THE PROBLEM OF SOCIAL DEVELOPMENT
1. People everywhere are becoming increasingly aware that the gap is widening between the rich and the poor nations of the world. This gap is also widening between the rich and the poor within all nations of the world. This gap and the underlying causes of this gap are now appropriately being addressed by the various drafts of the United Nations Document on Social Development.
2. People everywhere are interested in what constitutes authentic, tangible and sustainable development. This revised draft of the U.N. Document on Social Development begins with the premise that "Social Development" consists in the advancement and empowerment of the entire person—and of all persons—economically, socially, politically, culturally, intellectually and spiritually.
3. The questions remains, what must be done to promote real development? Given that 1994 has been called "the Year of the Family" in recognition that the family is the fundamental unit of any society, what can be done to strengthen the families and family life in all nations? By addressing these questions, we can begin to understand better the linkage between the population issue and development.
4. Conventional approaches to social development, as reflected in all earlier drafts, are based on either the world-view of socialism, that of capitalism, or some unstable mixture of these two approaches. But is there an alternative to the wage and welfare systems of capitalism and socialism—a true Third Way?
Social Development from the Perspective of the Third Way
5. Both socialism and capitalism concentrate economic power at the top. This strips the average citizen of most, if not all of his economic independence. To the disenfranchised citizen, it makes little difference that under capitalism the concentration is in private hands and under socialism the concentration is in the hands of the state.
6. Both systems are excessively materialistic in their basic principles and overall vision. Both, in their own ways, degrade the individual worker. Both bring forth economic systems which not only ignore, but hinder, intellectual and spiritual development.
7. Amalgams of the two systems, as in America's so-called "mixed economy" or the Scandinavian Welfare State model, differ only in their degree of social injustice, corruption, economic inefficiency, human insecurity and alienation which permeates each level of class-divided societies. What then would be the true "Third Way" for moving toward a freer, more just and economically classless society?
8. Most of the schemes sold by Western experts do not approach the problem of transforming socialist, state-controlled economies from the logical framework of a Third Way, and thus repeat the mistakes of the past. One such proposal was touted as a kind of "Marshall Plan" for the former Soviet Union. It was geared toward pumping an estimated $30-$100 billion of foreign money each year into the transforming economy of the CIS, promoting a public-sector wage system that would ensure every worker a wage packet in return for his labor.
9. Another plan, coming out of Liberal American Academia, advocated a capitalist brand of state socialism, where confiscatory progressive income taxes would "rob from the rich and give to the poor," thus ensuring a handout for every citizen, regardless of his efforts or the demands of justice.
10. Each of these approaches commits a fatal error. The "Marshall Plan Redux" implicitly limits the ownership of productive assets to a tiny elite of wealth accumulators—the nomenklatura of the old order, or faceless foreign owners of capital. Such a plan ensures that most, if not all, workers receive income only from selling their labor, in direct competition with advancing technology and an expanding global work force.
11. This ultimately reduces the worker merely to one more productive resource, disconnected from ownership rights in the labor-saving technology which accounts for most of the world's economic growth. The economically disenfranchised worker can then be purchased for as low a price as possible, and forced into unemployment whenever the owners decide to relocate their plants to places where labor rates are cheaper, or to replace people with machines. This approach also turns the country receiving such aid into a giant drug-addict, dependent upon regular infusions of foreign capital to keep the economy staggering forward.
12. Capitalism and socialism, as they have operated historically, violate traditional moral rights that owners of productive property have in the fruits of production. This is done by treating property incomes as "unearned" and even "stolen from workers." Thus the state morally justifies its intervention into the economy, taking from owners any "excess" income and redistributing it among non-productive non-owners, to whatever extent the redistributors think necessary to maintain social order. Such redistribution, unfortunately, tends to increase social conflict and leaves more economic power in the hands of the state than is healthy for achieving genuine social and economic justice for the many, not just the few. However, simply saying that capitalism and socialism have violated the rights of owners of productive property says nothing until property itself is defined.
Property
13. Many people erroneously equate property with material objects, such as land, structures, machines, tools, things. In law, however, property is not the thing owned but rather the relationships an "owner" justly acquires (as a result of access to credit or previous creative activity) with respect to things. Private property is a set of rights, powers and privileges that an individual enjoys in his relationship to things. Under the law, these include the rights of (1) possessing, (2) excluding others, (3) disposing or transferring, (4) using, (5) enjoying the fruits, profits, product or increase, and (6) of destroying or injuring, if the owner so desires. These rights are only as effective as the laws which provide for their enforcement.
14. English common law, adopted into the fabric of American law, recognizes that the rights of property are subject to limitations that (1) things owned may not be so used as to injure others or the property of others, and (2) that they may not be used in ways contrary to the general welfare of the people as a whole. As a functional matter and in the final analysis, property in everyday life is the right of control.
15. Next to the state itself, the corporation is one of civilization's greatest social inventions. In the modern world, the most important instrument for organizing private property rights in the means of production takes the form of corporate equity, represented by shares of common stock. These shares allow many owners to share individually and "jointly," not collectively, in the ownership, risks and profits of a modern corporation. The corporation in turn is a convenient legal vehicle which owns "collectively" the land, machines and other assets it needs to produce and market goods and services in the global marketplace. While individuals may own shares in a corporation, no shareholder has any legal title to the machinery or other assets owned by the corporation itself.
16. Joint or share ownership provides each shareholder his own definable private property stake in the corporation, and thus decentralizes economic power. In contrast, collective ownership of an enterprise offers no definable stake for individual owners, and thus concentrates power in whoever controls the collective.
17. Property in the means of production is the primary social "link" between a particular human being—the owner, partner or shareholder—and the process of producing and distributing wealth. Property determines who has the right to share in profits (the "wages of ownership"), as well as the ultimate risks and responsibilities of ownership. Assuming that economic values are set democratically and freely in a competitive marketplace, and that unjust barriers to participation in work and ownership are lifted, property incomes become the key to distributive justice. As declared by the late Salvador Araneta, a scholar and University President, a lawyer and a business statesman, a political scientist whose theoretical knowledge was sharpened by two stints as delegate to both the 1935 and the 1973 Constitutional Conventions of the Republic of the Philippines,
For America and the Philippines to become bastions of true democracy, they must correct, not the effects of the capitalist system, but its very fundamental defect. Capitalism is for, by, and of a few people. It is not economic democracy. Daniel Webster, in the Massachusetts Convention, had said: "Power naturally and necessarily follows Property." And Benjamin Leigh, in the Virginia Convention, made a more forceful statement:
"Power and Property can be separated for a time by force or fraud—but divorced, never. For as soon as the pang of separation is felt…Property will purchase Power, or Power will take over Property."
Thus, real political democracy cannot exist without economic democracy.
(Bayanikasan—The Effective Democracy For All, AIA Press, Manila, Philippines, 1976, pp. 57-58.)
18. This understanding of power is acknowledged in Article 17(1) of the United Nations Declaration of Human Rights, with the statement that,
Everyone has the right to own property, individually as well as in association with others.
This emphasis on the inalienable rights of humanity is even more forcefully stated in Section One of the Virginia Declaration of Rights, written 15 May 1776 by the Father of the American Bill of Rights, George Mason:
That all men are by nature equally free and independent and have certain inherent rights, of which, when they enter into a state of society, they cannot, by any compact, deprive or divest their posterity; namely, the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.
19. This emphasis is not reflected in the draft document on social development issued by the UN, and represents a major weakness of that document. Other weaknesses include 1) an over-reliance on the mechanism of the state to bring about social development instead of simply acting as the agent to remove barriers to full participation in the common good by all, 2) reliance on artificial job stimulation and creation to achieve a secure and adequate family income, which approach impedes genuine social development and creates an enslaving dependency status on the part of the job holder, and 3) a failure to respond adequately to the question of individual and family sovereignty and power, both economic and political, as opposed to that of the state.
Fundamental Human Rights
20. There are elements of individual and general human dignity, power and sovereignty that must be taken into account when discussing a program of social development. There must be an emphasis on persuasion and protection of basic rights as opposed to coercion of individuals and families by the state in order to bring about change. A reliance on the public sector must be de-emphasized, with the private sector favored as the primary vehicle for social and economic development. Rather than a restriction of the rich and pulling them down to the level of the poor, the greatest efforts must be made to ensure that the poor have the opportunity to participate in the rights currently enjoyed only by the rich, not in restricting the exercise of rights by the rich. There must be an essentially new system of wealth distribution, not a system of wealth redistribution through the mechanism of the state, which should, ideally, own nothing. It must be recognized that government is the servant, not the master of the people.
21. A cornerstone of an acceptable social order is justice. It is through the functioning of justice that all people gain access to the goods of society (such as education, social, economic and political activities, and expressions of cultural diversity), participate in the common good, maintain human dignity and protect basic human rights.
22. While a just social order is of primary importance, there has been little or no recognition of what justice is. Often confused with the lowest and most basic form of charity, almsgiving, justice must be clearly defined before any agreement can be reached as to the nature of the just social order that is required. Justice is the mandate to give everyone his due. Aristotle in his Ethics divided justice into two parts: Commutative justice and distributive justice. The first deals with exchanges of equal or equivalent value between individuals or groups of individuals. The second deals with a distribution or division of something among various people interacting together in shares proportionate to what each one deserves. These virtues have an impact directly on the behavior of individuals, not institutions.
23. It has been pointed out that "social virtues" are separate but complementary to the "individual virtues." While individual virtues describe the moral quality of our individual actions, social virtues describe the moral quality of our institutions. For example, individuals may act justly within unjust institutions, and vice versa. Thus, "social justice" focuses on human institutions and the principles of justice which guide their formation, development, and restructuring. Social institutions affect the behavior of individuals but they are not human beings themselves.
24. Social justice is the broader concept and encompasses economic justice. Social justice is the virtue which guides humanity in creating those organized human interactions called institutions. In turn, social institutions, when justly organized, provide the individual with access to what is good for the person, both individually and in associations with others. Social justice also imposes on each individual a personal responsibility to work with others to design and continually perfect institutions as tools for personal and social development.
25. Economic justice, which touches the individual person as well as the social order, encompasses the moral principles which guide humanity in designing economic institutions. These institutions determine how each person earns a living, enters into contracts, exchanges goods and services with others and otherwise produces an independent material foundation for his or her economic sustenance. The ultimate purpose of economic justice is to free each person to engage creatively in the unlimited work beyond economics, that of the mind and the spirit.
26. Justice is not satisfied by having the state or supranational organization confiscate the surpluses of the wealthy, whether of nations or of individuals, for redistribution among the poor. This confuses justice with charity. No one should be due a decent standard of living from the state. In cases of emergency and dire necessity the state may make a redistribution out of the surpluses held by the wealthy if the wealthy have not already done so on their own individually, but to collect and redistribute anything more than a bare subsistence is unjust, as is permanently embodying redistribution as the basic economic mechanism by which people gain their incomes.
27. Providing for those who are unable to hold a wage-system job for reasons such as age, disability or incompetence can be done through the mechanism of an independent non-governmental trust. Family members, court-appointed representatives or financial institutions can serve as trustees for those who are unable to perform labor, and act as agents for the beneficiary of the trust so that productive assets can be acquired and income generated so that anyone can become financially independent and free from dependence on the social services provided by the state, thus allowing full participation, even if by proxy, in the common good.
28. Humanity is not engaged in a search for an amorphous "common good," but can participate in a specific thing. Every higher institution depends on all those below it for its effectiveness, and every lower institution depends on those above it for its own proper place in the common good. It is precisely this whole vast network or institutions which is the common good, on which everyone depends for the realization of individual personal perfection, of a personal good. The common good is something which each person possesses in its entirety, like light, or life itself. When the common good is badly organized, when society is socially unjust, then it is each individual's own share of personal perfection which is limited, or which is withheld entirely. As the common good consists of that whole vast complex of institutions, from the simplest natural medium of a child's life, to the United Nations itself, each of these institutions from the lowest and most fleeting natural medium to the highest and most enduring organization of nations is the common good at that particular level. Therefore everyone, from the smallest and weakest child to the most powerful ruler in the world, can have direct care of the common good at a personal level. The common good can be directly attained through the mechanism of participative justice.
29. Commutative and distributive justice deal with what is due to a person on an individual basis. Participative justice deals with justice on a social or institutional level. It is concerned with what the individual has the opportunity and means to acquire at the present and in the future while acting within a particular institution. Participative justice can be viewed as the social justice aspect of the individual virtue of distributive justice, laying the groundwork for the unrestricted functioning of distributive justice on a social basis within the common good. No discussion of distributive justice makes sense without mentioning participative justice, since genuine distributive justice must always follow participative justice.
30. Justice is satisfied by removing barriers to participation in the common good. These barriers would include social, legal, cultural and institutional forms and structures that selectively deny rights to individuals or groups. Since part of the common good is the right to own productive assets in order to generate a living income, "participative justice" involves guaranteeing access to the means to acquire and maintain those assets. This means everyone has the right to use capital credit to purchase self-liquidating assets, as well as to retain ownership of those assets once they have been acquired.
Four Pillars of an Economically Just Society
31. A wage system orientation ignores one or more of the minimum essential principles for building a more just economy. Leaving out any one of these "four pillars" weakens the entire structure of the economy and leads to eventual collapse of any society. The four pillars of a genuinely economically, and thus politically, just society consist of:
- Expanded Ownership of Productive Assets.
- Limited Economic Power for the State
- The Restoration of Free And Open Markets
- The Restoration of Private Property
Pillar One of an Economically Just Society:
Expanded Capital Ownership
32. The goal of a program of expanded capital ownership is to promote widespread citizen access to capital ownership, creating new wealth accumulations for the many without taking existing accumulations of wealth from the few currently rich. This is achieved through the democratization of productive credit, which is used for financing growth through ownership-expanding mechanisms, institutions, and laws.
33. Expanded capital ownership decentralizes economic power and profit sharing to each citizen as the principal means of securing fundamental human and political rights, and as the ultimate check against the potential abuse of power by the state or by the majority against minorities.
Pillar Two of an Economically Just Society:
Limited Economic Power of the State
34. Limiting the economic power of the state ultimately involves the goal of shifting ownership and control over production and income distribution from the public to the private sector, from the state to the people. In order to shift primary power over the economy from the state to the citizens themselves, the economic power of the state should be specifically limited to:
- Encouraging growth and technological innovation, and policing abuses within the private sector;
- Ending economic monopolies and special privileges;
- Lifting barriers to equal ownership and profit sharing opportunities, especially using its monetary powers to provide widespread access to productive or capital credit;
- Protecting property, enforcing contracts and settling disputes;
- Preventing inflation and providing a stable currency;
- Promoting democratic unions to bargain over worker and ownership rights;
- Protecting the environment and conserving non-replenishable resources; and
- Providing social safety nets for human emergencies.
35. Within these limits the state would promote economic justice for all citizens. Coincident with this objective would be the goal of reducing human conflict and waste and increasing economic efficiency and creation of new wealth. This would increase total revenues for legitimate public sector purposes, thus reducing the need for income redistribution through confiscatory income taxes and social welfare payments.
Pillar Three of an Economically Just Society:
Restoration of Free and Open Markets
36. The goal of the establishment and maintenance of free and open markets is to restore free and open markets for determining just prices, just wages, and just profits. This is done by gradually eliminating all state subsidies, barriers to free trade and free labor, price and wage controls, and all non-voluntary, state-controlled or collectivist methods of determining prices, wages, and profits.
37. The result of genuinely free and open markets is to decentralize economic choice and empower each person as a consumer, a worker and an owner.
Pillar Four of an Economically Just Society:
Restoration of Private Property
38. Through the reform of laws which deny shareholders the original rights to participate in control and receive all profits proportionate to their property stakes, personal rights of property in the means of production are restored, particularly in corporate equity.
39. The result of the restoration of private property is to secure personal choices and economic self-determination. It re-establishes the economic equivalent of the ballot for re-creating an effective economic democracy within a competitive free enterprise system. It links income distribution to participation by new owners of new wealth.
40. While the language of the UN Draft Document on Social Development insists that human rights are to be respected, the most fundamental security for rights is not respect, but protection and guarantees. Certain rights are protected and guaranteed in the sense that in relations between individual human beings, each and every human person in a just society should have access to the same rights and privileges as all others. Some rights are inalienable in the sense that certain of them, such as life, liberty and access to property, cannot be taken away by other persons, associations, or a just state, not even by a majority vote. Rights are, however, limited in the sense that no one may exercise a right to the harm of others or of the common good.
41. In the area of morality, an individual may be said, in strictly human terms, to have a right to engage in activities which others regard as morally reprehensible. As long as such activities do not infringe upon the rights of others or harm the common good, the individual must be free to engage in those activities. However, he may not attempt to coerce others to engage in those activities, or seek to use the power of the state to force others to support his activities, including the levying of tax monies to be used in such support.
42. The view that the state is the first resort in bringing about social development and enhancement of human dignity is absolutely rejected. An emphasis on state control, whether of property, investment, education, charity, family planning or livelihood is completely unacceptable. Control by the state soon assumes the aspects of control for the sake of control. An emphasis on subsidiarity results in an insistence that the social unit closest to the individual exercise whatever control is to be exercised, and that more remote organizations, such as the state and other units of government, serve and assist the organic social units of society such as the family and the individual in exercising direct control over their own lives and property without usurping that function.
Population and Social Development
43. The growth of the world's population in the twentieth century is not the result of excessive reproduction, but of progress in health care and the growth of the world's economy due to significant technological breakthroughs. Although fertility has increased in some countries, decreases in fertility have generally overtaken increases. The real reason for population growth is a decline in mortality rates. Rates of fertility, birth, death, growth and migration, population density and demographic structures can be totally different, depending on the continent, country or region.
44. Anti-birth policies are costly and have not reached the degree of effectiveness desired by their promoters. Billions of dollars are spent annually to encourage people to reduce birth rates, but without a decisive effect on demographic changes. This money could perhaps better be used to promote social and economic development.
45. There is no proven theory that world population growth is continuous. Epidemics, wars, disasters and changes in human behavior patterns all effect population growth. Instead of heralding population increases as a sign of progress due to a drop in mortality rates, many anti-birth advocates use anticipated population growth to provoke fear and to advocate and fund programs that result in the breakdown of the family.
46. Population programs should instead aim at the empowerment of men and women, especially the poor. A positive and humanistic approach to the population question would leave decisions over family size within the family, not to be determined by government coercion or economic necessity, but rather by personal moral judgements of the family's own capacity to give birth and to offer a loving environment for each child and to nurture each child to the fullest extent of his or her human potential. In attending to the economic requirements of family life, society should create a positive environment for meaningful work and meaningful ownership opportunities, aiming at achieving adequate and secure incomes for each family within the emerging global marketplace. This is the aim of the Third Way to Social Development.
47. To achieve effective social development, beyond strengthening the family, programs should be developed for building livable and sustainable, "new communities" in rural and urban areas where poverty is endemic. Dehumanizing and unjust cultural environments retard individual and social development, but by building economically self-sufficient families and liveable communities, individuals can be inspired to live creative and productive lives. The Third Way would encourage people who live in inner-cities and poor rural areas to work together to create local growth strategies in which every worker and resident would be afforded the right and effective means to participate personally in capital ownership accumulations, in enterprise profits and in local decision making.
DRAFT PROGRAM OF ACTION
1. The World Summit for Social Development, coming on the eve of the fiftieth anniversary of the United Nations, presents an historic occasion for the international community as a whole to examine fundamental social and economic concerns that are common to humanity, to open a new era of international cooperation, to reaffirm faith in the dignity and worth of the human person, and to provide a new expression of the self determination of the peoples of the world "to promote social progress and better standards of life in larger freedom."
2. The World Summit builds on the outcomes of many United Nations conferences and international years.
3. Actions to address the three central problems of the World Summit—poverty, unemployment and social disintegration—must integrate social, economic, environmental and cultural concerns. Social development programs and objectives should be central to economic and sectoral decision making; economic policies should respond to social objectives; structural changes should contribute to overall social development; and, social policies and programs should foster sustainable development.
4. In order to fulfill the commitments and implement the principles enunciated in the Declaration of the Summit, we agree to concentrate our policies in the years ahead on the objectives and actions outlined below in this Program of Action. In this regard:
- We call upon all main actors of social development—governments, regional and sub-regional organizations, the international community, the private sector including employers, workers and their unions and associations, non-governmental organizations, global enterprises and financial institutions and other institutions of society—to work together and fulfill their responsibilities;
- We recognize the value of successful experiences and innovative approaches within the diversity of national conditions;
- We affirm the growing importance of international cooperation and mutual assistance and decide to strengthen the United Nations into a major influence for economic and social progress.
I. AN ENABLING ENVIRONMENT
5. Today's social environment dehumanizes the poor. The new thrust of transformation must be aimed at creating an enabling environment, one that rehumanizes the poor, one that provides an avenue for real self-determination and dignity for the poor. By an "Enabling Environment" is meant a social, economic and legal arrangement of society wherein barriers to full participation in the common good by all people are removed. This includes securing inalienable human rights, such as the rights to life, liberty and the means of acquiring and possessing property. Fundamental to protection of rights and the participation in the common good by all is the institution of private property, wherein each individual and family can gain their own source of economic and political independence and security.
6. This brings in the issue of the proper and legitimate role of the state. The state, as one of the most important creations of civilization, was never designed to be a producer of wealth. Part of this is that the state also does not function as an effective distributor of wealth, or, in modern times, as an effective redistributor to the poor of wealth confiscated from the rich. It is realized that the temptation in the face of economic problems is simply to pass a law to force people to act in ways that the state views as desirable. However, this introduces divisions and generally results in the exact opposite of what was intended. People become further encumbered with a greater and greater burden of complex and often contradictory laws and regulations; families, voluntary associations, and local communities become atrophied in their traditional responsibilities; and gradually the state itself becomes overloaded and dysfunctional.
7. It is the nature of the state to be a monopoly—a monopoly over society's instruments of coercion, wielded by the police at the local level and the armed forces at the national level. This monopoly makes government at any level an inherently dangerous social institution. Since the state is arguably the only legitimate monopoly, its power must be subject to checks-and-balances and democratic accountability when it rules "in the name of the people." In a democratic social order, real sovereignty is vested in the people. The state is the servant of the people and acquires its powers only as a grant delegated from the people. Yet, the ultimate sovereignty of every person can be maintained only if power—particularly economic power—is kept directly in the hands of the people, both as an inherent right and as a safeguard and protection against their own rulers. Without property and the full exercise of the rights of property, the individual remains essentially powerless, economically and otherwise, dependent on those who control his and his family's subsistence.
8. Limiting the economic power of the state does not mean encouraging anarchy. Rather, it involves creating a positive environment for private sector investment and entrepreneurship, linking workers and entrepreneurs to incentives set by competitive market forces, protecting property rights, ending state monopolies, special privileges and trade barriers, policing fraud, protecting the environment, promoting broad participation in long-range planning, encouraging productive uses of credit, and lifting the barriers for full economic participation and empowerment among all citizens. It also confirms the principle that the best government is the one that governs the least.
II. OBJECTIVES OF SOCIAL DEVELOPMENT
9. Objective 1: To give the highest priority, at all levels of policy makings and action, to social progress and the betterment of the human condition.
- To manage the process of social development in a manner that enhances its benefits for each individual human person;
- To create patterns of development that, in the context of the commitment of all nations to enhance the dignity and personal sovereignty of the individual and the family, reduce economic and political disparities, promote an adequate and secure income by individuals and families, equity and social justice and protect basic human rights;
- To ensure as far as possible the satisfaction of basic needs and access to basic services required for human dignity;
- To focus national and international strategies and policies on respect for the individual and the family and basic human rights rather than on purely economic issues;
- To address problems threatening individuals, groups and entire societies on a global basis, through the solidarity and mobilization of all concerned, and with additional resources, beginning with the level where the area of concern most strongly affects the individuals, groups and societies involved;
- To change the deep-rooted social, economic and cultural patterns of conduct which perpetuate the gender discrimination that exists in all societies by ensuring effective access by persons of either sex to significant opportunities to own and control wealth-enhancing assets;
- To eliminate the causes of migration through development, and to ensure the freedom of movement and the right to leave one's country and enter another;
- To recognize the specific problems of countries which, for reasons of low economic development, conflicts of various kinds and transition from one political system to another, are in need of effective assistance from the international community at this point in human history.
10. Objective 2: To create a favorable economic environment at national and international levels.
- To improve the functioning of the international economy towards more equitable and sustainable patters of development;
- To mobilize, beginning at the individual and family level and up through the national level, human and financial resources for social development;
- To reconcile the search for equity and the search for efficiency in the design and implementation of all national and international policies;
- To encourage international trade, promote free and open markets and the elimination of trade barriers, and to facilitate access by all to ownership and profits of advanced technology within new and growing enterprises serving global markets;
- To forgive existing and discourage future non-productive debt of developing countries and reduce productive debt to a level that would allow sustained social and economic development;
- To pursue actively alternative ways of securing macroeconomic stability, efficiency and the achievement of social goals, especially by means of empowerment of the individual and the family through access to productive property, generate new work opportunities through faster rates of private sector growth, and to integrate social objectives into the design and implementation of structural adjustment programs;
- To replace as far as possible the coercive redistribution of current wealth embodied in many social programs, with gainful employment and effective widespread access to ownership and profits from income producing property, maintaining a social safety net only for those unable to take advantage of ownership and employment opportunities for whatever reason, and to finance the national economic development of transforming countries by financing feasible development projects through the democratization of productive credit—a uniquely "social good"—thus reducing the dependency of developing countries on the past savings accumulations of wealthy countries;
- Encouraging developed countries and lenders to use existing savings pools to provide reserves for commercial credit default insurance, thus leveraging the amount of productive credit which can be made available for stimulating private sector growth linked to expanded ownership opportunities.
11. Objective 3: To create a favorable political environment.
- To promote human dignity, responsibility and solidarity at the individual level in all cultures and institutions of society; to practice tolerance and respect for diversity and pluralism;
- To protect human rights and fundamental freedoms;
- To recognize the legitimate roles of the individual, the family, the business corporation and the state in social development, and to ensure complementarity between those roles, market incentives and mechanisms, and the contributions of various institutions of society;
- To empower individuals and families with economic and thus political power so as to encourage democratic accountability and transparency, to discourage corruption at all levels and in all institutions of society, and to develop the civic spirit required for social progress and development;
- To avoid resorting to violence and to reduce at the world level resources and technology currently used for military purposes in order to allocate such resources to productive ends, thus reducing or eliminating the need to provide additional financing out of inflationary monetary policies, budget deficits, and non-productive diversions of past accumulations for social development.
12. Objective 4: To reduce and eradicate poverty in all countries through concerted strategies involving individuals, communities, civil society, governments and the international community.
13. Objective 5: To ensure that people living in poverty have access to whatever productive credit, ownership and job opportunities and resources can be made available to enable them to escape from poverty and to participate in and contribute to the development of their societies.
14. Objective 6: To ensure that people living in poverty have access to and control over the social services they need to escape from poverty, to expand the scope and quality of social services to prevent people from falling into poverty, and to empower the people with the means of earning sufficient funds to pay for such services for themselves.
15. Objective 7: To ensure the protection of people vulnerable to poverty and deprivation, the support of people who cannot support themselves, and relief and rehabilitation for people impoverished by disaster or conflict.
16. Objective 8: To declare and pursue, as a major goal, active policies to promote full, productive and freely chosen employment in ways that lift workers into ownership and profit sharing opportunities.
17. Objective 9: To develop a broader concept of productive work, and to recognize the broad range of activities in which people engage to sustain their livelihoods and serve their communities.
18. Objective 10: To develop the creation of productive employment and expanded capital ownership as the two central objectives and explicit aims of macroeconomic policies and to reinforce international cooperation to that effect.
19. Objective 11: To develop, select and adapt at the country level a mix of technologies compatible with national resource endowments and aimed at encouraging maximum rates of private sector growth and a zero rate of inflation in order to encourage more equitable share of ownership and profits from that growth and meaningful work opportunities.
20. Objective 12: To enhance the opportunities for all enterprises, including small- and medium-sized, to be created and to grow.
21. Objective 13: To improve the efficient and non-discriminatory operation of labor markets, with a view to enhancing the overall quality of employment and enabling workers to move from low productivity to better quality jobs.
22. Objective 14: To develop and implement a broader conception of work and employment.
23. Objective 15: To reduce substantially the unemployment of groups of people with special needs.
24. Objective 16: To strengthen the enforcement and improvement of worker ownership and empowerment, to improve the quality of working conditions that do not meet minimum standards in full respect of ILO Conventions, and to upgrade worker opportunities to share in ownership, profits, decision-making, and job opportunities.
25. Objective 17: To build equitable and inclusive societies based on human dignity, social justice, basic human values and common interests, and allowing the voluntary expression of cultural diversity.
26. Objective 18: To eliminate discrimination in all its forms and to achieve social integration based on equality of opportunity, respect for human dignity, and empowerment for every person and family.
27. Objective 19: To ensure universal access to basic education and literacy and equal access to advanced education, particularly for women and girls, to mitigate existing social inequalities.
28. Objective 20: To strengthen the social integration function of government by making public institutions and services more accessible and responsive to all.
29. Objective 21: To expand the role of the organizations of civil society and to facilitate interactions between individuals, social groups, non-governmental organizations and governments.
30. Objective 22: To ensure the integration and participation of disadvantaged and marginalized groups in social, economic and political activities while responding to their specific needs.
31. Objective 23: To ensure that young people have opportunities to realize their potential and to play a full and productive role in society.
32. Objective 24: To promote the integration of documented migrants into host societies and to eliminate involuntary migration.
III. REDUCTION AND ERADICATION OF POVERTY
33. Poverty exists in all countries and in various forms. Best defined as lack of access to the means to gain an adequate and secure income for the individual and the family, poverty has its origins in social, economic, legal and political structures which erect barriers to full participation in the common good by all, male and female, adult and child. The effort to eradicate widespread and epidemic poverty should focus primarily on lifting barriers and equalizing participatory opportunities for economic self-sufficiency for the most disadvantaged and vulnerable groups. Genuine equalization of opportunity will provide a preferential option for the poor, who by definition are the most deprived of opportunity, power, status and privilege.
34. The elimination of poverty, the promotion of adequate and secure incomes, and secure access to justice by all, is an ethical, political and economic responsibility of individuals, families, communities, civil society, governments and the international community. People living in poverty have the right to access to social goods, the infrastructure of civilization and the common heritage of man, in order to improve their own conditions of life, gain personal economic self-sufficiency and acquire the means to work together with others for the common good of their societies. Denying individuals the right to develop their personal potential to whatever degree they decide meets their personal aspirations and needs represents a degradation of the human condition and a waste of human life itself.
35. This brings in the question of population growth. Population growth is particularly high among people living in poverty and in the poorest countries. Of the approximately 90 million people added to the world's population annually, perhaps 30 percent or more are born into poverty. Direct allocation of scarce resources to efforts to slow or eliminate population growth are counter-productive and divert those same resources from the individual and social economic development which, evidence suggests, brings about a stabilization or decrease in the size of the population, as witness the below-replacement birthrate in highly-developed Europe. It is a necessary element of personal sovereignty, responsibility and authority that the mother and the father be empowered to make the decision as to the size of the family, without coercion or punitive measures on the part of the state, the community, or any other social unit.
IV. PRODUCTIVE EMPLOYMENT AND THE REDUCTION OF UNEMPLOYMENT
36. Job creation for the sake of job creation is counter-productive, and is simply a convoluted form of redistribution if the jobs are not market-generated or needed in the production process. Such artificially created jobs degrade the dignity of labor and dehumanize the worker. Through a program of expanded capital ownership, however, wealth-producing jobs are created and full employment can be achieved through high rates of capital growth supported by more widespread profit distributions. More labor would be drawn in by this revised economic equation for a social market economy, not because the jobs must be created for political reasons or as a means to redistribute income.
37. The Capital Homestead Program, as outlined below, represents one concrete proposal for moving toward the long-range vision of the Third Way. The Third Way itself embodies a moral philosophy and evolutionary process for transforming our institutional environment—our legal, financial, cultural and moral systems—to improve the quality of life for every person.
38. In striving to "make every worker an owner," the Third Way recognizes that by nature every person is a worker. Under the wage system framework, the concept of "work" has been stripped of much of its dignity, consigned only to that portion of human endeavor dealing with "making a living." In its larger context, however, work involves physical, mental and spiritual forms of human activity, from manual labor to meditation.
39. Within the paradigm of the Third Way, the highest form of work is not economic labor, but unpaid "leisure work"—work done for its own sake, the work of building a civilization and a society in which every person's potential can flourish, the kind of work which no machine can perform. Throughout history, creative work has mainly been engaged in by individuals with independent incomes, those who were supported by a patron or by someone else's labor. The Third Way provides a means whereby more people can engage in "leisure work" and gain their subsistence increasingly from an independent capital income produced by their own "technology slaves."
40. Humanity will probably never achieve the "perfect" economic system where all drudgery work is eliminated and everyone is free to do the work they love. However, as their window of opportunity closes, it becomes imperative for transforming and developing economies to implement effective programs of expanded ownership of productive assets. The alternative is a pendulum swing between capitalism and socialism (or their various permutations), where any period of stability merely serves as preparation for the next violent overthrow.
V. SOCIAL INTEGRATION
41. While full employment and full ownership opportunities should be complementary ideals for any economy, practically speaking there is always a small group either temporarily or permanently unable to earn their own livelihood. This group, while often smaller than many redistribution advocates claim, consists of the truly unfortunate and helpless poor who must be assisted. Also, restructuring an economy will likely result in some degree of unemployment due to the fact that some jobs will be eliminated, and those workers who lost their jobs will require training and education to fill the new jobs that will be created.
42. In order to protect the most helpless poor and those who may become unemployed during the privatization and economic restructuring process, a minimal social welfare system, a "social safety net," must be in place, funded principally from the "dividends" from growth and greater efficiencies expected from economic transformation. Bilateral and multilateral financial assistance from wealthier nations could also supplement the safety net in the early stages of the transformation. While this safety net must be in place, the goal should always be to minimize it as much as possible, not extend it. As many people as possible should be motivated and given the means to derive their incomes from wages from new jobs in a rapidly growing market economy, supplemented by ownership profits, not from public assistance.
43. The best means to achieve the listed objectives, however, is by a consistent application of the principles already stated in this document. These would eliminate the political and economic barriers that inhibit or prevent individuals or groups from full participation in the common good, particularly the access to productive property. Since rights guaranteed to all include their exercise by currently disenfranchised or powerless individuals and groups, protecting fundamental human rights is the best protection for those who lack access to the goods of society.
VI. MEANS OF IMPLEMENTATION AND FOLLOW-UP
44. The developing and transforming economies of the world with their untapped development potential have the same opportunity that the United States Federal Government had in the nineteenth century with its vast holdings of land. The question is how best to take advantage of this historic, but quickly disappearing opportunity. The United States of America used the Homestead Act to attain widespread capital ownership in the form of land. It is now up to the people of the world to choose what method they will use to distribute ownership of the assets of the unlimited frontier made possible by space-age technology.
45. The principles behind a Homestead Act are fundamentally different from the notions of creating "instant capitalists" by giving away ownership of state-owned enterprises, selling them to a small elite, or implementing some version of the Welfare State. The United States created owners by providing the opportunity to earn ownership of land, but then stopped short. The Third World can take up where America left off and surpass it by establishing a policy of "Every Worker an Owner," and ultimately, "Every Citizen an Owner," opening ownership opportunities to agricultural, industrial and financial resources as well.
A Capital Homestead Program
46. What is needed today is an "Capital Homestead Program" for transforming the economies of the Third World. This would give citizens of every country access to the means to earn ownership of the current and future agricultural, commercial and industrial wealth of the nation, rather than having the ownership handed to them or sold out from under them. Many governments hold tremendous industrial resources which the citizens need for creating a more just economy and political order.
47. There are obvious dangers in just selling to the financial elite. In some transforming countries the only ones able to acquire sufficient wealth for purchasing state-owned enterprises were those who used their political position before transformation to misappropriate public funds for personal use. Selling to the political elite continues the oppressive exploitation, mismanagement and inefficiency of the former socialist, colonial or imperialist regimes. It creates new management elites out of old political or cultural elites.
48. One of the underpinnings of democracy is the idea of "fairness." A governing authority, whether economic or political, must constantly ask itself if what it proposes to do is fair for everyone. In nations undergoing transformation from a state-dominated to a market economy, giving every citizen, especially those without savings or assets, the opportunity to purchase or earn ownership of what the state currently holds advances the cause of economic democracy and builds popular support to the transformation process. Simply carving the state's holdings into equal shares and distributing it equally to all, or just selling it to the few is not democratic. Nor is it democratic for a small ruling elite to cut themselves ever-larger pieces when the size of the pie is static or shrinking.
49. The question facing the Third World is how to make a free enterprise economy work while building a broader political constituency for free enterprise growth. How can people avoid the concentration of wealth in the hands of the few that inevitably accompanies capitalism, and the predictable and even more destructive backlash of socialism?
50. Many aspects of the Third Way will be determined by tax and banking laws that affect the process of democratizing productive credit. How this democratization is brought about—the timing, priorities and procedures—are social issues best discussed in an open and democratic fashion by people aspiring to build a free and just future for themselves.
51. To shift the role of government from today's income redistribution policies to the more limited and healthier role of encouraging economic justice through free enterprise growth, an Capital Homestead Program should begin establishing:
52. National Ownership Goals and Targets. Set a realistic long-term target, based on a nation's industrial growth potential, to achieve a minimum accumulation of income-producing assets, that is, an Capital Homestead Stake for every family.
53. An Capital Homestead Exemption. Establish a personal "Capital Homestead Exemption" that provides every person an opportunity to accumulate over a life time an income-producing, space-age equivalent of the 160 acres of land offered to landless Americans under the original Homestead programs, free from capital gains, inheritance, gift or similar taxes.
54. Positive Policies for Private Sector Growth. Re-create the conditions that resulted from the first American Homestead Act of 1862; full employment and declining prices and a broadened distribution of property ownership.
55. Planning for Maximum Growth, with a Balanced Budget and Zero Inflation Rate. Implement a peace-time counterpart of the war planning commissions of the Second World War to bring together each nation's finest minds and prime movers to recommend ways to achieve a balanced public sector budget and a zero inflation rate under each nation's Capital Homestead Program, including reasonable national ownership targets and priorities.
56. Anti-Monopoly Reforms. Link all economic reforms to methods that discourage privileged access to or monopolistic accumulations of private property ownership of the means of production.
57. Democratization of Central Bank Credit. Reform each nation's monetary policy (especially a power to discount "eligible" commercial, industrial, and agricultural paper) to bring about a two-tiered, non-subsidized interest rate structure within commercial banks of the nation. This reform would encourage more widespread individual access to lower-cost bank credit for ownership-expanding private-sector productivity growth and discourage access to non-productive uses of credit, while continuing to allow savers to receive market interest rates for non-productive or ownership-concentrating uses of credit, including government deficits.
58. Liquidity for Local Banks. Use the discount mechanism of each nation's central bank to supply sufficient money and credit through local banks to meet the liquidity and broadened ownership needs of an expanding economy, subject to appropriate feasibility standards administered by the local banks.
59. A Tax System More Accountable to Taxpayers. Radically simplify the existing national and local tax systems in ways the make government more directly accountable and responsive to all taxpayers.
60. Removal of Tax Obstacles to Broadened Ownership. Eliminate tax provisions that unjustly discriminate against or discourage property accumulations and investments incomes.
61. Reduced Growth of Redistributive Social Security Systems. Supplement and reduce growth of social security systems by enabling every person and family to accumulate (through inheritances, gifts, ESOPs, CSOPs, CICs, individual retirement accounts, and other expanded ownership vehicles sheltered from taxes under the "Capital Homestead Exemption") sufficient wealth-producing assets to provide each person with a taxable property income, independent of social security benefits and incomes from other sources.
62. Pro-Competition Policies. Remove economic bottlenecks to effective market competition so that just prices, just wages and just profits can be controlled by the laws of supply and demand, rather than by central planners, by fiat or regulation, by government-sanctioned monopolies, or by other coercive pressures.
63. A Market-Driven Wage and Price System. Gradually eliminate rigid, artificially-protected wage and price levels and other restrictions on free trade, which afford special privileges to some industries, businesses and workers at the expense of domestic and foreign customers of the marketable goods and services of the nation.
64. A More Just Social Contract for Workers. Focus top priority during the next several decades on developing a more just "social contract" for persons employed in the private sector, geared to maximum ownership incentives, so that instead of inflationary "wage system" increases, all employees can begin to earn their future gains increasingly through production bonuses, equity accumulations, and profit earnings linked to their personal efforts and to the productivity and success of their work teams and the enterprise for which they work.
65. Restoration of Property Rights in Corporate Equity. Restore the original rights of "private property" to all owners of corporate equity, particularly with respect to the right to profits and in the sharing of control over corporate policies, while still safeguarding the traditional functions of professional managers.
66. More Harmonious Industrial Relations. Promote the right of non-management employees to form democratic trade unions and other voluntary associations for negotiating and advancing their economic interest, including their ownership rights, vis-a-vis management.
67. Expanding Equity Opportunities for Farm Families. Update the family-owned farm concept as a basic unit for maintaining self-sufficiency in meeting each nation's food supply, while discouraging the spread of conglomerate and foreign takeovers of prime agricultural lands. Equity sharing among dozens of farm families working together as co-owners in integrated corporate agribusiness which meet economies of scale would update the family farm concept. It would also enable farm families to share in profits from farm suppliers, food processing, and world-wide marketing and distribution which have become the most lucrative portion of the world food industry.
68. Phasing-out of Agricultural Subsidies. Assist farmers who wish to associate together voluntarily in cooperatives and in enterprises jointly owned by farmers and workers, including integrated agribusinesses, for supplementing their farm incomes and reducing the need for subsidies.
69. Incentives for Research and Development. Encourage the most technologically advanced nations to combine their talent and resources to offer special ownership incentives for those engaged in research and development, especially in the search for new and sustainable sources of energy and labor-saving technology, to provide a more solid foundation for closing the development gap with poor nations.
70. Conservation of Resources. Develop new methods of conserving and recycling non-replenishable and limited natural resources that are vital to civilization's long-term survival, until suitable substitutes can be discovered and developed.
71. Property Incomes for Public Servants. Provide military, policemen and firemen, teachers, health professionals, students, researchers, housewives and other people not working in private sector enterprises with a growing and more direct equity stake in the free enterprise system, both as a supplement to their costly pension plans and so that they will better understand and defend the institution of private property.
72. Privatization of Public Sector. Privatize government-owned enterprises and services, to the maximum feasible extent, by offering their employees (and customers in capital-intensive operations like state-owned power generation and distribution systems) maximum opportunities to take over their ownership and control.
73. Prototype Policy Reforms for Local Governments. Encourage national governments to serve as models for regional and local governments to promote wide-spread capital ownership as a major goal for their citizens.
74. Development of Demonstration Free Trade Communities. Launch several broadened ownership demonstrations, possibly in rural and urban areas of high unemployment to evaluate the proposed tax and monetary reforms, innovative broadened ownership mechanisms and advanced concepts of worker participation in decision-making and self-management. The United Nations should adopt a treaty to be signed by all member nations that would allow all goods and services produced within U.N. certified "Free Trade Communities" to be sold within their countries exempt from any duties, tariffs, quotas or other restrictions on trade.
75. New Challenges for Global Corporations. Provide special incentives for global and multi-national corporations to encourage them to become instruments of peace and a more just world economic order, by broadening access to their ownership base to all citizens of the world community, especially for exploiting the resources of the sea and other planets.
76. In contrast to standard state-controlled retirement and "social welfare" programs, the Capital Homestead Program would create for every citizen an "Capital Homestead Exemption" of an amount sufficient to acquire enough income-producing assets to provide a growing consumption income from dividends. This personal estate, or "Capital Homestead," would be exempt from all taxes, and would be the modern equivalent of the 160 acres of land in the New World provided to landless pioneers from the Old World by the original American Homestead Act.
77. The Employee Share Ownership Plan (ESOP) and its variations such as the Consumer Share Ownership Plan (CSOP), the Individual Share Ownership Plan (ISOP) and the Community Investment Corporation (CIC), would serve as the basic credit democratization vehicles for linking new monetary and tax incentives for productivity growth with the expanding base of owners under an Capital Homestead Program. Each of these vehicles would help accelerate rates of growth of private sector enterprises by providing their new shareholders easy access to low-cost bank credit for buying growth shares repayable out of future growth profits. With expanded capital credit, the new owners would not be required to reduce their current consumption incomes, thus increasing the economic feasibility of private sector enterprises generally and sustaining higher levels of non-inflationary growth throughout the economy.
- The "ESOP" channels low-cost bank credit which links private sector workers to ownership shares and dividend incomes in the companies for which they work.
- A "CSOP" lets regular customers of utilities share in the governance, ownership of equity shares and profitability of "natural monopolies," like telecommunications, water and power companies, mass-transit and cable television.
- A "CIC" allows residents of a community to share in the control and profits associated with land planning and development in a highly participatory "new community." While the CIC would create new private sector jobs and entrepreneurial opportunities within new or redeveloped communities, its main emphasis is on empowerment through widespread participation, particularly in the ownership of land, technology, buildings and infrastructure that must be fabricated upon the community's land for expanding the local economy. The CIC is designed to serve as a for-profit land-planner and developer geared to rational innovation and change from the bottom-up at the community level.
- An "ISOP" is a way for individuals who do not work for profit-making enterprises to accumulate wealth and receive dividend incomes from newly issued shares in new and growing companies without being taxed on the accumulations (including property and shares gained through inheritance, savings, and arrangements like ESOPs, CSOPs and CICs). People who would use an ISOP could include school teachers, civil servants, military personnel, police, health professionals, students, housewives and individuals who have no remunerative employment, such as the totally disabled.
- Other legal devices such as Trusts for managing productive assets owned by the retarded or those determined by the family or the community to be incompetent and unable to manage assets personally.
Tax Justice
78. The notion that a tax system should be used to achieve an equality of results by means of confiscation of wealth from the rich must be abandoned. Instead, the tax system should encourage the reduction of economic disparities by promoting new wealth-producing technology and more equitable distribution of future ownership and profit sharing opportunities by all people. The simplest income tax system for the modern nation state is one where income from all sources, whether from labor or capital, is taxed at a single rate designed to eliminate budget deficits, while exempting incomes of the very poor and allowing for widespread accumulations of productive assets. Special impact taxes should be encouraged to reduce environmental degradation and to shift repair and clean up costs from the victims of environmental abuse to the producers and consumers of products that damage the environment. A single flat rate tax and reform of the various tax systems would eliminate the complexity and unfairness of tax systems that exempt income derived in "special" ways, that add to the living costs of the poor or discourage their employment, or act punitively against income that exceeds a certain amount, and would achieve the following objectives:
- To make all governments more directly accountable and responsive to all taxpayers;
- To improve structural restraints within the tax system on government growth and spending by creating a direct linkage between tax rates and budgetary changes;
- To encourage savings and investment and otherwise favor growth in the competitive free enterprise system as the direct distributor of consumption incomes for workers and retired persons;
- To reduce and gradually eliminate all redistribution and generation-dividing features within the current tax system, including pay-as-you-go social security and government pensions and entitlements, except for income exemptions and an income "safety net" for the genuinely poor;
- To simplify the overall tax system to improve taxpayer feedback and understanding and to make it less costly to administer;
- To produce neutrality in the taxation of consumption incomes from all sources, and otherwise remove any distinctions between "earned" and "unearned" incomes;
- To stimulate expanded opportunities for all people to acquire, accumulate, and receive incomes from direct equity participation in new and growing enterprises;
- To abandon today's complicated tax codes, replacing them with simple "escape hatches" designed to encourage expanded private sector investment and productivity incentives linked to broadened ownership participation;
- To eliminate the inflationary impact of the tax system itself on the costs of goods and services, and to remove artificial tax increases due to inflation and the nature of a progressive income tax;
- To integrate the corporation and personal income tax systems by eliminating any double or triple penalty tax on corporate profits, encouraging fuller dividend payouts and attributing non-reinvested corporate earnings as incomes taxable to shareholders;
- To eliminate any tax penalties on married couples, personal deductions except for tax deferrals and exemptions for savings and investments, tax credits, tax-free interest on public-sector financing, tariffs on imported goods, tax shelters for speculative and non-productive investment, and all forms of indirect and regressive taxes not based on consumption incomes;
- To eliminate the effect of inflation on gains from the sale or exchange of homes, farms and other assets;
- To encourage home ownership through the tax system;
- To expand the use of individual retirement accounts as a mechanisms for enabling all individuals to accumulate income-producing assets on a tax-deferred or exempt basis and permit such mechanisms to be used for acquiring corporate shares on credit secured and repaid with future corporate earnings undiluted by taxation;
- To relieve pressure on the national social security systems by establishing a lifetime personal tax-free asset accumulation vehicle to enable every individual to accumulate an adequate estate of wealth-producing assets to provide them with taxable property incomes to supplement incomes from other sources;
- To move toward the deconcentration of capital ownership in private hands for future generations of humanity by replacing estate and gift taxes with taxes on the amount that the recipient does not keep in the form of an income-producing investment or in an amount in excess of the "Capital Homestead Exemption" mentioned above.
79. A simplified, flat-rate tax income system gives a direct means for balancing national budgets and restraining overall government spending, including spending on social welfare programs. It would also eliminate the traditional double taxation of profits in ways that would maximize greater savings and investments in new wealth-producing plant and equipment, plus removing other features that discourage ownership. A single tax rate on all consumption incomes above subsistence levels for the poor would also force politicians to compete on who could provide the best government at the lowest rate of taxation, improve accountability of the public sector and limit the political and economic power of the state.
Justice in Credit
80. Capital credit should not be confused with consumer credit, whether the borrower is an individual or a nation state. Capital credit is used to purchase assets that pay for themselves, and, as an essential social good in a just economy, access to capital credit should be a fundamental right of citizenship. Consumer credit is used to purchase things that do not pay for themselves directly, whether public works, welfare subsidies, education or the basics of food, clothing and shelter. These are properly paid for out of current income or past accumulations of savings, and not out of money created through monetization of deficits or extension of socially created credit.
81. Dr. Muhammad Yunus, recipient of the 1994 World Food Prize and founder of the Grameen Bank of Bangladesh, in a recent address in Taipei, Taiwan, stated:
If we are looking for one single action which will enable the poor to overcome their poverty, I would go for credit. Money is power. I have been arguing that credit should be accepted as a human right. If we can come up with a system which allows everybody access to credit while ensuring excellent repayment—I can give you a guarantee that poverty will not last long. If the helplessness and isolation of labour, who have nothing to sell but their labour, can be totally removed by connecting labour with capital through a universal credit system, we'll then have other kinds of actors on the economic scene different from what the existing capitalist world would allow us to bring out.
Poverty is not created by the poor. Poverty is created by the existing world system which denies fair chances to the poor. If we can ensure truly equal opportunities to everybody in the society there is no reason why poverty should linger around us.
82. The role of a central bank is crucial in a true democratization of credit. By means of discounting eligible and democratically made loans made by commercial banks, singly or in aggregate, for productive purposes, the extension of credit and creation of money are linked to an actual increase in wealth. By ceasing the monetization of government deficits and extension of credit for non-productive purposes, a stable currency is assured and the ordinary citizen protected from the devastating effects of inflation.
Capital Homestead Program
83. It is important to encourage all citizens of all countries to accumulate a direct private property ownership stake in the growing industrial frontier in their country and in the global economy, and to ensure the broadest possible base of direct beneficiaries (and thus political supporters) of all future tax and monetary reforms. This will provide the means and method to eliminate poverty as the prevailing economic condition of humanity.
84. As the productiveness of technology increases, ever fewer workers will be needed to produce the necessities and even the luxuries of life. In the future, workers will change from being mere labor-for-hire whose subsistence remains constantly vulnerable to competition from labor-saving technology and workers whose market wage rates are lower—to the status of a worker-owner, who shares with other co-owners control over that technology and the power over investment, relocation, down-sizing, and profit distribution decisions.
85. The crucial safeguard against the threat of new technologies benefiting only a small ownership elite is expanded capital ownership. In transforming enterprises and farms in developing countries into effective competitors in the global marketplace, and in building the new enterprises of a successful growth economy, today's unemployed and underemployed can be lifted into a more dynamic productive sector. Connecting the worker through ownership to an ever-expanding pool of wealth created by more and more efficient robots, artificial intelligence, and other forms of advanced technology, will ensure that each citizen can participate directly in that future wealth.
86. In its initial stages, a program of expanded capital ownership will primarily affect the workers—the people who will have to turn failing or unproductive companies and industries into successes. The ultimate goal of the Capital Homestead Program, however, is for every citizen to have access to sufficient credit to become an owner of productive capital assets. Each citizen's "capital homestead" would ensure that he could attain a living income without having to rely exclusively on wages from his labor alone. Such a system would greatly reduce society's burden of supporting the unemployed and permanently incapacitated. By producing a living income, thereby reducing the burden of having to "toil for a living," ownership of productive assets could liberate human beings to enrich their lives materially, intellectually and spiritually. Over time, a steadily increasing portion of the population can, like today's wealthy, become liberated by technology from dependency on economic toil so that they can afford to devote more of their own time and resources on self-development and the unlimited and uncompensated work for the common good, what Aristotle called "leisure work."
87. The pivotal issue is whether private property is the key to justice and peace in the world. It either is or it is not. If it is, then it must be made accessible to every person and family in the world. Social development through expanded capital ownership should become the main new initiative for the United Nations during the next half-century. Such an initiative will produce unity where there is now division, order where there is now disorder. As the gap between the poor and the wealthy grows wider and more destabilizing, the United Nations today has an historic opportunity to take a new, more hopeful and higher road and guide all nations to a new world order based on genuine economic and social justice for each citizen of the global community. All members of the human community have something to gain from The Third Way.
