Binary economics promotes new thinking to benefit all individuals, economies and societies. It has nothing to do with ‘investment opportunities’ and the like purporting to make use of interest-free loans in some way. Such ‘opportunities’ are only too likely to be Ponzi schemes and scams.


Binary economics is the expression of a new universal paradigm or new understanding of reality that creates a new economics, a new politics, a new justice and a new morality.[1] It addresses the big environmental issues and is very relevant  to the technological shift now smashing out traditional jobs.  By ensuring that, over time, all individuals come to have ownership of, and access to, productive capacity and the benefits thereof, every individual has a genuine income.  Without the new modern universal paradigm – which is relevant to all societies including modern Islam – there will be no peace, nor an end to colonialism and racism.

The Modern Universal Paradigm - coverTHE PEOPLE OF EUROPE  must DEMAND interest-free (repayable) loans from the European Central Bank to fund large-scale public capital projects thereby providing jobs.

At the same time, the interest-free mechanism can be used, over time, to diminish national debt.

The mechanism can also be used, over time, to develop and spread the real economy to EVERY individual in society.

In particular, it can fund social housing at half or less of the present cost.

NB The interest-free loans are to be repaid and cancelled.

STUDENTS should DEMAND that all loans to them are interest-free, and they should link up with unions and workers to DEMAND that national bank (or European Bank) interest-free loans are immediately made available for big public capital projects, including social housing,  thereby creating work for other people. Once there is a general understanding of the power of national bank-issued interest-free loans, students should demand the extension of their use to other areas.

Quick Technical Summary of Binary Economics
1. Commercial banks to lend (at interest), as they wish, only their own money and, with permission, that of depositors. Commercial banks not allowed to create new money.
NB This creates a limited pool of money enabling reasonable interest rates to be paid to depositors.
2. Central (or National or European) Bank to create interest-free loan money for productive capacity and, in particular, for the spreading of productive capacity (and thus the associated consuming capacity), over time, to every person in society including the provision of social housing.   This is counter-inflationary because new, widespread productive (and consuming) capacity comes into existence while the money which created it is cancelled.
3. The Central Bank interest-free loan money to be administered by the commercial banks only allowed to make a reasonable administration charge.  Central and local government may also use the Central Bank interest-free money for public capital projects and social housing.
4. The Central Bank need only make periodic checks on a commercial bank to ensure that the interest-free loan supply is being used specifically for the spreading of productive capacity.
Any commercial bank abusing the privilege of administering the interest-free loan supply (for the benefit of everybody in society) will lose that privilege.


In its economics aspect, binary economics is a market economics whose markets work for everybody. Furthermore, it upholds private property but private property (and the associated income) for everybody.[2] A summary might be “a justice which creates efficiency and an efficiency which creates justice.[3]

An alternative summary is “the use of national bank-issued interest-free loans, administered by the banking system, for the development and spreading of various forms of productive (and the associated consuming) capacity thereby creating a balance of supply and demand with producers and consumers being the same people (as required by Say’s Theorem) and forwarding social and economic justice.

No subsidy is involved. Existing money (e.g., a bank’s capital or, with permission, the deposits of customers) may be lent in ways including interest. However, newly-created money MUST be lent interest-free for developing and spreading the real economy to  (and ensuring proper housing for) every individual in the population.

In its intent to involve people in ownership and participation, binary economics has affinity with distributism and with the worker cooperatives of the Emilia-Romagna region of Italy and the Mondragón Cooperative Corporation of Spain.

A quick illustration of binary economics

Philadelphia Waterworks and Museum. Source: Jeannine Keefer

A quick illustration of binary economics is the interest-free funding for low-cost social housing, a waterworks, bridge, sewage works, road or hospital – the use of national bank-issued interest-free loans halves, even quarters, the cost.

Two more illustrations are:-
* a halving or more of the usual cost of micro-credit for poor people
* the enabling of any individual in the population (from a baby to a retiree) to become a shareholder in one of the great corporations – the shares would be full-payout ones thereby creating a considerable income for the holder.

NB The financial savings of individuals are not used as the source for funding the full-payout shares – the source of the interest-free financing is ultimately the national bank.

The national bank is used as the source of the loans for the shares to emphasise that the national money supply is NOT that of a mere private grouping (as is the case today) but is society’s money supply which (although funnelled through the banking system making an administrative charge) can be interest-free for the purposes of an efficient, just economy. Indeed, where the financing of new productive capacity is concerned, interest is not necessary.

Binary economics defines ‘full payout’ shares as net of reserves for depreciation, research and development and the earnings of full payout shares are expected to be five to nine times existing earnings.

Binary policy results in national bank-issued interest-free loans being available for the purpose of development and spreading productive (and so consuming) capacity to every individual in the population thereby enabling producers and consumers to be the same people and, at the same time, forwarding social and economic justice.

In practice there would be two rates of interest – interest-free (for the purposes as above) and interest-bearing. Economies should not be reliant on foreign financial capital and so national bank credit should be used with capital controls being available.

Meaning of ‘binary’

The ‘binary’ (in ‘binary economics’) sometimes perplexes people. It means ‘composed of two’ because it suffices to view the factors in production as being but two (labor and capital) and thus there are only two ways of genuinely earning a living – by labor and/or by the ownership of productive capital. In viewing the two factors it can also be observed that humans own their own labor but they do not necessarily own the other factor – capital (which includes land).

NB ‘Capital’ means things which create wealth e.g. seeds, hand tools, machines, patents, land, raw materials, ships, quarries, bio-technological processes, telephone networks, farm animals, trucks etc. – anything which is non-human, which can be owned and which is capable of producing an income.

Binary economics is fundamentally different

Binary economics is fundamentally different from all forms of conventional economics (be they expressions of right-wing, centrist or left-wing theory).[4] Thus, unlike most mainstream economics, binary economics accommodates belief in God, unicity and ethics.[5] It directly addresses the main environmental issues; does not assume that humans only follow their own immediate short term self interest; ends economic colonialism; appeals to people of faith and of good faith;[6] and does not assume that humans (as distinguished from capital instruments) do all, or nearly all, of the physical creation of wealth.[7]

Binary economics is not a “third way” between capitalism and socialism: it expresses a new paradigm. Binary economics co-operates with, and supports, anybody who understands the uses of the national bank-issued interest-free loan supply.

In the 50-minute video below (2000) Harold Hudson Channer of Manhattan Neighbourhood Network tv discusses binary economics with Rodney Shakespeare, co-author of Binary Economics – the New Paradigm and Dr. Edward Wolff, the American expert on the distribution of wealth and author of Top Heavy.

NB Binary economics is a developing subject. The video is highly topical but, all the time, binary economics develops (see Developments on the Present page; the Global Crisis – Causes and Solution page; and the False Assumptions of Mainstream Neoclassical Economics page).

As a study, binary economics is not reductionist,[8] does not ignore the imbalance in power relationships between people,[9] and does not assume that extensive poverty is inevitable. (NB. 55% of the world’s population lives on under $3 per day: every day an estimated 25,000 people die from the effects of dirty water).[10] Being concerned with social justice and economic justice it also notes that allegedly successful ‘free market’ economies show symptoms of profound failure – thus figures from the 2004 Census show that one fifth of Americans live on under $7 per day.[11] Moreover, this happens in a country which is the richest in the world; which claims to be the embodiment of a perfect, efficient and just ‘free market’; and which spends 18% of its national income on health. Forty eight million Americans have to rely on food stamps.

Main cause of poverty

Binary economics establishes that lack of access to productive capital (in various forms) is the main cause of poverty and of structural imbalance in a market economy so that producers and consumers are not same people with consequent imbalance of supply and demand and a general inability to further social and economic justice. Moreover the institution of interest (as distinct from administration cost) operates as a giant hoovering operation sucking up wealth from the poor and transferring it to the rich.

It follows that productive capital must become as widely spread as possible. Furthermore, productive public capital e.g., waterworks, sewage works, roads, bridge, hospitals and housing must be spread and human capital developed via the provision of education and interest-free loans. All newly-created money must be interest-free and used for the purpose of developing and spreading productive capital to all people in the society.

Binary economics addresses weaknesses in current economic system

Binary economics addresses a number of weaknesses in the current economic system which are dismissed by conventional economics as being of no, or low, importance. The weaknesses include:–
* almost all of the modern money supply is in the form of interest-bearing debt created and owned by the banking system (in the UK over 95% of the money supply is created in this way: there are similar percentages in other countries)[12]
* the present money supply is generally not directed at productive (and the associated consuming) capacity but instead goes into derivatives, rising asset prices, consumer credit and putting everyone – individuals, towns, corporations, towns, cities, countries – into ever-increasing debt.[13]
* at present two lots of financing are required to keep the system going – one lot for production and a separate lot for consumption. The two lots are continually inflationary yet, all the time, more and more loan money must be created (by the banking system) if the whole economic and financial system is not to collapse. Inflation is inevitable with the present system.
* forms of productive capital remain narrowly owned and there is no policy to spread the ownership of productive (and the associated consuming) capacity throughout the population[14]
* people do not have their own independent incomes
* the practices of the IMF and World Bank which deliberately trap countries into never-ending debt; keep productive capital (and associated consuming power) narrowly owned; and, in an abuse of power, are generally bent on ripping off the wealth of poor countries
* in practice, economic colonialism
* in practice, racism

Binary economics redresses those weaknesses. Thus economic colonialism is ended by allowing countries to have control over their own money supply, control over their own assets, and freedom from international debt. No country should ever borrow foreign currency; instead all countries should always use their own currency. Moreover, opposition to racism has little meaning unless it is manifested in practical, everyday material improvement and binary economics provides this by spreading ownership thereby enabling the spreading of the associated incomes.

Binary economics does not expropriate or take: rather it enables everybody to build.

The binary competence

Indeed, over time, on market principles, binary economics enables all individuals to build an independent income or binary competence. The competence (the word can be traced back to Jane Austen, Alexander Pope and William Shakespeare meaning property or means sufficient for the necessaries and conveniences of life; sufficiency without excess) is defined as:-
a capital estate large enough to supply sufficient current consumer income to support at least one half of an affluent life style (measured in the context of what society as a whole can efficiently produce).

Figures contained in a 1998 study by Northeast Ohio Employee Ownership Center, Kent State University, Ohio and a 2005 study from the Center for Economic and Social Justice, Washington, D.C., indicate (2005 figures) that, aged sixty five, an adult would have a binary income of about $26,000 and a capital accumulation of at least $200,000 with both figures continuing to increase after the age of sixty five.[15) Today those figures would be much higher.

Along with the competence, of course, individuals will also be free to gain income from their labour as now.

As part of binary policy to develop capital ownership for each member of the population there is no estate duty (or Inheritance Tax) on death IF the estate devolves in such a way as to spread capital estates, and therefore capital ownership, to more individuals. If it does not do so, then there is a graduated tax.

Other characteristics of binary economics

Binary economics is of particular importance in a world where, increasingly, more of the physical contribution to production is being, and will be, done by machines and near-robots.[16]

Automation – Bread

With binary economics national debt is lessened and national unity encouraged. Binary economics creates a stable economy and associated financial system which is not subject to unsustainable booms and resulting crashes.

In binary economics there is no expropriation (as there can be in socialism, for example). Moreover, because people come to have sufficient income from their own independent capital estates much less redistribution is necessary (for example, by taxes in order to fund forms of government spending including welfare benefits). Because there is much less redistribution there is much less taxation.

Binary economics cannot be inflationary: it is counter-inflationary. Nor can it lead to a global financial crisis of the sort now threatening economies and markets. It upholds the periodic political vote but deepens democracy by ensuring that all individuals have the everyday freedom stemming from an independent economic base.[17]

Conventional economics compared with binary economics – see separate page

Brief summary

  • A brief summary is that binary economics results in:-
    * capital ownership for all individuals in the population so that they produce (and thus earn) independently of whether or not they also have a conventional job
  • * housing for all people
    * free markets
    * an efficient wealth creation including a balancing of supply and demand
    * structural economic and social justice
    * no inflation
    * proper encouragement of small and start-up businesses
    * sharing and participatory structures
    * a strong ethical sense imbuing everything
    * an end to riba/interest
    * an end to economic colonialism
    * public and environmental capital projects
    * a direct connection between money and the real economy

There is also:-
* an increase in political freedoms and a deepening of democracy
* policy to unite inhabitants who have different linguistic, religious, geographical and ethnic backgrounds

In particular, over time, binary central bank-issued interest-free loans enable a government to refrain from increasing the National Debt and enable the ownership of an economy to remain in local hands.

Binary economics is beginning to be taught in universities. The first such teaching is on the Islamic Economics and Finance postgraduate program at Trisakti University, Jakarta, Indonesia – Trisakti postgraduate Islamic Economics & Finance. Trisakti is famous as the birthplace of the 1998 Indonesian reformasi revolution. It is the biggest private university in Indonesia and second only to the main state university in prestige.

Courtesy Trisakti University, Jakarta, Indonesia


1. Robert Ashford & Rodney Shakespeare (1999) Binary Economics – the new paradigm.
2. Norman Kurland, Dawn Brohawn & Michael Greaney (2004) Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.
3. Robert Ashford & Rodney Shakespeare (1999) op. cit.
John H. Miller ed. (1994) Curing World Poverty: the New Role of Property.
There are five Justices at
4. Robert Ashford (1990) The Binary Economics of Louis Kelso: the Promise of Universal Capitalism (Rutgers Law Journal, vol. 22 No.1. Fall, 1990).
5. Rodney Shakespeare (2007) The Modern Universal Paradigm.
6. Rodney Shakespeare, (2007) op. cit.
7. Robert Ashford (1990) op. cit.
Robert Ashford & Rodney Shakespeare (1999) op. cit.
8. Rodney Shakespeare, (2007) op. cit.
9. Rodney Shakespeare, (2007) op. cit.
10. “Over a fifth of the world’s population still live in abject poverty (under $1 a day), and about one-half live below the barely more generous standard of $2 a day.” Technical Report of the High-level Panel on Financing for Development (United Nations, Dec., 2000).
11. William Shanley Poverty in America: American Dream Now a Nightmare for Millions? One in Five Lives on Less than $7 per day Global Research, April 23, 2007
12. Rodney Shakespeare & Peter Challen (2002) Seven Steps to Justice.
13. Rodney Shakespeare (2007) op. cit.
14. Norman Kurland, Dawn Brohawn & Michael Greaney (2004) op. cit.
15. Rodney Shakespeare (2007) op. cit.
16. James S. Albus (1976) Peoples’ Capitalism -The Economics of The Robot Revolution.
17. Louis Kelso & Patricia Hetter Kelso (1986 & 1991) Democracy and Economic Power – Extending the ESOP Revolution through Binary Economics.

See also About the Author

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