Politico-Economic Justice through Subsidiarity and Personalism

Dr. Robert D. Crane

Posted Nov 18, 2010      •Permalink      • Printer-Friendly Version
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Politico-Economic Justice through Subsidiarity and Personalism

by Dr. Robert D. Crane

  A first principle of justice is that economics and politics can never be separated, because they are interdependent.  Two important principles of politico-economics concern money and credit.  One is subsidiarity, whereby everything that can be done at the lowest level of community should be done there, and the other is personalism, whereby the individual person is this lowest level.

  The most egregious example of the opposite of these principles was the U.S. Supreme Court’s decision earlier this year to treat corporate and collectivist entities as persons for political purposes.  Only secular humanism, which denies the sacredness of the person and of anything else, could possibly justify such a decision.

  One issue is how to defuse power from the fed to the regional or local level through banks owned at this level by the citizens (not by a collective known as the state).  The role of the Fed would be to implement the Capital Homestead Act through these banks by controlling the issuance of interest-free money dedicated to investment in productive enterprises, especially those substantially owned by their employees.

  The Capital Homesteading solution to the diffusion of capital ownership is much the simplest and the best, whereby the Fed would provide an equal amount of investment money to every citizen every year.  Such accounts would be in normal commercial banks authorized to invest their clients funds interest-free in productive enterprises.

  The Fed can control the money supply by setting the percentage of profit that would accrue to the state banks for their fiduciary management of Capital Homesteading accounts.  The regional bank would earn this amount from the money it had given interest-free to the lower-level banks, and the central bank, the Fed, would do the same one level up.

  For example, from every dollar earned in dividends from privately-owned enterprises, perhaps 2% as a processing fee should go to the bank that passed the money through from the Fed to the individual enterprises after evaluation of these firms’ future profit potential.  This 2% would not be interest, because there would no return to the banks from their clients’ unprofitable investments.  The banks would share both profit and loss equally with the financed firm’s shareholders.

  If the state (or regional banks) want to own the Fed, that would be fine, as along as the state or regional banks are owned by the citizens of their respective jurisdictions. 

  The Fed, of course, could take on the task of directly implementing the diffusion of capital, but subsidiarity would be better served by going down one level to the individual states, or at least to regions.  The states might want to join a region for purposes of insurance underwriting, as was envisioned when Islamic banking was first introduced in Pakistan in 1982.

  This issue of regionalism was a hot topic in 1860, which Abraham Lincoln resolved by going to war at the cost of half a million American lives, the equivalent in our present population of many millions.  The alternative to war was a constitutional convention to intersperse a regional level of five governments (now perhaps more), each consisting of several states.

  Alexander Hamilton and Thomas Jefferson fought over this issue of subsidiarity. The principal cause of chaos in the world is because Jefferson, who feared centralized power of any kind beyond what was necessary, lost.  Abraham Lincoln wanted diffusion of productive ownership, but not of his own political power. 

    The principles of universal private ownership of the means of production and of interest-free banking and pure credit based on future prospects for profit rather than on past wealth accumulation, is known as Islamic banking, but the principles are universal.  When trading, rather than production, was the most profitable part of economic life, both the Christians and the Muslims accepted the institutions of asset backed and interest-free money, as well as pure credit. 

  The future of globalization as a framework for civilization should be the diffusion of all power so that a global system of governance would not end up as the final stage of fascism.  America can be a leader of the world, but we need to think outside the box in order to promote a model of prosperity and freedom through transcendent justice.

  The secret to all human problems is never to invent anything principally new but rather is to recover and rehabilitate the best of the past in the present to build a better future.  Sometimes we can appreciate the best of the past only by learning from its failures.  We have a lot to learn, which is why there is no better time to start than now.