Louis Kelso and the origin of the term post-scarcity, and its current and future use

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Paul D. Fernhout

Jun 19, 2009, 9:44:59 AM6/19/09
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Here are some comments on the origin of the term "post-scarcity" and some
thoughts linking it with past use and future use, and how a computer game
might help people understand some of that.

I had assumed Murray Bookchin had coined the term post-scarcity with his
book "Post-Scarcity Anarchism" book in 1971:
"Bookchin's titular "post scarcity anarchism" is an economic system based on
social ecology, libertarian municipalism, and an abundance of fundamental
resources. Bookchin argues that post-industrial societies are also
post-scarcity societies, and can thus imagine "the fulfillment of the social
and cultural potentialities latent in a technology of abundance". The
self-administration of society is now made possible by technological
advancement and, when technology is used in an ecologically sensitive
manner, the revolutionary potential of society will be much changed.
Bookchin claims that the expanded production made possible by the
technological advances of the twentieth century were in the pursuit of
market profit and at the expense of the needs of humans and of ecological
sustainability. The accumulation of capital can no longer be considered a
prerequisite for liberation, and the notion that obstructions such as the
state, social hierarchy and vanguard political parties are necessary in the
struggle for freedom of the working classes can be dispelled as a myth."

But in Googling yesterday, I see I was mistaken in my assumption. The person
who coined the term was apparently "Louis O. Kelso".
"The phrase post-scarcity economy was coined in the 1950s by economist Louis
Kelso, but it could have been envisioned any time after the Industrial
Revolution. The idea is that automation drives down the price of all goods
to effectively zero, money becomes meaningless, and the entire population
goes on perpetual vacation. ... For a robot to build more robots from sand
and gravel, it must replicate all the arts of ore mining, metal smelting,
and machining, to make just the metal parts. There will also be rubber and
plastic parts, and probably silicon electronic parts. The "self-replicative
robot" probably now occupies several acres, and is really a self-replicating
robot factory, producing both robots and more robot factories. In order to
accept cheaper less-organized raw materials, the unit of replication needs
to be more complex. MNT [nanotechnoly] simplifies matters somewhat. Products
are built out of carbon and other common elements, "machining" is done at a
molecular level, and no smelting is needed. Putting all the pieces together
into one desktop nanofactory becomes feasible. The raw materials are atoms
(dirt, air, water), time, energy, and software. Sometimes, what we really
want from a post-scarcity economy is self-sufficiency. Complete
self-sufficiency means that you can trundle off into the woods, build a log
cabin, catch your own food, make your own clothes, and perform your own
medical services. A nanofactory will make all that much more practical."

On Kelso:
Louis O. Kelso (1913-1991) was a lawyer, investor and economic thinker who
sought to find a way to preserve capitalism from the competition of
communism as an alternative within the context of the early Cold War and is
credited with the creation of the first Employee Stock Ownership Plan
(ESOP). His non-conformist "capitalism" might be compared to the peoples'
capitalism ideas of G. K. Chesterton in which ownership is distributed to as
many people as possible within the economy. Kelso developed the idea of
Binary Economics to explain the need for expanded capital ownership in light
of industrial production and the dominance of capital instead of labor. In
1956 Louis Kelso invented the Employee Stock Ownership Plan (ESOP) to put
his ideas into practice. The first ESOP which was used by the employees of
Peninsula Newspapers Inc., based in Palo Alto, California, to acquire the
newspaper chain. Since that time, ESOPs have been used by hundreds of
companies, including Avis, Exxon Mobil, Standard Oil of California and
Atlantic Richfield. In 1958, Kelso collaborated with the philosopher
Mortimer Adler to write The Capitalist Manifesto that is considered the
primary source of his economic theories. Kelso and Adler followed this book
with The New Capitalists (Random House, New York: 1961). Both books are
readable online from the Kelso Institute. Louis O. Kelso had significant
discussions concerning a Basic Income Guarantee with Russell B. Long and
Daniel Patrick Moynihan.[1] Kelso has inspired many economic thinkers
including James S. Albus, Robert Ashford and Norman Kurland.[2]

That Wikipedia article does not mention the post-scarcity term yet.

It does have this quote: "The Roman arena was technically a level playing
field. But on one side were the lions with all the weapons, and on the other
the Christians with all the blood. That's not a level playing field. That's
a slaughter. And so is putting people into the economy without equipping
them with capital, while equipping a tiny handful of people with hundreds
and thousands of times more than they can use." --Louis O. Kelso in Bill
Moyers: A World of Ideas, (1990)

A link to the Kelso Institute:
"The basic moral problem that faces man as he moves into the age of
automation, the age of accelerating conquest of nature, is whether he is
really fit to live in an industrial society; whether his institutions will
adjust rapidly enough; whether he will rivet himself with an absurd
institution like full employment in the economic order when it is not only
unnecessary but unadministratable in anything but a slave society; whether
freed from the necessity to devote his brain and brawn to the production of
goods and services, he can address himself to the work of civilization
itself. (Louis O. Kelso, 1964)"

Another article mentioning Kelso:
"Louis Kelso's Economic Vision for the 21st Century"
But Americans have also seen harbingers of troubles to come: the
disappearance of entire sectors of labor as robots, artificial intelligence,
and advanced office machines enter the work place. Globalization has
encouraged the flight of jobs and capital to lower-wage regions of the
world. Blue-collar workers and middle management alike have become targets
for corporate downsizing. Today, six Ph.D. computer scientists from India
can be hired over the Internet for the price of a comparable American.
Thousands of jobs have been lost to a computer chip. Even in the midst of
our prosperity most of us feel powerless to control our own futures or
unable to find meaning in our current condition. There is an economic fault
line running throughout America and the world which today’s economic gurus
seem unable to explain or remedy: the widening wealth and income gap between
a tiny rich elite and multitudes of poor in every country (including the
United States), and between developed and developing nations. Surrounded by
global communications, the global economy, and our global environment, we
cannot help but feel the tremors inside and outside our borders. With the
growing economic imbalances come bloody conflicts, widespread starvation,
international crime and corruption, depletion of the planet’s
non-replenishable resources, unconscionable destruction of the environment
and systematic suppression of human potential and life-enhancing technology.
Seeing through the chaos of our rapidly changing world, one post-scarcity
visionary of the 20th Century, lawyer-economist Louis Kelso, understood the
power of technology either to liberate or dehumanize people. Popularly known
as the inventor of the employee stock ownership plan (ESOP), Kelso observed
that modern capital tools and their phenomenal power to "do more with less"
have offered people an escape from scarcity to shared abundance. As a lawyer
Kelso also saw that the design of our "invisible" institutional environment
and social tools determines the quality of people’s relationship to
technology. Intangibles, such as our laws and financial systems, determine
which people will be included or excluded from sharing of access to equal
economic opportunity, power and capital incomes. Access to capital
ownership, asserted Kelso, is as fundamental a human right as the right to
the fruits of one’s labor. Furthermore, Kelso argued, the democratization of
capital credit is the "social key" to universalizing access to future
ownership of productive wealth, so that every person, as an owner, could
eventually gain income independence through the profits from one’s capital.
In the 20th century, many lived lives of quiet desperation, struggling from
paycheck-to-paycheck, or from hand-to-mouth, with no ownership stake in
society’s wealth-producing assets. Most 20th century Americans were limited
to a choice between the wage-systems of capitalism and the wage-systems of
socialism. Many lost hope that they and their descendants would ever share
in the American Dream. Just as Lincoln provided opportunities for
propertyless people in 19th century America to gain a piece of the world’s
shrinking land frontier, 21st century Americans will gain their ownership
share in the limitless technological growth frontier. In the 21st century,
Americans will be given a new choice, a "just third way" opened up by Louis
Kelso, an alternative model of development that transcends both Wall Street
capitalism and all forms of socialism. Choosing this road will lead America
back to its revolutionary roots to a more participatory, unified and
empowering "Second American Revolution" and a more just, free and efficient
market economy. America will then again serve as "the last best hope of

That other group's main site as a 501-c-3 non-profit:
"Welcome to the Web site of the Center for Economic and Social Justice. CESJ
is a non-profit educational center, think tank and social action catalyst.
We are dedicated to a free enterprise approach to economic and social
justice for all, through equal opportunities to capital ownership for every

So, there are two groups to maybe fold into open manufacturing somehow?

More on the idea of a "third way" that is neither capitalism-as-in-the-USA
or socialism-as-Stalinist-authoritarianism:
"Media pundits are now talking about a "Third Way," but none of them seems
to know quite what it is. People on the left who are positive toward the
idea describe it as socialism with a capitalist whitewash; people on the
right claim it is capitalism with a socialist veneer. The European and US
power elite, represented by Britain's Prime Minister Tony Blair and
America's President Bill Clinton, have begun using the phrase, but have
failed to define it in any meaningful way. On September 21, 1998 Clinton and
Blair met with other world leaders at the New York University Law School to
try to give content to "The Third Way." ... Is there a solution? Yes. There
is a real "Third Way" that goes beyond the traditional answers supplied by
the right and left. It offers a new vision and a new model for development
for countries of the world in which they can succeed to their fullest
potential within the framework of a global marketplace. "

The real revolution in that sense is that the "means of production" are
getting cheaper, better, faster, and smaller, to the point where it is
significantly cheaper to make complex customized things locally than
centralize their production.

(Whether mass produced things were ever really cheaper given all
externalities than similar locally produced ones is a different issue.)

Others point out that the basic ideas of capitalism break down in the face
of abundance:

Capitalism is fundamentally based on the idea of scarcity of capital and
scarcity of consumer goods (where profit-seeking is then motivated to get
money to get more goods and capital). If everyone has enough, there is no
motive for engaging in more production. If there is not a scarcity of
something, for example, if there is a lot of hemp everywhere for fiber
production growing as a weed, then capitalism *must* act to wipe out the
abundance through war or taxation or regulation or other means if the
capitalist system is to create an artificial scarcity so it can continue to
function (not to say it *should*).

Hemp is a good example of a self-replicating system that is dangerous stuff
to the ideology of capitalism:
"Industrial hemp has many uses, including paper, textiles, biodegradable
plastics, construction, health food, and fuel. It is one of the fastest
growing biomasses known, and one of the earliest domesticated plants known.
It may be environmentally helpful, for example hemp requires fewer
pesticides, no herbicides, controls erosion of the topsoil, and produces
oxygen. Furthermore, hemp can be used to replace many potentially harmful
products, such as tree paper (the processing of which uses chlorine bleach,
which results in the waste product polychlorinated dibensodioxins, popularly
known as dioxins, which are carcinogenic, and contribute to deforestation),
cosmetics, and plastics, most of which are petroleum-based and do not
decompose easily. The strongest chemical needed to whiten the already light
hemp paper is non-toxic hydrogen peroxide. ... While more hemp is exported
to the United States than to any other country, the United States Government
does not consistently distinguish between marijuana and the non-psychoactive
Cannabis used for industrial and commercial purposes."

For another example, the USA has spent trillions of dollars on wars over oil
that could otherwise have reduced our need for oil if spent on home
insulation, which from a capitalist perspective was the *right* thing to do,
even if from a humane perspective, it was the *wrong* thing to do.

Drug consumption often reduces material consumption, so it has to go too
(this is not to advocate drug use, including nicotine and alcohol, since it
can have a lot of other issues).

An educated self-reliant populace is a danger to capitalism too, so the
abundant potential of every child need to be dumbed down using school
according to Gatto:
"I’ll bring this down to earth. Try to see that an intricately subordinated
industrial/commercial system has only limited use for hundreds of millions
of self-reliant, resourceful readers and critical thinkers. In an
egalitarian, entrepreneurially based economy of confederated families like
the one the Amish have or the Mondragon folk in the Basque region of Spain,
any number of self-reliant people can be accommodated usefully, but not in a
concentrated command-type economy like our own. Where on earth would they fit?"

So, ultimately, capitalism will wage war on the post-scarcity future as it
tries to survive. We have been seeing that with the war on hemp, and the war
on childhood, and the war on drugs, and now the war on file sharing. And we
will likely see a war on 3D printing before capitalism-as-we-know-it is over
(using notions like patents and copyrights and "counterfeiting" to suppress
the use of 3D printers). (I say "capitalism-as-we-know-it", because one can
envision scenarios like Marshall Brain's Manna story, which are somewhat
capitalistic in a Kelso shared ownership sense with rationing through a
guaranteed basic income.)

Connecting this to my previous email on the limits of decentralization,
given a need for Manuel de Landa meshwork/hierarchy balance, it would seem
the originator of the post-scarcity meme (Kelso) was more in tune with that
need for balance than future users of it, just like Charles Fourier was more
in tune with the idea of abundance and social change than Karl Marx who came
along later and built on many of Fourier's ideas but in a different
direction (worse in many respects).

That does not mean I agree with everything Kelso or Fourier wrote, or
disagree with everything Bookchin or Marx wrote, just that we can see and
interplay of ideas, as people pick them up and put them into different
agendas and retrofit them around different sets of social assumptions. But
it may well be that Bookchin and Marx have lead people away from more
balanced meshwork-hierarchy interpretations of these core ideas in some ways.

One spin on post-scarcity from yet another perspective (transhumanist); I'll
quote just a non-controversial part of it:
"Envisioning a Post-Scarcity Economy"
"One of the things in looking into the future, and I’m not going to make a
forecast here, but if you make a simple extrapolation from about 1850 to
now, the average economic growth rate on the planet was about 3% per year.
And if you extrapolate that until about 2100 it will be about $550 trillion,
ten times bigger than the current world economy of $47 trillion, and the
average income on the planet would be $70,000 per capita. That could buy a
lot of toys, I hope, anyway."

Obviously, whether you agreed with that projection depends on how you feel
about capitalism and its ability to overcome peak oil and avoid major wars.

And there are even Biblical takes on post-scarcity:
"Making Another World Possible: The Torah, Louis Kelso, and the Problem
of Poverty"
"Why is it that after centuries of concerted efforts to eliminate it, and
decades of unprecedented economic growth that should have accomplished it,
poverty not only is still with us but actually is increasing? Starting with
a passage in the Old Testament, the source of moral behavior for believers
of Judaism, Christianity, and Islam, this author argues that the postulation
of the labor theory of value and scarcity by Adam Smith, and accepted as
part of the basic framework of the discipline of economics, has prevented us
from formulating public policies that would enable us to implement the way
the God of the Abrahamic faiths intended the poor to be cared for.
Substituting modifications in economic theory proposed originally by Louis
Kelso, a model acknowledging the independent contribution of capital in the
productive process is proposed that would enable us to formulate policies
for the production and distribution of wealth and that would make the
scourge of human poverty a bad dream of the past."

So, it is interesting to see these post-scarcity ideas resonating with
people of various faiths in different ways -- capitalism, transhumanism,
biblical, socialism, anarchism, libertarianism, marxism, green, and so on.

Note that America before 1492 was a pre-scarcity place in many areas, with
essentially Kelso's notion of capital (hunting, fishing, gathering grounds)
owned by the tribe in common (often by the women). There were still border
disputes which lead to ongoing perpetual feuding, although the Iroquois
Confederacy was moving beyond that internally and might have done so
externally given enough time (and many core ideas of the Iroquois
Confederacy became central to the US Constitution). There also were
occasional bureaucracies out of control that Daniel Quinn suggests were
trimmed back periodically (although that was before nuclear weapons and
internet surveillance and killer robots and dumbed-down people, so social
collapse was less risky). So, even in the Americas before Columbus we can
see those ideas and how they resonated with various cultures.

In our Seneca Tradition, the Field of Plenty is seen as a spiral that has
its smallest revolution out in space and its' largest revolution near the
Earth. This shape could be likened to an upside-down tornado. When our
Ancestors assisted the Pilgrims in planting Corn and raising crops so they
would not starve, we taught them the understanding of the Field of Plenty by
bringing the cornucopia baskets full of vegetables. The Iroquois women wove
these baskets as a physical reminder that Great Mystery provides through the
Field of Plenty. The Pilgrims were taught that giving prayers of gratitude
was not just a Christian concept. The Red Race understood thanksgiving on a
daily basis. The Field of Plenty is always full of abundance. The gratitude
we show as Children of Earth allows the ideas within the Field of Plenty to
manifest on the Good Red Road so we may enjoy these fruits in a physical
manner. When the cornucopia was brought to the Pilgrims, the Iroquois People
sought to assist these Boat People in destroying their fear of scarcity. The
Native understanding is that there is always enough for everyone when
abundance is shared and when gratitude is given back to the Original Source.
The trick was to explain the concept of the Field of Plenty with few
mutually understood words or signs. The misunderstanding that sprang from
this lack of common language robbed those who came to Turtle Island of a
beautiful teaching. Our "land of the free, home of the brave" has fallen
into taking much more than is given back in gratitude by its citizens.
Turtle Island has provided for the needs of millions who came from lands
that were ruled by the greedy. In our present state of abundance, many of
our inhabitants have forgotten that Thanksgiving is a daily way of living,
not a holiday that comes once a year.

Many of the Native Americans were offering abundance through nature and
philosophy, but many of the Europeans were offering death and scarcity
through guns, germs, and steel.

So, in talking about post-scarcity and open manufacturing, we are in a sense
just fulfilling the hopes of those Native Americans from many centuries ago.

Although, it seems like the current USA leadership speaks this new language
called "mathematical economics", so they have again insulated themselves
from hearing about post-scarcity. :-) Thus my emphasis on divide-by-zero
errors and obvious extrapolations of key ideas (exponential growth) into
transcendence (or absurdity).

You can see obviously absurd statements by conventional standards (but not
post-scarcity ones) that seem ignored in current social policy; for example:
"Gross world product (GWP) is the total gross national product of all the
countries in the world. This also equals the total gross domestic product.
See measures of national income and output for more details. The per capita
GWP in 2008 was approximately $10,500 US dollars (USD). The
Intergovernmental Panel on Climate Change (IPCC), in their Third Assessment
Report (TAR), predicts a maximum per-capita gross world product in 2100 of
approximately $140,000 (in year 2000 dollars)."

How does capitalism make any sense when the average income in the world
would be that of one of today's US millionaires? Who would want to "work" at
a conventional job, when they could live well and hang out with family and
friends and volunteer at whatever they wanted to do on a fraction of that
sum? Ninety years from now is within the lifetime of some people now alive.
And that is just the extreme, before then many issues would come up.

I guess I just don't speak the right language to help the elite boat people
understand (despite having gone to school with some. :-) Or even the
non-elite ones. :-(

Anyway, so that is why someone like Ted Hall of ShopBot Tools, with his
cornucopia of production, is doing more to convey this message than me. :-)
At least tangible objects require less language to explain.

Still, the boat people did not get the implications of the Cornucopia, and
maybe most people today do not get the implications of the ShopBot system or
other forms of digital fabrication either?

It seems to me this issue, helping "boat people" see the implications of
post-scarcity is really important. When we wrote our garden simulator, part
of the motivation was to help people see the long term implications of their
gardening choices. But a lot of that aspiration got lost in the difficulty
of just making something that worked, as well as trying to adhere to
published and validated agricultural models (models we found bugs in, and
biases in, for example the assumption that pesticides did not have secondary
and tertiary breakdown products, or ignoring the secondary effects of
dumping vast amounts of nitrogen into the soil which displaces micro
nutrients and leads to weaker and less nutritious plants, and so on, all
conventional agricultural versus organic agriculture issues). So, while we
started off wanting to make an organic gardening game, we ended up with
something much less than we hoped for, intimidated in part by the scientific
establishment, who in the end, knew less than us about some key issues.
There are simulations of the future like SimCity -- but even woven into that
are assumptions of scarcity and capitalism, like the USDA models we used had
various assumptions woven in. Of course, all models have assumptions -- but
peopel might as well be a variety of ones to choose from. :-)

It is interesting to see Chris Crawford's Balance of the Planet Game being
rewritten (by him) on SourceForge:

A write up about it:
"Chris Crawford seems to have a special liking for problems of global
concern. Balance of Power dealt with politics in the cold war, its successor
Balance of the Planet simulates nothing less than Earth's ecosystem.
Although Maxis' Sim Earth is often credited as the first "ecosim", the title
rightfully belongs to Crawford's game. Both games are equally interesting
nevertheless, as they use two vastly different approaches to an enormously
complex subject. ... Balance of the Planet breaks down the ecological system
into 150 single factors, connected in a cause-and-effect network. Rather
than experiencing the ecosystem as a whole, you discover a string of
subjects that influence each other. For example, when dealing with global
warming, you'd be referred to carbon dioxides and methane (the causes) and
rising sea level (the result). By following and understanding the links, you
may thus find out in which way beef production influences inundation. There
is, however, no accurate simulation of a global ecology, rather than a
sophisticated schematic of factors and problems."

Balance of the Planet had its own set of assumptions -- no matter how much
solar power you used, it seemed like you got about as many deaths from
people falling off roofs as from fossil fuel issues. (As if safe roof
operations was not a solvable problem in the long term with better training
and equipment or better design or robotics...) You could change various
parameters, but not that one if I recall correctly. It had a good point
about hydropower being destructive to rivers though, which did change my
perspective on hydropower.

There is a link on that SourceForge page for a related news item:
"Game-Related Education On the Rise At Colleges "

It would be great to see a "Balance of the Planet" that looked at
post-scarcity issues. Though it is hard to imagine, twenty years later,
people paying much money for something like Balance of the Planet was then;
essentially, it was a spreadsheet.

--Paul Fernhout

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