Why can't I be rich? Because, as lawyer-economist Louis O. Kelso pointed out in the ground-breaking treatise he co-authored with Aristotelian philosopher Mortimer J. Adler fifty years ago, you do not have democratic access to the means of becoming rich.

In "The Capitalist Manifesto" (1958), Kelso and Adler asked the question why, in the richest country in the world, there were so many people who lived on wages alone?" Why, in America of all places, did there seem to be barriers to people becoming owners of an amount of capital assets sufficient to generate an adequate and secure income? Did not George Mason, "Father of the Bill of Rights," list in the first clause of his draft of the Virginia Declaration of Rights of 12 June 1776 the "inherent" right to the means of acquiring and possessing private property?

What happened?

What happened was that the idea that capital could be formed (i.e., financed) only by cutting consumption, saving, then investing became an absolute dogma with the publication in 1797 of Thomas Malthus "Essay on Population."

Ironically, this is not, in fact, how capital was formed from 1830 to 1930, the period of one of the greatest industrial, commercial, and agricultural expansions in history as the United States grew from an isolated country on the edge of the world to a financial and industrial giant that determined the course of the world. Dr. Harold Moulton of the Brookings Institution proved in 1935 that during times of rapid economic growth, new money was created through the banking system without first saving.

The problem was that very few people were able to do this. Although existing savings are not necessary to form capital, they are necessary to provide for collateral to ensure that the newly-created money will be repaid, and the loan be non-inflationary.

Kelso and Adler reasoned that, since collateral is used by banks as insurance, the standard "risk premium" paid on all loans could be used as an actual insurance premium to replace the need for collateral. If the resulting loans that could be made were democratically available so that people currently without property could now have access to the means of becoming owners of capital, everyone could be, in relative terms, "rich."

For an in-depth treatment of this, as well as to obtain a free .pdf of The Capitalist Manifesto and The New Capitalists, visit the web site of the Kelso Institute, www.kelsoinstitute.org. For a holistic program to achieve widespread ownership of the means of production, see the web site of the Center for Economic and Social Justice ("CESJ"), www.cesj.org and look up "capital homesteading for every citizen."

Learn more about this author, Michael Greaney.
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