Capital Credit: A New Right of Citizenship

Most people live from paycheck to paycheck . . . or from hand to mouth. The answer to how citizens without adequate savings can acquire an income-producing property stake lies in the intelligent use of credit-specifically, productive credit.

Credit is a social creation. It can only exist in a society organized to protect contracts and property rights. A central premise of the Real or Just Third Way is that productive or capital credit is a “common good.” Equal access to this good is a fundamental human right and the social key for enabling have-nots to become haves.

One powerful ownership-expanding technique in the U.S. is known as the employee stock ownership plan (ESOP). The ESOP provides widespread and systematic access to capital credit to each employee in a participating company. An “empowerment ESOP” can be designed so that employees gain both a voice in corporate governance and a source of financing which does not reduce their paychecks or savings.

Traditional sources of capital funding treat loans to ESOPs the same as other corporate loans. An ESOP loan is based on the company’s credit, with repayment expected wholly out of future profits of the company.

Beyond the ESOP are other credit-diffusing tools which would open up ownership and profit sharing opportunities for consumers of public utilities, residents of new or redeveloped communities, teachers and other public servants, farm families, homemakers, the disabled, professionals, frustrated entrepreneurs, and citizens generally.

Transforming the Corporation through Justice-Based Management

Under the expanded capital ownership paradigm espoused under the Just Third Way, the business corporation (whether a small local business or a giant multinational) can become a vehicle for transforming the world into a more free and just marketplace. This Global Justice Movement web site places a very high focus on helping corporate managers to see that they can do their job more effectively by incorporating economic justice in the way they do business.

Through ESOPs and similar means for empowering corporate workers and customers, more people could legitimately acquire ownership of the growth of capital without taking from those who own existing assets. These new owners would be able to get income from capital as a supplement to their wage incomes.

Under “Justice-Based Management,” employees would supplement their fixed wages or salaries with monthly and annual bonuses, stock and dividends–all generated out of profits. Each employee could automatically earn and accumulate property while working in a participatory corporate culture, thus gaining a direct, personal interest in the success and profitability of his or her employer company.

International, National and Regional Economic Policies

Life-enhancing actions at the personal, family, enterprise or community level–no matter how well-intentioned–can easily be suppressed or nullified by a hostile or unjust external environment at the national or global level.

Moving from the microeconomic to the macro-economic level, proponents of the Just Third Way have developed strategies for reshaping basic social institutions, such as tax and monetary systems, which have become barriers to human development.

The Just Third Way is based on four interdependent pillars of economic justice:

  • – Expanded capital ownership

  • – Limited economic power of government

  • – Restoration of free and open markets for determining just prices, just wages and just profits

  1. – Restoration of private property in the means of production

Social technologies and laws designed to advance the four-pillar approach would encourage the broad diffusion of future capital ownership opportunities–the missing link in all other strategies for transforming the economies of the world. Economic and political power would begin to be decentralized into the hands of each member of society.

Social Justice, Not Utopia

We recognize that the world’s complex economic and social problems cannot be solved in a single stroke. There is no panacea.

Our concept of social justice, as developed and refined by such social justice proponents as the late Rev. William Ferree, addresses the structuring of institutions (laws, systems, social organizations, etc.) and how they enhance or degrade the sovereignty and dignity of the individuals affected by them.

By targeting institutions in society which are defective and unjust, social justice identifies the structural cause of the problem, not just the symptoms of the problem. Through democratic processes and by combining their individual strengths, concerned individuals can act in positive ways to bring about seemingly impossible changes in the social order.

Act of Social Justice – A Call to Action

Our Global Justice Movement web site defines the “act of social justice” as the moral virtue or good habit exercised when a person acts with others in an organized way to perfect the social order or any part of it within their reach.

Transforming bad laws and unjust institutions is impossible when each person acts in isolation or only for his own welfare. But together, organizing around common moral principles and a shared vision, people can convert social structures of exploitation and alienation into structures of justice.

America was born through acts of social justice. This is how racial barriers in the U.S. were lifted in the 1960s. And this is how communism was toppled in Eastern Europe and the former Soviet Union in the 1990s.

Implicit in any act of social justice is a recognition that improving the social order or an institution is a never-ending task. This is because human beings and human creations (including laws and institutions) are inherently imperfect. Hence, while we can never expect to achieve perfection, we have a moral responsibility to pursue justice.