© 1972 revised 2002 (later published in The Journal of Socio-Economics, Vol.30, pgs. 495-515)
In this paper a case will be made for a major transformation of any nation’s monetary system so that in the future new money will be created in ways that would unharness the full productive potential of society, while closing the growing wealth gap between the richest 10% and the rest of society — and to do so voluntarily without the need to redistribute existing wealth. Prices, wages and interest rates would be controlled under the proposed model of development completely by competitive market forces, not by the whim of central bankers, politicians or organized power blocs.
This paper will also aim at showing that Say’s Law of Markets — that supply can create its own demand and demand its own supply — can be made to work if capital credit is universally accessible to all. This new paradigm, first developed by Louis O. Kelso and later refined by Robert Ashford and Rodney Shakespeare would result in an asset-backed money supply that would provide sufficient liquidity to banks and other financial institutions for financing all or most of the new productive assets which are added each year to grow the economy.
While this author recognizes that both Karl Marx and John Maynard Keynes, and their many followers in academia, have rejected Say’s Law of Markets, this paper will point out how the binary economic model originally conceived by Louis Kelso refutes the criticisms of Marx and Keynes and offers a more sound moral and economic framework for promoting sustainable development within a market system. The Kelso model — recognizing both labor and capital as direct and interdependent sources of mass purchasing power–would be structured to create a more just and more productive system than any market system in the history of modern civilization.