: Ownership
of the land was to be relinquished every 49 or 50 years and returned to the original owner. During the
Middle Ages, the Catholic Church mostly enforced the rule that all “surplus” wealth legally belonged
to the poor. Islamic banking institutions are still fighting against usury, in the face of enervating snickering
from the international financial community. Modernity, the Age of Entitlements, has desperately
and disastrously tried to enforce a different rule: redistribution of wealth. Some applications of
this rule have assumed the form of “land reform”; as if that policy were not unfortunate enough, most
have assumed the myriad forms of forced transfers.
[7] For those who are outside the work force and are not yet independently wealthy, traditional and
nontraditional channels of charity must be used to achieve the substance — although not the form —
of economic justice. This is not to say that the form and substance of economic justice cannot eventually
be united in nontraditional policies that will eliminate the need for charily altogether.
[8] Pope Leo III, Encyclical Rerum Novarum (1891) 35.
[9] The use of national credit and the expansion of ESOPs and cooperatives are inherently gradual processes, simply because the creation of new wealth is unavoidably a gradual process.
POSTCRIPT
Of course, I have written much more on these issues in the intervening years. And I am writing still more. See, for instance,
Somism: Beyond Individualism and Collectivism
Toward a World of Peace and Justice, Mother Pelican, November 2014
Toward the Definition of Economic Rights, Mother Pelican, December 2014
Concordian Economics: Tools to Return Relevance to Economics, Mother Pelican, February 2015
The reader is invited to contribute to this ancient field. However, one thing ought to be clear. The writing project, perhaps, will never finish. It is the work of implementation that has to commence.
Piecemeal implementation has been going on here and there almost forever; it is systemic implementation that is sorely missing.
ABOUT THE AUTHOR
Carmine Gorga is a former Fulbright scholar and the recipient of a Council of Europe Scholarship for his dissertation on “The Political Thought of Louis D. Brandeis.” Dr. Gorga has transformed the linear world of economic theory into a relational discipline in which everything is related to everything else—internally as well as externally. He was assisted in this endeavor by many people, notably for twenty-seven years by Professor Franco Modigliani, a Nobel laureate in economics from MIT. The resulting work, The Economic Process: An Instantaneous Non-Newtonian Picture, was published in 2002. Dr. Gorga is president
of Polis-tics, Inc., a consulting firm in Gloucester, MA, and during the last few years has concentrated his attention on the requirements for the unification of economic theory and policy. He is currently working on a book entitled A New Monetary Order: Based on Rights, not Privilege. For details, see www.carmine-gorga.us.
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