Binary economics

Binary economics, also known as two-factor economics, is a proposed economics theory by Louis O. Kelso that suggests policy makers endorse a continued use of both private property and a free market but should also seek significant reforms to the banking system as a means of producing fairer economic growth. In his theory making, he sought to provide greater access to capital, income, and stock ownership of private enterprise for more individuals in free-market system. In simple terms, kelso thought to see how dual systems of economic activity to create a more fair system of wealth distribution and thus development of variety of economic development in capitalist system with beliefs in free market.

Kelso principally theorized with this model that widespread use of central bank-issued, interest-free loans to fund employee-owned firms could simultaneously finance economic growth and widen stock ownership in a way which binary economists believe would be non-inflationary. The term "binary" in his case is derived from a perceived heterodox treatment of labor and capital (but not in the sense of binary opposition). Kelso claimed that, in a truly free-market system, wages for the working class would tend toward falling over time. Additionally, he postulated all the benefits of technological progress in a system to reduce manual labour would almost entirely be accruing to capital owners and thus access to wealth for economic growth would be shut off.

Kelso's proposed theory has helped inspire scholarly speculation into alternative wealth distribution via banking systems.