Readers' Forum

Do we havea choice,as employees,to opt for a dif ferent policyfromthe privatesector-or to choose no policyat all? What kindofchoicecanwe makeabout the 15.3 percent we and our employertogether must con tribute to SocialSecurity?Do we have the oppor tunityto designan alternativeretirement program with our employer? And what about overtime arrangements? Who decides all of that on our Readers' Forum To the Editors: In your July 1990 issue, an articleby DwightD. Murpheyseeks to positionEmployeeStock Owner shipPlans(ESOPs)as a threatto thefreemarketand as a vehiclefor a new constituencyfor the American Left.Nothingcouldbe furtherfromthe truth.ESOPs do notconstitute"workers'control"or"workers'self management"butinsteadallowworkers(bothhourly and salaried)to becomecapitalworkersas well as labor workers.One need only read the writingsof Louis O. Kelso,founder of the ESOP concept,to understandthatKelsodoesnotbelievein afree lunch oragiveawayofcapitalownership.Dr.Murpheyinhis articleis correctwhenhe statesthatworkers'"control is inefficientto the extent that it is socialist."The ESOP advancesthe cause of the free marketsystem and educatesworkersto understandthat employers, in orderto be competitiveandprofitablein afreemar ketsituation,mustbe efficientandproductive.ESOPs canandhavereducedlabor-managementstrife,there by providingESOP corporationswith a competitive edgein the domesticand worldmarketplace.

Stripped to its core, Murphey'sarticle seeks to 393 employment contract? The government again, because we "publics" can't be trusted to know what'sbest for us. And this just scratchesthe surface in one area ofour lives.Youwouldbe hard pressedto findany area of our existencewhere Big Brother doesn't close off our options and dictate what kinds of contracts we are allowed. Just pause and think about it. Then reflecton what this is sayingabout you as a person. How independent are you? How free are you to pursue your own happiness?How able are you to control your own destiny when your government all but writes your life's contracts? And how much longer are you willingto sit back and watchother people you don't even know rule your life? D perpetuatean elitistgroup owningall the means of capital acquisition, thereby (though Murphey doesn'tseem to understandthis fact) placingwork ing men and women in ideologicaland economic competition with their employers.In that battle, everyoneloses and no one wins. Inequalityin the abilityto achievecapitalacquisitionis a rallyingcry for exponentsof the foolishand dangeroussocialist system.The goalofany economicsystemis to create goodsand servicesthat can be utilizedby it~ produc ers as consumers.The theoriesofLouisand Patricia Hetter Kelso have made capitalownershipa reality for millionsin the UnitedStates,therebyspreading the constituency for the free market system and demonstratingto thoseindividualsthatin acapitalist systemwith broad-based capital ownership,their lives can be improvedby reason of their own hard work and efficientparticipationin the free market system.

D. BruceShine,GeneralCounsel UnitedTextileWorkersof America ProfessorMurpheyresponds: I am callingmy remarksa "response"rather than a "rebuttal" becauseI hope to enlistcommon ground-not an adversarialrelation-with people suchas Mr. Shine. In my article in the July Freeman, I essentially made three points: 1. That employee ownership is growing by leaps and bounds as a result of the massive tax 394 THE FREEMAN • OCTOBER 1990 preferences that have been given to it since 1974. This growth is a product of "interventionism," not of the free play of market forces. 2. That the rapid institutionalization of employ ee ownership will create a vast new constituency for government intervention. One reason for this is that millions of employees are being caused to rely upon a non~diversified form of holding as one of their principal investment vehicles. Govern ment willalmost inevitably,given the political real ities once an enormous employee-ownership con stituency comes into being, be called upon to make sure that employee-owned companies don't fail or at least to serve as guarantor that the employees won't lose the value of their shares if their compa nies fail.

3. That, even though I don't think the move toward employee ownership will lead to socialism in the United States, the Left can certainly be counted on to seek to dominate it with an anticap italist animus. Workers' control was central to much 19th-century socialist thought, and has been a centerpiece of Western European and American socialist thinking in recent years. What many of us don't realize is that there is an extensive and active socialist literature on the subject. This suggests that we are creating a potentially hostile institution within the heart of capitalism itself, with all of the future conflict that that entails. Those who favor a free market had better get busy within employee owned businesses to see to it that such ownership actually does create an identification with capital ism on the part of the employees. We need to understand that American employees' hearts and minds are going to be contested territory in an unfortunate ideological war. It's a war in which proponents of a free market will,as always, be at a serious disadvantage in terms of intellectual and media articulation.

These are the points I made in the article. Now I am pleased that Mr. Shine has raised an aspect that I did not have space to address in my article. (I've devoted considerable attention to it in recent issues of the ConservativeReviewand The Journalof Social, Politicaland EconomicStudies. I will be glad to send copies to anyone who writes to me in care of The Freeman.) He refers to the writing of Louis O. Kelso, known as "the father of the ESOP (Employee Stock Ownership Plan)." He indicates that Kelso and his coauthors-who were Mortimer Adler for the first two of four volumes and Patricia Hetter Kelso for the final volume-actually favor employee ownership as part of a free market sys tem, not of socialism. I can only hope that Mr. Shine, and others, will go back and read Kelso's books carefully, looking past the rhetoric of a "new capitalism" and seeing that what Kelso has actually been propounding for over 30 years is a thoroughgoing socialism.

In fact, Kelso's writing is the most fascinating example I know of semantic inversion. He and Adler were brilliant in devising a way to call social ism "capitalism." ESOPs are only a small part of the road to the "new capitalism." The idea is to have an unlimited supply of government -backed credit to lend to vir tually everyone, without obligation to repay (and thus the semantically disguised handout), to make it possible for people to buy all sorts of property -including even shares in sidewalks-until every one in our society owns roughly the same amount of property. Then everyone is to receive payments derived from their ownership as a form of entitle ment. This vast scheme of redistribution and of entitlement payments is called "capitalism" because everyone is made an "owner" and is said to be receiving a return on his or her "capital." I know this is astonishing, but anyone who doubts my summary of it is urged to run, not walk, to the public library to read anyone-but prefer ably all four-of Kelso's books. There, under an impressive array of verbiage and semantic inver sion, the discerning reader will see the whole scheme laid out in all its glory.

I hope Mr. Shine is one of the many who have genuinely been fooled by the Kelso books. Many solid free market proponents have accepted the Kelso rhetoric at face value. I have no doubt but that true proponents of a market economy willjoin me in opposing Kelso's scheme, although anyone who's been snookered needs a little time to adjust to a realization of it. After a short period of disbe lief,they should be angry.Not at me as the messen ger bringing bad tidings, but at Kelso. Dwight D. Murphey The Wichita State University Wichita, Kansas 395 A REVIEWER'S NOTEBOOK The War of Ideas by John Chamberlain J ohn C. Goodman of th.e National Center for Policy Analysis, in company with Ramona MarotzBaden of the Foundation for Re search on Economics and the Environment, are doing their best to keep up with changing ideas as they affect Latin America. They continue to have their troubles. As their new book, Fightingthe War ofIdeasin Latin America (National Center for Policy Analy sis, 12655 N. Central Expressway, Suite 720, Dal las, Texas 75243, 252 pages, $6.95 paper), went to press, the very first page of their introduction demanded drastic footnoting.