Background
Kelso elaborated on his proposals in The New Capitalists in 1961; before teaming up with political scientist Patricia Hetter Kelso to further explain how capital instruments provide an increasing percentage of the wealth and why capital is narrowly owned in the modern industrial economy. Their analysis predicted that widely distributed capital ownership will create a more balanced economy. Kelso and Hetter proposed new "binary" share holdings which would pay out full net earnings as dividends (with exceptions for research, maintenance and depreciation). These could be obtained on credit by those not possessing savings, with a government-backed insurance scheme to protect the shareholder in the event of loss.
Kelso's writings and his attempts to promote them were not well received by academic economists. Milton Friedman said of The Capitalist Manifesto "the book's economics was bad...the interpretation of history, ludicrous; and the policy recommended, dangerous" and recalls a debate where even the moderator Clark Kerr "lost his cool as a moderator and attacked vigorously". Paul Samuelson, another Nobel Memorial Prize in Economic Sciences winner, told US Congress that Kelso's theories were a "cranky fad" not accepted by mainstream economists, but Kelso's ideas on promoting wider capital ownership nevertheless significantly influenced the passing of legislation promoting employee ownership.
Read more about this topic: Binary Economics
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