In his questions about the source documents on which Ellerman bases his
position, Spitzley shared with us an important piece of homework: "So far
your paper on ESOPs is the first significant critique of Kelsonian ideas I've
seen, and I waded through 40 years of the Citation Index trying to find
some…." My experience with a more cursory search in the Journal
of Economic Literature turned up a similarly blank page. Would the Citation
Index have included contemporary reviews of The Capitalist Manifesto and
other books authored in whole or in part by Kelso? Has anyone here seen such
reviews?
Spitzley’s report is consistent with what I have heard from Robert
Ashford and other advocates who were close to Kelso. That is, the response from
economists has been mainly a deafening silence, except for some high profile but
dismissive encounters with Samuelson and Friedman. Ashford has been working
tirelessly in recent years to break that silence. Once tenured as a law
professor, he turned his attention to writing expository articles about
Kelsonian analysis and policy, submitting them to academic journals, organizing
sessions, symposia, even conferences on the subject, and this year his and
Rodney Shakespeare’s book was published (Binary Economics: The New
Paradigm). Having participated in several meetings with Ashford and some
others of the small group identified by Norm Kurland as pure Kelsonians (see his
early postings to the COG forum), I believe that Ashford has the confidence of
these disciples as a faithful and dedicated expositor of the ideas and intent of
his mentor, Louis Kelso. Binary Economics (the book) includes a
retrospective on efforts to promote and apply Kelso’s ideas over the past
forty years, and seems to have been motivated in significant measure by the
question of why they have not received more attention from economists. While I
haven’t read nearly everything written by Kelso himself on this subject, I
am confident by reason of these contextual circumstances in recommending the
Ashford and Shakespeare book as the most up-to-date and cautious statement of
the orthodox position. To the extent that we address ourselves to critical
evaluation of Kelso’s ideas in this discussion, I suggest that the A&S
book is indispensable. A further advantage is that the authors are alive and
active and may therefore be expected to explain and defend their position when
questioned or challenged.
So far in this discussion, however, the most prolific proponent of Kelso-type
ideas has been Shann Turnbull, and the chief contribution of "pure"
Kelsonians has been Norm Kurland’s own effort to demonstrate that Shann is
heterodox. Despite his protests of solidarity with the spirit of Kelsoism, it
does seem that Shann’s position is distinctive. Furthermore, his position
on distinguishing among various kinds of capital seems to be the primary defense
proffered thus far to the critical focus of Ellerman on the Kelsonian claim that
capital productiveness is ignored in conventional economic analysis. Since this
unseen or unacknowledged productiveness is their key to making new capitalists
without the old ones feeling a dilution of their wealth, it is critical to the
political propagation of the Kelsonian policy prescriptions. Shann’s
notion of procreative capital offers a way around the Ellerman critique, but
David denies the distinction.
Now if Shann should succeed in persuading David (and the rest of us) that
there are critical distinctions among procreative and dormant or consumptive
kinds of capital, and thereby mitigate some of the dilution and redistributive
reservations against capital ownership policies, what will it mean for the
political campaign to extend the application of such policies? Since Shann has
been branded as heterodox by the most vehement champion of Kelsoism that we have
heard from so far, it must mean that insofar as the ownership solution achieves
the acknowledgement of macroeconomic benefit that Michael has identified as our
goal, it will be on the basis of Turnbull arguments rather than those of
Kelso—or of those who see themselves as the guardians of his doctrine. If
much more democratic ownership should turn out to be the future of capitalism,
therefore, dictionaries of economics in the late 21st century may
speak of the "Australian policies" instead of binary economics, and
the name of Kelso will be a footnote to "the Wizard of Oz".
In other words, where are the defenders of Kelsonian orthodoxy against the
Ellerman critique?