Monday, October 31, 2011

Civil Endowment Theory and The Special Proposal

In this post I will try to very succinctly lay out the basic ideas of Civil Endowment Theory, Civil Capital, and The Special Proposal. I realize that many of my previous posts have been too long for people to grapple with in a blog format. I am grateful to Country Wisdom News and Visit Vortex for giving me professional experience in writing on topics of importance and keeping it fairly brief.

Civil Endowment Theory looks at our current-state economy and tries to put real world solutions on the table, solutions that are both feasible and non-utopian. It should be noted that economic dogma of both left and right is largely based on utopian thinking. The market fundamentalists think that the market can fix everything. Socialist/Marxist thinkers believe the government can fix everything. These utopian theories qualify as “zombie economics.” They are dead theories that still have a lot of legs.

Keynesian economics occupies a much different territory. To put it very briefly, Keynes was right. The government can positively influence things like employment, business investment, and inflation through fiscal and tax policy, along with the actions of central banks. Yes, it can. But that implies there is the political will, sanity, and honesty to exercise this influence skillfully. What we’re seeing in our current time period is a total lack of political will, unity, and honesty around using the powers of government in the economy. In particular, we are seeing the flagrant abuse of deficit spending for things like unfunded foreign wars. Keynesian remedies are a bit on the subtle side, perhaps almost like homeopathy in medicine. If you’re drinking 20 cups of coffee a day, don’t expect homeopathy to work! Thus, though Keynes was right, Keynes is also not enough—especially in our current political climate.

For all these reasons, I believe the true way forward is through what I call civil economics. Civil society needs to step up and take on new responsibilities and new powers in the economy. We can keep an open and free economic system, and build in social justice and sustainability. However, it is going to take some changes in how we think and behave. A lot of people want these positive changes, and I guarantee everyone wants a realistic sense of economic opportunity in their lives. We are looking for solutions, and the time has come to put them in place.

Civil Endowment Theory takes a look at the role of capital in a modern economy, and points out two things: first, capital is essential. Since the dawn of the industrial age, we’ve become completely dependent on manufactured goods for economic life. Manufactured goods in turn depend on the investment of money, ideas, and work. A very pure and simple definition of capital is that it is the union of financial power and an investment idea that is put into practice for a productive result. This leads us to the second key point of Civil Endowment Theory: there is nothing inherent in capital that necessitates that it be used for selfish purposes. That is merely the historical pattern we’ve inherited.

Marx’s critique of primitive capital is correct as far as it goes, but his solution is both an historical and a theoretical failure. Civil Endowment Theory takes the following view: capitalism cannot be reformed, but capital can! What is the reformation of capital? It is quite simple: capital for the common good. We can institute a causal force for reform by creating such capital, which I call civil capital. We do not need to outlaw private property or private capital, but we need to create a balancing force, a leading force, of investment power in the economy. How will we endow such civil capital? Again, the answer is simple: through generosity.

If you take these ideas at all seriously, a lot of questions will arise for you. How will this capital be administered? Is there really enough generosity in the human spirit to create enough civil capital to make a difference? How will this play out as a story in the public realm? These are good and indeed crucial questions. I have developed a lot of detailed responses to these questions, but it’s also good that you think about them yourself.

Finally, there is Special Proposal. This proposal is again extremely simple in its essence. The Special Proposal is that we create a Civil Endowment System. We need to test the hypothesis of Civil Endowment Theory. I have no interest in arguing about its feasibility for the rest of my life. Only by engaging in this work will we see if it will perform as designed. Civil Endowment Theory holds that civil capital will operate at three levels: symbolic, catalytic, and structural. The first level, the symbolic, is of significance at literally any level of scale. So the question arises: would you contribute a penny to build a permanent capital investment fund for the economic wellbeing of all humanity, all those living now, and those yet to be born? Even thinking about such an act will influence the way you regard the economy, capital, and your fellow human beings. As for me, I’m in for a penny.

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