Beyond austerity and stimulus: democratizing capital acquisition with the earnings of capital as a means to sustainable growth

To enhance (1) the earnings of poor and middle-class people and (2) sustainable growth, this article recommends broadening competitive market opportunities to acquire capital with the earnings of capital. The prospect of more broadly distributed capital earnings in future years provides incentives to profitably employ more labor and capital in earlier years. Without redistribution, modest changes in the system of corporate finance will enable market participants to price the value of more broadly distributed capital acquisition and thereby provide market incentives to produce (1) enhanced earnings for poor and middle-class people, (2) enhanced corporate profits and growth, (3) reduced need for welfare dependence, government spending, borrowing, and taxes, and (4) enhanced sovereign creditworthiness. The approach advanced in this article rests on a theory of fuller employment that operates in the long run as well as the short run. It is somewhat similar to Keynesian theory and yet also distinct and complementary. If the approach is implemented either alone or in conjunction with Keynesian policies, the fuller employment and broader distributive benefits may surpass expectations based on Keynesian theory and may make both austerity and stimulus strategies more affordable and politically feasible.