Re: binary economics

["David Spitzley" <dspitzle@gw.wash.k12.mi.us>]

In all honesty, I think the term was meant to refer to Kelso giving co-primacy 
to capital and labor as productive factors in production.  Again, this is not 
to suggest that the productivity of capital was the major insight of Kelso's 
theories.  Instead, the co-primacy was important because a) Kelso's intent was 
to establish equal standing for both labor and capital in asserting their 
rights to a full and proportionate share of economic output, rather than 
attenuating or eliminating private ownership rights in capital to stabilize the 
economy and the social order, and b) Kelso wanted to emphasize the importance 
of establishing binary >incomes< for the majority of households.  Treating 
capital ownership and lack thereof as a primary focus for household 
microeconomics is at least a shift in emphasis from mainstream economics, even 
if the concept can addressed by mainstream practitioners.

Speaking as an economist in potentia, I find Kelso interesting not because he 
made any great conceptual breakthrough in economics, but because he was able to 
find "handles" within economics with which one can attack distributional issues 
which have generally been difficult to approach coherently.  Some of these 
ideas actually came from elsewhere (Marx, Keynes, and another less-known writer 
on credit whose name I can't recall), but he put them together for the first 
time.  Coming as I did from reading Bob Black (The Abolition of Work), Robert 
Anton Wilson (the RICH economy) and Buckminster Fuller (National Dividend, 
etc.), it was nice to see someone with a utopian/cornucopian plan that could 
actually be implemented.


>>> Dan Bell <dbell@kent.edu> 10/19/99 11:18PM >>>
I am no expert in Kelso. I would request some clarification on
the term binary economics. As presented by David Ellerman, it seems
to represent the fact that Y = K^alpha L^(1-alpha), both capital
and labor contribute to total output.

However, I thought binary economics was based on Kelso's idea that
broad ownership allows supply and demand to grow evenly.
As a larger percentage of income is distributed according to
capital rather than labor, broad ownership would ensure that
a broad population of consumers had sufficient income to create
a corresponding demand.

Furthermore, an increase in productive capital would increase
output by X. Since the additional income of X would be broadly
distributed, demand would also increase by X. Thus this binary
process allows for much higher rates of growth because increases
in demand are driven directly by increases in supply.

Can someone clarify to what "binary" was intended to refer?

Thanks

Dan Bell