Locke abandoned the Doctrine of Economic Justice and replaced it with an analysis of the conditions that yield the justice of property rights. To which Marx, the Socialists, (and their predecessors) retorted: let us rather analyze the injustices of property rights. These are the contours within which the legal, social, economic, and political discourse has been carried out during the last few centuries. We might get out of this chasm, through an analysis in three parts. In Part I, we outline three fundamental mistakes in Marx’s analysis; in Part II, we analyze the existence and conditions of economic rights as generators of just property rights; in Part III, we complete the Theory of Economic Justice by adding the plank of Participative Justice to the two traditional planks of Distributive Justice and Commutative Justice.
Introduction
The cri of Rationalism and the Enlightenment for “clear and distinct ideas” caused a series of major unintended consequences from which we have not yet recovered. We abandoned; correction: We believed we could abandon abstract ideas to pursue concrete ideals. There are many cases in point; see, for example, Gorga (2016a and 2017a). Here we shall be solely concerned with the effect of the overarching culture of Rationalism on the theory of economic justice.
With John Locke, we lost the “abstract” theory of economic justice.[i] This paper is an attempt to recover it. The shift was subtle. So subtle that, perhaps, not even John Locke was aware of it. Certain it is that, without mentioning the deed, he discarded the economic content of the Theory of Justice[ii] and replaced it with an approximation that might be called “business,” “personal relations,” “private affairs,” and “private or personal justice.”
Property Rights
John Locke abandoned the world of economic justice that ruled our daily actions from Aristotle, through Aquinas, to the Doctors of Salamanca, see, for example, Wood (2002), and abruptly started the pursuit of a similar-looking, but completely different ideal: the pursuit of the justice of property rights; accordingly, he specified the well-known conditions for the “proper” acquisition of property rights: Locke (1689, Bk. II, Ch. v, paras 25-27).[iii]
All extant theories of justice suffer from this shift. Coase (1937 and 1960), Rawls (1971), Nozick (1974), Gewirth (1985), and Sen, with his Theory of Social Choice as an aspect of the theory of justice (1998 and Pazzanese 2021) are all concerned with the many facets of the justice of property rights.[iv] (Individual writers—see, especially, Monsignor Ryan [1906 and 1916]—have dealt with one aspect of that doctrine, Distributive Justice. But they never formed a school, except when they misapplied it as a requirement of re-distribution of wealth. An intellectual and practical impossibility: from whom, to whom, how much, how often? These are all arbitrary decisions that leave everyone disappointed.)
These are theories that are an implicit or explicit condemnation of the positions of Karl Marx and the Socialists. This is the pivotal historical event: To the proclamation of John Locke about the justice of property rights, many people retorted: Let us rather concentrate our attention on the injustice of property rights; let us concentrate our attention on the way they were mostly acquired, on the way they are exercised.
The Chasm
This is the chasm in which the social, economic, political, and cultural discourse toils today.
This chasm might be systematically and harmoniously bridged if we take three steps:
I. We convincingly show the fundamental mistakes of Karl Marx;
II. We convincingly show the relationship between property rights and economic rights; and
III. We complete the Aristotelian/Aquinian Doctrine of Economic Justice and thus transform it into the Theory of Economic Justice.
The theory of economic rights does not supplant the jurisprudence of property rights; on the contrary, by unveiling the roots of property rights, the theory of economic rights puts the exercise of property rights on a more just and firmer basis; see, Gorga (2010).
To put it pithily, economic rights are the fathers and mothers of property rights.
I. A REBUTTAL OF KARL MARX’S POSITIONS
Karl Marx’s positions have been rebutted in a thousand ways. When put to the test, his expectations have consistently resulted in disastrous practices. And yet, in high places, we are currently faced with yet another robust revival of his theories. Wrong ideals never die because it would be splendid were they to succeed. It is worth going once more to the roots of the many failures of Marxism.
Karl Marx made three strategic mistakes. These mistakes doomed his high expectations about eliminating the faults – the injustices – associated with the exercise of property rights. The ultimate justification for the perennial revival of Marxism is that we are all indeed mightily suffering from these injustices.
Although not widely acknowledged, is not financial insecurity a general condition of the modern world?
First Failure: Overdependence on the Power of Words
Marx believed that his analysis was so convincing as to induce people to change their minds. This is the common, congenital belief of the Enlightenment in the power of words—as distinguished from systems of thought—to change the world. The reality is that the analysis of the faults of property rights can be extended from here to infinity; it is not going to redress any of those faults. The sum total of wrongs does not give any inkling as to possible needed solutions.
Intemperate belief in the power of words is a common mistake of Enlightenment thinkers, which in its worst forms leads to bloviation, an explosion of words directed by muddy thinking, a form of intellectual bullyism; see, Gorga (2018). The shortest proof that Marx, the author of Das Kapital, fell into this trap can be found in the fact that today there is still deep uncertainty about the meaning of “capital.” See disquisitions about Piketty’s (2014) work.
Second Failure: Overlooking Social Relationships
Marx believed that his analysis was so convincing as to induce people to change their ways. He relied mostly on the power of his words to incite people to action. But what action? Ideas have no legs. They acquire their legs when they enter the hearts of people who will then change their practices. And here, Marx made his second strategic mistake. The few suggestions he offered about the need for Marxist practices were largely without content.
To see how weak the Marxist analysis is, we have to conceive of society as a box. Marx simply turned the social structure upside down: What was private, he suggested, be made public. He was not at all concerned with what happens within the box – he thought that social relationships would change automatically. (This is mostly a repetition of the first mistake enlarged from economics to sociology, essentially meaning “culture” as a whole: a phantasmagoric change.) To see the weakness of this assumption, we need to ask, “Does it really matter whether the dominant factor in the making of cars is called The Department of Transportation or Ford Motor Company?” Karl Marx did not even consider the consequences of joining political and economic power.
Third Failure: Considering Labor as Merchandise
The third strategic mistake of Karl Marx is the most serious. He did not realize, and, apparently, his disciples and followers have not yet realized, that he gave up the fight before entering the ring. Once he conceded that labor, or euphemistically, the “services of labor” are treated as merchandise to be bought and sold on the market, the fight for justice was over.[v] Compensation for those services is determined within the governance of property rights—a sphere that is not encumbered with too many objective limits enforceable in a court of law.
The right way is to consider labor as the owner of the wealth it produces.
This statement is Lapalissian. There is no question as to its truth, its validity, its tremendous implications for our social, economic, and political relations. It is nearly universally and consistently accepted in theory. As we have seen in the relative footnote (no. 3), even John Locke reaffirmed and emphasized it. Yet, it is often neglected in practice, where it most counts. Fortunately, the world is so constructed that the validity of this fundamental statement can be ascertained through the proper set of economic, let alone moral, theories. (Facts are infinite; therefore, theories are indispensable.) That the product of work rightfully belongs to the person who creates it, as we shall see, can be definitely ascertained through the analysis of economic rights.
Public Rights
They might have generally stated it, but neither Locke, Adam Smith, Marx, Keynes, nor Hayek, nor any of their disciples have yet made an analysis of economic rights (unless, through the doctrine of social justice. the proposition is confused with the—ever-growing—list of entitlements, namely entitlements or moral claims to the wealth of others). The fault belongs to none other than Kant (and his predecessors and followers). Immanuel Kant left undefined the category of public rights. Economic rights belong to the category of public rights.[vi]
Such an epistemological lacuna left even a concerned legislator and jurist of the caliber of Emanuele Gianturco with the only alternative of conceiving a “diritto privato sociale” (social private jurisprudence). Notwithstanding his excellent intentions, this was an unfortunate oxymoron that left Gianturco open to scorn.
II. EXISTENCE AND EXERCISE OF ECONOMIC RIGHTS
Property rights, in their character as legal documents, are inert; they literally are pieces of paper. They do not produce real wealth. [They can produce financial wealth, but this is a socio-legal-political attribute that is not pertinent to our discussion. Briefly put, financial wealth is not real wealth. For some clarification, see Gorga (2017c)]. A recent book by Michael Heller and James Salzman (2021) details how intrusive and pervasive property rights are, but property rights do not produce real wealth. Were the production process to stop tomorrow—even with a superabundance of property rights and no matter how well distributed they should be—life would soon come to a screeching halt.
Real Wealth
It is the exercise of economic rights—today manifested and exercised as economic privileges; see, Gorga (1994)—that generates new real wealth. To understand how this is true is to understand the operations of the economic system. Economic rights are rights of access to and control over real wealth. Through economic rights, we pass from control over paper documents to control over real wealth. It is real wealth—again, not a paper document—that produces real wealth.
The transition from a regimen of property rights to a regimen of economic rights does not abrogate property rights. On the contrary, since the law abhors a vacuum, the right of ownership over new wealth is automatically, and immediately, extended to the owners of the real wealth engaged in producing new wealth. It is thus essential that those who want to exercise their economic rights first acquire the legal ownership of property engaged in the production process—if they do not already have such rights. Economic rights do not confer ownership of property rights; they provide legal and moral justification for property rights but do not create property rights. They create property.
It is, then, that, since the law abhors a vacuum, society will apportion ownership rights—or should apportion—ownership rights to those who have created that property as soon as wealth is created.
Power and Privilege
It is at this juncture that—often, way too often—power and privilege prevails. The law is overruled, and the rights of property are apportioned among those who are overbearing (i prepotenti): the bullies. Overbearing people do not come alone; they are mostly a product of the laws and those who make the laws. It is at this juncture that stealing (from the rightful owners of property) becomes legal.
Some laws are “illegal”—and immoral—since they sanction the apportionment of property among those who have not created property.
These are the hard legal rules that make abrupt changes in the social, economic, and political reality hard to obtain. Yet, this is the way to preserve order and avoid chaos. We all need that.
How to Eliminate Blatant Injustices of Many Existing Property Rights?
As usual, there are three ways.
THE FIRST SOLUTION
Marx, the Socialists, and the Communists advocated the short-term solution: Revolution. That is an abrupt and violent turn of events. This is the short-term approach, the human understanding approach to set things right.
THE SECOND SOLUTION
Then there is the inside/long-term approach. This might be called the Divine approach. The Gospel tells us that God does not punish the wicked personally. Rather, He/She/It allows the wicked to build traps into which they eventually fall. What is the trap that the wicked Capitalist builds? The trap is the weak market and the unsustainable growth pattern. Most economic growth is widely recognized to be a “bubble.” There is no real wealth inside the bubble, so at the least provocation, the bubble explodes.
THE THIRD SOLUTION
Then there is the patient way, the long-term non-violent way, the Concordian way.
How do we eliminate the blatant injustices of many existing property rights? We can obtain this aim through the exercise of economic rights. We will see that they are not very slow in their operations, either. In any case, wounds of injustices built up over at least five thousand years of history cannot be healed in one day.
This is the way. It is not the legal right of property that creates new wealth. Rather, it is the economic right of access to the factors of production that creates new wealth. Property rights, as legal rights, determine the rights of ownership over new wealth. Thus, again, economic rights do not replace property rights but put property rights on a solid and rightful base, The proviso is that property rights be acquired through economic rights and responsibilities.
(It is, in other words, true that property rights legally grant access to real property. However, since property rights are not acquired—and indeed not even exercised—through strict legal responsibilities, their legitimacy will always be questioned, and their existence threatened. It is through privilege, not through rights, that new wealth is owned today. And yet, economic rights do not destroy privileges: they legally turn privileges into rights—once rights are extended to everyone).
It Is Essential, Therefore, to Know Economic Rights
It is essential, therefore, to know economic rights. As there are four (modern) factors of production—land and natural resources, labor, financial capital, and physical capital—there must also exist four economic rights that give access to these factors:
- The right of access to land and natural resources;
- The right of access to the fruits of one’s labor;
- The right of access to financial resources imbued in our national credit; and
- The right of access to the fruits of one’s property.
How are these rights acquired? To the best of this writer’s understanding, economic rights are acquired through the exercise of corresponding economic responsibilities, namely,
- The responsibility to pay taxes on land and natural resources under one’s control;
- The responsibility to perform tasks required in the process of wealth creation;
- The responsibility to repay loans obtained through access to national credit; and
- The responsibility to respect the property of others.
Here’s the chain: Economic rights, acquired through the exercise of economic responsibilities, are rights of access to real wealth that allow for creating new real wealth. Ownership of the new wealth automatically belongs—ought to belong, must belong—to the creators of such wealth.
Economic Rights and Economic Responsibilities
Some of these economic rights and responsibilities (ERs&ERs) need more explanations than others. The duty to pay taxes on land under one’s control—emphasized not only by John Stuart Mill and Henry George but by eight Nobel Laureates in economics—is rooted in a simple reality: Most of the value of land is given, not by efforts of individual owners, but efforts of the community in which the land is located. A rock in Arizona is worth a pittance; a similar rock in New York City is worth gazillions. Figuratively speaking, we all want to stand on this rock to enjoy the benefits of the Metropolitan Museum, the Guggenheim, the New York Philharmonic, the many Museums of Science and Tech, the subway, and myriad other public—and private—facilities.
Land taxes are primarily designed to destroy the latifundia (vast holdings generally set to inefficient uses). When owners of vast estates do not wish to pay such taxes, they will opt to sell the land. The market of the land is expanded, and the price of the land will thus be reduced. Hence, the opportunity to own land is extended to present property-less people.
Labor as Capital
The right of access to the fruits of one’s labor (remember Marx) gives right, not only to wages but to participation in the capital appreciation of the firm. This right is acquired, not by violent upheavals, but—thanks to the genius of Louis O. Kelso—through the legal transformation of workers, and consumers, into stockholders, respectively, through fabled ESOPs and CSOPs.[vii] ESOPs are Employee Stock Ownership Plans, and CSOPs are Consumer Stock Ownership Plans.
National Credit
The right of access to financial resources imbued in our national credit—thanks to the indefatigable efforts of Benjamin Franklin—is inscribed in Article 1, Section 8 of the US Constitution. The Federal Reserve System (the Fed), our central bank, creates (or ought to) and distributes money, not out of “thin air,” but on the strength of our national credit. Since all residents of a nation contribute to the value of its national credit, all residents of a nation are rightfully eligible to receive loans, at the cost of administration, issued by the central bank—a facility that can be adroitly operated by local banks.
The responsibility, of course, is to repay the loan. Without such a reasonable assurance, there is no right of access to national credit, our last common wealth. A paper outlining this proposal, as well as the need for a systematic (Mosaic) Debt Jubilee every seven years, was sent to the Fed – Gorga (2015) – and the Fed gave a nod of approval to this policy; see, Durr (2016). The writer has had precious few resources of time and money to follow the suggestions of the Fed.
The Brandeis Rule
Notwithstanding the appearance, more difficult is the case of the right of access to the fruits of one’s property, with the corresponding responsibility to respect the property of others. This right is respected everywhere, except—in an industrial society—where it counts most: in relation to the ownership of our large corporations. In this area, rather than “law and order,” one observes the operations of the Pac-Man approach.
In honor of the strenuous efforts of Louis D. Brandeis and the cohort that created the Progressive Movement with its feeble anti-trust laws in the United States, this writer has conceived of the Brandeis Rule as a substitute for the Pac-Man approach: Let the first 100 largest corporations grow internally as large as the market allows them to grow, but sternly prohibit them from engaging in buying or being bought by other entities.
After analyzing the results, enlarge the number of corporations subject to the Brandeis Rule to the next 100 or the next 200 largest corporations, up to the level where corporations operate only within a limited geographic area, such as any one state in the United States. The expectation is that the captains of our great industries will love being freed from looking sideways and over their shoulders. They will love to concentrate their attention on the internal needs of our wondrous corporations—with a passionate, relentless pursuit of the common good of stockholders and stakeholders.
A full understanding of these ERs&ERs is acquired, not through the reading of Keynes or Hayek, but through understanding the legacy of four giant American thinkers, in their order of appearance on earth: Benjamin Franklin (money), Henry George (land), Louis D. Brandeis (physical capital), and Luis O. Kelso (labor). As a unit, they form an unassailable fortress.
Who Are the Opponents?
Who are the powerful people who would object to this program of action? As pointed out on another occasion, Gorga (2017b), four presumed antagonists are supposed to be:
- landowners who do not want to pay a fair share of taxes on the value of their land;
- central bankers who do not want to serve the public interest;
- entrepreneurs who do not want to offer full compensation for services received; and
- business people who want to gobble up the fruit of other people’s efforts.
Where are they? Apart from their minuscule apparitions, when measured against the billions of entrepreneurs who behave morally, they are four phantoms. But they are more dangerous for being ingrained in the imagination of people who, blinded by their institutional power, see neither economics nor morality clearly. (Institutional power: tax assessors, politicians, and academicians who, unable to speak truth to power, make themselves powerless and paralyze entire nations in the process.)
A fuller understanding of ERs&ERs is acquired by putting them in the context of the theory of justice.
Economic Rights and the Theory of Justice
Briefly put, economic rights and economic responsibilities perform functions outlined in
- the conception of “general abstract rules” by Hayek (1960, p. 153),
- the “original position” by Rawls (1971, pp. 12, 72, 136, 538),
- the “reverse theory” by Nozick (1974, p. 238), and
- the “Principle of Generic Consistency” by Gewirth (1985, p. 19).
The many unexamined questions in these theories can then be examined and become satisfactorily answerable.
Practically, they function as Gladwell’s “tipping points” (2000). Ultimately, it was a poet, Vincent Ferrini (2002), who caught the essence of economic rights and responsibilities by identifying their ability to provide “the answers to universal poverty and the anxieties of the affluent.”
Among other benefits, economic rights and responsibilities allow us to identify four privileges that make for much inequality in today’s world.
Four Horses of Inequality
Control over the four factors of production, acquired today as a privilege with no, or very limited, responsibilities, gives rise to four horses of inequality:
- Land and natural resources ownership without the payment of taxes (while extracting oil “depletion” allowances from the taxpayer);
- Legal appropriation of the value of the work of others;
- Gaining control over the process of creation and distribution of money, while saddling the majority of the population with exorbitant interest payments for consumer credit (see, Bhutta et al. (2016)) and nearly shutting everyone else out of capital credit markets. Consumer credit, in any case, enslaves the borrower, while capital credit potentially liberates the borrower; and
- Gobbling up friends and potential enemy corporations to corner the market in order to pay low wages and exact high prices for consumer products. These are the abuses of market power that can be controlled only through a regimen of economic rights and responsibilities. They are the only tools to reduce inequality and obtain—not equality—but economic justice.
Many other ideological, sociological, and institutional factors determine existing conditions of inequality. But they are contributing factors. The animating forces can be found only among the privileges enjoyed through control of the four factors of production.
Inequality Benefits No One
Inequality is certainly inimical to the poor and the propertyless. However, since inequality is the source of instability of the market, its ultimate effect is this: It is the wealthy who suffer most from periodic financial collapses of the economy.
Happy are the penniless. Happy are those who rely on more permanent values than those bestowed by money.
III. THE LOST THEORY OF ECONOMIC JUSTICE
Some Content of the Early Doctrine of Economic Justice
A case can be made that the four Economic Rights and Responsibilities above, cast in the appropriate language of the times, formed, explicitly or implicitly, the content of the Doctrine of Economic Justice that ruled the Western World for about two thousand years. See, Wood (2002). As Aristotle formulated it and Thomas Aquinas, followed by the Doctors of Salamanca who corroborated it, the doctrine comprised two planks, the plank of Distributive Justice and the plank of Commutative (commutation = exchange of wealth) Justice.
Distributive Justice
The plank of Distributive Justice talked of fairness in the distribution of wealth as it was created; the plank of Commutative Justice, already in Aristotle—implicitly—established the principle of equivalence as the objective measure of what was given and what was received. Since prices are rather elastic entities, the Doctors of Salamanca determined that the just price is the fair market price. This was the doctrine of economic justice that was obliterated by Locke with his intellectual shift to the requirements of the justice of property rights. As it can be seen, the doctrine was never static. Perhaps at a glacial pace, there was a constant attempt to improve the value of its content; the constant effort to establish ever better methods to determine the precise fairness of weights and measures should not be forgotten.
Certainly, from the very beginning of Greek mythology, the Goddess of Justice, Athena, was conceived as the goddess of civilization, knowledge, wisdom, and crafts at the same time. More technically, perhaps, Themis was conceived as the personification of justice (justice herself), goddess of wisdom and good counsel, and the interpreter of the gods’ will. Themis was generally represented as a lady holding an old-style scale (the blindfold is a modern addition). The scale has two identical plates falling from a central pillar (a la Gaudi). The third item in the equivalence concretely is the pillar itself. More abstractly, it is the relation between the respective weights placed on the two plates. Was this not a perfect depiction of the objective measure called for by the principle of equivalence?
Failure of Distributive Justice
Much scholarship, beyond the ability and the interest of this writer, will have to prove or disprove the validity of these assertions. One result might be sufficient for the time being. No tenant or sharecropper contract under that doctrine would have tolerated the scale of distribution of wealth prevailing today: some corporate officers receive compensation 350 times larger than that of the average worker. Talk about the sources of inequality.
The Commons
This ancient conception of economic justice was supported by an entire culture of moderation. Usury was legally prohibited; it took President Nixon to destroy the last vestiges of that tradition in 1971. Even in ancient Greece, the commons were the last resort for free laborers: they could go there to gather berries and wood or to offer pasture to their one or two sheep. Once the commons were enclosed, to recover the value of the sums given to the Kings, buyers brought 100 sheep to those lands, and the ecology of the enclosures collapsed. What then collapsed were the enclosures themselves, as Garrett Hardin later admitted, but the truth has never been favored by fanatical extremists.
Debt Jubilees
Debt jubilees were common. Monasteries functioned as not-for-profit corporations. They created employment for the laborer class at fair wages Their product was made available to the poor free of charge. Surplus wealth in the community-at-large legally belonged to the poor – see, Tierney (1959, pp.22-444) – and was distributed to the poor, not through any of the verbal bludgeons used by Karl Marx, or administrative nightmares of our welfare system, but by voluntary disposition by the owners of that wealth. (More extended discussions of these issues, as well as detailed sources of information, can be found in many venues, of course, but also in some publications of this writer; see, for example, Gorga [2011]).
These propositions might remain a bit abstract; let us anchor them more closely into history.
A Bit More of History
Three portentous, internally related events occurred in 1776 as causes and effects of Locke’s emphasis on property rights. Thomas Jefferson, in drafting the Declaration of Independence, literally erased the word “property” from the famous Lockean synthesis of “life, liberty, and property.” This formula encapsulated much remote history:
- All in favor of the pursuit of happiness.
- All in favor of a world of entitlements, if not a world of rights without responsibilities.
- All to preserve the union, while tolerating the original sin of slavery.
On the other side of the pond, Adam Smith published his Wealth of Nations in that same year. While the emphasis has, properly, been placed on the positive content of that masterpiece, its negative content has been passed under silence. Yet, one is more powerful than the other. Without understanding the negative content of the Wealth of Nations we are literally deprived of the understanding of the negative forces ruling the modern world. Two such forces are:
- the obliteration of morality from the social sciences
- the evisceration of hoarding from economic science.
The Theory of Moral Sentiments
Adam Smith published The Theory of Moral Sentiments in 1759. Without the Wealth of Nations, the earlier work might have been classified as the work of a mad philosopher. That was no longer possible after the success of the Wealth of Nations. Who could ever pay much attention any longer to a set of moral sentiments? Who would pay any attention any longer to such fickle entities as our brittle movements of the heart? Adam Smith must have been aware of the ancient wisdom of Jeremiah (17:9), who said:
“More tortuous than all else is the human heart, / beyond remedy; who can understand it?”
Adam Smith obtained an audience in high places because he invoked “a higher” authority as the arbiter of our actions; he invoked the power of an “impartial spectator.” Impressive. But to the knowledge of this writer, no one has ever asked who the impartial spectator is. The answer is lui-même. No matter. The influence of The Theory of Moral Sentiments has been decisive in expelling morality from the social sciences, especially from economics; who would ever want to lose the purity, the sanctity of science by mixing it with such entities as moral sentiments?
The Lack of Moral Judgment
The trouble is that lack of moral judgment has been the culprit in determining the inability of the social sciences to solve “the free rider problem,” the problem of fringe operators who want to get something for nothing in this life – see Gorga (2019). The trouble is that the free rider problem could not be simply neglected. Someone had to solve it, and no better candidate was ever found than The State. It is thus that the state has assumed its overwhelming importance in our social, economic, and political life—the life of the extreme right just as well as the life of the extreme left – all for our benefit. (While the center periodically oscillates between the two extremes.)
Hoarding
The cancellation of hoarding from economics was possibly even more deleterious to our mental stability. Without hoarding, we cannot understand economic science. And without the understanding of hoarding, we cannot deal with famines—and many other unfortunate economic events in the world. Without the understanding of hoarding, we cannot truly understand the requirements of economic justice.
The seed of these many discoveries was sown in this writer in the distant year 1965, during a summer of intense intellectual struggle with Keynes’ General Theory. All of Keynes’ difficulties in writing the General Theory were due to his mistaken impression that he was fighting the “jejune” economics of Marshall, while his enemy was actually Adam Smith’s conception of Saving. Erase the word Saving, substitute it with the word Hoarding, and you are put on a steady road to understanding the economic process and reconstructing economics by building Concordian economics. This feat has been acknowledged by several sources, including the Journal of Economic Literature (JEL). In its second annotation of The Economic Process (2002, 2009, 2016), on page 1462 of its December 2017 issue, JEL recognizes that
“Expanded third edition presents the transformation of economic theory into Concordian economics, shifting the understanding of the economic system from a mechanical, Newtonian entity to a more dynamic, relational process.”
Brief presentations of Concordian economics can be found in Gorga (2009b and 2017b). There are many practical implications involved in the development of Concordian economics. Chief among them is its potential ability to yield financial independence to everyone – see Gorga (2021b). Among the theoretical implications, the most important is likely to be its fostering of the transformation of the doctrine of economic justice into the theory of economic justice.
From the Doctrine to the Theory of Economic Justice
Undoubtedly, one of the reasons John Locke had such an easy time obliterating the Doctrine of Economic Justice was the objective fact that the doctrine survived all those years without a head. Let me explain. Aristotle could not conceive of extending rights to everyone. Slaves allowed for the Leisure Class, to which he belonged. Therefore, he could not conceive of transforming his doctrine into a universal theory. Of course, there is less of an explanation for St. Thomas Aquinas and the Doctors of Salamanca—apart from the fact that most priests were coming from the ranks of privileged families.
For the many rational justifications of slavery, see, for example, Neill (2011). For the reality of slavery, see the works of Frederick Douglass—chief among many others. Another more generic explanation is that Aristotle and Aquinas were explicitly addressing their thoughts to people who were actively participating in the economic process: landowners, sharecroppers, and shopkeepers.
Three Planks
Unencumbered by any such restraints and reassured by much economic theory, this writer has recognized that those rights must be extended to every resident of a nation and added a third plank to the traditional two. We now have Participative Justice, Distributive Justice, and Commutative Justice forming the theory of economic justice. The principle of equivalence is the principle of logic that holds the three planks together. Thus, each of the three terms has to be constantly identical to itself; each in a symmetric position with the other, the terms can be exchanged with each other, and the results must be the same. One term transitions into the other, thus forming a trilogy. Mathematics and geometry confirm the validity of this organic arrangement of terms: two terms lead to circularity of argumentation. Science begins when a third point is found.
For the ease of presentation and analysis, this writer has been using the following diagrammatic format:
Fig. 1 – Theory of Economic Justice
Much can be said about the Theory of Economic Justice. The briefest possible presentation is this: Without participating in the economic process, it is difficult to receive a fair share of the wealth produced; and without offering a fair share of wealth, it is difficult to obtain anything on this earth.
Conclusion
The existence of property rights has been in danger ever since the emphasis was placed on them by John Locke. The world has never witnessed such an ever-widening set of conflicts as those experienced during the last three centuries. The assault comes from many well-intentioned sources. The hidden power of these sources lies in the lack of existence of better solutions to the need to redress the injustices prevalent in society. The ultimate result of this course of action is this reality: By destroying property rights, we are gradually destroying the bonds that hold people together in society.
Opponents of property rights, of course, change the direction of the vectors. They theorize that property rights are destroying the bonds of society. (They could be given the benefit of the doubt, were they to offer proper solutions.)
Economic Rights as the Source of Property Rights
A better solution is the creation of a regimen of economic justice in which economic rights extended to everyone are the indisputable source of property rights. Ecologists fear not: the exercise of economic responsibilities will be the ultimate source of protection of Mother Earth. That is to say the least, ERs&ERs foster an automatic reduction of waste – see, for example, Gorga (2021a).
To install a regimen of economic rights, society does not need the contribution of even one cent, let alone two cents of the wealth of the affluent. What society needs to do is to use all its powers to transform the privileges that the affluent enjoy into rights—and responsibilities—that everyone can exercise. This program of action can be presented as a Grand Compromise: the affluent release their privileges, and the property-less set their use—or threat of use—of pitchforks aside once and for all. Pitchforks is a metaphor that includes all fatuous attempts to re-distribute wealth, through taxation or forceful expropriation.
Appendix
A FEW MORE OBSERVATIONS ON MARXISM
The mistakes highlighted in the text do not stem from anything outside Marx’s thinking but from the very core of that thinking. Apart from the unavoidable general influence of the culture of the age, there is no one else, no other entity to blame for those errors. This is the truth, which is hard to swallow for a faithful disciple: Marx was not an economist: he was a very opinionated sociologist. He did not do any field work; his brain sufficed for him.
As to economics, he did not know what capital is. Capital is a wondrous thing. Although not alone, he failed to distinguish financial capital from physical capital. Worse, he assumed that profit, interest, and rent are “surplus value” that is derived from “unpaid labor” (or stolen from workers.)
They are not that. They are the fruit of financial capital, an invaluable benefit to mankind. As a barber next door knew well, and Marxist ideologues still find it hard to recognize, money is the best labor-saving device.
Marx and Archimedes
In Marx’s incomplete system of thought, there is no room for Archimedes’ conception of the world, a conception that was encapsulated in this statement: Give me a fulcrum, a lever long enough, and I will lift the world. A lever is an expression of physical capital, it is not a gift of Nature. A lever itself, or at least the use of the lever, is the creation of the human mind. The universal recommendation to mankind has traditionally been: Do use the lever to transform the human condition.
Capital, in both its financial and physical incarnation, is a factor of production. It is an invaluable factor of production. Capital is not something to be erased from the face of the earth. Capital is something to put to work for men and women. Men and women are not destined to work only – they are destined to think and love.
To reposition the statement in the text that “Wrong ideals (ideologies) never die because it would be splendid were they to succeed,” one must courageously recognize that it is a divine gift that some ideologies are never materialized: What a horrible world is Marx’s world, what a nightmare of the human mind, and what a slavery to the human hand.
Yes, given the assumption that we are descendants of monkeys, our best hope would be to evolve into gorillas. This is the best that historical materialism can offer.
Notes
Special thanks, in addition to Franco Modigliani and Meyer L. Burstein, go to Vittorio de Caprariis, Robert A. Mundell, Mitchell S. Lurio, Norman G. Kurland, Michael Emmett Brady, Stefano Zamagni, William J. Baumol, Laurence J. Kotlikoff, Michele Boldrin, Jeroen C.J.M. van den Bergh, Kevin P. Gallagher, William J. Toth, William R. Collier, Jr., Damon Cummings, and Veljko Milutinovic.
Selective portions of this research have also been endorsed by John K. Galbraith, Otto Eckstein, Steve H. Hanke, Mark Perlman, Francesco Forte, Augusto Graziani, Alberto Tarchiani, Aldo Garosci, Giorgio Spini, Gerald Alonzo Smith, Charles T. Wood, Norman A. Bailey, Buckminster Fuller, Rosanna Marini, Gordon Richards, Alan Reynolds, Rudy Oswald, Steve Kurtz, Ernest Kahn, Louis J. Ronsivalli, Howard Zinn, Robert F. Drinan, Thomas J. Marti, Cassian J. Yuhaus, James E. Hug, Richard John Neuhaus, John J. Neuhauser, Irving Kristol, Michael J. Naughton, L. Joseph Hebert, John C. Rao, and Peter J. Bearse among others. Last but not least, Laurence Katz.
Footnotes
[i] Strictly speaking, as we shall see, we lost the “doctrine” of economic justice. This paper is an attempt to extend the doctrine into a theory.
[ii] The Aristotelian distinction between political justice and economic justice, whose sum creates a full theory of justice, is not generally considered.
[iii] The specific conditions are: “The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided… makes it his property… for this labour being the unquestionable property of the laborer, no man, but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others.”
[iv] Utilitarianism, with Jeremy Bentham at its head and its myriad applications, is mercifully passed over in silence. The practical implications of Utilitarianism are despicable. The intellectual roots of Utilitarianism have deep cultural flaws – see Brady (2013).
[v] This analysis has a clear purpose: to stop pursuing misguided programs of action and concentrate our efforts on what is feasible and just. The Appendix highlights a few of these observations’ consequences for Marxism.
[vi] Economic rights are public, natural, universal rights, essential to realizing economic justice; they alone foster conditions that lead to the promise of a full “Life, Liberty and the pursuit of Happiness.” See, Gorga (1999).
[vii] This writer has long advocated for union membership dues to be tied, not to wages, but to equity sharing and cash-back programs.
References
Bhutta, Neil, Goldin, Jacob, and Homonoff, Tatiana. 2016. “Consumer Borrowing after Payday Loan Bans.” Journal of Law and Economics 59:225-259.
Brady, Michael Emmett. 2013. “John Maynard Keynes’s Upper and Lower Valued Probabilities: A Study of How Statisticians, Philosophers, Logicians, Historians, and Economists Failed to Comprehend Keynes’s Breakthrough Application of G. Boole’s Interval Approach to Probability in the 20th Century.” International Journal of Applied Economics and Econometrics 21:254-272.
Coase, Ronald Harry. 1937. “The Nature of the Firm,” Economica 4:386-405.
———.1960. “The Problem of Social Cost,” Journal of Law and Economics 3:1-44.
Durr, Jean. 2016. Personal Communication, September 14. Public Affairs Office, Board of Governors of the Federal Reserve System. Available at file:///C:/Users/cgorg/OneDrive/Attachments/ECONOMICS/Documents/2nd%20Jean%20Durr,%20FRS.pdf.
Ferrini, Vincent. 2002. “Gorga worthy of note,” Gloucester Daily Times, December 11, p. A6.
Gladwell, Malcolm. 2002. The Tipping Point, Lebanon, IN: Back Bay Books.
Gewirth, Alan. 1985. ”Economic Justice: Concepts and Criteria” In Economic Justice: Private Rights and Public Responsibilities, Kenneth Kipnis and Diana T. Meyers, eds. Totowa, N.J.: Rowman & Littlefield.
Gorga, Carmine.. 1994. “Four Economic Rights: Social Renewal Through Economic Justice for All,” Social Justice Rev. 85:1-2, pp. 3-6.
———-1999. “Toward the Definition of Economic Rights,” Journal of Markets & Morality 2:88-101.
———. 2002 and 2009. The Economic Process: An Instantaneous Non-Newtonian Picture. Lanham, MD. and Oxford: University Press of America. Third edition by The Somist Institute, 2016b.
———. 2010. “Roots of Property Law: From the Moral Contract, and the Doctrine of Economic Justice, to the Social Contract. Is the Legal Contract Next?” World Institute for Research and Publication (WIRP), June 4. Available at SSRN: http://dx.doi.org/10.2139/ssrn.1600595.
———. 2011. “Some Shortcomings of the Social Contract.” Available at SSRN: http://dx.doi.org/10.2139/ssrn.3143002
———. 2015. “Two Proposals in the Form of Two Petitions Designed to Stabilize the Monetary System.” The Somist Institute, December 3. Available at Two Proposals.pdf.
———. 2016a. “Wake up America. Wake up from Your 250-Year-Old Slumber.” Mother Pelican, A Journal of Solidarity and Sustainability, Vol. 12, No. 6.
———. 2016b. “Two Proposals to Stabilize the Monetary System.” Econintersect, August 21.
———. 2017a. “A Cascade of Errors (1517-2017).” OpEd News, October 31.
———. 2017b “Concordian Economics: An Overall View.” Econintersect, January 2.
———. 2017c. “Money, Banking, and the Economic Process,” Econintersect, July 12.
———. 2018. The Redemption of the Bully: Through Love Toward the Beloved Community. Republic of Moldova, Chisinau: Scholars’ Press.
———. 2019. “The Free Rider Problem,” Mother Pelican, A Journal of Solidarity and Sustainability, Vol. 15, No. 2.
———. 2021a. “Toward Economic, Ecological, and Human Interdependence,” Mother Pelican, A Journal of Solidarity and Sustainability, Vol. 17, No. 6.
———. 2021b. “Project Financial Independence.” Econintersect February 25.
Heller, Michael and Salzman, James. 2021. Mine! How the Hidden Rules of Ownership Control Our Lives. New York, NY: Doubleday.
Locke, John. 1689 [1965]. Two Treatises of Government. London: Awnsham and John Churchill. Laslett P. ed. NY: A Mentor Book, Bk. II, Ch. v, paras 25-27.
Neill, Ralph. 2011. Slavery in the Writings of Thomas Aquinas, Yumpu.com. Available at: https://www.yumpu.com/en/document/read/12426173/slavery-in-the-writings-of-thomas-aquinas
Nozick, Robert. 1974. Anarchy, State, and Utopia. New York, NY: Basic Books.
Pazzanese, Christina. 2021. “Amartya Sen’s nine-decade journey from colonial India to Nobel Prize and beyond,” The Harvard Gazette, June 3.
Piketty, Thomas. 2014. Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press.
Rawls, John. 1971. A Theory of Justice. Cambridge, Mass.: Harvard University Press, 12, 72, 136, 538.
Ryan, John A. 1906. A Living Wage: Its Ethical and Economic Aspects. New York: Macmillan.
———. 1916. Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth. New York: Macmillan.
Sen, Amartya K. 1998. “The Possibility of Social Choice.” From Nobel Lectures, Economics 1996-2000, Editor Torsten Persson, World Scientific Publishing Co., Singapore, 2003.
Tierney, Brian. 1959. Medieval Poor Law: A Sketch of Canonical Theory and Its Application in England. Berkeley: University of California Press.
Wood, Diane. 2002. Medieval Economic Thought. Cambridge, UK: Cambridge University Press.
