Document Type

Working Paper

Date

2008

Keywords

binary economics, capital ownership, employee ownership, ESOPs, economic growth, economic development, post-Keynesian economics, socio-economics, unutilized capacity, economic justice, private property, micro-credit, Louis Kelso, monetary policy, credit insurance

Language

English

Disciplines

Economics

Description/Abstract

Binary economics simultaneously offers a paradigm for understanding economic efficiency, growth, and justice that is foundationally distinct from classical, neoclassical, Keynesian, and socialist economics. First proposed by Louis Kelso, binary economics also offers a prescription for establishing a more inclusive, competitive and democratic private property system, one that universalizes the right to acquire capital with the earnings of capital. Focusing on an important anomaly left unexplained or poorly explained classical, neoclassical, and Keynesian economics (i.e., the persistence of unutilized productive capacity in a context in which markets are supposedly becoming more efficient) and left unremedied by any approach yet applied, binary economics specifically offers both a distinct explanation and a market-based policy alternative that promises a means to produce much greater and broadly shared abundance. As an economic theory, binary economics holds that broadening individual participation in capital acquisition with the earnings of capital has a potent (but presently untapped) distributive relationship to growth that is not caused by productivity gains and governmental strategies to redistribute or regulate demand. (This proposition is known as the principle of binary growth). In other words, the distribution of capital acquisition with the earnings of capital is positively related to the employment of unutilized productive capacity and growth in important ways not comprehended by conventional economic theory. Like no other economic paradigm, binary economics (1) reveals important market connection between unutilized productive capacity and wealth concentration, and (2) offers new strategies to achieve the goals of efficiency, broadly shared growth and prosperity, and economic justice by way of widespread, and eventually universal, individual, participation in capital acquisition and ownership. Compared to the classical, neoclassical, and Keynesian economic approaches with respect to the criteria of (1) reasonable assumptions, (2) internal consistency, and (3) plausible descriptions, predictions and prescriptions, impartial analysis reveals that the binary approach is more consistent with scientific principles. Based on widely accepted principles underlying the philosophy of science, spiritual values, professional ethics, and secular morality, institutions of higher education have a special responsibility to teach binary economics in most contexts in which issues of economic growth, efficiency and justice are taught or considered. The people have a right to know. The contexts include course segments, courses, certificate programs, majors and degree programs in economics, political science, sociology, business administration, philosophy, history, theology and law. In law schools for example, rigorous exposure to binary economics is necessary to enable lawyers to help people to identify and secure their essential rights and responsibilities. Professional ethics governing other professional occupations and academic disciplines also call for the inclusion of binary economic principles in contexts where the positive and normative analysis of issues would otherwise be significantly influenced by one or more conventional approaches to economics. Keywords: binary economics, capital ownership, employee ownership, ESOPs, economic growth, economic development, post-Keynesian economics, socio-economics, unutilized capacity, economic justice, private property, micro-credit, Louis Kelso, monetary policy, credit insurance

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