Re: Welfare and scientific ethics

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

>>> Shann Turnbull <sturnbull@mba1963.hbs.edu> 11/06/99 07:08AM >>>
David Sptizley quoted the

"third principle of social justice (the Principle of Limitation) that no
individual can be allowed to possess so many productive assets that it
interferes with the ability of other individuals to participate in the
economy effectively."

My basic premise is that the current rules of ownership are inequitable
because they do not reflect the "Principal of Limitation".  This is because
the current rules allow investors to get overpaid to obtain "surplus"
profits (those in excess of the incentive to invest) and/or windfall gains
from "spillovers".  This also makes the current rules of ownership
inefficient.  So on both grounds of equity and efficiency I argue that we
need to replace the current static, exclusive, unlimited tenure rules of
ownership with rules that are dynamic, inclusive and time limited to the
tenure of user and/or contributor of value.  Contribution to value in
productive enterprises is made by employees, customers and suppliers as no
business can exist without these "strategic" stakeholders.  

As I state on page 2 of my book 'Democratising the wealth of nations' we
need to change the Marxist dictum to:

>From each according to their interest
To each according to their contribution
Provided the basic needs of all are fulfilled.

The word "contribution" includes that of strategic stakeholders of
productive assets and the demands of non-owners which bid up the prices of
consumption assets like urban land.   Stakeholder or "ecological" property
rights can be used to transfer windfall gains in land and housing from
owners to non-owners as is achieved by my concept of a Community Land Bank
(CLB) reviewed in Appendix II of my New Strategies paper (
http://cog.kent.edu/lib/turnbull1/turnbull1.html ) which also has a
bibliography on this concept.  

As all individuals occupy land and shelter, the introduction of stakeholder
ownership would provide equity entitlements in land and shelter with usage.
 They would provide every individual adult with equity entitlements in each
site in the same manner all Australian employees obtain pension fund
entitlements from each job.  The mechanics of how these deferred equity
entitlements would accumulate are indicated in Figures 13 & 14 of my 'New
Strategies' paper.  

CLBs represent the fundamental economic and political building block
(holon) of an economic and political holarchy outlined in Table 7 'Global
Governance & Political Economy' of my New Strategies paper.  It is at
through this community level that "basic needs of all" are provided or
exchanged for community service.  In addition, with stakeholder ownership,
all citizens would also be accumulating equity entitlements as consumer
stakeholders if not also as supplier and employee stakeholders.  

Each CLB may take a different approach to answer Dan Bell's question:
 "And yet, how much can we / should we protect people from themselves. And
who's to say that the trustee's choices will be better than the
beneficiary?"  Refer to http://cog.kent.edu/archives/ownership/msg00094.html 

Dan seems to assume that the answer would be managed at the Federal level
of government.  Consistent with the principle of subsidiarity i would
propose that it should be managed at the lowest level of government so
community services can be exchanged for basic need and/or the CLB manages
the equity entitlements of its residents.  i.e. some CLBs might become mini
socialist communes and others might prefer more individualistic and/or
self-reliant arrangements.  Each CLB could try different ways to care for
its impoverished.  However, the early experience of the town of Letchworth,
30 miles North of London, indicates that CLBs could provide a minimum
income for all residents (through paying a dividend on its shares) financed
from the rent/rates of commercial activities in the community (Refer Table
7).  ie, CLBs collectively create a guaranteed minimum income.  This is an
important different approach for creating a "two income economy" as
envisioned by Kelso. 

The dictum of Social Capitalism quoted above explains why my proposals are
fundamentally different from Kelso, even though we share a very similar
vision.  ESOPs, CSOPs, GSOPs etc. were designed to share the expansion of
productive assets.  They can and are used also for the transfer of existing
productive assets.  However, they do not change the way ownership
concentrates wealth.  This is why I describe them as being only a "band
aid" in providing an "Ownership Solution".  

The Kelso techniques provide a very valuable way to reduce the problem of
property rights making people richer and concentrating wealth.  However,
the Kelso proposals do not correct the inherent defect in the nature of
property rights which are inconsistent with the "Principal of Limitation"
and the principles found in nature which creates its own limits to growth.
In nature all living things change in time (dynamic rather than static) and
have limited life.  We need to follow nature in designing the nature of
property rights.  A fuller discussion will be found in my article: 'Should
Ownership Last Forever?', Journal of Socio-Economics, 27:3, pp. 341-363,
1998. http://papers.ssrn.com/paper.taf?abstract_id=137382 

The above comments should provide a basis for others to respond to Keith's
posting "The Principle of Limitation, in Kelso and Turnbull" which arrived
while I was composing this message.

Regards

Shann

At 07:25 AM 6/11/1999 , you wrote:
>Alan Zundel <IPGmail@aol.com> quotes me as writing: 
>>> ...it would be logical to tackle to problem of turning redistributive 
>policies 
>>> which concentrate ownership into redistributive policies which broaden >> 
>ownership as a transitional step to a fully democratic economy.
>
>and then responded:
>>> You assume that a binary economy can at some point be a "steady 
>>> state" condition without any need for further redistribution.  I am not so 
>>> sure of that.  Changing the rules that currently facilitate concentrated 
>>> ownership will help, but in the contingencies of life there will always be 
>>>  people who end up with more and others who end up with less.  We will 
>>> still need a state with the power to uphold the rules and deal with the 
>>> losers.  Kelso's version of the "withering away of the state" is no more 
>>> convincing to me than Marx's.
>
>I agree with you on one level, and disagree on another.  I disagree on the 
>grounds that Marx's "withering away of the state" might also be read as "the 
>retirement from power of the authoritarian rulers I used to get the process 
>started", whereas Kelso's might accurately be read as "the retirmement of 
>democratically supported public policies which I used to get the process 
>started", and I find the latter a much more believable course of events than 
>the former.
>
>However, I am also inclined to agree that programs such as unemployment 
>insurance and so forth will never go away entirely, though the demands upon 
>them may shrink substantially in a more Kelsonian economy (doing away with 
>the assumption of completeness).  However, it is important to realize that 
>Kelso never advocated the elimination of the state; he's definitely a 
>libertarian rather than an anarchist.  He expected that the state would be 
>required to serve as the main guard against monopoly power, both in the 
>standard sense, and in the sense of his third principle of social justice 
>(the Principle of Limitation) that no individual can be allowed to posess so 
>many productive assets that it interferes with the ability of other 
>individuals to participate in the economy effectively.
>
>This brings up an interesting point: is it possible that violations of the 
>Principle of Limitation could be addressed through means other than 
>redistribution of the excessive portion of the individual's ownership stake? 
> If so, how?  I can see that forced sale of excessive assets to ESOPs, et 
>al, for fair market value might not be considered redistributive, but it 
>still seems a bit grimy given Kelso's low tolerance for injustice.

Shann Turnbull
P.O. Box 266 Woollahra, Sydney, Australia, 1350
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