RE: A suggested strategy

[Michael Harrington <mharrington@milken-inst.org>]

I wholly agree, (except my choice of metaphor was hasty and meant just to
assume an influential name in contemporary economics, not as an icon of
economic thought!)
I also think we can do this...

Michael Harrington


-----Original Message-----
From: kwilde@magi.com [mailto:kwilde@magi.com]
Sent: Friday, October 15, 1999 5:05 PM
To: ownership@cog.kent.edu
Cc: dbell@kent.edu
Subject: A suggested strategy



Dear Ownershippers,

Please excuse me for coming late to the party. On looking over the list of
early subscribers, it seems that my chief qualification for the position of
coordinator must be that I have less direct experience in our subject
matter than anyone else!  My willingness to take it on stems from a desire
to explore with a few other economists the main elements of ownership
strategies proposed by financial innovators like Turnbull and Kelso.  My
hope is that we can do two things:
1. Help non-economists understand why mainstream economists have taken
little interest in the campaign to widen the distribution of capital
ownership, and
2. Present arguments and evidence that such ownership does in fact bear
significantly on issues that are of concern to mainstream economics.
I suspect that the second of these may prove to be the trickiest, and that
is why I believe it important to win the sympathetic or at least the
cooperative understanding of the non-economist innovators and promoters.

The best reading I can recommend to non-economists is a 1987 book by John
Kenneth Galbraith entitled Economics in Perspective: A Critical History
(Houghton Mifflin).  Galbraith is not universally loved among economists,
of course, but I believe that those economists who are interested in the
objectives already described by Michael Harrington will find that
Galbraith's treatment is useful assistance.  For those who have not read
the book, I should emphasize that it does not treat our subject
specifically; it is a history and description of economic thought, set
within the context of its times and showing that economists have focused on
contemporary problems, developing theories and techniques that can be and
are superseded in time by the emergence of new and different circumstances
and problems.  An important inference to be drawn from this is that
although economists try to work scientifically, the outcome need not, and
for the most part ought not, be regarded as a relentless and irrevocable
unveiling of universal or eternal truth.  (This point is of special
significance for proponents of what Norm Kurland has termed "pure
Kelsonianism".)

In applying his observation of evolutionary change to future directions of
economic thought, Galbraith pointed out that some former preoccupations
like sufficiency of output at reasonable prices, of monopoly power and even
the level of wages, have been substantially tamed. The more pressing
problems of our time and the immediate future concern the security of
income, not so much its level.  Accordingly, "the factors affecting
security of employment are now far more socially important than those
determining the level of reward".  In the dozen years since those words
were published, the issue of income security via employment has obviously
become much more acute.  This is the Achilles' heel of mainstream
macroeconomic policy, dependent as it still is on "jobs, jobs, jobs", and
is of course the entering wedge of ownership solutions.  Galbraith
acknowledges the sticking power of the neoclassical system and discusses
the nature of its appeal, but in perspective the urgency of unexplained
problems does yield to new and more relevant analysis.  Revolution is
accomplished in economics primarily by the death of the older generation,
not by its submission to superior argument.  "Does wider distribution of
capital ownership have an impact on macroeconomic variables?" Michael asks.
 The mainstream response, he says, is that it ought not affect them
(employment, interest, prices).  The response from those of us who choose
to focus more directly on income security is that employment is an
inadequate surrogate for income security, and that ownership of productive
assets is a legitimate and important indicator of economic welfare.  To
deny it is to imply that growth in aggregate gross product is the summum
bonum of national welfare.  No economist of my acquaintance, past or
present, would  admit to that belief.  

If we are joined by economists who are willing to focus on income security
as a legitimate and important economic problem of our time and the future,
and who recognize full-employment policies as an insufficient policy
instrument, then perhaps we can adopt as group strategy an idea that
occurred to me from reading Michael's letter to Norm.  Quoting Michael:
"If Michael Harrington says distribution of capital matters for purely
economic reasons and Paul Krugman says it doesn't really matter
economically, perhaps only socially and that's not the realm of economists,
then I have no doubt on who the policymakers and the public are going to
follow." I propose that we aim, as a group, to assemble arguments and
evidence sufficient to persuade a few "Paul Krugmans" to sit up and say
"Hey, maybe distribution of capital does matter economically.  Let's have a
closer look!"  Paul Krugman will be our metaphor to epitomize the
successful, articulate, solidly established academic economist whose
opinions, when identified with his name, carry weight with policy advisers,
opinion-leaders and decision-makers.  I do not suggest that we should be
inviting "Paul Krugmans" to be part of our discussion, necessarily.  We
should be seeking primarily those we believe may have an interest in our
subject, which is the question of whether or not capital ownership and its
distribution have relevance for economic issues as the latter are perceived
by professional economists.

I look forward to your reactions.

Keith Wilde


P.S.to Dan:  I am pretty sure I have subscribed to "ownership".  If not,
can you let me know and make this posting happen?  Thanks.