The early thinker most associated with the idea that employees should have an ownership stake in firms was Louis Kelso, a lawyer, economist and philosopher who in 1973 persuaded Russell Long, the powerful Democratic senator from Louisiana, to support legislation legalizing ESOPs.

Kelso is something of a controversial figure in economics; his ideas -- outlined in his 1958 tome "The Capitalist Manifesto" -- represented, to some, an unholy mix of Marxism and capitalism, and he has never really been accepted by academics. But there remains a small band of Kelso devotees, including some in business and policy circles, who believe that Kelso's idea that workers ought to trade their labor in return for capital was nothing short of revolutionary. If we followed Kelso, they say, and pushed more owners to give equity to workers, we would have a more "just" society.

When economists talk about the ingredients required to produce an item, they outline two categories -- which can be broadly described as the workers and the machines, or, more formally, labor and capital. It's always troubled some people -- most notably Karl Marx -- that machines are always getting better and better, meaning that workers are always becoming relatively less and less valuable in comparison and are bound to eventually become, some fear, put out on the street. The communist solution to this was to give governments control of everything, an idea that hasn't fared well. Kelso's solution is more elegant: Let workers get paid for their work in capital.

"The gap between the rich and the non-rich was getting wider," says Norman Kurland, who runs a nonprofit called the Center for Economic and Social Justice and who helped Kelso lobby for ESOPs in the 1970s. "Kelso's idea was that there was a problem in the way we finance new capital. There are barriers to ownership -- it's very difficult to become an owner. If you want to buy a house or a car, you can go out and get credit. But it's much harder to finance capital" -- the infrastructure necessary to start a business.

To be sure, there are always some people who manage to get financing to start businesses. "There are always some geniuses who can break the barriers," Kurland says. "But you can't run an enterprise system as if everyone's a genius." And employee ownership was conceived as a way of transferring capital -- and the wealth that comes with it -- to the vast majority of us who aren't geniuses.

"Americans," Kelso told "60 Minutes" in 1975, "are a nation of industrial sharecroppers who work for somebody else and have no other source of income. If a man owns something that will produce a second income, says Kelso, he'll be a better customer for the things that American industry produces. But the problem is how to get the working man that second income."

For people who don't like the inequality in capitalist systems but who've nevertheless resigned themselves to capitalism, Kelso's idea can be charming. It softens capitalism without adulterating it, especially if it can be shown that companies that adopt employee ownership are, in the long run, more successful.

During the almost 30 years since ESOPs were introduced, they have become popular financial instruments, and champions of employee ownership say that United's failure will probably not do much to stem the employee-ownership tide sweeping over the American workplace. According to the ESOP Association, more than 11,000 companies in America, covering 8 percent of all employees, have ESOPs. In more than half of those firms, employees own enough equity to be a "major factor in the corporation's strategy and culture," the group says.

But what United's failure shows, Kurland says, is that workers have not yet adapted to their true calling, which is as owners. Americans too often measure their worth by the size of their biweekly paychecks, not by the wealth they're accumulating in capital. For this, he blames labor unions, who get their power from wages, and he blames management, who often think of their workers as being as dispensable as machines. He also blames academics -- economists mainly -- who have not yet pushed Kelso's ideas.

Louis Kelso died in 1991, without much fanfare. But Kurland says he's optimistic that Kelso's ideas will be adopted by mainstream business and academia, and he's not worried that what happened at United will give employee ownership a bad name. "When you have Enron situations, you see you need this," he says. "If every worker knew Ken Lay was taking money out of their pockets, he wouldn't be going to get away with it. This effort is a global effort. It must be done right."

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