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ABSTRACT. Binary economics holds that a broader distribution of capital acquisition with the earnings of capital promises more consumer demand in future years and therefore greater incentive to employ labor and capital in earlier years. Therefore broadening individual participation in capital acquisition with the earnings of capital has a potent (but presently untapped) positive distributive relationship to growth that is not caused by productivity gains and governmental strategies to redistribute or regulate demand. Compared to classical, neoclassical, Keynesian, Austrian, institutional, socialist, and other schools of economics, binary economics specifically offers (1) a distinct explanation for the persistence of long-run unutilized productive capacity (2) a unique paradigm for understanding economic production, prices, efficiency, growth, and justice, and (3) a market based policy alternative that promises a wholly voluntary means to employ productive capacity more fully, profitably and sustainably to produce much greater and broadly shared abundance by way of a more inclusive, competitive, and democratic private property system that universalizes the competitive market right to acquire capital with the earnings of capital. To achieve these goals, no transactions are mandated and no government taxation, redistribution, or borrowing is required. Rather, with a binary understanding of market economics, and with modest reform of the existing system of corporate finance, these goals could be achieved entirely by way of voluntary transactions that yield widespread, and eventually universal, individual, capital acquisition with the earnings of capital. When judged by the criteria of (1) reasonable assumptions, (2) internal consistency, and (3) plausible descriptive, predictive, and prescriptive utility, compared to the other economic approaches that are routinely taught and employed, the binary approach is more consistent with scientific principles. Based on widely accepted principles underlying the philosophy of science, professional ethics, secular morality, and spiritual values, educational institutions and foundations have a responsibility to teach binary economics in most contexts in which issues of economic growth, efficiency, sustainability, and justice are taught or considered. Professional ethics governing fiduciaries, advisors, and government officials also call for the inclusion of binary economic principles in their positive and normative analysis of those subjects and in the discharge of their professional duties. pp. 11–53
JEL codes: E23; G14; D63

Keywords: austerity-stimulus debates; broadening capital acquisition; effective demand; growth theory; Keynesian economics; neoclassical economics

How to cite: Ashford, Robert (2015), “Unutilized Productive Capacity, Binary Economics and the Case for Broadening Capital Ownership,” Economics, Management, and Financial Markets 10(2): 11–53.

ROBERT ASHFORD
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Syracuse University College of Law

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