Compassionate Justice: The Third Factor of Production
by Dr. Robert D. Crane
Half the world insists that socialism has permanently self-destructed. The other half insists that capitalism must soon die through its own internal contradictions. Let’s hope that both are right. So why all the continuing polemics among economic theorists when a solution can be found in so-called binary economics, which recognizies the legitimacy of both the socialist and capitalist theories of value so long as they are not narrowly construed to be mutually exclusionary.
Perhaps the reason for hurling the accusations , “You are nothing but a socialist in disguise” and “No, you are an unreconstructed capitalist pure and simple,” is that both sides should recognize a third factor of production, namely, God.
The natural law called sunnat Allah in three places in the Qur’an is based on a three-factor theory of wealth production. The primary factor is God, because God produced both the natural physical world and the dual physical/metaphysical being or “factor” called human beings. The second factor of production, not necessarily secondary, are these human beings who contribute their labor to multiply the bounties of the earth. The third factor consists of these bounties, which include both the original natural resources and their multiplication in the form of “capital” and “profits.” Such capital comes both from the original physical creation of the universe, without which they could not exist, and from man as an intermediary.
The question then becomes whether an intermediary should claim full credit for the bounties known in economic theory as “capital and profits.” If not, then how does one distinguish between the original investment by God and the investment by man?
One can, of course, say merely that man is the ultimate creator of everything of value, which would turn man into a false god. This is the essence of the Marxist labor-theory of value. Or, one could admit that the tools, including physical capital and infrastructure (but not money which has no value in itself) have value independent of man once they are produced. If this fabricated value is at least partially independent of man in its source, how does one determine its value as sacred property? The entire earth is sacred and so is every human being, but the earth and man have different roles in the production of wealth.
Binary economics teach that the tools of production, once created, create more wealth, as shown by the example of the fifty men who ploughed a field compared to the one man who replaced them by using a manufactured tractor. The tractor, known as property, produced 98% of the wealth. Assuming that binary theoreticians can determine logically the precise role of property in plowing the field and directing the natural processes of plant growth, who should own the tractor?
One option would be to give full ownership to the guy who borrowed money, based on the collateral of past capital accumulations, to buy the tractor. Is this just? Yes, within the capitalist system. Or should the fifty guys with rakes appropriate the tractor as their own, even though they contributed nothing to its purchase? Is this just? Yes, within the Marxist system, because the tractor is merely “accumulated or congealed labor,” so that as laborers they have the sole right to own the tractor. Even if at the macro level this were to be accepted, would it be just to redistribute wealth by taking the tractor away from the individual farmer who bought it?
And, incidentally, how about the land and the air that nourish the plants? Neither labor nor capital produced them. Land could be considered an independent factor of production, but needn’t be if it is considered to be part of the first factor, namely, God.
Even air and the “vacuum” of outer space have been debated as factors of production. As founding president of the Harvard International Law Society and in later writings during the early 1960s at my Space Research Institute (Duke University) and in a Washington law firm (Haley, Wollenberg, and Bader), I addressed the legitimacy of private ownership of communications satellites. Soviet legal theorists and I debated, in both English and Russian (see my lengthy article in The American Journal of International Law, July 1962), about who owns the air and beyond. In order to secure the future of space communications from hostile rockets from either side, we compromised by creating ComSat, which was a hybrid socialist/capitalist platypus.
Oddly, the long-range goal of the Soviet space program was to secure Communist ownership of the red planet, Mars. We were more modest in merely trying to prevent Communist ownership of earth’s only moon. This was our “one small step for mankind”. Of course, the funding for the space program, though disguised by the creation of NASA (the National Aeronautics and Space Agency, for which I was to become its first General Counsel) was funded by the U.S. military.
The nub of the issue is whether property in the means of production is sacred or not. If it is then one should concentrate not on redistributing ownership from those who have monopolized it, but on working to perfect our existing institutions so that future ownership of property will be equitably owned. This calls for distributing future wealth equitably through the production process so that nothing has to be redistributed.
Admittedly in most countries this would be a lot more difficult than in America, because we do not believe in military coups (at least not yet). And too many people really want to become mini Bill Gates, Warren Buffetts, and Donald Trumps, even if they currently may be living on welfare. This is part of American mythology, what one might call a cultural impediment at odds with the founding principles (but necessarily founding practices) of the Great American Experiment.
One might say the the gist and substance of binary economics as an action plan is how to build broadened and therefore more equitable ownership of future wealth, which, God willing, will soon dwarf whatever has been produced in the past. The specifics and dynamics have been spelled out in a number of books published by the Center for Economic and Social Justice, http://www.cesj.org over ,the course of the last quarter century and in books by others linked through its webpage.
Is this a more realistic goal than the extremes of the monist or one-factor economics inherent in both capitalism or socialism? This has yet to be seen. My philosophy is based on the advice of the Prophet Muhammad, when asked about the end of the world, about which every religion has its own speculations. He answered, “Even if you would know that the world will end tomorrow, go out and plant a tree.”
This is classical Islamic economics, but it is common also to classical Judaism and classical Christianity. None of these three religions can be understood in isolation from the others, because they form a single civilization. Perhaps this is what one should call the macro-economics of compassionate justice, the true thirdway. The real threat to humankind is the failure to recognize this universal wisdom.