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The Capitalist Manifesto
Louis O. Kelso and Mortimer J. Adler, 1958

"We are initially addressing ourselves to ... men who feel themselves well-off, not to starving, downtrodden victims of injustice and oppression. We cannot exhort them to engage in violence, and to do so without fear because they have nothing to lose but their chains. We must persuade them, in much calmer tones than that, to act rationally, with insight and prudence, because they do have something to lose - their freedom - which an abundance of creature comforts may have lulled them into forgetting.

"Men who think they already have all the liberty and justice they can expect, in addition to plenty of material goods, cannot be emotionally exhorted to take radical measures for the improvement of their society. They can only be asked to think again." (p. 5)

"Never before has a society marched more joyously into ambush by the very forces it implacably opposes but does not recognize. We are faced with the spectacle of a nation sincerely seeking democracy and economic justice through means which it fails to recognize as destructive of both." (p. 11)

"Leisure, properly conceived as the main content of a free, as opposed to a servile, life, consists in activities which are neither toil nor play, but are rather the expressions of moral and intellectual virtue - the things a good man does because they are intrinsically good for him and for his society, making him better as a man and advancing the civilization in which he lives." (p. 17)

"Only if freedom from labor becomes freedom for leisure will the [expanded capital ownership] revolution produce a better civilization than any so far achieved, and one in the production of which all men will participate. Only if men thus use their opportunity for leisure will the [expanded capital ownership] revolution result in an improvement of human life itself, and not merely in its external conditions or institutions. As labor is for the sake of leisure, so freedom and justice for all are the institutional means whereby the good life that was enjoyed by the few alone in the pre-industrial aristocracies of the past will be open to all men in the [capital ownership] democracies of the future. (p. 19)

"Man's special dignity lies in goods which no other animal shares with him at all, as other animals share with him the goods of food, shelter, and even those of sleep and play. Hence man has no special dignity as a producer of subsistence or wealth, but only as a user of wealth for the sake of specifically liberal activities productive of the goods of the spirit and of civilization." (p. 23.)

"We now know what our ancestors did not know; that, under conditions of industrial production, and with the promise of [expanded capital ownership] fulfilled, it is possible for a whole society to be economically free and for all men to have the opportunity to live like human beings." (p. 25)

"The classless society of [expanded capital ownership/The Third Way] ... would be a classless society of masters not slaves, of propertied men able to enjoy leisure, not of propertyless men still engaged in toil."

"… [A] classless society [of propertied men and women able to enjoy leisure] fulfills the ideal of economic democracy. All its members would be economically free and equal, even as in a political democracy all men enjoy political freedom and equality. Just as the status of citizenship conferred upon all has achieved political democracy, so the individual and private ownership of capital by all households would achieve economic democracy. This ideal can become a practical reality to whatever extent an actual society is able (1) to reduce human toil to the minimum through a proper use of automation; (2) to approximate a universal diffusion of private property in the capital instruments of production; and (3) to educate its members to devote themselves not only to the wise management and productive use of their productive property, but also to the pursuits of leisure and the production of the goods of civilization." (p. 29)

"By property we mean that which a man possesses, together with a right to control it, use it, derive benefits from it, or dispose of it, in any lawful manner that he wishes." (p. 43)

"Innate property is that which a man possesses as part of his own nature, together with a right to its control. So far as property having economic significance is concerned, the only form of innate property is the productiveness that is inherent in a man's bodily strength and mental skill." (p. 43)

"Acquired property consists in all things external to a man's own person, which he not only possesses but also establishes his right to control." (p. 44)

"It is market demand which gives items of wealth their market value. It is the free play of the forces of demand upon the sources of supply that objectively and impartially determines the exchange value of whatever things are regarded as items of exchangeable wealth. But something further than a demand for particular goods or services is necessary for it to be regarded as an item of wealth rather than one of the goods of civilization which lies totally outside the sphere of wealth. It must be something which, by the common consent of those who own or furnish it and those who seek it, is regarded and treated as subject to purchase and sale, or exchange." (p. 49)

"[W]here there is no property, there can be neither justice nor injustice. The statement is usually meant to apply with complete generality to everything that belongs to a man by right - that which is his own or proper to him, whether innate or acquired." (p. 52)

"[E]ach independent participant is entitled to receive a distributive share of the total wealth produced; and that in each case the distributive share, to be just, must be strictly proportionate to the contribution that each makes toward the production of the total wealth by the use of his own property." (p. 55)

"The exchange value of goods and services is, in its very nature, a matter of opinion. Only where free and workable competition exists does the value set on things to be exchanged reflect the free play of the opinions of all, or at least many, potential buyers and sellers. Any other method of determining values must involve the imposition of an arbitrary opinion of value, an opinion held by one or more persons or an organized group; and such a determination of value, to be effective, must be imposed by force." (p. 58)

"Justice, in its most general formulation, imposes the following moral duties or precepts upon men who are associated for the purposes of a common life: (1) to act for the common good of all, not each for his own private interest exclusively; (2) to avoid injuring one another; (3) to render to each man what is rightfully his due; and (4) to deal fairly with one another in the exchange of goods and in the distribution of wealth, position, status, rewards and punishments." (p. 66)

"An industrial economy faces another problem, which is neither one of justice nor of charity in the distribution of wealth. It is the problem of maintaining a level of consumption adequate to ever increasing levels of productiveness. If it fails to solve this problem, an industrial economy is prone to cycles of boom-and-bust....Only the widely diffused purchasing power that represents a generally higher standard of living can solve this problem." (p. 66, Footnote 10)

"Every man has a natural right to life, in consequence whereof he has the right to maintain and preserve his life by all rightful means, including the right to obtain his subsistence by producing wealth or by participating in the production of it....Since a man who is not a slave can participate in the production of wealth only through the use of his own productive property, i.e., his own labor power or capital, the right to earn a living is a right to property in the means of production. The principle of participation, therefore, says that every man or, more exactly, every household or consumer unit must own property in the means of production capable, if employed with reasonable diligence, of earning by its contribution to the production of wealth a distributive share that is equivalent to a viable income." (p. 68)

"When the great bulk of the wealth is produced by capital instruments, the principle of participation requires that a large number of households participate in production through the ownership of such instruments." (p. 81)

"To assert that every man has a right to obtain his living by earning it is not ... the same as asserting everyone's right to a living wage. Under pre-industrial conditions, it might have been possible for those who had no property except their own labor power to have earned a living wage if their contribution to the production of wealth had been justly requited. But in an advanced industrial economy, in which most of the wealth is produced by capital and in which the ownership of capital is concentrated so that all but a few households are entirely dependent upon their ownership of labor for participation in production, it is apparent that labor-at least mechanical labor-would not earn a living wage if the contribution it makes, relative to that made by capital instruments, were justly requited; that is, if instead of being overpaid, the value of its services were objectively and impartially evaluated under conditions of free competition." (p. 81)

"The principle of participation entails a right to produce wealth in a manner consistent with the way wealth is in fact being produced, taking full advantage of the existing state of technology." (p. 82)

"If one wishes freedom and justice, the thing to be in a democracy is a citizen. As one cannot now effectively participate in democratic self-government without suffrage, so in the fully mature industrialism of the future it may be impossible to participate effectively in the industrial production of wealth without owning capital." (p. 86)

"The path the [expanded capital ownership] revolution will take faces in exactly the opposite direction from that taken by the communist revolution. It seeks to diffuse the private ownership of capital instead of abolishing it entirely. It seeks to make all men [capital owners] instead of preventing anyone from being a [capital owner] by making the State the only [capital owner]." (p. 103)

"If it was a great step forward in the history of man for the rise of civilization to permit a small class of free men to engage in the liberal pursuits of leisure and to advance civilization itself by their efforts, how much greater is the step that can be taken by our emergent mass society when it sees how to turn the twin institutions of democracy and [expanded capital ownership] into a school for the good use of the political and economic freedom they confer on all men alike." (p. 111)

"If we were not devoted to the institutions of political democracy, because through their intrinsic justice they afford all men the freedom and dignity essential to the pursuit of happiness, if we were not deeply imbued with the democratic faith in human equality, if we did not firmly believe that equality of opportunity in a truly classless as well as free society held out the promise of the fullest development of the potentialities of the human spirit-if these things did not constitute the ideal goal of our aspirations, we would be under no necessity to undertake the [expanded ownership] revolution. But given these ends, we have no other choice." (p. 138)

"[T]he establishment of [expanded capital ownership] as the economic substructure of democracy will produce for the first time in history the ideal classless society in which the whole mass of humankind will constitute a single class-one that is truly privileged and justly so." (p. 140)

"[U]niversal ownership by individuals of wealth-producing and income-bearing property, which is capital in an industrial economy, is needed as the economic basis for the universal possession of political rights and privileges which come with citizenship in a republic." (p. 142)

"The ultimate goal of [the Third Way] is not full employment on the level of subsistence work but rather the fullest employment of one's time in leisure work." (p. 145)

"The ultimate aim of [Expanded Capital Ownership/The Third Way], beyond the establishment of economic justice and freedom, is the enjoyment of leisure by all men in the major portion of their life's time....Only [Expanded Capital Ownership/The Third Way], by the soundness and consistency of its principles, aims at the right human result-the good life for all men." (pp. 146-147)

"Democracy and [Expanded Capital Ownership] are in themselves intrinsically desirable for the justice and freedom they establish as the essential conditions of a truly classless society. But establishing the conditions of such an ideal society will be a hollow triumph unless the human beings who live under such conditions put them to good use. Whether or not they will depends largely on whether our society, through the liberal education of all its members or through other means, can achieve a moral and intellectual revolution - one which leads human beings to put good institutions to good use." (p. 158)

"Even the best institutions do not operate automatically for the benefit of mankind. Their ultimate result is no better than the ethical goals or ideals men set themselves and discipline themselves to seek. Freedom gives men the opportunity to live well, and justice makes that opportunity equal for all. But neither guarantees that men will avail themselves of it for the highest development of which each is capable." (p. 161)

"There are two subordinate causes of concentration in the ownership of capital. One is itself a direct result of the greater productiveness of capital [than labor]: among the higher incomes of the economy, it is generally true that the higher the income, the higher the proportion that is derived from capital. The other cause is simply a well-known pattern of economic behavior: excluding the great number of persons in the low and lower middle income groups who account for no capital formation, the higher the income, the smaller the proportion that is spent upon consumer goods and services; or, what is the same thing, the higher the income, the larger the proportion that is normally invested in further capital formation." (p. 176)

"The concentration of the production of wealth in the hands of the few is inconsistent with participation in its production by all. This is but another way of saying that the production of most of the wealth by a small proportion of the households is inconsistent with a just distribution of income to all households. To the extent that all the households of an economy derive an income under conditions of concentrated capital ownership, the principles of charity or expediency (or both) must be operative." (p. 177)

"Our Founding Fathers accurately observed that the freedom of citizens lies in their individual possession of sufficient economic power to check the inevitably centralized political power of government. The application of their principles of free government in our modern industrial society compels the conclusion that the diffusion of privately held economic power-and this now means the broadly diffused private ownership of capital-is the only means of counteracting centralized political power. Hence the performance by government of its obligation to broaden the private ownership of capital is at the same time a guarantee of the separation of political from economic power and a guarantee of individual freedom." (p. 242)

Two-Factor Theory: The Economics of Reality
Louis O. Kelso and Patricia Hetter

"The sooner the world solves its economic problems, the sooner its inhabitants can afford leisure and peace and get on with the non-material things that are inherently important: the work of mind and spirit that is gloriously and uniquely human, the work that no machine can ever do." (Preface by Louis Kelso, p. xxi)

"The theory of [expanded capital ownership] introduces symmetry and logic into an industrial economy where the bulk of wealth is produced, not by human labor as under pre-industrial conditions, but by capital instruments. Its economic objective is the production and enjoyment of the highest level of affluence (humanly useful goods and services) for every family, consistent with optimum use of the economy's resources and productive power, and the desire of its people to consume. The political objective of [expanded capital ownership] is maximum individual autonomy, the separation of political power wielded by the holders of public office from economic power held by citizens, and the broad diffusion of privately owned economic power." (p. 8)

"Mass production implies mass consumption; it is illogical to build the industrial power to produce goods and services without building at the same time the commensurate economic power of families and individuals to consume the output." (p.9)

"All men want to produce the wealth they and their families wish to consume and enjoy; no one wants his livelihood to depend on the arbitrary will of others; everyone hates to receive charity; everyone despises a parasite." (p. 10)

"The [expanded ownership] revolution makes two assumptions about the good society. One is that its most important value is freedom. Any society seriously caring about freedom must structure its economic institutions so as to widely diffuse economic power while keeping it in the hands of individual citizens. Nor can freedom in an industrial democracy be long maintained unless the economic well-being of the majority is reasonably secure. Never in history has universal suffrage been built on a sound economic foundation.... Secondly, it is assumed that leisure is essential to a civilized definition of affluence. To venerate collectively what every intelligent man eschews individually, namely unnecessary toil for the goods of subsistence, makes no human sense.... [T]he totalitarian work state . . . has no place for whole men, only 'human resources' and servile functionaries." (p. 11)

"Experience shows that, as a general rule, human beings are incapable of judging the needs of others to be as great as their own." (p. 27)

"The human objective of economic production is the enjoyment of the products. The individual engages in production in order to entitle himself to a share of the goods and services thus created (or to the equivalent of his share in purchasing power) which he wants for the use and enjoyment of himself and his dependents. He is not interested in toil per se. His concern is to legitimate his right to consume." (p. 31)

"[T]here are two factors of production: the human factor (labor in all of its forms-intellectual and technical as well as manual), and the nonhuman factor (capital, defined as productive land, structures and machines). Although each factor produces wealth in exactly the same sense (physically, economically, politically and ethically), the part played by either in the productive process at any given movement and in each particular enterprise is determined by the current state and application of technology and by management practice." (p. 31)

"Laissez-faire economists pay lip service to capital as a factor of production, but they treat it functionally as something that mysteriously raises the 'productivity' of labor." (p. 34)

"All productive activity is a means to an end-human consumption and enjoyment." (p. 49)

"[T]he presence of the non-human factor in any form does not make the human factor more productive: it makes the combination more productive. If the price of both factors in this competition for the opportunity to produce is determined in reasonably competitive markets...the value of the human factor is reduced." (p. 59)

"A monetary system which in effect monetizes new capital formation under controlled conditions where top corporate and financial executive feasibility scrutiny is a prerequisite to the new capital formation coming into existence in each corporation, would be the first logical and totally flexible monetary system in history." (p. 95)

"[T]he proper goal of the economy is general affluence; for affluence is the product of capital, not labor.... (p. 138)

"While the moral convictions of individuals are important in the long run, it is institutions that determine the immediate course of events - particularly the institutions of finance.

Not an evil conspiracy, but defective financial institutions and the lack of alternative institutions have delivered us to the door of the total work state." (p. 163)

"The tenor of youth's discontent leads us to hope that in the rising generation the American founding fathers may have found their sons at last. If so, they and their counterparts around the world will begin to dismantle the dreary workhouses the elders have erected, and set about building, in their place, generally affluent leisure societies: the only environment in which man may live in freedom and peace." (p. 166)

Democracy And Economic Power
Louis O. Kelso and Patricia H. Kelso

"A basic truth is not invented but discovered. The more basic and universal it is, the more obvious it is apt to be and the harder to perceive, even though, like Poe's purloined letter, it lies in full view. Once found, its existence seems natural and inevitable. Everyone silently thinks, 'How could I have missed that?'" (p. xi)

"To work today means to work increasingly with and through capital." (p. xxi)

"[U]niversal capital ownership is not an option, but, just as Aristotle foresaw, a necessity." (p. xxi)

"You do not have to be a capital owner to be able to buy capital. Binary financing techniques open up capital ownership to those who are born without capital - most of the human race." (p. xxiii)

"Capital is a central part of the life support system of every post-industrial economy. Every family and every single individual needs to legitimately acquire and own a reasonable part of that life support system, so that the principles of free market economics will work as Adam Smith envisioned in a preindustrial era." (p. xxiv)

"Since affluence is generally the product not of labor but of capital, the economy must be structured so that eventually all households produce an expanding proportion of their incomes through their privately owned capital and simultaneously generate enough purchasing power to consume the economy's output." (p. 8)