Capital democratization

Although principles underlying binary economics were first published in Kelso and Adler [Kelso, L.O., Adler, M., 1958. The capitalist manifesto, downloadable at Kelso Institute], the many books and papers that discuss the subject generally do not utilize conventional economics language. To facilitate the teaching of binary economics in beginning and intermediate college courses in economics and business, the paper explains some major microeconomic and macroeconomic fundamentals of binary economics by utilizing conventional neo-classical economic models. It then compares the theoretical results reached in a non-binary economic environment to those that may be reached in a binary one. The most important result from the comparison is that, in a non-binary environment, the economy would employ less than full potential capital and thus generate less than optimum output, consumption, saving and investment. The authors hope the article will help the reader to (a) understand the binary principles and (b) analyze the ‘binary promise’ of greater growth based on a broader distribution of capital ownership.