Binary Economics The new Paradigm

Binary Economics The new Paradigm - Robert Ashford

Not many people are aware that the Employee Stock Ownership Plan (ESOP) was hatched from a macro-economic theory which qualifies in every respect as a genuinely new paradigm in economics. Louis Kelso himself took awhile to realize this. Almost until the end of his life he believed that he had merely corrected an error in the classical model. This was a critical error, since it is responsible for the historical bottleneck in the private property free market system that prevents market-sourced income from flowing to the many who want and need to consume its products.

In Binary Economics: The New Paradigm, Robert Ashford and Rodney Shakespeare, an American law professor and an English historian respectively, explain the premises and principles which Louis Kelso first discovered and then developed and refined into a logically coherent model of the free market system during his long career (more than 50 years) as a lawyer and investment banker. Although academic economists have either ignored Kelso or dismissed him as an “amateur crank” (Paul Samuelson’s famous epithet), his binary paradigm explains, as theirs do not, such “anomalies” as the economic decline of the middle class, growing social alienation, and our inability to transfer technology to the emerging nations in ways that do not create bubble economies that inevitably burst.

Most unsettling, conventional economists neither understand the cause of depression nor how to prevent the next one except through massive applications of the standard Keynesian remedies which even the European welfare states are repudiating because of their negative effects on monetary integrity, motivation and property. Not long ago, Lester Thurow, a superstar of his profession, writing on the Asian crisis, admitted without apology: “Economic collapses are an intrinsic part of capitalism.”