A summary of issues that have emerged up to October 19

[kwilde@magi.com]

Dear Ownershippers,

As coordinator, I am supposed to provide a summary of our activity from
time to time, for the benefit of other participants and managers of the
overall program.  The report should include some information about who and
how many are participating.  I haven't done that part yet, but the
following seems to sum up what I have seen of the discussion to this point.  

Keith 

Issues/Questions under examination in the Economics of Ownership Group

Income security is widely recognized as an issue for the attention of
economists.  It is furthermore reflected strongly among "key problems"
identified in the COG/Ford Foundation project statement (Library).  

Security of incomes serves therefore as the focus of our intent to increase
the number of economists who take a professional interest in policies to
broaden the ownership of productive assets.

The most basic question, from the viewpoint of economists, appears to be
whether or not a broader distribution of ownership can be shown to be an
improvement in the general welfare, in some macroeconomic measurement.  

Proponents affirm that there will be macroeconomic benefits if the
prescriptions are applied with sufficient accuracy and volume to provide an
adequate test of the underlying theory.

Some economists who have examined the supporting arguments for the
prescription reply that the rationale seems to be weak, mainly because
proponents have not paid careful attention to abundant argument and
evidence from economists about the central ideas of the ownership
prescription-but which those same proponents say are missing from standard
economic rationale.

The most critical of these ideas to have been raised thus far concerns the
productivity of capital relative to that of labor.  Ownership proponents
say that standard  economics is deficient in recognition of capital as
productive, continuing to assign to labor a share of credit when output is
in fact produced to an ever more exclusive degree by machinery and other
fixed assets alone.  Some economists respond with indignation that they in
fact pay very careful attention to measuring productivity, in every
conceivable way, and that there is ample recognition of the role of capital
in production.

Proponents from specialties other than economics, especially those basing
themselves on the writings of Louis Kelso, complain that economists have
never taken the time and effort to really understand his arguments and to
conduct a serious evaluation of his theory.

A few economists affirm that they have given a careful look, and that their
evaluation has been negative-a criticism that seems to be based heavily on
the assertion that economics ignores capital, assigning credit for
productivity only to labor.

Proponents acknowledge that there have in fact been negative reviews by
economists, and conclude from this that there must be something wrong with
standard economics.  They are consequently in favor of constructing
economic theory on a new foundation, one which will recognize the superior
contribution of capital in production.  With such an improved theory to
buttress the prescriptions, proponents believe that legislatures can be
more readily induced to install the complete set of rules and institutions
which will ultimately demonstrate the macroeconomic superiority of the
political program.