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The most important thing to note about basic labor is that the labor market would determine which positions would be put in that category, not bureaucrats (public or private). Initially, all positions that were being paid more than the allotted income at the time of the conversion to this monetary system would continue to be paid that same income, all of it paid by their employers, their future pay to be decided by negotiations with their employers, the same as always; the pay of people filling all positions that paid the same or less than the allotted income would become the allotted income. Thus, the amount of pay that the various positions in the economic matrix were earning--and only that--would determine which positions were initially counted as basic labor. It would be prorated for part-time work; it could be paid as hourly wages; employers would pay for differentials—as in shift work—and the full amount for overtime.

Competition for qualified labor, and only that, would thenceforth determine how much pay different positions would require for each to be filled—including which positions could be designated by individual employers to be paid the allotted income. Presumably, every employer would try to designate as many positions as possible as basic labor, to avoid paying out that money. Individuals would be free to decide whether to accept that pay for that work or to do something else. To maintain sufficient dynamic tension in the labor market, the allotted income would only be paid to basic labor, not serve as a base salary for everyone. (An exception to that rule could be made for positions in government so that less of government’s revenue would be needed to meet the payroll and more could be directed towards its other responsibilities--which would be greatly reduced.) Based solely on the conditions in the labor market, over time some positions that initially paid more than the allotted would be reduced to being paid the allotted income and some positions that initially paid the allotted income might come to be paid more than the allotted income. The same positions in different local labor markets--or even with different employers in the same local labor market--might be in or out of the category of basic labor (because of imperfect knowledge of labor markets by both employers and employees).

How much would the allotted income be? First of all, it would be the same amount for everyone who was paid it. The amount of it would be based on the average income at the time of the conversion to this system, so currently it would be at least $500/wk. ($12.50 as an hourly wage) for the U.S. It is because everyone who could work could get a job and it would pay that amount of money that there would be no poverty (except for those who could work but chose not to work; they would get nothing).

How would the allotted income be paid? It would be paid out by a monetary agency. The monetary agency would have no discretionary authority, but would merely be the paymaster for those being paid that income. [That would eliminate the Fed’s role as manager the money supply and, in conjunction with the way government would be funded (see below), the Fed’s role as enabler of unlimited borrowing by the federal government; there is a case to be made for banning the bond altogether in making this change to the monetary system)]. The money would originate with the monetary agency. It would simply put money in the accounts of individuals as required, doing no more and no less. (It could be a cashless system, with the monetary agency only making electronic credits to accounts, but cash does provide liberty.) Again, the total of that money paid out by the monetary agency would form the money supply of the economy.

In this new monetary system he amount of the money supply would simply be the amount of the allotted income multiplied by the number of people being paid it. The size of the money supply would be, as economists say, exogenously determined (i.e., it wouldn't depend on other factors in the economy). Changes in the size of the money supply would be determined by three things, and three things only: the number of people of working age and the age of retirement, the number of adults too incapacitated to work, and the proportion of the workforce employed in basic labor. The monetary system would be self-regulating and would make capitalism as an economic system, for the first time, the completely self-regulating thing it is supposed to be.

Again, the allotted income would create a huge, bulletproof body of consumers who would provide businesses steady streams of revenue. At the same time, having such a large body of people with a fixed income would sustain output and passively govern prices, especially of more common goods. Since the number of people being paid the allotted income would far exceed the number of people earning more than that income, the former group would control the prices of the stuff they commonly bought. People with more money could cause upward pressure on the prices of more rarefied goods and services. They could also cause speculative bubbles (only not in real estate, commodities, or currency, as explained below in "addressing inflation"). Neither of those outcomes would be detrimental to the vast majority of the people--those being paid the allotted income. From their perspective, the economy would be about as stable as the surface of the moon (sans meteors), where mere footprints in the dust can last forever.

To prevent an infinite flow of money into the economy the money would have to circulate back to the monetary agency. It would circulate to businesses via purchases of goods and services. It would circulate to government via a transfer (which is how government would get funded without taxes). It would be transferred back to the monetary agency from government.

Every adult would be required to have an account at a bank (though all would be free to choose which—domestic—bank to use). All individuals would be allowed to retain some amount of money in their accounts; at the end of each month any money above that amount in anyone’s account would be transferred to government. Individuals could therefore avoid the transfer by just making purchases. That money would have to be in the account of some business somewhere (leaving aside, for now, exports/imports).

Every business would also be required to have an account with a domestic bank. Each business would be allowed to keep a percentage of its profits; at the end of each quarter the sanctioned proportion of money in every business’s account would be transferred to government. (Businesses could have transfer-exempt accounts to accrue money for capital expenditures.) All salaries a business paid would count as legitimate expenditures in calculating profits, but bonuses would not. Again, there would be no limit whatsoever on the amount a CEO, for example, could make, but it would have to take the form of salary, as the existence of bonuses would open the door to all manner of monetary manipulation.

Appendix 1: 20th-Century Thinking about Stability

Now, capitalism requires money like life itself requires water. For that matter, capital is often referred to in aquatic terms, such as 'liquid', 'pools', and 'flows'. Back in the the early 1900's a group of economists got interested in money's role in the inherent instability exhibited by capitalism, its tendency to alternate booms and busts, the dreaded 'business cycle'. (Recent events only suggest how big and bad those booms and busts used to be, before nations began seriously attempting, at least, to manage their capitalist economies.) Since the original contributors to that discussion were Austrians, their approach to economics has become known as the 'Austrian School'. One idea that for a time got the attention of the Austrians, and especially among them F.A. Hayek, was the concept of 'neutral money'. For them that referred to the possibility of developing a set of policy prescriptions for the banking system to eliminate money's contribution to capitalism's instability. The Great Depression, along with John Maynard Keynes's analysis of it and proposed solution for it, in which he emphasized employment and output, put an end to the idea of neutral money. [I included a survey of the scholarly literature on the concept of neutral money in an appendix in my Master's Thesis.]

           Keynes's ideas swept the economic world. The U.S. in large part won World War Two for the allies with the sheer mass of its production of equipment and supplies related to the war effort, and the U.S. economy during that war was Keynesian with a vengeance--to include rationing (for both consumers and businesses), wage and price constraints, and extremely high marginal tax rates.

           Following that war Keynes's ideas seemed to be indisputable, but, largely due to the efforts of Milton Friedman, the possibility of applying monetary policy to the economy was not forgotten. (While Keynes had nothing but disdain for the notion of neutral money, Friedman was rather sympathetic to it.) He maintained that monetary policy could be used to manage the economy, ameliorating if not eliminating the business cycle, with much less intervention in the economy than Keynesianism required. Also, whatever intervention was required would be undertaken by a nongovernmental institution, (in the U.S.) the Federal Reserve System. Experience has taught us that neither Keynesianism nor monetarism is foolproof.

           Keynesianism calls for government to stimulate the economy when a recession looms by increasing its purchases of goods and services from the private sector. The idea is for government to use borrowed money for that purpose instead of raising taxes to get the money to pay for those goods and services because raising taxes would take money out of people's pockets, which would decrease their ability to make purchases of their own, which would work against what government was trying to accomplish. Having government borrow money to stimulate the economy used to be more efficient when globalism was less fully developed. Now the same 'bang', the same effect on the domestic economy, requires a lot more 'bucks' because so much of the money goes straight out of the domestic economy. (Still, most of the economic stimulus that some people claim had come from cutting taxes over the last couple of decades was actually the result of the huge borrowing government did during that period, especially the 'pork barrel' money, much of which went for local construction projects; the big money from the tax cuts has mostly fueled a series of speculative bubbles, which continue to this day, especially in the commodities markets.) Though the Keynesian remedy for recession is less effective than it used to be, its remedy for inflation has never been seriously tried. That's because it requires raising taxes. (Inflation is often referred to as a 'hidden tax'.) Politics being what it is, that has turned out to be impossible.

           Monetarism, on the other hand, does have an applicable cure for inflation: to reduce the amount of money available to banks for making loans, thereby causing interest rates to go up, thereby decreasing the demand for loans with which to make purchases, thereby reducing total demand, thus 'cooling off' the economy. Monetarism, however, does not provide a good means for stimulating the economy to stave off a recession. The only tool it has available for that purpose is to increase the money available to banks for making loans, thereby lowering interest rates. The problem is that raising interest rates is much more effective in decreasing the demand for loans than lowering interest rates is in increasing the demand for loans. Trying to 'push' potential buyers into taking out a loan by lowering interest rates is often compared to pushing on a string. In addition, the fact that a recession is either looming or has begun (the reason within monetarism for lowering interest rates to begin with) means that people are fearful of loosing their jobs, which discourages them from wanting to take on additional debt, no matter what the interest rate is. Even for wealthy people the presence of a recession creates fear, as their incomes ultimately depend on the overall condition of the economy.

      So, the current monetary system actually contributes to instability. When the economy is expanding bankers want to participate in the good times by making loans. Their ability to do so is enhanced by the rising value of all of the assets they hold when an economic expansion is underway. Bankers thereby contribute in turn to the economic expansion by supporting an increase in demand for goods and services, especially for 'big ticket' items. Once the economic expansion begins to falter and a recession is thought to be in the offing, bankers become fearful of making loans, thus contributing to the end of the economic expansion and the onset of a recession. Far from being neutral, then, as a practical matter our present monetary system exacerbates the instability inherent in capitalism as we know it.

           One might suppose that we could use Keynesianism when necessary to stimulate the economy and monetarism when necessary to control inflation. Again, politics has made that impossible (especially in the U.S.). Even if it were politically possible to use a combination of Keyesianism and monetarism to smooth out the business cycle, however, an economic structure that didn't require any management would be better. If that structure also solved other structural problems, that would be even better. If it also increased the amount of justice in the economy, that would be better still.

           In capitalism as we know it, then, money cannot be 'neutral' because it enters the economies of the nations through banks in the form of loans, which are only undertaken to make purchases. Moreover, once gold and silver were banished as legal tender, it became impossible for money to enter the economy in any way other than through the banking system, and the only way bankers will let any money out of their grasp is in the form of a loan, on which interest must be paid. Thus, interest has become in effect rent paid on the money supply. It's just plain wrong for the citizens of a nation to be required to pay rent to bankers for the money supply that is absolutely essential for the economy.

Appendix 2: Smith to Keynes to Me

There is a line of economic thought that runs from Adam Smith (An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776) to John Maynard Keynes (The General Theory of Employment, Interest, and Money, published in 1936) to my proposal. I'm not saying I consciously sought to extend that line of thinking about the economy. As I noted above, applying real justice to the economy was the route I took to get where I am in my economic thought. Since I have read both of those books and thought a lot about the ideas in them, though, and since my proposal can be considered in strictly economic terms, without reference to justice, subconsciously anything is possible. At any rate, the purpose of this appendix is to illuminate that line of economic thought. (I'll write it, from this point, without reference to anything written above, so there may be some repetition of things written there.)

   When Adam Smith wrote his book pretty much the whole planet was ruled by the monarchs of Europe. The ruler of England ruled most of it. Most European monarchs ruled on the basis of Divine Right. That is, if they were on the throne it was because God had favored them, and they only had to answer to God for their actions--and they tended to take God into account only on their deathbeds, if then. Their realms were their property, to do with however they saw fit.

   Smith was an amazingly prescient person. Capitalism was really just forming as an economic process in the late 1700's, and even at that only in England. Yet, he astutely analyzed that nascent economy, both at the level of the individual business and as an overall system.

    Recall the title of Smith's book. His primary concern was to explain what made a nation wealthy and how a nation's wealth could be enhanced. One can think of his book as an open letter to European monarchs. His explanation and recommendations put him at odds with the doctrine of mercantilism.

      Mercantilism was the economic doctrine favored by the monarchs of Europe at that time. It called for rulers to treat the finances of their realms as anyone would those of one's household: to exert as much control as possible, to take in as much income as possible, and to spend that money judiciously. The rulers were most happy to abide by the first two parts of that doctrine. They were not the least bit lax in exercising their power domestically, including controlling economic activity. They were both diligent and imaginative when it came to increasing their incomes, especially that part of it that came from taxes. When it came to spending, though, they didn't abide by the doctrine so enthusiastically. They spent money lavishly on themselves, on wars to expand or defend their realms, and on exploratory expeditions with the aim of expanding their realms. The circle of people who benefited from that fiscal policy was very small.

   Most people suffered greatly under their monarch's fiscal policy. Economically, monarchies were sponges. The bulk of the people who paid taxes never saw any benefit from them. Though monarchs taxed their realms to the breaking point, they almost always 'needed' more money. In a sense, then, Smith could be said to be the original supply-sider: he argued that lowering taxes--and ending other barriers to trade, both domestically and internationally--would spur economic activity, sustain prosperity, and in the end make the nation as a whole wealthier. Since the wealth of nations determined how much money monarchs could get their hands own, it would be in their self-interest to adopt his policies. [Dear contemporary supply-siders: the world was a different place back then.]

        In 1936 the world was mired in the Great Depression. Capitalism had suffered a massive stroke in 1929 and seven years later was showing no signs of recovering from it. Keynes diagnosed the problem as being a shortage of aggregate demand, and recommended that government make up that shortfall by borrowing and spending. The idea was to stimulate a self-sustaining expansion of the economy. It was a tactic that could be used any time the economy fell below full employment, i.e., suffered a recession. That is what is usually thought of as 'Keynesianism'. [By the way, "recession" entered the vocabulary of economists during the Great Depression. Even then the economy would grow a bit from time to time, only to shrink back. Under the circumstances such economic reversals couldn't be called depressions, so the term recession was used to describe them. It has been used ever since to describe relatively mild cases of falling output and rising unemployment.]

       The ultimate cause of the Great Depression, according to Keynes, was too much money getting into the hands of too few people. That is a natural tendency within the capitalist economy. Basically, that is the whole point of the system as it had arbitrarily evolved: it is a gigantic social mechanism for channeling money to the owners of businesses. Only so much money could be invested in businesses; the owners of big businesses still had lots and lots of money on their hands. They also made personal investments, i.e., buying things that they hoped would be worth more money in the future than they were then, including stocks and real estate. Inevitably, speculative bubbles would form. When those bubbles burst the result was financial ruin for many people and a depression for the economy. As Karl Marx had predicted, those "crises" got worse and worse over time until at last a depression occurred from which capitalism could not recover. Marx had failed to foresee, however, what Keynes saw: that government could come to the rescue.

    According to Keynes's analysis, in order to prevent depressions it would be necessary to prevent speculative bubbles. To prevent speculative bubbles it would be necessary to prevent too much money from accumulating in the hands of too few people. To prevent that from happening it would be necessary to have very high marginal tax rates on very high incomes. That way, instead of money accumulating in the hands of too few people, it would keep circulating. Government would act as a gigantic pump, collecting taxes and spending that money in the private sector.

    Though Smith proposed lowering taxes and Keynes proposed raising them, the goal of Keynes's policy was the same as that of Smith: to keep the money circulating, thereby sustaining a high level of economic activity and general prosperity for the nation. In Smith's time monarchs were sponges for money. Their tax revenues came primarily from duties (taxes on exports) and tariffs (taxes on imports). One can readily see how lowering those would increase economic activity. In Keynes's time the owners of big businesses were sponges. Though there were progressive income taxes in capitalist nations at that time, the top rates tended to be low (even without accounting for loopholes) and went up only to pay for particular, very large expenditures, such as a war. (Beginning with the Vietnam War in the U.S. it has become all but impossible, politically, to raise taxes even for that in this country.) At any rate, to keep money out of the hands of those 'sponges' so that it could keep circulating was the goal of Keynes's proposal for taxation. [Keynesianism is explained at more length in my knol, "The Case for Keynesianism."] Today businesses themselves are sponges: it is commonly estimated that the Fortune 500 companies are holding over 1 trillion dollars in cash. My proposal would set a limit on how much money people and businesses are able to retain. The circulation of money would be structurally determined. That would be far more certain, effective, and efficient than having the circulation of money be a matter of public policy to be bandied about in the political process, as is the case at present.

    Hopefully, the line of thought connecting Smith, Keynes, and me is now visible to the reader. In all three cases the goal is to keep the money circulating. Economically, that is the essence of this proposal.

Appendix 3: Broader Context

As noted above, this idea, like any new idea, will require evaluation. Publishing it provides everyone the opportunity to do that. It must not be dismissed, however, merely for being something new and different. Nations with freedom of speech have a decisive advantage over nations without it: New ideas can come to the fore as needed. If we summarily dismiss new ideas we might as well be living in some kind of dictatorship, where any attempt at free speech would get a person thrown in prison--a really bad prison. [To be sure, the existence of this idea should already be known to all. The media in a nation with freedom of speech have a Constitutional duty to be on the lookout for new ideas. Large numbers of the media in this nation (and a couple of others) have had many, many opportunities to make this idea public knowledge--as well as pundits, scholars, think tanks, politicians, political organizations, etc.]

           People might wish from someone proffering such a proposal more credentials than I can present. Einstein, however, was a patent clerk with an undergraduate degree when he developed his startlingly original ideas about the nature of the Universe. While the only thing this author might have in common with that man is being employed outside academia, to verify the validity of this idea does not require higher math. With a little thought, anyone can do it.

          For better or worse, these days, in the U.S. at least, addressing the issue of faith seems to be required of anyone who would venture to participate publicly in the political process. It so happens that I am a man of faith, a Believer in the God of Abraham--like all Jewish, Christian, and Islamic people (in the chronological order of the advent of those bodies of faith). One of religion's great contributions in this world has been a concern for ethical behavior. Taken as a whole, the religions just mentioned probably emphasize justice more than any other ethical value. Even Jesus talked about acting justly almost as much as he talked about loving one another. [There's a reason Jesus was completely apolitical: if all people actually lived according to his teachings there would be no need for any formally organized societal institutions; conversely, one can live according to his teachings regardless of the social environment in which one finds oneself.]

           There is an ethic of justice which has underlain my thinking about the economy: mutual respect in the process of effecting all choices. That ethic is not based on any belief, however, whether religious (theological) or secular (ideological). I realized that no ethic of justice can be justly applied to political and economic processes unless it is necessarily universal--no one can coherently deny its applicability to oneself--which no ethic based on any belief can be. I therefore had to formulate an account of justice which does not contain even one belief. Even so, the idea of acting with respect for others in the process of effecting choices, while it eviscerates all ideologies, does not contradict any ethic of any religion of which I am aware. [For more on that ethic see "Real Justice."]

            I stumbled upon the proposal I'm presenting in this knol after I had in fact designed an economy that would be perfectly just in its structure and its intended functioning (based on the aforementioned ethic of mutual respect). There are three conditions of justice for a perfectly just economic system: (1) freedom for individuals to decide how and to what extent to participate in the economy (very pointedly including free markets, i.e. free individuals determining by the private choices they effect what will be produced, in what quantity, and at what price); (2) an income available to all (adults) but required for no one; and (3) no economic exploitation (people using other people to make money for themselves). Currently, only the first of those conditions of justice is present in the structure of our economy.

   Implementing the idea being presented here would not produce a perfectly just economy. It would have freedom, to include free markets, and it would have "an income available to all... ." It would not, however, have in it the third condition of justice given in the preceding paragraph. Leaving out that third condition of justice would mean instituting far less change to the structure and functioning of the economy; other than the complete absence of taxes, hardly any change would be noticeable in people's day-to-day lives--except for those who were delivered from involuntary unemployment/ poverty. [Anyone interested in a model of an economy which meets all three of those conditions see my book, A Just Solution.]

           I was looking for a way to create a more just economy that would not be perfectly just because I concluded that the idea of instituting a perfectly just economy would require more change than most people would be willing to accept. I realized that applying the second condition of justice to the economy would solve all of the structural problems in the economy that a perfectly just system would solve while making it more just, though not perfectly just. I also knew that for there to be any chance for most people in the U.S. to accept this proposal, it must not even appear to challenge the principle of competition or the profit motive (though in my model of a perfectly just economic system both of those would in fact exist).

            Although this idea is the result of applying the ethic of real justice to the economy, it can be considered on purely pragmatic grounds, i.e., what it could do for us economically. Perhaps some day, somewhere a perfectly just economy will be instituted. For now, following some advice of Jesus, we can let the day's own trouble be sufficient for the day.

Appendix 4: Where in the History of the World Are We?

These days, lots of people seem to think there is some better place to which we need to go, or at least some other direction in which we should be headed. Whatever destination or direction might be proposed however, before deciding upon one we must know our current location.

It does appear that we are at some kind of historical juncture. It does seem like a fundamental choice of some kind is forcing itself upon us. Suddenly, there is an urgent need for us to know where we are.

We do have a map. It is the map of history. The thing about this map is that the lines on it are all in the past. The places we have been and the course we are now on do limit our choices.

So the first question we must answer is, where in the history of the world are we? I submit that we are at the place where continuing economic decay intersects with the end of the age of ideology. I’ll take up the second of those lines of development first.

Following the fall of the Western Roman Empire, chaos reigned. The only source of continuity and authority was the Church. Yet, the Church was not able to bring justice, and all the good that follows from it, to Europe.

In the middle part of the second millennium after the birth of Jesus, the Church suffered a schism that tore it asunder. Brutal, interminable war ensued between Protestants and Catholics. After a hundred years or so of religious strife many Europeans realized that religion cannot be universal—even among people who shared a belief in Jesus as the Son of God—and so cannot be a source of justice, with all its benefits, for nations.

They turned to ideology. An ideology is a set of ideas about how a community should be organized and governed which is based on secular principles. The turn to secular ideology contributed to the advent of what is called the Modern era. Secularism was equated with objectivity, which was thought to be the key to formulating universal principles, which are necessary for establishing justice for nations.

It turned out that ideological principles are based on secular beliefs, so ideologies are in effect secular religions. That means that they have no more chance of being universal than any ‘real’ religion does. Even worse, while no more likely to be universally shared than is any religion, ideologies lack the acknowledgement of the need for grace that is common in religions—however far short of that heavenly ideal any adherents of any religion may at any time fall.

Now we have come to the end of the era of ideology. People are realizing, as Europeans realized about religions—and whether consciously or not—that ideology cannot bring justice to nations. Ironically, part of the evidence for that realization is a heightened religiosity, and especially fundamentalist interpretations of religion, by people of all religions. The unraveling of societies that have been organized and governed based on principles based on secular beliefs is further evidence of the general loss of faith in ideology.

There is a synergistic relationship between the loss of faith in ideology and economic decay. Each feeds, and feeds upon, the other. Economic decay also has its own causes and effects.

Capitalism grew out of Europe’s mercantile economy, which was characterized by local production and consumption (most of it on large estates), with large-scale trade limited to luxury items and a few raw materials. The stabilization of political systems in nation-states, the growth and development of systems of transportation/communication in those nations, and a lessening of various restrictions on business in them created national markets that in turn encouraged the development of large-scale manufacturing in a process that was itself synergistic. Capitalism is the name given to the economic form created by that particular process of social evolution. There was no intelligent design.

From its inception, capitalism has been subject to the ‘business cycle’, periods of expansion and increased prosperity alternating with periods of contraction and increased economic misery. Karl Marx predicted that capitalism would suffer cycles of greater and greater magnitude until it suffered a contraction from which it could not recover. That happened. It is called the Great Depression.

During the Depression John Maynard Keynes developed a non-Marxist diagnosis for what had happened to the economy. His prescription was to have government use its powers to tax and spend to lessen, perhaps eliminate, the business cycle. That worked reasonably well until the mid-1960’s. Beginning then, and despite active participation in economies by governments and central banks, nations’ capitalist economies began to suffer an extended period of slow decay.

Since the mid-1980’s, capitalism has been sustained by a steady growth in debt, both private and public. Debt is a way of increasing the purchasing power of a given level of income. As long as the debt is small enough that the income available can continue to service that debt there is no problem. If income fails to grow fast enough or debt grows too fast, however, the debt can become too large to be sustained by the available income. If that happens on a large enough scale, a general, systemic bankruptcy must occur (though hyperinflation might precede it due to attempts on the part of those who control the money supply to forestall it). That is the fatal problem facing capitalism. It is an insoluble problem, given the current monetary system.

So, people have lost faith in ideology at the same time that the doomed attempt to sustain capitalism by accumulating debt is approaching its predestined end. It is no wonder that nations which have had ideology as their conceptual foundation and capitalism as their form of economic organization, and especially the political processes of those nations, are stressed to the breaking point.

Fortunately, philosophical liberalism has provided for democratic political processes. Those processes allow the right person or idea to come to the fore as needed. What we need now is an idea for saving capitalism from the threatening avalanche of accumulated debt. One such idea is presented above. Implementing it would also eliminate instability, involuntary unemployment/poverty, and taxation. That is no reason to disdain it. Even better, that idea follows from real justice, which contains a necessarily universal ethic (mutual respect in effecting all choices) and provides a non-ideological conceptual foundation for capitalism and political democracy. [See "Real Justice."]

What to Do

We now have available a really just, completely good form of capitalism. With the Constitution of the U.S. the people of this nation "ordained and established" for themselves and their posterity "a more perfect Union." Now peoples everywhere on Earth can ordain and establish for ourselves and our posterity a more perfect economy.

   To my mind the greatest and most overlooked aspect of the period leading up to the American Revolution was the sustained discussion of the two most important public questions there can be: "What is justice?" and "How can it be achieved?" Though they did not get the answer to the first question quite right, they got close enough that they were able to create really just structures for government and the political process as a whole. [For more on that topic see "Real Justice."]

   The ultimate goal is for this proposal to be adopted in at least one nation in some form. As a prelude to that there must be a sustained public discussion of every issue related to the structure and functioning of the economy, to include the place of justice in it, and how what we want of the economy can be achieved. To start that process those who have read this essay must share it with others and encourage them to read it and share it with others. [We are fortunate to have the internet available to facilitate that process.] In the U.S. implementing this proposal could take the form of adopting an Addendum to the Constitution which would do for the monetary system and the economy what that venerable document did for government and the political process of the nation. Nothing need be spilled other than some ink. In general, the model for social change must be the mode of action that brought down the Soviet empire and brought about the 'Arab Spring': the sheer weight of public opinion. Real justice prohibits co-opting people (using coercion or manipulation or simply ignoring the presence of other people) in the process of effecting this choice, the same as effecting any choice. When enough people want this proposed change to happen, it will happen. [Towards that end, this proposal needs a 'handle', a convenient term that can be used to refer to it; all I've been able to come up with are "21st century capitalism" or "demand-based capitalism"--in my book I used "democratic capitalism" and "the demand economy," but those terms seem to imply more change than this proposal would entail.]

    Some people are of the opinion that the mere mention of discussing the economy in those terms is a violation of all that is good and right. They are wrong. They defend capitalism as we know it by pointing to its unplanned, undesigned, unconscious evolution. They seem to think that makes it somehow pure. Monarchy, however, had come into existence the same way. Many of the defenders of capitalism as we know it seem to think that 'business' is some special, privileged activity. Rather, producing and exchanging goods and services with one another is simply part of what happens in the course of life being lived by human beings who are breathing the sweet air of liberty. The 'Founding Fathers' of the U.S.A., who defeated monarchy and established on this continent first one union then another, "more perfect" one, knew that justice is the most important single thing. Justice can only be achieved by consciously discerning the ethic of justice and applying that ethic to interactions among human beings. In the absence of consciously achieved justice, arbitrariness reigns. As John Locke pointed out, arbitrariness in interactions among human beings is injustice. Whatever else the economy may be, it is all about interactions among human beings. So let us, as the Bible says, "strengthen our weak knees" and "run with perseverance the race that is set before us." At the end of it lies an economy with all of the good in capitalism, none of its structural problems, and more justice in the economy than the civilized world has ever known.

It does seem to be the case that most people, once exposed to life with liberty and equality, prefer that to life without them. Yet, there are those who do not. Neither liberty nor equality is universally embraced by human beings.

One doesn’t have to be a militant Muslim to see the challenge liberty presents to rigorously religious life. Religion and liberty can be reconciled, through freely willing to obey God’s will, but conceptually that opens at least one more can of worms to untangle. Meanwhile, fascists, Stalinists, militarists, and other authoritarians live to abolish liberty.

At the same time there are interpreters of Judaism and Christianity as well as Islam (among other religions) who insist that all people aren’t equal in the eyes of God, for instance Believers vs. non-believers and men vs. women. Besides that, the theoretical and practical problems associated with secularly equating equality with justice are greater than people often appreciate. For example, the fundamental issue that has come to inform the left-to-right political spectrum within the geopolitical expanse of philosophical liberalism, with all its attendant conflict, is how and to what extent equality should be addressed in the economy. Even among those who agree philosophically that liberty and equality combine to form the foundation of justice, an unbridgeable divide separates politically those who would emphasize the former from those who would emphasize the latter.

In the 17^th century John Locke summarized for the ages the idea that liberty and equality form the foundation of justice. In one of the most famous statements in philosophy he defined injustice as “being subject to the arbitrary will” of another. In that he was correct. He went from there, however, to equate liberty with justice. In that he was mistaken. [Thomas Jefferson all but plagiarized Locke in writing the most famous passage in the Declaration of Independence of the United States, referring to equality and Rights.]

It is easy to understand why Locke went where he did conceptually. He lived at a time when the ‘Divine Right’ of monarchs was only beginning to be seriously challenged. He was siding with the champions of freedom against the forces of oppressive tyranny. Even so, it can be easily demonstrated that he was wrong to equate liberty with justice. For that matter, the very notion of liberty and equality as the foundation of justice is just plain wrong.

On the face of it, one can ask how people running around doing whatever they want can have anything to do with justice. According to Locke, the Rights to life and property set legitimate limits on the Right to liberty: Everyone’s liberty ends at everyone else’s person and property.

[I capitalize when the reference is to Rights that are claimed to be pre-existing as opposed to rights that are acknowledged to be the product of humanity. “Pre-existing Rights” refers to those that people claim they perceive to exist, that have always existed, that wanted only to be comprehended, such as the 'Natural Rights' to life and liberty, as opposed to rights that are conceived—created—by human beings, such as a right to vote, a right to trial by jury, etc.--i.e., the rights we assign to ourselves within the political processes of our communities. I also use the lower case in referring to rights in a generic way.]

That, however, brings to mind another question: why property should trump liberty as a Right. [Don’t anybody panic: Real justice does not threaten in any way the institution of private property; here I’m just critiquing Locke’s thinking.] After all, according to Locke liberty is what justice is and justice is the paramount social value. Moreover, as Karl Marx correctly realized—even if it was the only thing he got right—property is a source of social power. Rights, pre-existing or not, are the antithesis of power. Rights are a means of limiting power without having to resort to contesting power with power. [That way lies incessant warfare of one kind or another (which does suggest the famous words of Thomas Hobbes, describing what human life would be like if we didn’t live together in communities: “a war of every man against every man…the life of man solitary, poor, nasty, brutish, and short.”)] Conceptually, curbing arbitrary power is the reason for the existence of rights of all kinds. Again, human beings can and do assign themselves various rights within their communities, which certainly can include a legal right to own property, but that is very different from property as a Right, especially one that sets a limit on a Right to liberty.

[The relationship that exists between power and rights also makes the notion of ‘states’ rights’ in the U.S. an oxymoron: Only people can have rights; any state--any place, any time--can only have power. That in turn serves to illuminate a larger slippery slope I have recognized of late on which we find ourselves: One encounters references to the ‘rights’ of government officials to do this or that when, as agents of the state, none of them has one single right that is not shared by all other citizens; the proper term for the basis of the actions of people in that capacity can only be ‘power’ (or ‘authority’)].

Still another question that arises is why all human beings would be equally entitled to those Rights. It is because all people are entitled to all of those Rights that all must respect the person and property of all others. Locke’s answer is that it is because we are all equal (because God created us equal). That, however, makes equality more fundamental than liberty is in his derivation of justice. A social value that is more fundamental is more foundational—it supports the existence of the other, but is not dependent on the other for its existence. A social value which is more foundational than another social value must be the more essential of the two. So, if we seek to bring logical consistency to Locke’s thought we end up equating justice with equality, not liberty—or any other Right. [To borrow a term from John Rawls, in Locke’s thought equality is “lexically prior to” liberty. Rawls has liberty lexically prior to any other “social value.” As with Locke, though, equality is even more fundamental than liberty is in Rawls’s thinking, something ‘prior to’ any mere social value. For Rawls, human equality determines the nature of the ground on which the entire effort to establish justice in any community must take place, his much-discussed (by academic philosophers) “original position.” That was a hypothetical construct in which he attempted to demonstrate the principles of justice any community of people would choose to govern it. He took for granted the equal status any person would have to participate in that process of choosing principles.]

Another problem with basing justice on Rights is the essentially self-centered nature of Rights. It’s always about “my Right” (or “right”). Humans being what we are, that does make liberty a much easier sell than equality is, because the latter is all about including others in the recognition of equality. The ‘sellability’ of liberty versus equality is further enhanced in that those who emphasize liberty might feel they can simply ignore issues like prejudice, bigotry, racism, etc., whereas the idea of equality flatly disallows ignoring such issues. Those kinds of issues aside, a self-centered approach to so fundamental a thing as justice in any community must have a deleterious effect over time on the general state of relations among the members of it—as the abysmal state of common courtesy in the U.S. these days would seem to attest.

Worst for Locke’s case is that any assertion of human equality or of pre-existing Rights can only be a belief, whether such a claim might involve God or not. People often refer to ‘God-given’ Rights, but there is no Bill of Rights in the Bible, “Old Testament” or “New Testament,” or the Q’ran. For that matter, the word “rights,” whether capitalized or not, never appears in either "Testament" of the Bible, though “justice” is all over the place in both of them. Some sense of equality among all human beings is present in both of them, but not in the form, ‘all people are created equal’. To assert secularly that all people are fundamentally equal is still a belief: It cannot be verified by observation within material existence or even be established on the basis of historical evidence or statistical probability.

Beliefs, whether religious (theological) or secular (ideological), cannot be valid determiners of what justice must be.That does not mean that beliefs are invalid. Beliefs are a perfectly valid form of knowledge. Beliefs are knowledge as certain as any other form of it. They are extra-rational knowledge, knowledge that is beyond the sensible capacity of human beings, “the assurance of things not seen,” to quote the Bible (referring to faith, belief’s inseparable companion).

Still, there is no way for anyone to prove to anyone else the validity of any of one’s beliefs. That means the validity of any belief is limited to those who accept it as a belief. It also means that the beliefs of any person are arbitrary from the point of view of any other person. Since everyone’s beliefs are arbitrary from the point of view of anyone else, some people imposing their beliefs on others is the very thing Locke himself recognized as being an injustice. In other words, people who consider it an injustice to have beliefs they don’t share imposed on themselves (which is everyone who has any beliefs) must acknowledge that it is an injustice for their beliefs to be imposed on others. Hence, if the ethic of justice is the one by which all members of a community must be governed, for it to be justly applicable it cannot be based on any belief, whether that belief be religious or secular, to include a belief in equality or pre-existing Rights.

As even that brief analysis of one person’s ideas about justice demonstrates, the central problem of justice is how people can be, well, justly required to abide by any particular ethic, ‘whether they like it or not’. The only way that can be possible is if that ethic is necessarily universally valid for human beings. In that case its applicability to everyone cannot be coherently denied by anyone. Only justice in that form can be real justice.

Historically, even to see that as the problem has been difficult. The ancient Greek city-states had such homogeneous cultures that every citizen in the community shared the same ideals—and anyone who seriously didn’t was invited to leave. [Banishment (ostracism) was an actual punishment handed out for nonconformity and it was tantamount to a death sentence, as no other city-state would take in a banished person--unless that person was an aristocrat, anyway; Athens made an exception for Socrates, who was allowed instead to drink poison.] Asian cultures have also emphasized social harmony, with tremendous social pressure to conform to whatever has been the prevailing norm. In many times and places, including Medieval Europe, religion has provided the ethical principles for justice. Europe’s Renaissance gave rise, eventually, to secular approaches to the search for an ethic of justice.

Following centuries of vicious, brutal conflict between opposing groups which both claimed to be the true followers of Christ, Modern European philosophers correctly recognized that religious belief could not provide a necessarily universal ethic because religious beliefs, being beliefs, cannot be necessarily universal. Those philosophers thought that secular reasoning is inherently objective and that whatever is objectively true is necessarily true. So, they constructed elaborate philosophical systems to explain all of ‘what is’, or at least what we can know, which necessarily included ethics. Postmodern philosophy has established that objectivity itself is hopelessly ephemeral, thus inadequate for determining a necessarily universal ethic.

The heroic reasoning of Modern philosophers actually followed from secular beliefs, including equality; Rights; various suppositions regarding human nature; various conceptions of some ‘State of Nature’; metaphysical realms of existence (e.g., the “noumenal” realm of Immanuel Kant); immutable, irresistible, determinative processes (e.g., the historical dialectics of G.W.F. Hegel and Marx); etc. Secular beliefs result in ideologies, which can be no more objective than any theology. (Real justice would have no effect on religion, but that it could eliminate all philosophical ideologies is one of its greatest potential contributions to humanity.) [Marx was the only one to identify his systematic philosophizing as an ideology, but he thought it was free of beliefs. Yet, besides including in it a determinative historical process, he also avowed equality.]

In short, no previous ethic proposed for justice has been necessarily universal with respect to human beings. That is why, as a practical matter, all previous assertions as to what justice is have eventually come to naught: That lack of universality has always been ‘found out’, making the ethic vulnerable to the elements of lust and greed. Once in that state those ethics had about as much chance of providing a guiding light as a candle in a rainstorm. People have perceived they were free to opt out of being governed by them. The erosion of the accepted validity of the communities’ ethic of justice has caused a generalized loss faith in the validity of the communities’ institutional structures, given that those structures and their intended functioning are based on that ethic. That process is ongoing in Western culture at this moment. That’s why the societies within that cultural sphere are falling apart. A necessarily universal ethic cannot end lust and greed or the unjust acts they drive people to commit, but it can be, as an ethical beacon, perpetually impervious to their effects.

There is one form of knowledge which is necessarily universally valid for human beings: observational knowledge. That is knowledge which is validated by observations within our material existence. For an ethic of justice to be necessarily universal it must be in that form of knowledge.

[Postmodernist readers will object to that paragraph because it assumes that the material existence I perceive is what all human beings—given my perception of the existence of other beings with a consciousness like my own—must perceive. They’re right. On the other hand, anyone who reads this from within one’s own consciousness and perceives material existence consistently with the experience of that existence which I am describing is bound by the ethic at which I shall (eventually) arrive. Only a being who truly believed that the world that was perceived as existing outside that being’s consciousness was a phantasm of that being’s subjective self would be exempt from this ethic. Yet, as Jesus of Nazareth, for one, pointed out, what we really believe about existence is revealed in how we act. Any being that would claim an exemption from this ethic on the grounds just described would have to demonstrate by the way it lived its total life that it was the only ‘real’ being of its kind. (If there was only one, why would it have a gender?) The very act of claiming an exemption—thereby acknowledging a perception that there are other beings with whom one is in a state of reciprocal claims regarding one another—would, however, obviate that purported belief.]

An example of observational knowledge is the observation that Earth revolves around the Sun, and not vice-versa. Certainly, anyone can claim that the Sun revolves around Earth. For laypeople to make such an assertion is harmless enough, in that nothing follows from it. If we were to attempt to send people into space and back using calculations based on that claim, however, it would have dire consequences for the people on that vehicle. Justice, or its absence, has consequences for everyone. Therefore, we must all acknowledge justice that is shown to be valid via observations within our material existence. Yet, two possible objections to observational knowledge as determining what justice must be do come to mind.

One objection is that such knowledge can be unexpectedly impermanent. There have been observations about the world that were once accepted as valid but eventually turned out to be erroneous. For instance, the idea that Earth was flat was deemed to be true for millennia. On the other hand, there are observations about the world that are and have been valid from the day Adam first gazed upon Creation. For example, no object has ever simply fallen off Earth; what we call gravity is as valid today as it ever was. We’ll see that the observations that determine the ethic of real justice are in no danger of ever being discovered to be invalid.

The other possible objection to observational knowledge as the form of knowledge that the ethic of justice must take concerns sufficient verification of observational knowledge. Sufficiency of verification depends on the use to which the knowledge is being put. In casual conversation little or no verification may be required. In engineering, we like to have lots of verification. Justice requires absolute, inviolate, universal verification. We’ll see that the observations that determine real justice are not only universally valid, but are universally verified by all people in the course of our experience of our material existence.

So, for the ethic of justice to remain in the plane of material existence, whence everyone must acknowledge it, neither its referents (the beings and their actions to which it must apply) nor its determiners (whatever determines what justice must be) can lie outside that plane. All of justice, everything about it, must be contained within material existence. If even one referent or determiner of the ethic of justice were to be outside material existence, then we would be back to the murky places where we’ve always been respecting this subject of inquiry.

The beings for whom justice must exist are humans. That seems straightforward enough. One’s moral code can include, for example, rules regarding how one should treat other living things or for that matter the inorganic environment, but justice is limited to human beings. Among human beings, justice is limited to interactions with other human beings in effecting choices (choosing among perceived alternatives and taking actions to bring those choices to fruition). Effecting choices is what we do, literally every moment of our waking lives. It is integral to human life. No conscious, wakeful human being can stop effecting choices (though our perceived alternatives or our ability to effect a given choice can be severely constrained by circumstances). That is one choice that is eternally denied us. Most importantly, one human being can only materially impact another human being by effecting a choice. Again, one’s personal moral code can contain rules regarding private actions, or attitudes, or even thoughts, but the concern of justice is human beings' interactions with one another in effecting choices. [I was directed toward recognizing the place of effecting choices in justice when I read Warren J. Samuels’s "Property and Power," in Perspectives of Property, Gene Wunderlich and W.L. Gibson, eds. (1972); in it he defined “social power” as (paraphrasing slightly) the ability to effect choices.]

Real justice, then, is limited to interactions among human beings in effecting choices. That is the domain of justice. Outside that domain one’s personal morality must take over, but within it every human being must be governed by the ethic of real justice.

Now, everyone observes that we humans are social beings: We live together in communities. We further observe that choice-effecting people living together in communities generates conflict. The question arises, what should we do with respect to those conflicts? The tricky part of that question is the central problem of justice already noted: For any person to be required to accept any particular answer to that question, that answer must be necessarily universally valid for human beings. That is the only criterion available for deciding that question. If anyone were required to abide by any answer to it that wasn’t necessarily universally valid for human beings, that would be a case of some people arbitrarily imposing their wills on others. That’s why the ethic of justice must be the product of observational knowledge.

All of that echoes Locke’s logical juncture at which he identified injustice as being subject to the arbitrary will of another person. This brings us to the most crucial observation concerning real justice: All of us observe that every human being has a will that is independent of the will of every other person. Yet, the will is immaterial. How, then, can the will be any part of real justice? While the will is immaterial, it manifests itself in a material way in the process of effecting choices when one decides which perceived alternative to pursue. Though that mental act is itself also non-material, it is necessarily a part of effecting any choice within the material realm, where it can effect other people. Given that effecting choices is integral to our material existence and that choosing is an integral part of that process, for anyone arbitrarily to constrain any other person’s capacity to choose is to deny that person his or her full status as a human being. Therefore, protecting all people’s capacity to choose for themselves is the heart of the mater of justice.

The issue of justice finally becomes one question: Whose will should prevail in a conflict which arises in the process of effecting choices? If anyone could materially demonstrate that the will of one of the people involved in the conflict was somehow inherently more worthy of being fulfilled than was the will of any other person involved in that conflict, that would provide an answer. That, however, is not possible. That means anyone who wanted to believe such an assertion could believe it, but no one could be justly required to believe it, much less submit to an outcome based on such an assertion. [I address the questions that arise in unavoidably hierarchical relationships, such as family, work, and school in a brief “Addendum,” below.]

It is important to note that having one’s will thwarted is not necessarily an injustice. This takes us back to Samuels, who observed that our ability to effect choices depends on our possession of sufficient amounts of the sources of social power relevant to any particular choice. Our sources of social power are our capacities, abilities, talents skills, knowledge, etc. as well as our material resources such as looks, money, and wealth. In attempting to effect any choice we marshal whatever of those resources we have that are pertinent to accomplishing that particular end. [Samuels called those ad hoc, temporary collections of targeted resources “opportunity sets.”] If one does lose out in the competition for effecting one choice or another that is not an injustice as long as there has been no co-option and the outcome has been uninfluenced by factors extraneous to the relevant sources of social power. (To the extent that people decide such competitions, if in doing so they go outside a consideration of the relevant sources of social power, whatever their motivations, they are arbitrarily asserting their own wills in the process.) Whoever has the most of the relevant sources of social power should prevail. Those sources of social power can include psychological factors, such as the determination to succeed. Determination can become sheer arrogance and obstinacy, however, which can have nothing in common with mutual respect.

The inevitable, inexorable, unassailable conclusion to which the above analysis leads us is that we have no choice but to engage in mutual respect for the mutually independent wills of all people in effecting all choices (“mutual respect in effecting choices” for short). That’s the definitive, sufficient, prescriptive condition of justice; it tells us how we must act regarding other human beings in the process of effecting choices. The minimum, necessary, proscriptive condition of justice draws the line between just and unjust acts; it tells us what we cannot do in the process of effecting choices. It is this: No one may co-opt the will of any other person in that process. When effecting any choice we must respect all other people’s capacities to choose for themselves, beginning with choosing whether or not to participate in that process. Anyone’s participation in the process of effecting any choice of any other person must be sufficiently informed and wholly voluntary. That participation can only be just if the participation itself is something the participant has chosen. Conversely, anyone must be allowed to participate in the process of effecting any choice that affects that person. Basically, the minimum condition of justice disallows killing, coercing, lying, cheating, or stealing when effecting choices.

That’s what I call real justice. It couldn’t be any simpler. Its referents are interacting human beings effecting choices; its determiners are one or two observations about human life in our material existence; at its minimum it boils down to a handful of proscriptions, rules of behavior that happen to coincide with every moral code of which this author is aware. After all these millennia, at long last humanity can know, as certainly as we can know anything, what justice is.

We can now see the proper relationship between justice and liberty. Let's stick with the most basic notion of liberty, freedom to exercise one's will. When everyone is engaged in mutual respect for the mutually independent wills of all people in effecting all choices, then that establishes the maximum liberty that co-existing people can enjoy simultaneously. Liberty is not, therefore, the foundation, or the determiner, or the predicate of justice. Rather, liberty is the product of justice: Justice begets liberty, not vice-versa.

We can also see the precise nature of Locke's great error. As stated previously herein, he did see correctly that injustice is being subject to the arbitrary will of another person. Since being free from the arbitrary will of any other person is to be in a state of liberty, one can see how he went from that definition of injustice to make liberty the predicate of justice. What he should have seen, however, is that justice requires us to refrain from subjecting others to our arbitrary wills. That is what mutual respect is. As also stated previously, it is perfectly understandable that Locke went in the conceptual direction he did. Even so, given the tremendous influence his thought had on subsequent thinking about the subject of justice, the direction he took resulted in a huge wrong turn in the human quest to know what justice must be.

[It may have occurred to the reader that the observation that no one can prove that anyone is inherently more worthy than is anyone else to have a choice effected establishes at least a kind of equality among human beings. That’s true. It would then be possible to go from there to establish equality as the determiner of justice. A requirement of mutual respect follows from that observation before equality does, however. The former is more immediate than the latter is. While the practicality of applying a proposed ethic of justice to either the political process or the economy cannot be a basis for judging its efficacy, the more easily it can be applied to those, the better. We’ll see that it is at least as easy to apply mutual respect to the political process as it is to apply equality to it. A the same time, while it is truly impossible to apply equality to the economy in any meaningful way, we’ll see that mutual respect is readily applied to it—without compromising in any way the fundamental elements of capitalism: freedom, private property, competition, the profit motive,no limit on income. [The economic details are in “CAPITALISM for the 21^st CENTURY—and Beyond.”]

We can now turn to the application of real justice to the political process. We can readily extend Samuels’s conception of social power to define the political process as the process of effecting choices for the community as a whole. As such, it is a socially organic thing. It is inherent to the very act of having a community of human beings: Every community of people necessarily has a political process. The political system is, then, the set of institutions via which choices are effected for the community as a whole. The political system includes political parties and other politically oriented organizations, etc. Of particular note is the institution that is the community’s constitution (or its equivalent). The constitution states the general rules governing participation in the political system as well as specific rules for the structure and intended functioning of the government. The government is the set of institutions via which choices are actually implemented for the community as a whole. As such, it is a part of the political system. It is the innermost core of the whole of the political process.

So, the political process is the process of effecting choices for the community as a whole. The institutional structure through which that process operates is the political system. At the heart of that institutional structure, the place in the political process where choices are specified and particular actions are taken to implement those choices is the government.

Every political process of any community that has ever existed has been informed by some ethic. Keep in mind that, generically, an ethic is any rule for governing the behavior of people. We generally think of ethical behavior as ‘good’ behavior, but of course good is in the eye of the beholder. ‘Might makes right’ is an ethic—one that has probably underlain more communities’ political processes than any other over the history of civilization. This brings us back yet again to beliefs: If any community’s communal ethic is based on beliefs, then, unless all members of the community freely share all of the exact same beliefs where that ethic is concerned, applying it in the community necessarily means beliefs are being imposed on people. Beliefs always have a legitimate place in people’s participation in the political process of their community, but no belief ever has any place in the structure of any community’s political process.

Here’s the thing: If the constitution establishes the rules for the political system, on what basis can the process leading up to the establishment of the constitution be governed? The answer is that the area of the political process that extends beyond the political system is political speech. That means political speech is something more than a right. It is integral to the political process: Since every member of the community will be affected by the choices effected for the community as a whole, every member of the community must be allowed to participate in the political process via speech—every man, woman, and child. Thus, protecting political speech is necessary for a just political process. It can be divided into two categories, primary and secondary political speech.

Primary political speech is restricted to presenting choices for the community to effect. It does not include arguments for or against, merely the prospective choice itself. There must be absolute liberty of primary political speech. That is, there can be no prior restrictions on what choices people might proffer, nor can there be any material repercussions whatsoever received by the person or persons introducing or reiterating any potential choice, whether from the government or any private person or group.

Speech for or against any such choice is secondary political speech. That speech must be free. That means it cannot have any prior restrictions on what can be said, but it would be possible to have certain ex post restrictions, in the form of penalties for engaging in libel or slander. Such restrictions would be limited to civil action initiated by the individual suffering the alleged offense, however. There could be no penalties or constraints of any kind initiated by government on secondary political speech—or any accomplished through private thuggery.

Unlike political speech, participation in the political system and government can be justly restricted among members of the community. Political rights—rights of participation in the political system—are the necessary source of social power for participating in the political system. As a football coach I once had was fond of saying, "think about it:" It is impossible to participate in any political system if one is denied the rights associated with participating in it (running for office, voting, helping in myriad ways to promote, or contest, any candidate, party, policy, etc.—keeping in mind that political speech is beyond a right). Without the rights of participation one can act politically outside the system, but that is an entirely different matter, and something that regimes that have denied those rights to people actively discourage—to put it mildly. Furthermore, every member of the community will be affected by the choices effected in the political system.

For all of those reasons, all members of a community must have all rights of participation in the political system unless it can be sufficiently argued that disallowing that restriction would compromise the functioning of the political system or the government. All that can be put in the form of a succinct principle: Political rights must be available to all members of the community but for objective restrictions, universally applied. We can call that the democratic distributive principle.

The reader may recall the above passage in which I endorsed the postmodernists’ rejection of objectivity as a possible basis for determining the ethic of justice. In the democratic distributive principle, however, “objective” isn’t the basis for an ethic of justice by which all people must allow themselves to be governed. Rather, in that principle, which is itself determined by the ethic of real justice, "objective" simply means without reference to any belief, whether religious or secular. Since we are talking about restrictions on participation in the political system, any such belief would have to be of a negative nature, a belief that some group, as a group, every member of the group, was not worthy to participate in the system.

The first test of this more restricted idea of objectivity is universality: If a proposed restriction can’t be applied to everyone, it can’t be objective. It is true that all beliefs, being abstractions, are potentially universal, but to impose restrictions on participation in the political system based on beliefs would a clear-cut a case of some people’s beliefs being imposed on others, which we’ve seen is always an injustice. Restrictions based on age, as a proxy for maturity, are the best example of a valid restriction on participatory political rights.

A political process with liberty of primary political speech, freedom of secondary political speech, and political rights that are distributed in accordance with the democratic principle is political democracy. All extant democracies are—in their structure, at least—consistent with real justice. Historically, the various forms democracy has taken have been based on a belief in the fundamental equality of the participants in the process (though in various times and places there have been unjust restrictions on participation). Yet, we have seen that, since the political process necessarily involves every member of any community (considering that its outcomes are choices effected for the community as a whole), to erect the structure of a community’s political process on a foundation of belief is to act unjustly as Locke conceived it. Yet, though equality is a belief, it does generate an onus of mutual respect for those who hold that belief. That is why basing the political process on a belief in equality has allowed for the establishment of really just political processes.

Democracy is above all a vehicle for nonviolent social change. Liberty/freedom of political speech and the constitutional rights to vote, run for office, petition, and assemble are all means to that end. The objects of change can range from particular laws, to general policies of government, to the structure of the entire political process, to the idea of justice that underlies democracy itself. Liberty/freedom of political speech provides that self-referential capacity. Democracy, properly understood, not only allows for nonviolence in effecting change, but requires it: Real justice restricts us to rational persuasion in the political process. All of this, by the way, provides democracy an inherent practical advantage over all undemocratic political processes: It allows for individuals and ideas to come to the fore as needed for the benefit of the community.

Nonviolence isn’t the real basis for touting democracy, however. Rather, we can celebrate the simple fact that democracy accords with real justice. It isn’t that democracy is better than any other form of government because it’s the form of government Euro-Americans chose to establish and Euro-Americans are somehow better human beings, or smarter, or wiser, or closer to God, or any such thing. Rather, Euro-Americans, in their search for universal Truths, hit on equality as one of the determiners of justice, and equality, the historical basis of democracy, turned out to be darned close to the actual truth of the matter of justice. None of that gives anyone a right, or even a license, much less a duty, to go around the world establishing democracy at gunpoint. By making democracy a genuinely, truly, irrefutably universal value, however, real justice has won for those who favor democracy total, final victory over any who would oppose democracy in the battle of ideas. Those who live in democratic nations can celebrate that victory with renewed confidence in the veracity of the structure of their existing political processes. Justice requires that they use those processes to achieve justice in the structure and functioning of the economies of their communities.

Just as the political process has three conditions of justice (liberty of primary political speech, freedom of secondary political speech, and the application of the democratic distributive principle to the rights of participation in that process), we’ll see that the economy also has three conditions of justice. By the nature of things, the political process must have all three conditions present to be a just process. In the case of the economy, on the other hand, it can be more or less just, depending on how many of the conditions of justice are met. Let me explain.

The first condition of justice in the economy is freedom. Similar to speech in the political process, there is a requirement of freedom in the economy that transcends the economic system. People must be free to decide how and to what extent they will participate in the economy. That includes having free markets: free individuals determining what will be produced, in what quantity, and at what price by making private decisions. No economy without that level of freedom can be just. Even if both of the other conditions of economic justice could be met without meeting the requirement of freedom in the economy, it still would not be a just economy. That’s because of the intimate connection between liberty and mutual respect: Again, liberty is the result of people respecting the wills of one another, one another’s capacity to choose for oneself.

As for the economic system itself, money is to it as political rights are to the political system, i.e., the necessary source of social power for participating in it. Money is important in the political system—more and more, it seems—but money is not integral to it like participatory rights are. One can participate in it without money. For instance, one does not have to pay to vote. The economic system, on the other hand—any economic system—runs on money. [Anyone who would object that a barter economy doesn’t run on money would be wrong—in a barter economy each person is producing one’s own ‘money’, one’s own ‘medium of exchange’ (the textbook definition of money in economics).] Given that money is the necessary source of social power for participating in the economy, real justice requires that the democratic distributive principle be applied to it. That is the second condition of economic justice.

In preparation for applying that principle to money, let us start with a brief comparison of some pertinent differences between rights and money. For one thing, rights are immaterial. That is why an infinite number of people can share a single right without that right being diminished in any way. Also, rights are discrete: Either one has a right or one does not. Money is material and it is continuous. The latter condition means that one can have more or less of it; the former condition means that money always exists in finite quantities, so it cannot be shared without diminishing the amount each would get. Overcoming that material limitation is the key. Accomplishing that would mean that applying the monetary application of the democratic distributive principle need not diminish the amount each would receive. It would also mean that the democratically distributed income need not be limited to members of the community, as political rights are for obvious reasons, since any number of people could be paid that money without costing anyone anything.

A final consideration in applying the democratic distributive principle to money is that money generally comes to people in the form of income. There are plenty of people who make lots of money in other ways, but the vast bulk of all monetary receipts is in the form of income. So, in applying that principle to money we can put it in the form of income.

As a result of all of those considerations, we see that the democratic distributive principle must be in a sense reversed. Since rights are abstract they are by their nature universal, so that justice is found in the (potential) universality of any restrictions barring people from exercising those rights which are deemed to be necessary for the optimum functioning of the process. In other words, the ‘default value’ is that any person will be allowed to exercise all political rights unless ‘otherwise noted’. In the case of money, people don’t start with it and have it available to use unless restricted from using it. Rather, they don’t have it till they receive it. Justice becomes a matter of applying just conditions for being paid.

Recall the democratic distributive principle applied to political rights, above: Political rights must be available to all members of the community but for objective restrictions, universally applied. We are now ready to apply it to money: There must be an income available to all people who meet objective conditions, universally applied. We can call that the 'allotted income'. The conditions for being paid that income must still be (potentially) universal. Here are four suggested conditions: age, being retired, being incapacitated, or being employed in a position that was paid the allotted income. For present purposes, it is enough to say that such an income is feasible if it is at the same time the money supply for the economy. (See, again, my previously referenced knol for more on the economic technicalities of applying this principle.)

The third condition of justice for the economy is concerned with preventing economic exploitation. Economic exploitation is simply some people using others to make money for themselves. It is embedded in a process in which those who control the revenue of businesses can arbitrarily determine what the distribution of the portion of that revenue that is available for remuneration is to be. Those ‘deciders’ are self-interested individuals who are fully aware that the less of that revenue they allow others who are employed in that business to receive, the more there will be for themselves. They blatantly ignore the presence of others’ wills in that process, which is clearly really unjust.

There are two possible solutions to that injustice. One solution would be to separate the revenue of businesses from the remuneration of any individual, to establish an impermeable barrier between the revenue of businesses and any person. That could be done by having everyone who worked in any business be paid the democratically distributed income. The other solution would be to have a democratic process in every business in which all people employed in the business could have the means and opportunity to change the existing pattern of remuneration in it. [The details of both of those approaches are contained in the first chapter of A Just Solution; the chapter is viewable for free on this site.]

To summarize, the domain of justice is limited to human interactions in effecting choices. Within that large but finite domain the sufficient condition of justice is mutual respect for the mutually independent wills of all people in effecting all choices. The necessary condition of justice, the prohibition against co-opting the will of any other person in effecting any choice, provides an absolute ethical standard to govern interactions among us. Both of those conditions of justice are necessarily universal with respect to human beings because they are determined by universally valid—and universally verifiable—observations of temporal existence. Outside of that domain one’s personal morality must take over, but inside it any and every morality must be governed by real justice, due to its universality. The realm of justice most emphatically does include the political process of any community and the economy. It must govern the structure and functioning of both. Political democracy as we commonly think of it generally accords with justice, at least in its structure. There is not now, nor has there ever been in the history of civilization, a just economy anywhere on Earth.

Real justice is mutual respect in effecting choices. All people are required to take into account the wills of all other people in that process. In the course of our lives, however, we all find ourselves in various relationships in which our wills are clearly subordinate, when our wills are of secondary importance, if that, as a matter of course. Those are hierarchical relationships. I distinguish between ‘natural’ hierarchies, such as family, and what I call ‘artificial’ hierarchies, such as school and work.

Besides families, natural hierarchies include all relationships in which one person is materially dependent on another and has no choice in the matter, does not have the option of being independent. That can mean food, clothing, and shelter, but it can also include money and medical care. In such relationships the will of the dependent person is clearly subordinate to the person(s) on whom that person depends. The dependent person must accept that fact of his or her life. That does not mean that the will of the dependent person is to be blithely ignored, however. Justice requires that will of the dependent person be considered even if it ican be summarily overruled. Moreover, there is a clear, undeniable onus on the ‘independent’ person(s) in such a relationship to act in the best interest of the dependent person(s). A genuine desire for what is best for the dependent person is the only valid reason for overruling that person’s will.

In 1936 the world was mired in the Great Depression. In that year John Maynard Keynes, in his book The General Theory of Employment, Interest, and Money, diagnosed the problem as being a shortage of aggregate demand for goods and services. He prescribed having government make up that shortfall by borrowing money (selling bonds) and using it to engage in public works, thus stimulating a self-sustaining expansion of the economy--which tactic could be used whenever the economy fell below full employment. That, in the shell of a very small nut, is Keynesianism as it is usually referenced in our public discourse.

Besides his diagnosis and prescription for that immediate problem, Keynes also had a more general analysis and set of recommendations for the capitalist economy. Like Adam Smith 160 years earlier, he saw that the key to sustained, general prosperity in that economic system is the circulation of money via production and exchange.

Keynes saw that excessive speculation can subvert that circulation of money in the capitalist economy. That happens when speculative bubbles form. Speculative bubbles are good for all those who are early purchasers of that particular thing but bad for those who get in on them too late, and some speculative bubbles have a direct negative effect on the general economy while some do not, but all speculative bubbles have an adverse indirect effect on the economy. Keynes’s solution to the problem of excessive speculation is to institute progressive income taxes with very high marginal tax rates on very high incomes.

Keynes’s more general analysis was based on the “marginal propensity” to consume/save. That means that the less wealthy a person is, the more likely it is that any additional personal income will be spent on consumer goods and services, whereas wealthier people tend to save any increased amount of income they might get. “Save” here means ‘not spend on consumer goods and services’ and includes both actual savings and personal investments.

When very wealthy people do things with their extra money they can move markets. If they put large amounts of money in savings they lower the rates of interest that is paid to savings. That is contrary to their economic self-interest. Therefore, they turn to personal investments. That is, they seek to purchase things that they hope will be worth more money in the future than they are in the present.

When they make such purchases, however, prices can start to rise. Other wealthy people may notice that the market value of something is increasing and decide to purchase some of it. That causes the price of it to increase further, thereby attracting more demand for it, and you have your speculative bubble being formed.

A speculative bubble has formed when the demand for something is increasing for the sole reason that the price of it is rising. (That something is amiss is apparent in the overturning of the law of supply and demand.) Exactly when, in the course of things, that point is reached with respect to one item or another is a matter of, well, speculation. Even when it is perfectly evident that such a point has been reached, however, it is still ‘rational’ to purchase more of it as long as it can be sold before the bubble bursts.

As was suggested above, a speculative bubble can conceivably form with respect to almost anything. The first historically significant speculative bubble in modern times had as its object tulips: yes, tulips. Rare products, such as art, can be the objects of speculative bubbles. A more popular object of bubbles is real estate. They recur in it every so often. Stocks are another object of recurring bubbles, as are commodities—the raw materials necessary for the production of consumer goods. Even a nation’s currency can be the object of speculation.

When rare products are the object of speculative bubbles the only people who get hurt directly are the people who buy into them too late. When things that are necessary for the production of consumer goods and services are the object of speculation it is bad for the economy as a whole. As we all know, speculation of that kind can wreck entire economies.

Even speculative bubbles involving rare products are bad for the overall economy, however, because they skew the allocation of money. That is the indirect effect of all excessive speculation. Money spent on ridiculously priced tulips is money that is not directed towards economic investment, like plant and equipment, productive techniques, new products, and pure research, or the purchase of consumer products.

While all speculative bubbles are bad, savings and personal investments are good. It is good to have savings because that produces downward pressure on interest rates. It is good to have enough demand for stocks and real estate to keep their prices from falling (overall, though discrete fluctuations will always occur). At the same time, we need sufficient demand for consumer goods and services.

Keynes’s key point was that too much money in the hands of too few people will inevitably generate excessive speculation. At the other extreme, poor people do not have enough money to sustain sufficient demand for consumer goods and services, much less money for saving or personal investments. The middle class has what capitalism needs: enough money to purchase goods and services in sufficient quantities and money left over for some savings and some personal investments.

In a capitalist economy, then, a large, financially healthy middle class is the foundation for sustained prosperity for all. Think of it this way: Ten households spending $25,000 to renovate ten kitchens will generate more economic activity than one household spending $250,000 to renovate one kitchen will. Thus, and only thus, it is good for capitalism to have progressive tax rates with very high marginal rates on very high personal incomes, with that money used to pay for public goods like transportation infrastructure and to subsidize the middle class in areas like education, medical services, home loans, and starting small businesses. Using that money to subsidize the middle class in those areas enhances the financial well-being of that economic class. (To Keynes, helping the poor is primarily a moral question, therefore outside strictly economic analysis.)

Such programs do benefit the supply side of the economy. Viable systems of transportation are necessary for business. Education provides businesses with a large pool of capable human capital. The industries related to building, furnishing, and maintaining houses form the most significant segment of the domestic economy. A system of universally available medical services would remove from businesses the burden of providing health insurance and paying into workers’ compensation, and improve the physical well-being of the labor pool in general. Such expenditures are therefore investments in the economy as a whole.

Keynes also thought that, if necessary, government could impose wage and price controls and even allocate resources. Such measures were peripheral, though, and would not normally be necessary or even necessarily be adopted in abnormal times. (They were adopted, however, in the U.S. for the duration of World War Two, to magnificent effect.)

Politically conservative people would have us think of government as a monetary sponge. It is not a sponge. It is a pump. Every penny government receives in taxes is returned to the private sector. (It is true that Medicare has a trust fund that tax money goes into and is not immediately spent, but much of it goes immediately to be held in the private sector and the place that money goes when it is spent eventually spent is to the private sector.) Taxing and spending in itself cannot hurt the economy.

This is where notions based on the attitudes of the revolutionaries of 1776 get into trouble. They were subjects of a king, not citizens of a democratic republic. Regarding taxation, monarchies were monetary sponges. Monarchs sought to collect as much money as possible in taxes and, other than spending money on wars to expand/defend their realms and sinfully extravagant personal purchases, to hold onto as much of that money as possible. (That is where Smith and Keynes meet; the former urged monarchs of those times to adopt policies that would encourage the circulation of money by encouraging economic activity in general.) Still, monarchs almost always ‘needed’ more money.

These days, big businesses are more effective sponges. It is commonly estimated that the Fortune 500 companies are currently holding, collectively, 1 trillion dollars in cash (after they’ve paid out sinfully extravagant bonuses to senior executives; why not stimulate the economy with bonuses for other employees?).

The 1950’s are deemed by many politically conservative people to be our nation’s Golden Age. According to the National Taxpayers Union, in that decade the top personal tax rate was as high as 92 percent (for taxable income of $400,000 or more). Meanwhile, the Federal-Aid Highway Act of 1956 (which funded the start of the Interstate system) and the Servicemen’s Readjustment Act of 1944 (popularly known as the G.I. Bill) established large public programs of precisely the kinds Keynesianism recommends.

Borrowing and spending by government is another matter. ‘Tax-and-spend’, Keynesian Democrats controlled Federal fiscal policy from the 1930’ until the 1980’s. Control of that policy has since been relinquished to borrow-and-spend, supply-side Republicans. Since 1980 our Federal debt has gone from almost 1 trillion dollars to around 14 trillion dollars and from about 33 percent of GDP to basically 100 percent of it. The economy has gone from “Morning in America” to mourning in America.

The author of all this is Stephen Yearwood. He was born in Atlanta, GA, U.S.A. on October 11, 1952. He has been working on this ethic and its implications for personal interactions, political processes, and the economy for more than a quarter of a century. He’s done this and that for subsistence while focusing on this project; for the past fifteen years or so he’s been billing himself as an itinerant carpenter. He doesn’t have a Ph.D. in anything, but along the way he has earned a B.S. in political science, most of an M.Ed. in the area of social studies, and all of an M.A. in economics (thanks to the educational benefits of the G.I. Bill). He has read a small library’s worth of history, philosophy, and economics. Although the realization that the domain of justice is limited to interactions among human beings in effecting choices is original, this ethic rests on all that has come before it in the modern philosophical tradition. [Mutual respect is the only generalizable ethic available to postmodernists.] While he has learned that justice must be totally temporal—completely contained within the world of our material existence—he is a person of faith. He believes in the God of Abraham. He believes the God of Abraham loves justice and hates injustice. Yet, his God has never provided a straightforward definition of justice. Perhaps God gave us human beings our magnificent brains so we could figure out for ourselves what justice must be. Mr. Yearwood is hoping he hasn’t been foolish in assuming that the citizens of the U.S.--and the world--in this day and age have the self-confidence to think for themselves and to judge for themselves the validity of this account of justice and what it requires of us in our relations with one another, both direct and those we experience through the structure and functioning of our political and economic processes.

“Justice for All Not Possible Using Beliefs,” The Atlanta Journal and Constitution, Faith and Values Section, September 30, 2006
[the editor’s awkward title, by the way, not mine]

“Justice: Mutual Respect in Effecting Choices,” Contemporary Philosophy (Vol. XXVII, No. 1 & 2, Jan./Feb. & Mar./Apr., 2006) 71-75.

“Democratic Capitalism: An Economic Model for Presently Less Developed Nations,” Contemporary Philosophy (Vol. XIX, No. 6, Nov./Dec., 1996) 16-22

“A Model of the Political Sphere of Society,” Contemporary Philosophy (Vol. XVII, No. 5, Sept./Oct., 1995) 28-29

“The Science of Chaos Has Important Lessons for Democracy,” featured Letter to the Editor, The Atlanta Journal and Constitution, March 10, 1990 [again, the editor’s grandiose title]