For quite a few years now I have been advocating for a Revolution from the Center, a political revolution based on the principles of Concordian economics. Current events in Washington make this project rather urgent. Let us go over some key points.
The Dissolution of the Republican Party
Clearly, Trumpism has sounded the death knell of the Republican Party. The Republican Party has not been able to secure the reelection of Donald Trump. In the process it has split itself into two major factions: those who cater to whatever whims Donald Trump pursues at the moment and a conservative remnant that is faithful to the glorious tradition of Abraham Lincoln.
There is very little to say about the Trumpist faction. Sooner or later they will discover that Donald Trump is intensely dedicated only to himself.
The sooner they realize this simple reality, the sooner will they join those in the Republican Party who are faithful to the Lincoln democratic tradition.
Clearly, Trumpists are in charge of the party and they are not easily going to relinquish their control. Rather than engaging in an internecine all-losing war, Lincolnians might give some serious attention to the need to establish the Republican Party of Concord.
The Republican Party of Concord
The Republican Party of Concord will have to preserve whole its Republican tradition of fairness, trust, and social accountability. To achieve this goal, the Republican Party of Concord might want to sponsor the four economic policies advocated by Concordian economics.
As specified elsewhere, these policies are outlined in the following paragraphs.
To be assured of immediate success, Lincolnians might want to walk across the aisle and convince their colleagues to create, as soon as possible, the Democratic Party of Concord. A major intellectual effort for Democrats will be to adapt their social policies to the opportunities offered by the following Concordian economic policies.
To be assured of immediate success, a brave delegation of both Republicans and Democrats might want to walk into the Oval Office and respectfully offer President Trump this alternative:
National Policies to Recognize Rights and to Enforce Responsibilities
Fully expounded, four Concordian economic rights and responsibilities give birth respectively to four full blown national economic policies in the fiscal, monetary, labor, and industrial realm. For reasons that become apparent in the process, let us take them in reverse order.
From the Respect of Other People's Property to an Industrial Policy. We do not have an industrial policy today. Everything goes. As a result we have the Pac Man approach to industrial policy whereby the winner takes all. Thus, we obtain corporations that are too big to fail. The practices of the Pac Man Economy give rise, not to internal harmonious growth, but to zombie corporations that are "too big to fail." These ventures/vultures must be allowed to fail if they fail. To have a harmonious national economic development, we must prohibit all external mergers and acquisitions; corporations should be free to grow as large as they can through internal growth. I like to call this the Brandeis Rule.
What we have been attempting to form as an industrial policy is a congeries of efforts spanning a great latitude of fields and institutions. Automatically, what we do in monetary policy affects our industrial, commercial, and agricultural activities setting interest rates and determining the money supply unavoidably affects these activities. The panoply of agencies, from the Federal Trade Commission to the Interstate Commerce Commission, affect these activities. Even the determinations of the Food and Drug Administration have such an effect.
Dominating all these agencies, automatically, stands the power of the Anti-trust division of the U.S. Department of Justice. This is the agency that has the final say on the nature and composition of our agricultural, commercial, and industrial activities. This is the agency that has the final say on which mergers and acquisitions stand and which are prohibited. For a comprehensive look at this power, let us notice that this is the agency that determines the destination of organizations to become or not to become "too-big-to-fail."
"Too-big-to-fail" are organizations that are likely to be serially rescued by extraordinary infusions of money by the Federal Reserve System.
Trouble is, the Anti-trust division of the U.S. Department of Justice does not have a steady, objective policy impervious to external political and financial influence. Far from it. It is here that Concordian economics helps to provide a clear distinction between activities that ought to be permitted and policies that ought to be sternly prohibited.
To become clear and feasible, Concordian agricultural, commercial, and industrial policy ought to be applied progressively to the first, say, 100 largest corporations for one or two years and then be progressively enlarged to the next tranche and the next, until we reach the level of corporations that do business only within the limits of one state.
The largest corporations ought to be subjected to this policy: Internally, these corporations can grow as large as they can; external mergers and acquisitions ought to be prohibited in no uncertain terms. They should not buy other corporations, no matter how large or how small; they should not be allowed to be bought either. One or two years of observations will yield sufficient evidence whether this policy frees the great captains of our industry from looking outside their confines and looking behind their shoulders. They ought to look exclusively at the internal welfare of the organization.
Labor policy. As we have no industrial policy in the modern world, so we have no labor policy. Again, a congeries of agencies deal with labor policies, but they pay no attention to what is essential for labor to prosper. Labor policies are restricted to external constraints rather than internal ones. Most attention is focused on two goals: We pursue policies of labor unionization and high wages.
Unions, while essential in today's industrial organization, carry with them a considerable set of negative attitudes: feather bedding, resistance to mechanization, and political involvement are some of the characteristics that set them to work against "capital" rather than in collaboration with capital. Thus is the modern world split asunder.
The policy of high wages is involved in a mirage. Immediate benefits are destroyed by long-term negative effects: High wages invite competition, foreign and domestic, that destroys the goose that lays the golden egg. Work sites move to another region; they even move abroad. Workers stay put, now unemployed, without autonomous means of existence. In the meantime, once corporations raise prices, high temporary wages turn out to be a bane for people on a fixed income.
There is a much better labor policy, the policy of equity distribution. Wealth should be owned by the producers of wealth in accordance with the value of their contribution. Apart from favoring policies that enlarge the number of individual entrepreneurs, Employee Stock Ownership Plans (ESOPs) are ideal instruments to achieve this aim.
Union dues should no longer be tied to high wages but to the fair distribution of corporate equity.
Once the task of labor policy is shifted from the task of raising wages to the policy of equity distribution, an exceedingly bright future comes within our reach. The distribution of profits will be fair; the opprobrious policy of income distribution for top executives 200, even 300, times the wage of the average worker will become a sad memory of the past.
Even consumers can then be made an integral part of the corporation, by distributing a share of the profits of the organization in accordance with the amounts they have spent to purchase the product of the corporation. This is not wishful thinking. It has been practiced for generations by the Harvard Coop; it is steadily increasing under our very eyes. Consumers, after all, are an integral element of the web of relationships that keep the corporation afloat year round.
Once labor policy and economic growth are looked at this way, the introduction of robots will be welcomed. The ownership of robots will be apportioned fairly among those who create the robots.
Monetary policy. The Federal Reserve System (the Fed) is instructed today to achieve two goals on which it has only an indirect power: control inflation and favor full employment of our national resources. Concordian economics maintains that the Fed has control only over the creation and distribution of money. Therefore, it assigns to the Fed three tasks: 1. Create money only for the creation of real wealth; 2. Distribute loans among individual entrepreneurs, corporations with ESOPs and/or Consumer Stock Ownership Plans (CSOPs), and among public agencies with taxing power; 3. Issue loans at cost.
NOTE: If the Fed stops financing the purchase of financial assets and confines itself to fostering the creation exclusively of real wealth, zombie corporations that have been killed by forces of the market will not be long with us. Free markets will indeed become free markets. The old ideal of economics will at last be a reality.
Concordian economics also calls all public and private creditors to systematically destroy debts every seven years. They will destroy only a bunch of zeros; their relative economic position will remain intact as before the jubilee.
Fiscal policy. The complexity of the fiscal policy of today is due to an attempt to recover what has been legally granted to the oligopolists. Fiscal policy is considered after the operations of the economic process have been completed. What is not realized is that, by then, the play is over: Actors and even large part of the audience dissolve into the night; only kibitzers lounge in the isles hotly engaged in idle, wishful talk.
If instead we have a set of fair industrial, labor, and monetary policies that take care of a fair distribution of income and wealth while income and wealth are being created, then we realize the only fair tax is a tax on land and natural resources.
The complex implications of these policies become clearer when placed in the context, not of Keynes' or Hayek's writings, but the writings of four powerful American thinkers: Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso. Individually, their works do not stand; together they form a formidable fortress. The form an all-American economic policy.
Some Expected Effects
Among the many expected effects of Concordian economic policies three seem more important and urgent than others: The Federal Reserve System ought to shift its view from Wall Street to Main Street; if Main Street functions properly, Wall Street will prosper properly.
With these four economic policies functioning properly, all segments of the population will benefit fairly. MAGA People will no longer be the sacrificial lambs of the elites.
The roar for redistribution of wealth will be a noise of the past. Once Concordian economic policies are implemented, the distribution of income and wealth will have been achieved fairly and squarely. The affluent do not need to contribute one cent of their wealth to the exercise of economic rights and responsibilities.
About the Author
Carmine Gorga - see Wikipedia, Google Scholar, and Gravatar (a Globally Recognized Avatar). He is a Fulbright Scholar, president of The Somist Institute. In 1965, after a summer of intense intellectual struggle with the General Theory, Dr. Gorga changed one equation in Keynes' model of the economic system and found himself in a completely new intellectual world; this is the world of economic justice (not social justice) that existed before John Locke and Adam Smith. The transition to Concordian economics, greatly assisted by Professors Modigliani and Burstein, can be found in The Economic Process (2002), a book whose third edition has been annotatedagainby JEL in December 2017 (p. 1642). For the fullness of economic justice, the core of Concordian economics, see here and here. For a full understanding of Concordian economics, Gorga has gradually realized, we need to go beyond Individualism and Collectivism, toward Somism (men and women in the social context); from Capitalism and Socialism/Communism we need to go to Concordianism; then we need to pass from Rationalism to Relationalism. See www.TheRelationalUniversityOfGloucesterMass.org.