by Professor Robert Ashford, © 2000 Robert Ashford, reprinted with permission of the author.
1. Overview of binary economics
1.1. Capital and labor are “independently” productive: They have “independent” productive capacity (just as two workers have independent productive capacity even though they may cooperate or do their work “interdependently”)
1.2. Technological advance makes capital much more productive than labor
1.3. Capital has not only a productive, but also an independent (and very potent distributive relationship to growth.
1.4. Efficiency, justice and sustainable growth require an open private property system.
2. Three paradigm altering concepts are
2.1. productiveness vs. productivity, (“work done” and/or “productive contribution” vs. output per unit of input)
2.2. the binary private property system, and
2.3. the principle of binary growth.
3. The binary property system:
3.1. Private Property Principles: Participation; Distribution; Limitation
3.2. The binary property right: the right to acquire capital and to pay for it out of its pre-tax income on market principles, and then to receive its full net income indefinitely.
3.3. Market Rights vs. Welfare Rights
3.4. The Employee Stock Ownership Plan (ESOP) is a capital credit device
3.5. The binary infrastructure: An Open System of Corporate Finance
3.5.1. Constituency Trusts
3.5.2. Qualified Lenders
3.5.3. Capital Credit Insurance (private and public)
3.5.4. Central bank (Federal Reserve)
3.6. A new choice in law between two private property systems: Universal Acquisition rights vs. Concentrated, Exclusionary Acquisition Rights
3.7. A New Concept of Economic Democracy – defined in terms of universal, individual participation
4. The Principle of Binary Growth: Economies grow not only as a function of increases in productivity, investment, and technology, but also as an independent function of the distribution of capital acquisition and income on market principles.
4.1. Binary Growth vs. Redistribution and Inflation.
4.2. First Order Effect: Binary Growth
4.3. Second Order Effects:
4.3.1 greater human efficiency,
4.3.2. more rapid technological advance,
4.3.3. more efficient pricing of capital and labor,
4.3.4. lower transactions costs (including taxes),
4.3.5. more leisure, and
4.3.6. less alienation and hopelessness.
5. Important questions:
5.1. Are the first and second order effects additive or redundant?
5.2. What differences in growth and distribution will result within a binary economy?
5.3. Related issues:
5.3.1. Effects on Motivation, Industry, Productiveness
5.3.2. The Financial Decision-making Structure
5.3.3. Capital Credit Insurance (the FHA experience)
5.3.4. The Cost of Capital
5.3.5. Monetary Policy and Inflation
5.3.6. Tax Policy
5.3.7. The Government’s Role in a Binary Economy.
6. Burdens of proof and fiduciary obligations of investigation related to teaching, researching, advising, and advocating.
7. Given widely shared principles and values underlying higher education, binary economics should be widely taught.