Customer Reviews

The Capitalist Manifesto

5 star:		(6)
4 star:		(0)
3 star:		(0)
2 star:		(0)
1 star:		(0)

 

 

This book is an extremely powerful and pithy explanation of how capital and labor interact in modern capitalism. It argues that wealth tends to concentrate because capital is more productive than labor, and so it calls for policies to compensate labor with capital instead of cash.

This is one of those books that need to be read from front to back. No fair peeking to see "Who done it."

Louis O. Kelso caries you step by step through the pitfalls of political systems including capitalism to a more robust form of political freedom that can only be achieved with economic freedom. Who owns the Alaskan pipeline? What is leisure and how does it benefit humanity? We are moving out of a labor-based world and need to adjust our way of thinking.

Many economic problems seem black or white. This book takes a third path alternative. For the most part this may only works on paper. However, there are practical examples.

This book is an eye opener and you will look at what you see on TV and read in a new way. Do not confuse this system with any previously read book.

While reading this you must take in account that it was written a while ago. Be sure to catch up with the changes and a newer understanding by reading "The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings."

The Capitalist Manifesto was written during the Cold War, when capitalism and communism were competing economic systems. In part one, Lou shows where he thinks Karl Marx made his big mistake and says:

The path the capitalist revolution will take faces in exactly the opposite
direction from that taken by the communist revolution. It seeks to diffuse
the private ownership of capital instead of abolishing it entirely. It seeks
to make all men capitalists instead of preventing anyone from being a
capitalist by making the State the only capitalist.

Part two of the book is Lou's program for the "capitalist revolution." It would help households become owners of corporate shares. They would pay for the shares through bank loans. Dividends on the shares would first repay the loans. After that, the dividends would be a major source of household income.

Each element of the program calls for new legislation. One major government program would make credit easily available for households to invest in businesses. A "Capital Diffusion Insurance Corporation" would be federally chartered, to insure against some of the risks, such as the failure of a business to sell all of a securities offering and the catastrophe to a borrower from multiple business failures. This insurance is intended to lower the bank's interest rate so that the borrower's loan payments would be less than the expected dividends on the shares.

To provide cash for loan repayment and household income, corporations would be required to pay out their entire net income in dividends. (Younger businesses could retain earnings for growth and reserves against risks.)

Lou and I agreed about the need to broaden the ownership of capital and increase the number of individuals who could receive investment income, as a supplement to work earnings. We had three differences about how that could be done:

1. Lou's programs placed an intermediary between the individual owners and the business. DPOs create a direct relationship between owners and management.

2. Lou's programs require extensive government legislation and oversight. Direct offerings use the existing legal framework, without any special treatment.

3. Lou's programs used Wall Street investment bankers, including Kelso & Co., in packaging and distribution. We have prepared electronic toolkits for use by the business itself in designing and completing direct offerings.

Lou believed passionately that each of these three elements was necessary. He told me that the intermediary was needed because the new owners did not have the experience or training to manage direct investments. He said this was a temporary measure and could gradually be eliminated as more people became capable of capital management. In our direct public offerings, over 90% of the investors have never owned shares directly in a business before. Nor do they have an account with a securities broker. Nevertheless, our interviews show that they read the offering documents and perform the same "risk/reward analysis" as securities analysts and investment managers.

Government intervention was necessary, Lou argued, because vast borrowings were required for workers to invest in businesses. The financial institutions would not extend that credit without government guarantees, tax benefits or other incentives. As to our direct offerings, one of Lou's followers referred to them as a "Marie Antoinette" response. (When told the French people could not afford bread, their queen reportedly said: "Let them eat cake.") The point of the comment being that households don't have money to invest, unless they can get loans that are repaid from the investments' income. However, we have seen that "workers" will choose to allocate money to owning shares in a business, rather than spend it on something else. The money is there, if it can be diverted from consumption. Government-supported borrowings are not necessary. (Ironically, Paul Samuelson, Nobel Laureate in Economics, referred to Lou's programs on television's "60 Minutes" as: "It really has a Marie Antoinette-ish ring to it. `Let them own capital!'")

Lou's programs are complex and require professional intermediaries and their advisors. The ESOP and all the other "_SOPs" involve creating trusts and intricate financing negotiations and documentation. There is clearly a role for investment bankers and their lawyers. Direct offerings rely on simple structures that have been used for centuries. We have demonstrated that they can be done without these financial engineers and sales forces.

These differences do not detract from the benefits that I and many others have gotten from Lou's writings and examples of his theories in action.

This is one of those books that need to be read from front to back. No fair peeking to see "Who done it."

Louis O. Kelso caries you step by step through the pitfalls of political systems including capitalism to a more robust form of political freedom that can only be achieved with economic freedom. Who owns the Alaskan pipeline? What is leisure and how does it benefit humanity? We are moving out of a labor-based world and need to adjust our way of thinking.

As with most economic heroes this is a third alternative to what looks like black and white problems. Usually this only works on paper. But there are practical examples.

This book is an eye opener and you will look at what you see on TV and read in a new way. Do not confuse this system with any previously read book.

While reading this you must take in account that it was written a while ago. Be sure to catch up with the changes and a newer understanding by reading "The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings."

The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings

This is one of those books that need to be read from front to back. No fair peeking to see "Who done it."

Louis O. Kelso caries you step by step through the pitfalls of political systems including capitalism to a more robust form of political freedom that can only be achieved with economic freedom. Who owns the Alaskan pipeline? What is leisure and how does it benefit humanity? We are moving out of a labor-based world and need to adjust our way of thinking.

Many economic problems seem black or white. This book takes a third path alternative. For the most part this may only works on paper. However, there are practical examples.

This book is an eye opener and you will look at what you see on TV and read in a new way. Do not confuse this system with any previously read book.

While reading this you must take in account that it was written a while ago. Be sure to catch up with the changes and a newer understanding by reading "The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings."

The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings

This is one of those books that need to be read from front to back. No fair peeking to see "Who done it."

Louis O. Kelso caries you step by step through the pitfalls of political systems including capitalism to a more robust form of political freedom that can only be achieved with economic freedom. Who owns the Alaskan pipeline? What is leisure and how does it benefit humanity? We are moving out of a labor-based world and need to adjust our way of thinking.

As with most economic heroes this is a third alternative to what looks like black and white problems. Usually this only works on paper. But there are practical examples.

This book is an eye opener and you will look at what you see on TV and read in a new way. Do not confuse this system with any previously read book.

While reading this you must take in account that it was written a while ago. Be sure to catch up with the changes and a newer understanding by reading "The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings."

The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings