Systems Thinking and Bank-Debt Thread

As part of the process of consolidation of my own thoughts, I from time to time participate in discussions which relate to Kahatika in some way. The following is just such a thread which I would like to save so that I can look back on it the future.

Systems Thinking World

 

Lorraine (Lori)

Are you satisfied with the Compound Interest and Bank-Debt Money System presently (non)functioning in much of the global economy? If not, what are your suggestions?

Several approaches discussed to “fix” our ailing economies are based on changing (or “correctly” using) our current money system, which in most countries includes money issued as bank debt with compound interest. As discussed in Barry’s thread (http://linkd.in/13gGioe), compound interest has the property of “Success to the Successful” (tending to make the rich richer and the poor poorer), which leads to overshoot and collapse, if not countered in some way. Other approaches want to have complementary currencies that do away with compound interest and have the opposite—demurrage.

To provide some background, a number of perspectives include:

Modern Monetary Theory (MMT), which is being discussed extensively in a sister LinkedIn site, MMT World http://linkd.in/YuJQyt. MMT describes present-day money creation in the fiat money system that exists in many countries including the US, and discusses what could (descriptive) and what should (prescriptive) be done differently within this system. Typically, MMTers accept compound interest and the bank-debt system, but rightly point out that bank “loans create deposits,” not the other way around (i.e. banks are not reserve-constrained). Steve Keen, an Australian economist, is developing a systems model that includes bank debt to show the effects of this system. He calls for a modern debt jubilee in order to keep the system from collapsing. http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/

Bernard Lietaer and co-workers, e.g. “New Money for a New World” and “Money and Sustainability: The Missing Link” discuss the literally thousands of experiments in alternative and complementary currencies that don’t rely on compound interest. Some have demurrage charges (essentially negative interest). See http://www.lietaer.com/2010/09/effects-of-interest-based-currencies/.

Ellen Brown and the Public Banking Institute http://publicbanking.wordpress.com/) have called for the creation of state and local banks, along with the use of credit unions, so that interest and profits are channeled back into the local community. To date, one state—North Dakota—has such a bank, but others are considering this option. http://www.motherjones.com/mojo/2009/03/how-nation’s-only-state-owned-bank-became-envy-wall-street Germany has a long history of public banks—Sparkassen and Landesbanken.

The American Monetary Institute, which wrote HR-2990, “The National Emergency Employment Defense Act of 2011.” The Act would have dismantled the Federal Reserve and the practice of the government borrowing its money into existence through bank debt. Instead, the government would create money to pay existing bonds as they come due and spend money into existence. It would place a limit on the rate of interest and fees charged by private banks and provide for payment of a Citizens Dividend as a tax-free grant to all US citizens residing in the United States in order to provide liquidity to the banking system at the commencement of the Act. (In a sense, the last provision has some similarities to Steve Keen’s proposal and the Grillo platform for getting Italy’s people out of debt.)

1 month ago

Joe Van Steen, Cezary Wójcik and 5 others like this

207 comments

 

Follow Richard

Richard Wright • Richard D. Wolff, a Marxist economist, argues in his book “Democracy at Work:A Cure for Capitalism” the financial industry (including banking) is simply a sub-system of the capitalist economic system. He makes a plausible case that this capitalist economic system is fundamentally and fatally flawed due to basic systemic problems that ensure that such sub-systems as banking are corrupt, inefficient, and prone to massive failures.
Anyway that is his opinion on the subject.

1 month ago • Like

1

 

GeneUnfollow

Gene Bellinger • @Richard, does Wolff say anything about other subsystems also being corrupt?

1 month ago • Like
 

Follow Richard

Richard Wright • According to Wolff the entire capitalist system (industry, finance, merchant, agricultural sub-systems are corrupt and inefficient).
Side note 1: the implosion of the Soviet Union was NOT a failure of a Marxist Economic System, but a Socialist System morphed into a system of state capitalism which Wolff argues is even worse than a private capitalist system.
Side Note 2: The problem with Marxism is that, like Christianity, it has has not been tried and found wanting, it has been found hard and never tried.

1 month ago • Like

2

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • (Jessie Henshaw wrote in Barry’s thread ( http://linkd.in/13gGioe ):
Loraine,
I’m quite aware of those currencies that are claimed to correct the problems of systemically growing inequity by eliminating money creation by fiat from debt. The inequities that come from debt based money creation and from the compounding of investment earnings are quite different.
Suffice to say in our economy one is usually well regulated and the other is highly encouraged. It’s the highly encouraged one that the all the alternative currency models I know of just ignore, for some inexplicable reason.

I go to great lengths to be clear, and do keep asking the experts who promote those currencies, why they make no provision for controlling the limitless wealth concentration procedure our whole society seems to strongly encourage. Apparently that’s the reason, as they simply walk off
confused and simply won’t say! Really! It seems to be unimaginable to question “things our whole society strongly encourages”.

So as I see it, “complementary currencies” don’t actually touch the problem. The problem of compounding has to do with what people do with their money, not how much money banks can create to lend.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Jessie,
I assume you mean that the US fiat money creation by debt is well regulated by Congressional mandate and that compounding of investment earnings is encouraged(?). Which was which in your statement wasn’t clear to me. If that’s the case, it appears that you are complaining about the AMI solution because it deals with the first–government debt—but essentially ignores the inequities caused by the second (compounding of investment earnings). Am I interpreting you correctly? If so, then I completely agree with you regarding the AMI proposal. That’s my problem with it as well.

Regarding the alternative currency models, most of the ones I’m familiar with (mainly from Lietaer’s research) do NOT encourage the second. In fact, many have demurrage charges to discourage money hoarding.

1 month ago • Like

 

Follow Rolf

Rolf Häsänen • You all might already know this but just in case it.

If you want to test out your own or other Economic theories there is a System Dynamics software simulation package called MINSKY that Professor Steve Keen is developing.

http://sourceforge.net/projects/minsky/

There is a lot of SD models on Steves homepage and Professor Kaoru Yamaguchi @ Doshisha Business School has crafted a Macroeconomic model that you can run on vensim.

http://gmba.doshisha.ac.jp/about-us/people/kaoru-yamaguchi

1 month ago • Like

3

 

Follow T.A.

T.A. Balasubramanian • Lori

In ST terms, it may be worthwhile looking at the root causes of the persistence of the CI & BD economy – and as I looked around for a clear articulation of these causes, I found an interesting paper that puts these in perspective.

[][]

http://bit.ly/11wcCSK

FINANCIAL STABILITY
A CASE FOR COMPLEMENTARY CURRENCIES
Prof. Dr. Margrit Kennedy

[][]

Kennedy outlines the 3 great misconceptions that seem to be at the root of the problem.

These are

> 1.The ‘Growth Misconception’ [what Jessie and others have been focused on] is based on the belief that money based on interest can grow forever – and this in turn is based on people not understanding two generically different types of growth. The normal physical growth pattern in nature in which everything stops growing at an optimal size. This is the only sustainable growth pattern that exists. The opposite us exponential growth doubling its units at regular intervals. It may be described as the exact opposite to nature, in that it grows slowly in the beginning, then accelerates continually faster and, finally, grows in an
almost vertical fashion.

> 2. The ‘Transparency Misconception’ deals with the second major difficulty in fully understanding the impact of the interest mechanism on our economic system. Most people think that they pay interest only if they borrow money. They do not understand the fact that every price contains a certain amount of interest, depending on the share of capital deployed per unit of output. This relationship – together with the rate of
interest – determines the interest component in prices.

> 3. The ‘Fairness Misconception’ is based on the notion that everyone is treated equally in our monetary system. We all have to pay interest when borrowing money and receive interest for savings. However, when we take a closer look, there are indeed huge differences as to who profits and who pays in this system.

I think these three root misconceptions – or ’causes’ need to be drilled down into in order to redesign any new system of money – Kennedy’s ‘complementary currencies’ alternative model is just one of these.

1 month ago • Like

2

 

Follow Richard

Richard Wright • T.A. thank you for sharing Dr. Kennedy’s explanation of misconceptions afflicting analysis of currency systems.
Still I believe that it is a mistake to try and resolve the “Bank-Debt Money System” inequities independently of the larger capitalist economic system in which it resides.

1 month ago • Like

2

 

Follow T.A.

T.A. Balasubramanian • Richard

Re: the larger capitalist economic system

You are right – the capitalist system and its powerful structure are the framework in which the misconceptions become “given wisdom” – so deeply embedded that people rarely stop to examine or question.

1 month ago • Like

2

 

Greg Stevenson • @T A And when they push to hard to demolish or deeply reform the capitalist system they prematurely wake up dead.

1 month ago

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Richard,

Thanks for your posts on Richard Wolff! I heard him on Moyers & Company a few weeks ago and was really impressed. Wolff is scheduled to be on Moyers again tomorrow morning (in my area), along with Sheila Bair. Wolff is also having a live chat on March 26 to answer questions: http://billmoyers.com/content/live-chat-with-richard-wolff-2/

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

Thanks for the Margrit Kennedy paper and the three misconceptions. Kennedy is my favorite researcher into how interest really works in our present system. I believe she has heavily influenced Lietaer’s and Ellen Brown’s thinking.

To me, the ‘Transparency Misconception’ was especially eye-opening, especially her finding that “On average, people in Germany pay about 45% interest in the prices of goods and services they need for their life” due to the interest cost in obtaining capital for essentially every step of the production process.

1 month ago • Like
2

 

Follow T.A.

T.A. Balasubramanian • Greg

Lori is pointing us to a way out of the impasse – by generating alternatives – like Kennedy’s ‘complementary currencies’ – that call forth innovative thinking.

1 month ago • Like

2

 

Follow Richard

Richard Wright • In the mid-1990’s I attended a talk by an economist (whose name escapes me) who was an advocate of “Currency Boards” in place of central banks and as a means of avoiding IMF interventions. Currency Boards apparently decide the intrinsic valuation of a nations currency and then tie its foreign exchange rate to a specific foreign currency such as the dollar or Euro. The guy who gave the talk believed that strong and informed currency boards would solve most of the world’s monetary problems.
I share this not because I am a currency board advocate or really know anything about them, but to reenforce T.A.’s point that there are many alternatives to the existing monetary system. Currency Boards are just one example.

1 month ago • Like

 

Follow Alan

Alan Hayman • Does anyone understand Binary Economics?

http://en.wikipedia.org/wiki/Binary_economics

I have only recently come across it. I am not an economist and don’t claim to understand it fully but the capital ownership principles look interesting, particularly as we move towards an automated society.

1 month ago • Like

1

 

Follow Ron

Ron Sposato • I came across this very interesting TED Talk and though I would share it:

http://blog.ted.com/2012/05/17/playlist-the-roots-and-effects-of-income-equality/

1 month ago • Like

1

 

Follow Alan

Alan Hayman • Thanks Ron, I found it very interesting and it confirmed my suspicions!

1 month ago • Like

 

Follow Ron

Ron Sposato • Richard Wilkinson has also written a very interesting book, entitled “The Spirit Level”.

1 month ago • Like

1

 

Greg Stevenson • @T A Could it be said that the formation of the “Greenback” helped lead to Lincoln waking up dead?

I’m a follower of Steve Keen and a donator to the Minsky modelling project on kickstarter. My company is a foundation member of a barter alternate currency system in New Zealand.

I suspect the monetary system as it exists at the moment is in need of massive reform, but am sceptical that this will occur without massive catastrophe. I work to prove myself wrong and hope that I am wrong so that I can stop worrying about it.

1 month ago

2

 

Follow Richard

Richard Wright • IMO a currency system is merely a sub-system of a much larger economic system. As I noted Marxist economist Richard Wolff wants to replace the almost universal capitalist system with a Marxist Model. For those uncomfortable with Marx, but looking for different model than capitalism ought to check out Technocracy.org. The technocratic movement began during the great depression of the 1930’s, but still has adherents today. The movement has some interesting ideas on currency systems among other things.

1 month ago • Like

2

 

Follow T.A.

T.A. Balasubramanian • Richard

The ‘complementary currency’ models (CCMs) that have worked in some situations have proved that even in a larger economic framework, there is scope for innovation in positioning a CCM as tailor-made for the demands of the situation.

Dr. Kennedy provides an example from Brazil that solved a crisis in the education sub-system.

http://bit.ly/11wcCSK

FINANCIAL STABILITY – A CASE FOR COMPLEMENTARY CURRENCIES
Prof. Dr. Margrit Kennedy
[][]

The Brazilian ‘Saber’ demonstrates clearly the different design features of complementary currencies in comparison to conventional currencies. That is the reason why I want to describe it here in more detail. In Brazil 40% of the population is less than 15 years of age. This causes an enormous educational problem.

When the mobile phone industry was privatized, the government levied a 1% surcharge for education on all mobile phone bills. This resulted in a fund of 1 billion US$ or 3 billion Reais for education in 2004. Bernard Lietaer proposed the introduction of a voucher system called “Saber” in order to increase the number of students that could afford a college level education. The vouchers would be given to schools for the youngest (e.g. the 7 year-old) pupils, on the condition that they would chose a mentor from an older class to strengthen their weaker subjects.

The Saber would then move to the older schoolchildren, and so on until, at last, seniors of 17 years (who want to go to university) would use the Sabers to pay a part of their tuition. While the value of the Saber would be the same as the Real, nominally, it would only be redeemable for tuition payments for higher education. In addition, it would lose 20% per year as an incentive to pass it on – unless it had reached the universities.

Thus (including a reduced tuition rate for those subjects with free spaces in the universities), the Saber system would multiply by ten times what a direct allocation of the resources for education would otherwise allow and, thereby, create ten times the amount of education services

[][]

So the interesting possibility is that such ‘fit-to-situation’ CCMs are possible even inside the framework of the existing economic system. It requires the collective will of those who are most negatively impacted by the existing system to focus on such opportunities.

1 month ago • Like

1

 

Follow T.A.

T.A. Balasubramanian • Greg

Avoiding massive catastrophe is surely in everyone’s radar, I agree!

I am not familiar with the Minsky model – perhaps you could elaborate on it?

Regarding Lincoln, my best guess is that he was under duress to manage a war – so the outcome of his actions after that is best described as ‘unintended consequences’?

Incidentally, here’s a very interesting ‘conspiracy’ report I found on those times.

[][]

http://www.michaeljournal.org/lincolnkennedy.htm

“Lincoln printed 400 million dollars worth of Greenbacks (the exact amount being $449,338,902), money that he delegated to be created, a debt-free and interest-free money to finance the War. It served as legal tender for all debts, public and private. He printed it, paid it to the soldiers, to the U.S. Civil Service employees, and bought supplies for war.

Shortly after that happened, “The London Times” printed the following: “If that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all coun­tries will go to North America. That govern­ment must be destroyed, or it will destroy every monarchy on the globe.”

The Bankers obviously understood. The only thing, I repeat, the only thing that is a threat to their power is sovereign govern­ments printing interest-free and debt-free paper money. They know it would break the power of the international Bankers.”

[][]

1 month ago • Like

2

 

Follow Barry

Barry aClemson • Lori and all,

Please please please write a paper for the STW Journal based on this thread.

I am unable to truly keep up with this discussion but have seen enough to be convinced it is very important.

IMO a paper based on the thread should NOT be an attempt to summarize or synthesize every post. Rather, the paper should be based on what the author learned from the discussion and should explicitly show, to the extent possible, WHY the proposals are systemically sound.

In the thread on “how to select systems methods” we got three separate papers which, in some respects, disagreed with each other (two of them have not yet been published but I think they will be).

1 month ago • Like

1

 

Follow Ron

Ron Sposato • I have finally found an economist who makes total sense. Here is a link:
He has also written a book, it is on Amazon, has a Kindle edition.

http://www.youtube.com/watch?v=qG3CU1st_l8

1 month ago • Unlike

2

 

Follow Angela

Angela Courtney • Ron, yes that is a useful book IMO
I have ‘The Spirit level: why equality is better for everyone’ it presents excellent insights from a variety of statistical and comparative records pertaining to health, education and income from international/geographical perspective. The material is very readable in the way it is presented including lots of graphs.

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Alan,
Thanks for the link to Binary Economics. It appears worth investigating further. I found the Wikipedia discussion hard to follow, so I looked up Louis Kelso and found the http://www.kelsoinstitute.org/ Kelso was the person who thought up the Employee Stock Option Plan (ESOP) to help laborers become capitalists (owners of capital). He also expanded the concept so that laborers could be diversified. http://www.kelsoinstitute.org/questions-answers.html

As I understand it, binary economics gets its name because it asserts that, because of technology, there is not one factor (labor), but two—labor and capital—that increase productivity, and now all the profits go to those who OWN the capital, not the laborers. His wife and co-researcher Patricia Hetter Kelso wrote about Kelso, Say’s Law, and paradigm change in: http://www.kelsoinstitute.org/pdf/whatlouiskelsoknew.pdf

Kelso was concerned about why Say’s Law of Markets wasn’t working. The law
“describes a system where productive input on one side, measured in costs, translates into distributive out-take on the other, measured in earnings. It is an accounting equation—in Louis Kelso’s words, ‘double-entry bookkeeping writ large.’ The costs of production become income paid to those who have contributed to production. Governing this process is a moral and legal construct called Private Property—the true “invisible hand”—which enforces the distributive rule, ‘to each according to his production.’

“Say’s Law indicates that supply and demand is a self-regulating process—a feedback system. It is conceptually sound. Its apparent unworkability is due to the attempt of economists from Adam Smith on to interpret it as if only one factor were ‘at work,’ when in fact there are two. By failing to recognize that capital instruments also perform work and earn income, thereby constituting a second factor of production, traditional economists simply could not account for the changes industrialization was making on the supply side of the market equation, and their corresponding effects on the demand side.

“…technology is a process by which human ingenuity and invention shifts ever more of the burden of production from labor to capital, from the human factor to the non-human factor. In other words, technological change methodically replaces labor input with capital input, changing the input mix from labor intensive to capital intensive. It is a process which increases the productive power not of those who work with capital but of those who own capital. And to the extent that the private property rule of distribution is respected, it proportionately increases the flow of market-sourced income to capital owners, and proportionately decreases the flow to labor. Technological change, in other words, is the mysterious agent responsible for creating a bottleneck in the supply/demand pipeline.

“…Perhaps the reason Keynes and the classical economists, including Karl Marx, could not see beyond labor employment was that until Louis Kelso invented them, there were no techniques to finance capital ownership for those without savings. Ownership was the prerogative of those who financed new capital or bought existing capital out of personal income withheld from consumption. Since working people had to spend every last penny on subsistence, capital ownership was not an option for them.”
(part 1)

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • (part 2)
“In the early seventies, this revealing exchange took place between reporter Mike Wallace and Professor Paul Samuelson on national television:

Wallace: ‘All right. My understanding of Kelsoism is that it’s designed to enable men who are born without capital to buy it, to pay for it out of the income it produces, to own it and therefore to receive income from that capital. Devoutly to be wished?’

Prof. Samuelson: ‘Oh, yes. And it would be nice to have lollipops grow on trees for the picking … It really has a Marie Antoinetteish ring to it. ‘Let them own capital.’

“This is a beautiful example of the scarcity mentality that characterizes conventional economics. Capital ownership is “cake,” a scarce luxury product before bakeries were mechanized to produce it in volume. Louis Kelso used to say that the Industrial Revolution was a revolt launched by the human race against scarcity….

“The practical implication of Kelso’s insights is that we cannot efficiently produce goods and services through two factors while distributing income through just one. Free market logic simply will not permit it. And if we jettison the free market, as Marx did entirely and Keynes did partially, we need look no further than the former Soviet Union to see the consequences. The material and moral basis of that society was devastated by the dogma that all wealth is produced by labor.

“…The conventional economic paradigm chains the full employment economy to perpetual expansion. It offers no surcease or escape from a necessity that already is threatening the viability of our planet.

“Louis Kelso’s binary perspective delivers us from this deadly bind. He offers specific, detailed economic proposals for correcting the problem at its source, which is the ever-widening imbalance between production and consumption. He shows us how to accelerate economic growth by unblocking the purchasing power created by the free market but not distributed to consumers with present needs and wants. This is not, as the Keynesians believe, a problem caused by maldistribution of INCOME. The cause goes deeper. Fundamentally—and this again is an insight unique to Louis Kelso—the problem arises from MALDISTRIBUTION OF THE PRODUCTIVE POWER OF CAPITAL.”

[][]
I understand that part of the problem with Kelso’s original concept was that he suggested people get loans from banks to fund their capital investments. We all know the problems this causes, based on compound interest. I gather he modified his concept at the end. I’m looking forward to delving into this further and investigating how it can be integrated with Richard Wolff’s ideas of co-ops, which I found extremely enlightenling (to be continued in another comment).

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron and Angela,

If you have read “Spirit Level,” could you outline for us some of their recommendations. Thanks!

1 month ago • Like

 

Greg Stevenson • @TA MINSKY at kick starter is a Steve Keen project to build a better economic modeling software package. Essentially it is Steve’s contention that the advisors to the policy makers are too entrenched in theory, deemed truth by the school of economics they were trained in. The solution is to enable economic advisors to find and then show alternatives which better describe reality to ensure better advice. This he hopes will lead to a special type of debt jubilee to resize the finance sector and allow the world the possibility of a sustainable future. A big ask, but I’m all for attempting to save the world using both macroeconomics and a microeconomics simultaneously.

No conspiracy theories had an element of truth to them?

1 month ago

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,
Notice Greg’s comment to TA above–which stole my thunder 🙂 regarding Steve Keen (“Debunking Economics”). He’s one of the few people who predicted the 2008 crash. He has a great blog: http://www.debtdeflation.com/blogs/

As I mentioned in the thread introduction and Greg just reiterated, he calls for a modern debt jubilee in order to keep the system from collapsing. He explains it here: http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/

1 month ago • Like

 

Follow Ron

Ron Sposato • Lori,

I’ve read it, I agree with him. I also am researching his book on Debunking Economics. I think he is the first economist I have read who makes sense, for today’s environment.

Also, as Steve Keen explained, this is one of the primary problems with neo-classical economists, in that the dynamics of the financial market are not captured, but are treated as if static.

This is the problem that QE spending cannot overcome.

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,

Amen! If you haven’t, I suggest you read E.L.’s blog post about QE being Bernanke’s way of protecting Wall Street for the next big crash at our expense: http://the-small-r.com/2013/03/05/bankings-excess-reserves-are-a-war-chest/

“…Bernanke’s quantitative easing (QE) efforts have been a reaction to his singular obsession with preventing the onset of deflation…[QE] has fueled the rise in commodities and equities and the returns from these investments, actively pursued by Wall Street banks and their protégé hedge funds….

“That Bernanke’s QE efforts have prevented deflation from setting in cannot be argued with, but it has also created a negative externality: In a period when most household incomes are in decline, any rise in commodity prices squeezes out what little money remains in circulation at the low- to mid-levels of income. There is no growth in incomes to cover the growth in food and energy prices. The money to cover the difference is coming out of households’ discretionary income, which of course assumes a discretionary income remains.

“In essence, lower- and middle-income households have bailed out Wall Street banks (for the next financial crisis) by paying more than they should for food and energy. In fact, consumers of food and energy around the globe have contributed.

“So we can draw the line from rising commodity prices to Wall Street’s war chests. But what about the gains from equities, from those rising stock markets? Wall Street banks have an exclusive view of stock-market activity, thanks particularly to high-frequency trading algorithms. They will know when to bail on equities and collect their profits. But for outside investors who have dived into the stock markets due to their rapid rise – the “muppets” of Wall Street lore – they will also contribute to Wall Street’s war chests… when they are forced to book their losses.

“Without argument, such investments have helped Wall Street fill its war chests, and Bernanke to avoid deflation. It has helped them, not us.”

1 month ago • Like

 

Greg Stevenson • @Ron and @Lori. To extinguish debt via a modern debt jubilee, where does the thing doing the extinguishing come from? If that thing is SDRs, materialised from the ether, with no debt burden, purely on the basis of global consent to do so, have we reached the new world order? If so, how many influential economists will the world need to convert, perhaps via the Minsky project, before global consent forms policy of a couple of hundred sovereign states? If the mathematics of these new models can only be understood by elite mathematicians and physicists, how can grass roots pressure be brought to bear on policy? Is this an occasion where two wrongs (Moral Hazard wise) make a right? Does the world have the time?

These questions still float around my head after reading the revised edition of Debunking Economics

I continue to design systems which work at a microeconomic level just in case.

1 month ago

 

Follow Angela

Angela Courtney • Hi Lori,
Spirit level contains a vast panorama of research from developed countries which produce statistics on health and education related to social inequality, related to income The author’s recommendations are that tackling inequality should be a political goal. I too assume that tackling social problems without paying people a living wage undermines the system and many problems are compounded. There is not one policy for reducing inequality in health or educational performance of school children and another for raising national standards of performance on other areas but if inequality is tackled standards across a range of factors will improve. They concluded that rather than revealing some previously unknown influence on health or social problems,their research (which includes the scale of income differences) indicates a consequent social hierarchy and that gradients adversely impact on culture, health, behaviour and general well-being of the poorest people.
The graphic illustrations are what created the most impact on me, their local (to me) conclusion on GB and UK and Ireland did not spring any surprises but I was astonished at how poorly the US showed up, naively perhaps! they are all available here:

http://tinyurl.com/yffzaze

The authors Richard Wilkinson and Kate Picket have TED talks too (link in Ron’s earlier post)

1 month ago • Like

1

 

Follow Ron

Ron Sposato • Lori,

I agree with Angela’s overview of “Spirit Level”, lots of data, (all basically from UN), good graphs, but recommendations are sparse and are mainly political. Unfortunately, I can’t agree that “paying people a living wage”, should be part of a monetary system, I believe that has to be a result of productivity.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,

Regarding you statement “I can’t agree that “paying people a living wage”, should be part of a monetary system, I believe that has to be a result of productivity.”

Read my post above to Alan researching Binary Economics, technology, and productivity. The Patricia Hetter Kelso paper states about her own conversion: “Before meeting either Kelso or his co-author, Mortimer J. Adler, I had read The Capitalist Manifesto and The New Capitalists. My reaction had been, ‘Eureka, this is it!’

“Dr. Adler had undergone a similar transformation. As the result of a single question Kelso put to him, on whether a human worker of any kind, skilled or unskilled, was any more productive now than two or three thousand years ago, he had ‘a blinding flash of light.’”

Is the Wall Street CEO who helped cause the crash any more “productive” than a McDonald’s hamburger flipper?? (Maybe he is, if you consider ruining the global economy extremely “productive”…)

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Greg,

Regarding “the thing doing the extinguishing:” A sovereign nation with a fiat money, if it so chooses, CAN create money “out of the ether”—just like Abe Lincoln did with the Greenbacks, as Tabby discussed above. This is a basic premise of Modern Monetary Theory (MMT) regarding fiat money—a premise Keen agrees with. There are several blog sites, including our sister LinkedIn site, MMT World http://linkd.in/YuJQyt . Keen lists several in his book, including http://neweconomicperspectives.org/ , which contains an MMT primer (just click on the upper right corner).

I agree with you that a LOT of people must be converted for this to happen worldwide.

Regarding “moral hazard:” Corporations can and do declare bankruptcy every day, and that’s not considered a moral hazard, just “business.” Why is it moral hazard only for the little guy?

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Barry,

Thanks for the suggestion. I’d like to pull a paper together after this thread gets further along. A paper is a great (albeit painful) way to organize thoughts.

1 month ago • Like

 

Follow Ron

Ron Sposato • I am finding out more and more about Steve Keen, Here is a link to his blog DebtWatch,
especially read the Manifesto, I think it will be enlightning:

http://www.debtdeflation.com/blogs/

1 month ago • Unlike

3

 

Greg Stevenson • @Lori

A unilateral modern debt jubilee would be an interesting thing to model.
I wonder at what point a “Hot War” would be triggered? Jim Rickards “Currency Wars” is an interesting read.

A modern debt jubilee wouldn’t have debt extinguished just for the little guy.

It’s very nature reduces future revenue of very powerful individuals and organisations.

The moral hazard of bankruptcy in places other than USA is regarded more than it is for your country. Both by law and societal stigma. Bad thing, good thing, not sure.

1 month ago

 

Follow Ron

Ron Sposato • Greg,

If you read the way it is administered, the total would be printed as fiat currency and distributed with the idea of reducing debt.

Of course, you are right that those who suckered the public into debt would resent it, and those who had no debt would be resentful that they did not get more.

Bankruptcy is a result of bad management, and as so, to blame the debt jubilee for it would be wrong, but I am sure that wouldn’t matter to some.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Greg,

In the US, with the Big Bank bailout, we already had debt extinguished for the Big Guys. Our Fed chief Bernanke is doing his best with the QEs (read comment above) to make sure their pockets are lined for the next crash. Keen’s debt jubilee would decrease profits for the Big Guys, but not eliminate them, because people would need to use their “jubilee” to pay down debt, if they have any:
http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/

“If America is to avoid two “lost decades”, the level of private debt has to be reduced by deliberate cancellation, as well as by the slow processes of deleveraging and bankruptcy.

“In ancient times, this was done by a Jubilee, but the securitization of debt since the 1980s has complicated this enormously. Whereas only the moneylenders lost under an ancient Jubilee, debt cancellation today would bankrupt many pension funds, municipalities and the like who purchased securitized debt instruments from banks. I have therefore proposed that a “Modern Debt Jubilee” should take the form of “Quantitative Easing for the Public”: monetary injections by the Federal Reserve not into the reserve accounts of banks, but into the bank accounts of the public—but on condition that its first function must be to pay debts down. This would reduce debt directly, but not advantage debtors over savers, and would reduce the profitability of the financial sector while not affecting its solvency.”

[][]
In contrast, switching to a debt-free and interest-free fiat money to finance government spending ala Lincoln and the Greenbacks would likely cause much more massive loss of private bank profit.

It’s also likely that if one larger country switched out of the “bank debt” system, people in other countries would demand it for their country, as well, in a domino effect. That would really irritate the rich and powerful, so no country is likely to do this unless there’s a very large worldwide uprising from the bottom demanding it.

I spent a couple of hours in January listening to Rickards “Currency Wars” and other talks on YouTube and I bought the book, but have not yet read it. At the time, I agreed with his discussion of QE (see comments on E.L.’s blog above) and the Fed, as well as some of his proposed solutions, e.g. regulating and breaking up Big Banks. (Now I want to get rid of bank-debt government funding altogether and have the Fed work only with state public banks, as well as break up the Big private Banks.) I also agree with one of Rickards’ proposed future positive solutions—a world of mixed reserve currencies. Better yet, we could have the demurrage-based “Terrra” or Trade Reference Currency, as discussed by Lietaer et al. in “Money and Sustainability.” You can read about it on-line at http://www.money-sustainability.net/read-the-book/ Click on the book (sometimes it just show as a black box) to expand and go to pp. 158-166 in the book (which are 160-171 on the bottom count).

I still get depressed and expect it will take a much bigger crisis than 2008 for any of this to occur. I’ll be pleasantly surprised, however, if Grillo in Italy can get his program going, which is essentially MMT. It could set the stage for bigger positive change.

1 month ago • Unlike

1

 

Follow Richard

Richard Wright • Ron thank you for introducing me to the work of Steve Keen. I read his Manifesto an find him a remarkably clear headed economist. I am getting his latest version of Debunking Economics. His views are clearly at odds with those of Richard Wolff, but seem a lot more level headed.
I would note that the technocrats who advocate government by scientists, engineers and other subject mater experts exclude economists from the latter category.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,

Regarding your comment: “those who had no debt would be resentful that they did not get more.” As I understand Keen’s proposal (quote above in my response to Greg), everyone would get the same amount. Those who had debt would have to use the money to pay it down, while those who saved would have even more money to use as they want.

1 month ago • Unlike

1

 

Greg Stevenson • @Lori

I bought the kindle edition of Lietaers book yesterday as a result of your previous link. It’s on special at $9.99. I’d read a little online at the link you mention. I’ll read more tucked up in bed with my iPad.

In the meantime does Trans National Corporation (A) who has just done a leveraged buy out of Trans National Corporation (B) just prior to the implementation of a modern debt jubilee get issued with $X billion of newly formed money to help extinguish the bank debt?

Steve Keen recognises the moral hazard, which I applaud him for, and I think sees it as a transition mechanism of no worse moral hazard as has been occuring to date.

I recently read Satyajit Das’s Extreme Money to get a bit of a historical perspective. Have you read that? I enjoyed it, he is a good writer. I have no idea as to its accuracy.

1 month ago

1

 

Follow T.A.

T.A. Balasubramanian • Greg

Re: I continue to design systems which work at a microeconomic level

Do you have any examples you can talk about? This seems the right way for small sectoral economics to come into play – experiments with micro systems that solve bits and pieces within the framework of the large CI and BD system!

1 month ago • Like

 

Greg Stevenson • @ TA

I have a pet project I call Kahatika.
At its core it is a software based system which you can think of as a module to a company’s financial/management system. Its essence is very simple.
Its implementation, not so much.
Google it if you’re interested, but I don’t believe in rallying people to a cause.

1 month ago

1

 

Follow Alan

Alan Hayman • Thanks Lori for your interesting response on Binary Economics. When assessing theories I like to look at the extremes. If we consider the extreme case of a society where robots do all the work then it seems to me the economy would collapse if people didn’t own the capital. So from that point of view, Louis Kelso’s proposition makes sense. Dr Albus’ People’s Capitalism apparently outlines a plan to achieve the ownership.
http://en.wikipedia.org/wiki/James_S._Albus

1 month ago • Like

1

 

Follow Trine

Trine Moore • @pandoras box, thats been opened for a long time, and as Gene says theres other systems too which are corrupting, and breaking down, shedding and sloughing ofF old skin…Were already way past the tipping point and end of the worlds scenarios though some are slower to catch on to that than others, its happening and happening continuously, worldwide..All old and degenerative is passing way its inevitable.. the death.

and the new systems emergent have yet to fully show ,as integral, and they are,

the now as emergent properties and futurenows.

1 month ago • Like

2

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Alan,

Thank YOU for introducing me to Binary Economics. I’m now committed to learning more. What we need to do is tease out the “capitalism” part from the “interest” and money system part. Can we have capitalism without an interest-bearing money system??

1 month ago • Like

1

 

Greg Stevenson • @Lori

As I understand Bill Still’s solution, I think that involves merging treasury function with central bank function. Issuing new money to the economy is then performed by people who can be voted out via elections. (power to the people) New money being spent into the economy as opposed to being injected into the banking system. Reducing the money supply is then accomplished via taxation.
I guess banking could then be done along the lines of strict Islamic banking which supposedly still deems usury a sin. No fractional reserve banking.

I guess this innovation would require clever voters who are more interested in long term common good as opposed to short term self-benefit?

I just finished listening to Louis Kelso’s 1984 keynote speech. I like his thoughts. In my younger left wing days I liked the French innovation of the 36 hour working week. I saw it as a natural consequence of the degree of automation going on. Somehow ensuring income with less active involvement by everyone is envevitable. Kelso’s solution seems better than most.

I worry a little, Policy driven more universal ownership of capital seems to smack of subprime crisis. I guess ESOP is far less prone to corruption?

1 month ago

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • @Greg,

I believe Bill Still’s solution is the American Monetary Institute-developed approach. If I understand HR 2990, the bill as it was introduced to Congress, the AMI solution dealt with government debt—but didn’t do much about the inequities caused by compound interest on private debt, except to put a cap on interest rates and fees. (The bill died. It was a start.)

I’m digging further into Kelso’s solution as modified by Dr. Albus, as Alan recommended. I just bought the Kindle version of Albus’ “Path to a Better World” for US$3.99. I share what I gather is your concern about whether it deals with boom/bust cycles.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • @Richard and those interested in MMT,

I listened to Richard Wolff again. He made a great suggestion on Moyers & Co. that MMTers would love. (Many MMT followers argue for a short-term government Job Guarantee at a living wage, instead of unemployment compensation, during a recession for those who want to work. The problems come in how to implement such a program and not hurt either private industry or long-term government employees.) Wolff is a proponent of cooperative businesses, such as Mondragon in Spain ( http://en.wikipedia.org/wiki/Mondragon_Corporation ). He suggested that, instead of just unemployment compensation when people are laid off, the govt should pay the equivalent of 3 years’ unemployment compensation up front for each person if 11 jobless people self-organize into a cooperative business. He also recommended govt assistance in grants/loans to further fund the co-ops.

1 month ago • Like

 

Follow Richard

Richard Wright • Lori, yes the center piece of Wolff’s version of Marxism is what he calls Worker Self Directed Enterprises (WSDE) a classic Marxist idea. In this scheme there would be two types of workers: productive workers who actually produce or perform what goods or services the enterprise turns out; and non-productive workers who provide the support services needed by the productive workers to carry out their duties. (Non-productive is NOT a pejorative term). Both types of workers would own the means of production as well as all related enterprise functions.
He also provides a good deal detail about how this worker based system could replace capitalist systems.
Is he right? I don’t know, but do believe that monetary reform alone only changes one component of a larger system and would probably have to be repeated regular as the rest of the system forces currency issues to malfunction.

1 month ago • Like

2

 

Follow Barry

Barry aClemson • Richard and Lori,

I don’t know anything about Marx’s ideas for worker directed enterprises
but i do know that a variety of worker owned / worker managed enterprises
are becoming a very large part of what some term the new economy. The
Mondragon group in Spain is the largest and probably the exemplar example
but there are thousands of such companies within the US also. IMO these
sort of companies overcome many of the perversions of the publicly traded
corporation, in part because the publicly traded corporation has a very
narrow decision framework (i.e. maximise profit and to hell with everything
else) whereas the worker owned / managed company will quite naturally have
a much broader decisoin context, e.g. they will look at profit as a
necessary constraint within a broad range of necessary values.

1 month ago • Like

2

 

Follow Alan

Alan Hayman • I agree Barry and I am reminded of the quote from Peter Senge:

“Profit for a company is like oxygen for a person……..unfortunately, most businesses operate as if their purpose is breathing.”

1 month ago • Like

2

 

Follow Richard

Richard Wright • Barry you sound a lot like Richard Wolff!

1 month ago • Like

 

Follow Barry

Barry aClemson • Richard,

re sounding like Richard Wolff …. that is a little scary since I don’t
know who wolff is … In your opinion is sounding like him good or bad?

1 month ago • Like

 

Follow Richard

Richard Wright • Barry, Richard D. Wolff is a Marxist economist who has written quite extensively on the subject of Marxism vas Capitalism. As Lori has observed he also appeared recently on the Bill Moyer’s show on NPT. His critique of the systemic problems of the capitalist systems IMO is absolutely right. Whether Marxism is a better system I don’t know, but do think alternative economic systems should be explored.
Saying you sound like Richard Wolff is of course a complement.

1 month ago • Like

 

Follow Javier

Javier Livas • I produced this presentation on BANK MONEY some time ago. It seems we agree.

https://www.dropbox.com/el/?r=/s/w4ptk9t93oxe9m7/BankMon.pdf&b=clk:None:5080228431232449615:1310:647&z=AAACfYh8QDIdPwO8T-o305rl5_HO2Tgz6MTb0UP_aiC53w

1 month ago • Unlike

4

 

Follow Joe

Joe Van Steen • Barry,
Javier’s presentation may also have applicability to your civilization thread. At least, on quick read, it seems that way to me.

Javier,
Thanks for sharing!

1 month ago • Like

 

Follow Barry

Barry aClemson • Richard,
Thank you!

1 month ago • Like

 

Follow Richard

Richard Wright • I recommend using the link that Javier has provided to a masterful presentation by Gunnar Heinsohn and Javier Livas on how the capitalist financial system actually works. It also reflects Staford Beer’s thinking on this topic.

1 month ago • Like

 

Follow Laurie

Laurie Corzetthttp://www.realitysandwich.com/node/170926
From the Middle Class to the Mutual Class
Paul Glover
“The next American generations will never achieve Middle Class excess. That’s good for the planet and tough for them. Fortunately, though, Millennials can become a prosperous Mutual Class by starting genuinely nonprofit mutual aid systems that enable them to live well by sharing resources. Such programs were widespread and successful one hundred years ago.

Through them we create millions of jobs that revive our neighborhoods. We give ourselves raises by lowering prices. And all our current skills are employed while we enjoy new talents.
Young and old, we will become the government as we create these regional food systems and regional stock exchanges, establish green co-housing programs and green labor administrations, reduce dependence on fossil fuels toward zero, replace automobile space with train and bike space, convert vacant urban land into greenhouses and orchards, develop co-operative health plans and clinics, issue our own education credentials and our own community money.
Such local systems prepare us to take power by creating parallel authority. By taking power together we regain time for creative individuality. We move from dependence to ownership.”

1 month ago • Like

2

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Javier,
Thanks for sharing your presentation. It gives a very detailed systems analysis of our problems. I completely agree with the general approach and conclusions. However, I might disagree with some of the details. Is it possible that part of the problem is also what Kelso outlined in his binary economics that, because of technology, there is not one factor (labor), but two—labor and capital—that increase productivity, and now all the profits go to those who OWN the capital, not the laborers? In your chart on p. 38, government didn’t increase as a percentage, the service sector and FIRE increased to balance the decrease in manufacturing. To me, it wasn’t government’s size so much as its corruption and the actions of the Fed, who followed Monetarist policies, rather than structural Keynesian policies. (See Thomas Palley, “From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics.” )

But these are secondary issues. What do you propose as solutions? Do we need a system with more inclusive capitalism, local and state public banking, no compound interest, a more socialistic system and/or…?

Regarding cleaning up corrupt government–As much as I dream of passing the Anti-Corruption Act ( http://anticorruptionact.org/ ) or something of the sort, I’m fearful we’re not likely to get a transparent government anytime soon unless/until we experience an even larger crisis.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Laurie,

Thanks for the Paul Glover link. It appears he likes local alternative currencies such as “Ithaca Hours” ( http://www.paulglover.org/hours ) to help people develop more community spirit and power.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Help!

Thanks to all of you, I am now up to my eyeballs in books/reading material on more inclusive capitalism and the alternative, socialism. Could those of you who recommended various books please post short summary “book reports” to give us all their main points, especially as they relate to interest, bank debt, and type of economic system. Then we can try looking at each systematically and, perhaps, attempt to integrate the best of the various approaches.

1 month ago • Like

1

 

Follow Richard

Richard Wright • Lori,as you wish. “Democracy at Work: A Cure for Capitalism” by Richard D. Wolff:

When the Soviet Union (USSR) imploded a large number of people both in and out of the U.S. Government, who should have known better, loudly proclaimed that among other things it represented a triumph of Capitalism over “Communism” and was proof that capitalism represented the best economic system ever developed. Wolff, a dedicated Marist, claims this is nonsense.

He devotes a large portion of this book doing an excellent job of showing the systemic flaws of capitalism and provides some compelling reasons why capitalism by the very way that the system operates produces gross social equalities, devastating economic fluctuations, and irrational behaviors bordering on lunacy. In doing so he points out that the USSR economy was not a Communist System in the sense that Marx envisioned, but a socialist system that had morphed into “State Capitalism.” Wolff throws a lot of economic terms around, but is careful to explain their meanings and implementations. As a true Marxist he explains his views in terms of the ownership of tools of production and disposition of surpluses (profits). For an economist he is remarkably clear.

His solution is to replace the capitalist economic system with what he refers to as Worker Self Directed Enterprises (WSDE) system in which the workers not only own the means of production, but also own the related structural functions of the enterprise. This is pure Marxism. The problem with Marxism, like Christianity, is not that it has been tried and found wanting it is that it has been found hard and never tried. So really nobody knows if a WSDE system would work let alone be a successful replacement for capitalism.

1 month ago • Like

1

 

Follow Javier

Javier Livas • Lori,

In my view, and following Stafford Beer’s teachings we must look at the whole of the governance system, not just the creation of money which certainly generates the musical chairs game when interest has nowhere to sit down. Then we have to realize that REPRESENTATIVE DEMOCRACY is based on assumptions and constraints that are no longer valid. We could design a new governance system from scratch. In this system, following the Viable System Model, it would become quite clear that BANKs and MONEY CREATION, which is your immediate concern are usurping a role which they should not have as planners of the economy. This means that we, the people, need a government which works with real time control and enormous expediency. I realize that getting rid of the US CONGRESS will not be easy. The way things are shaping up world wide, with very stupid wars going on, financial crisis everywhere, maybe, just maybe a BIG CHANGE might not be so distant.

1 month ago • Like

1

 

Follow Javier

Javier Livas • I sincerely think, I might add, that it would not take that much of an effort to get 30-40 people together and give redesigning government a try. It would take some traveling, some facilitation and hotel expenses, plus our time. In my experience as an activist for democracy in Mexico I am very aware of just how valuable it is to have a Black and White, in print, example of what you want. Only then will people start considering the option. We could show that government could cost about 1/3 or 1/2 of the current expenditure. I am afraid many countries keep betting on the US, so that prevents change somewhere else. Please consider that as an extra argument.

1 month ago • Like

 

Follow Javier

Javier Livas • Comment for Richard,

I think socialism had its chance, and trying this late to convince people that what the USSR was something else is futile. What about the lack of liberty, was that something else too? We should realize that capitalism is what got us here and that whatever new system we design is not going to be called socialism. So let go of that, I suggest to Wolff. I would not waste my time reading his work. We have a lot of new knowledge that is being wasted. Again, systems and cybernetics.

1 month ago • Like

 

Follow Richard

Richard Wright • Javier do not conflate Socialism with Marxism.

1 month ago • Like

 

Follow Ron

Ron Sposato • I think Javier is correct, in that socialism has a bad taste in the west and will not be accepted as a form of governance. There is power in words, remember that.

1 month ago • Like

 

Follow Ron

Ron Sposato • Lori, speaking of alternate currencies, have you heard of the”bitcoin”?

http://techcrunch.com/2013/03/28/bitcoin-how-an-unregulated-decentralized-virtual-currency-just-became-a-billion-dollar-market/

1 month ago • Like

 

Follow Richard

Richard Wright • Ron and Javier: Socialism refers to control of the means of production by society which in practice means the government acting for society. Marxism (communism) refers to owner ship of the means of production by the workers actually producing the goods or services, hence Wolff’s idea of Worker Self Directed Enterprises (WSDE).
Ron “socialism is an economic system not a political system.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Javier,
I agree that our present government in the US is part of the problem, but it’s not either/or — “free market capitalism” and the cult of individualism are also problems. Re your comment: “What about the lack of liberty, was that something else too? We should realize that capitalism is what got us here and that whatever new system we design is not going to be called socialism:”

“Capitalism” leaves just as sour a taste in many people’s mouths as “communism” or “socialism.” All are failed systems, as they have been practiced. I detected a note of the political philosophy of neoliberalism in your presentation. I have also read critiques of our present system from just as strong a systems approach as yours, but with other philosophical biases. I believe that we need to integrate them because IMHO all individual perspectives have a grain of truth, but are incomplete. For example, from a perspective I strongly agree with, which “includes and transcends” what I consider the best of neoliberalism and Keynesianism, we have a great LACK of “liberty” or “freedom” in the US and other capitalist societies around the world.

Palley (“From Financial Crisis to Stagnation”) wrote: “Income inequality, unemployment, and economic deprivation in turn hollow out and caricature freedom by removing the means to enjoy it. In the language of Amartya Sen (1999, p. xii), unemployment and economic deprivation are forms of ‘unfreedom.’…

“Introducing the concept of unfreedom radically changes the assessment of the relation between markets and freedom. Although markets promote the freedom of many, they can also increase the unfreedom of others. Consequently, unfettered markets can reduce overall freedom.

“The fundamental policy challenge is how to balance this conflict. Promoting the freedome of some may increase the unfreedom of others, whereas remedying the unfreedom of some may infringe the freedom of others.

“Neoliberal thinking ignores this problem by denying the conceptual legitimacy of unfreedom and giving zero policy weight to remedying unfreedom. This makes for powerful rhetoric, because the assumption that unfreedom does not exist means unfettered markets can only increase freedom. However, it is only this assumption that produces the rabbit of freedom out of the market fundamentalist hat.”

[][]
Palley writes of a “heterodox economics” with aspects of several economic “theories.” IMO, we need LOTS of experiments in alternate forms of democratic government practiced first at the local and state levels before we get to the national level. The US was MUCH smaller back in 1776 than it is now. Having only 30-40 people developing a system for >300,000 people could be considered “central planning.” In STW Journal there’s an article with a different approach than what you had in your presentation. Both yours and theirs have merit. (So do other approaches.) See “An Idealized Design for the Legislative Branch of Government” by Terry Bouricius and David Schecter, 2(1), January 22, 2013 ( http://stwj.systemswiki.org/?p=1407 )

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • All,

Dylan Ratigan writes about local experiments in California: http://huff.to/107zrZ3

“I’m learning more and more by just watching the locals in action. What stands out is the state remains uncoupled from the bureaucratic machinery of the East.

“A remnant from our pre-tech days, perhaps, but Californians still do things their own way as if assistance from Washington would take too long to arrive.

“Lower your gaze from the massive economy and celebrity politicians to the average citizen in small towns and big cities up and down the state, and you will see this easily observable phenomenon.

“Out here, there is a culture that is impatient and unwilling to wait for large institutions to hatch plans to solve problems and create solutions. Whether it is the Silicon Valley entrepreneur, my friends and business partners at Archi’s Acres, or even folks in the entertainment industry breaking new ground, the one common thread that binds this Golden State together is a willingness to try, fail, succeed and, occasionally, triumph without anyone else’s permission.”

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,
Regarding the bitcoin. Here are a few good blog posts on the problems with it, from older to most recent:
http://realcurrencies.wordpress.com/2012/05/18/bitcoin-impressive-but-flawed/
“Bitcoin has already shocked both the establishment and the blogosphere. A privately controlled currency, completely independent from Government backing. Bitcoin leads the way in many respects, but is ultimately flawed: it was built on false premises and does not address the key issue, interest.”

Today’s post: http://realcurrencies.wordpress.com/2013/03/29/bitcoin-blessing-or-a-trap/
“Bitcoin now stands at $89. It’s the most ridiculous bubble in ages and its bust will be legendary.”

I especially liked his more general blog post on debt-free money and compound interest: http://realcurrencies.wordpress.com/2012/01/05/debt-free-money-alone-does-not-solve-compound-interest/
“Debt free money in a full reserve banking system can still be subverted by the Money Power through Compound Interest. This is a vital issue for all Debt Free currency activists and theorists. It also is relevant for Gold and even Bitcoin.”

Here’s how he suggests money be created–by mutual credit: http://realcurrencies.wordpress.com/2012/01/03/mutual-credit-the-astonishingly-simple-truth-about-money-creation/

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • (Javier, I meant to write “>300 million people” not “>300,000”.)

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • All,
This is the best website explanation of demurrage and the Wörgl that I’ve found: http://realcurrencies.wordpress.com/2012/07/02/the-power-of-demurrage-the-worgl-phenomenon/
“The velocity of money is a badly neglected aspect of monetary theory. It is far more important than people realize and both in past and in the present depression, sluggish circulation played a major and negative role. The most obvious way of increasing the velocity of money is Silvio Gesell’s demurrage, a negative interest rate, in effect a tax on holding money. This is not just theory. There is a famous case in which it was implemented. The Wörgl experiment showed truly extraordinary results and is legendary in Interest-Free Economics.”

1 month ago • Like

 

Follow Joe

Joe Van Steen • Lori,
““Capitalism” leaves just as sour a taste in many people’s mouths as “communism” or “socialism.””

Many, but not as many. That makes a big difference. I enjoyed David Brook’s opinion piece in the NY Times today. http://www.nytimes.com/2013/03/29/opinion/brooks-the-empirical-kids.html

Perhaps a new generation growing up with things like the current economic problems and the banking problems may have a different attitude about economic systems, and whether capitalism is everything it’s cracked up to be.

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Joe,
I found the comments on Brooks’ piece just as instructive, e.g. (Richard should like this one.) :

Scott LaBarge, Santa Clara, CA: “As a philosophy professor who has had close contact with a couple decades’ worth of college students, I’ll tell you this much: every year as part of a two-quarter sequence I teach on concepts of justice, I have my students read (among many other things) the Communist Manifesto. While Marx’s ideas in that work always have found a group of students willing to take him seriously, there have always been a lot of students eager to attack and reject him too. Not this year. I was shocked at how readily the large majority of students accepted Marx’s analysis of class struggle as though nothing could be more obvious. Their favorite line (paraphrased) was that in a capitalist society the political class is just the executive committee of the bourgeoisie. And even though these are generally pretty well-off kids (I teach at a pretty expensive liberal arts school), they weren’t happy about this state of things. They were also pretty skeptical of Marx’s utopian alternative, but believe me, these kids were looking for an alternative to the status quo.”

1 month ago • Like

1

 

Follow Richard

Richard Wright • Lori, I should make clear I am not a Marxist, but like “a multiplicity of options” to be considered when trying to transform any economic system. I still maintain that trying to reform the currency system is a waste of time if the lager economic system that it is a part of is not transformed as well.
I have been defending Marxism because so many folks apparently have no idea of what it actually involves and yet are quick to make uninformed judgments. Such as conflating it with socialism or confusing socialism with governance systems.

1 month ago • Like

3

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Richard,
We’re in violent agreement about the “multiplicity of options.” IMO, the currency and economic systems are intertwined.

Regarding “socialism,” I’m afraid it means different things to different people. Some of the posters here have experience with different types/amounts of is commonly called “socialism” as an economic system and political philosophy as currently practiced (different in different countries), not as a stage of economic development in Marxist theory. For the first, see http://en.wikipedia.org/wiki/Socialism
“Socialism is an economic system characterised by social ownership of the means of production and co-operative management of the economy.[1] “Social ownership” may refer to cooperative enterprises, common ownership, state ownership, or citizen ownership of equity.[2] There are many varieties of socialism and there is no single definition encapsulating all of them.[3] They differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how management is to be organised within productive institutions, and the role of the state in constructing socialism.”

For those interested in the Marxist stage that I believe you, Richard, are thinking about when you write socialism (Is that correct, Richard?), see http://en.wikipedia.org/wiki/Socialism_%28Marxism%29
“In Marxist theory, socialism, lower-stage communism or the socialist mode of production refers to a specific historical phase of economic development and its corresponding set of social relations that eventually supersede capitalism in the schema of historical materialism. In this definition, socialism is defined as a mode of production where the criterion for production is use-value, where production for use is coordinated through conscious economic planning and the law of value no longer directs economic activity.…’”

1 month ago • Like

1

 

Follow Richard

Richard Wright • Lori: the concept that “socialism, lower-stage communism or the socialist mode of production…” is precisely where the Soviets maintained their country was, with Lenin himself pointing out that Russia wasn’t ready for actual Marxist Communism. They never seemed to be able to get out of that stage.

Here is an idea for you: the current capitalist system in the U.S. is not “free market capitalism” as is often claimed, but state subsidized capitalism in which the federal government is always there to step in if an enterprise “too big to fail” gets in trouble. The U.S. banking system has repeatedly demonstrated this.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Richard,

AMEN! I think the term is “crony capitalism” and it applies not only to Wall Street but to the other Big Businesses as well, including such companies as Monsanto, GE, Big PhRMA, Halliburton…

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron and All,

Here is a coin built similarly to bitcoin, but with demurrage so that it’s NOT a store of value and so isn’t subject to hoarding and money hiding (e.g. drug money) as is happening with bitcoin. It’s called Freicoin (“Frei” means “free” in German): http://freico.in/about/

1 month ago • Like

 

Follow Trine

Trine Moore • actually money isnt the dynamic, which is needed, what is is resourcefulness.

recourcefulness has much more untility, that money which is thoughappearing material actually imaginal in origin and so also in function, consider money as a figment, of imagination

1 month ago • Like

3

 

Follow T.A.

T.A. Balasubramanian • Lori

Joe’s NY Times article ponders how the education system might change attitudes of the young today.

“Buhler argues that the group she calls Cynic Kids “don’t like the system — however, they are wary of other alternatives as well as dismissive of their ability to actually achieve the desired modifications. As such, the generation is very conservative in its appetite for change. Broadly speaking, Cynic Kids distrust the link between action and result.” ”

In this context, Einstein’s quote on capitalism puts this influence down as ‘the worst evil’ …

“This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation”

As long as the B-schools continue training future generations in the fine art of capitalism-as-usual, there’s bound to be little questioning of the status quo.

1 month ago • Like

2

 

Follow T.A.

T.A. Balasubramanian • I came across this interesting British perspective – on Karl Marx being right about capitalism – that touches on many of the issues in this thread …

[][]

http://www.bbc.co.uk/news/magazine-14764357

A Point of View: The revolution of capitalism

Marx understood how capitalism destroys its own social base – the middle-class way of life.

As capitalism has advanced it has returned most people to a new version of the precarious existence of Marx’s proles. Our incomes are far higher and in some degree we’re cushioned against shocks by what remains of the post-war welfare state.

But we have very little effective control over the course of our lives, and the uncertainty in which we must live is being worsened by policies devised to deal with the financial crisis. Zero interest rates alongside rising prices means you’re getting a negative return on your money and over time your capital is being eroded.

The situation of many younger people is even worse. In order to acquire the skills you need, you’ll have to go into debt. Since at some point you’ll have to retrain you should try to save, but if you’re indebted from the start that’s the last thing you’ll be able to do. Whatever their age, the prospect facing most people today is a lifetime of insecurity.

[][]

1 month ago • Like

2

 

Follow Angela

Angela Courtney • TA both above very helpful; insightful and @ Trine it IS now about resourcefulness 🙂
@Lori and ALL thanks and keep the faith 😉

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,
Thanks for that insightful article. This part was especially poignant to me:

“But the larger fact is that the free market works to undermine the virtues that maintain the bourgeois life.

When savings are melting away being thrifty can be the road to ruin. It’s the person who borrows heavily and isn’t afraid to declare bankruptcy that survives and goes on to prosper.

“When the labour market is highly mobile it’s not those who stick dutifully to their task that succeed, it’s people who are always ready to try something new that looks more promising.

“In a society that is being continuously transformed by market forces, traditional values are dysfunctional and anyone who tries to live by them risks ending up on the scrapheap.

[][]
I have lots of trouble with people who preach “responsibility” and put all the blame on the little guys for getting themselves in debt. IMO, the whole affects the parts just as much as the parts affect the whole.

1 month ago • Like

2

 

Follow Ron

Ron Sposato • Lori…. “IMO, the whole affects the parts just as much as the parts affects the whole”, is that a surprise?

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Ron,
It’s not a surprise to me. I’ve lived with it and felt its affects all my life. However, I believe many of those “on the top,” especially libertarians who preach “personal responsibility” and “individual liberty” to those on the bottom don’t understand this at all.

1 month ago • Like

3

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Here is Comment 145 from the article in Tabby’s link. I think it sums up our present problem very well:

“Silvia, 4th September 2011 – 8:12 I can’t remember who expressed this, but it seems to sum up what living in our economic system is like for ordinary people: You can’t win, you can’t break even, and you can’t get out of the game. It’s a lot more subtle, and certainly more comfortable than direct Stalinist repression or Maoist brain-washing, but the result – to make us conform to a system that profits a few at the top – is the same.”

1 month ago • Like

2

 

GeneUnfollow

Gene Bellinger • @Lori, and the few at the top would deny that this is the case! Actually they probably don’t even believe it’s the case — even though it is.

1 month ago • Like

1

 

Follow Matthew

Matthew Hoesch • This has been a fun and enlightening thread to read.

Lorraine: In addition to interest rates distorting outcomes, you may also want to consider Rehypothecation.

A basic definition: http://www.investopedia.com/terms/r/rehypothecation.asp
Longer discussion has been covered at Zero Hedge ( http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe )

It would be interesting, if possible, to graph total amount of rehypothecation in the system.

1 month ago • Unlike

2

 

Follow T.A.

T.A. Balasubramanian • Lori

I can see how (what you had been saying) about Walmart fits into the capitalist scheme of things a little more clearly now! This discussion helped!

Given the size and scale of the Walmarts – I still see that if the corporate giants can put their hearts to work to remove the capitalist dysfunctions – they may be the game changers yet for a new order … or am I dreaming?

1 month ago • Like

2

 

Follow Richard J.

Richard J. Francis • My simple question (apologies if it’s been asked already) is:

WHO are the few people (maybe even one) that we owe all this money to – and do they think collecting that amount of money is right, fair and practical is a world now largely stalled of growth and progress for five years?

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Matthew,
Thanks for educating us on rehypothecation. That was a really scary article. It was written in late 2011. Do you have any more recent info on what’s happening?

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby

Thanks! (I’ll try never to mention Walmart again! 🙂 )

Re: Corporate giants putting their hearts to work… It would be great, but to paraphrase Gene, they probably really think that what they’re presently doing is good for the world, so you/we have our work cut out for us. “The stronger the positive feelings associated with the old story, the less interested the storyteller is in learning a new one.”

Maybe we should start a new thread on how to help raise people’s consciousness levels/stages. How do we help get people (and ourselves) to have “Aha” insights that move us forward on our path toward better understanding? IMO, Gene’s future book will be a big help to do that, but we need other approaches as well. What are the leverage points and who would be the best targets (e.g. people at which “stages” in the terms of integral psychology)?

1 month ago • Like

1

 

Greg Stevenson • I’ve been following another related discussion in the resilient futures group for a number of months. It’s called the real deal with debt and there is now almost 600 contributions to the discussion.

http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=61710133&gid=118033&commentID=128601206&trk=view_disc&ut=24mIY1ZB1575I1&_mSplash=1

Randomly delving into links within this discussion brings forth a huge amount of information.

1 month ago

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Hi Greg,

I tried to join the closed group you linked us to above and downloaded a pdf on Resilient Futures, which looks interesting. However, I guess they don’t like my profile because I haven’t been accepted into the group (yet) 🙁

1 month ago • Like

 

Greg Stevenson • I think it took a couple of days before the admin got around to accepting my request.

1 month ago

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Greg, Thanks for the info. Then there’s still hope for me?! 🙂

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Alan,

I’ve been reading more of binary economics because I agree with its premise about labor, technology, and capital. My problems are how to actually implement the system. When I bounced around the idea with my husband, his first question was who would insure the loans and how would it be decided which “entrepreneur” would be funded if venture capitalists had no stake in it? What’s your understanding of this?

Also, privatizing the commons by giving all people a financial share could have unanticipated negative consequences for the environment, rather than the hoped-for positive effects. The only example I know of is in the state of Alaska: http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

The Alaska Permanent Fund Dividend takes the annual tax income from the Alaskan oil pipe line and distributes it directly as income to each individual Alaskan citizen – “The lowest individual dividend payout was $331.29 in 1984 and the highest was $2,069 in 2008.” Has this annual dividend turned Alaskans into anti-environmentalists with a “drill, baby, drill” mentality in order to get more money?

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • In browsing blogs, I discovered another engineer, C. H. Douglas (1879–1952), who wrote a book called “Social Credit” about a similar idea to Kelso’s regarding labor and technology: http://en.wikipedia.org/wiki/Social_Credit

“He saw the “cultural inheritance of society” as the primary factor [in production]. He defined cultural inheritance as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization. Consequently, mankind does not have to keep “reinventing the wheel”. “We are merely the administrators of that cultural inheritance, and to that extent the cultural inheritance is the property of all of us, without exception.”…

“Douglas proposed that unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas also believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because he suggested that we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief.”

[][]
Is anyone familiar with this approach who could tell us more about it?

1 month ago • Like

 

Follow T.A.

T.A. Balasubramanian • Lorri

One reason why I think the Walmarts of the world can turn around is the example of Bill Gates [and the elite capitalist club of mega billionaires] and the pledge to give away their wealth (in different proportions).

When the top echelon of capitalism demonstrates that they can let go of the money wagon, it would perhaps begin the process of re-examining the motives of capitalism?

[][]

http://bit.ly/16xWsaC

Richard Branson joins Bill Gates in giving away wealth
Sir Richard Branson is one of the latest batch of billionaires to pledge to donate at least half their wealth to philanthropic causes.

Members of the Giving Pledge commit to give away at least half their wealth to charitable organisations and philanthropic causes. The pledge was established three years ago by Mr Gates, co-founder of Microsoft, his wife Melinda and Mr Buffett.

[][]

1 month ago • Like

 

Follow Alan

Alan Hayman • Lori

I often have difficulty being able to get from a great concept to implementation and binary economics is no exception! So when I stumbled across binary economics, I turned to STW for guidance. Dr Albus’ papers put some meat on the bones and here’s one of his summary presentations:

http://www.peoplescapitalism.org/presentations/PresentationPlanforProsperityandEconomicJustice1.ppt

As I said in a previous post, I fail to understand how capitalism can work in a totally automated society unless people (not the state) have a stake in the assets. But getting from A to B is not at all clear to me at the moment.

As far as negative consequences for the environment are concerned, IMHO this can only be controlled by regulation and for the bigger issues, e.g. climate control, the regulation has to be global. I don’t believe any economic system can discriminate between ‘good’ and ‘bad’ enterprises.

I’m fascinated with the “cultural inheritance of society” that you refer to from C.H Douglas’ book. We destroy that inheritance at our peril and I have always been concerned with some people’s luddite attitude to technology, particularly when driven by a desire to preserve employment. But at the end of the day, employment is just a means of earning money to live and if a share in the technology provided the same or better earnings potential, there wouldn’t be the conflict. That brings us full circle to binary economics!!

1 month ago • Like

1

 

Follow Angela

Angela Courtney • Lori @Can we be satisfied with the Compound Interest and Bank-Debt Money System presently (non)functioning in much of the global economy?

and @He CH Douglas) defined cultural inheritance as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization. Consequently, mankind does not have to keep “reinventing the wheel”. “We are merely the administrators of that cultural inheritance, and to that extent the cultural inheritance is the property of all of us, without exception.”…

And see how powerful is u tube? http://tinyurl.com/d7etyym

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

Regarding Gates and other elite capitalists: If I read my history correctly, the Robber Barons Rockefeller, Carnegie, etc did the same thing later in their life because they didn’t want history to look upon them (so) poorly. They gave “charity,” but had no intention of changing the system that enabled them to make their riches on the backs of others.

I don’t see any of the elites today doing any differently–I see no feelings of guilt or remorse regarding the present system, nor any consideration of an alternative system–even in your Branson link. When I see REAL, SYSTEMIC change ideas coming from that arena, then I’ll be very willing to rethink my prejudices… (I don’t want to get into the debate you and Mary had about Gates…:-) )

1 month ago • Unlike

1

 

Greg Stevenson • @Angela. See my comment on http://www.linkedin.com/groupItem?view=&gid=2639211&type=member&item=210925060&commentID=129323136&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN&_mSplash=1
Is Capitalism ignoring the writing on the wall?

1 month ago

 

Follow Trine

Trine Moore • picking up on some of the cores jn this thread as BT says a look at root causes..

identifying root causes would help, as would some commons sense of proportion too, the fault lines of economics and finance are well known and identified, in Spirit level and many many many other analyses, show the inadequacies, and pre post errations… As todays headlines..see, the news Re HBOSs and other examples including the philpots and tha daily mails absurdly strident headline of a few days ago was dis graceful, but only a reflection, of a much deeper complacency and arrogance within and throughout the state itself, which is shown by another headline about the wise and beautifuls attempts to opt out, of yet another EU directive about the right to privacy: right to delete records from the internet,

Thats all part and parcel of the wise and beautifuls all rights…. and directions and habits especially the habitual routines which are followed as doctrine and policy, as followed.. from and sotypified by the blair and bush legacy,and now aledgedly focused newswised re south korea.

re root causes, theres practiced incompetence across the board and beyond,
spreading into social structures and choices. Thats no secret its official.

As too the arrogance of beliefs.. thats worth saying again , as the arrogance of beliefs,
and the arrogance incorporated in corporate cults and policies, which inflate and exaggerate, with disproportion…

And result? is in directors and directions, the great and the beautiful, who order and boss, are by conscencus directors, but ones which show not to be True North,which is hardly surprising..nor that directives are inflated estimates puffed up.

the inflated claims of capablity made by creative accounting for a start was there with Enron,the grossed hyper generatnve puff,oversold, brought about collapse, thats very much how its been since south sea bubbles market hysteria spreads fasters than a listeria out break and thus subprimes, as happened yet again in 2008, except this time thers a difference this time theres the emergence of a real democracy, one which is a world groundswell, and its unstoppable in its continuance, like a tsumani its beyond and out side of human control and its exposing as it has with HSBOS the failures of directorates and the effcet of the steerage classes who end up doing..

the errosive has corroded trust, and is exposing incompetence anbd disfunctioning in routes and routines, which include institutional propagandas. the Gander is goosed.

the results is bust broken sytems, not fit for purpose or so were told..

By any commons sense the worlds economy is, busted, and all aired up,

hyperinflated, yet oddly though it is still continues functioning daily,which should tell us all something about the nature of root causality.. its a psychological.

as hyper states are, collective features of massed psychology, were the cause and the curse, and the means to resolve too.

wwere the cause and the curse and the means to resolve the inadequacies and ineptitudes of embedded policies which supposedly practice, but which frankly are so legion that nobody take a blind bit of notice of them, except in the theatre.. notice the word theatre, except in the thaetre of infinite justice which as nothing whatsover to do with god and everything to do with belief, as bush and blairs decrepid and disreputable show has shown with guatamano and other places on destruction of spirit, sanctioned by the wise and beautifuls, who are flannel peddlers with creative accounting, count imaginary figures as if real, and thats the state one of quasi real.

a state of belief in the quasi real fuedalism.

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Alan (and All),

While I agree with Kelso’s theory, I see problems with his and his followers’ completely capitalist solutions. IMO, we need to take the best concepts of any system and discard what was negative in it, then put the good stuff from the various systems together in a new way—“include and transcend.”

There are ways to encourage entrepreneurship and banking systems that work far better than what we have now and don’t have the implementation problems that binary economics seems to have. I especially like state/public/co-op banks, such as the public Bank of North Dakota, that put the emphasis on people and on local investment. However, I fear they are coming under heavy attack: http://bit.ly/Z6NiMP (For those who don’t live in the US, the designation “red state” means a conservative/Republican state, in contrast to a “blue” liberal/Democratic state.)

“In 1919, the Non-Partisan League, a vibrant populist organization, won a majority in the legislature and voted the bank into existence. The goal was to free North Dakota farmers from impoverishing debt dependence on the big banks in the Twin Cities, Chicago and New York. More than 90 years later, this state-owned bank is thriving as it helps the state’s community banks, businesses, consumers and students obtain loans at reasonable rates. It also delivers a handsome profit to its owners — the 700,000 residents of North Dakota. In 2011, the BND provided more than $70 million to the state’s coffers. Extrapolate that profit-per-person to a big state like California and you’re looking at an extra $3.8 billion a year in state revenues that could be used to fund education and infrastructure.”

Now the Big Banks may be trying to demolish the Bank of North Dakota by making it illegal. (Other public banks, such as the Sparkassen and Landesbanken in Germany, would also become illegal…):

“Clearly, from Wall Street’s perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street’s stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret….The biggest banks also want the treaty to eliminate “non-tariff” barriers including regulations that create “unfair” competition with state-owned financial enterprises.

“Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state,” according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.

“…A small but highly dedicated group of financial writers, public finance experts and former bankers have formed the Public Bank Institute to spread the word….The movement is gathering steam…

“Since the crash, the financial community has largely managed to wriggle off the hook. In fact, fatalism may be replacing activism as we sense that maybe Wall Street is simply too big and too powerful to change. After all, the big banks seem to own Washington, as too-big-to-fail banks are permitted to grow even larger and more invulnerable to prosecution and control.

“But this new public banking movement could have legs, especially if it teams up with those fighting for a financial transaction tax (see National Nurses United.) Most Americans remain furious about how financial elites profited from the crisis — before, during and after — while the rest of us pick up the tab. Americans know deep down that Wall Street is the predator and we are the prey.

“The state-owned and operated Bank of North Dakota proves that it doesn’t have to be that way. This is the time to fight for public state banking in a big way.

“You game?”

1 month ago • Like

 

Follow Richard

Richard Wright • Lori, I am ready to go to the barricades, but the U.S. Financial System is really a subsystem of the larger state subsidized (“crony capitalism”) U.S. Capitalist System. If we want institutions like BND to survive we need to change the very culture of capitalism in the U.S. (not necessarily eliminate it it).

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Richard,
Yes, but there may be a slight glimmer of hope in the strangest place–the new Pope Francis I. I mentioned the Social Credit movement above, started by the engineer C. H. Douglas. The movement still exists, and some Catholics are at the forefront. The Social Credit movement does away with the implementation problems of binary economics. The central recommendation is that each person be given an annual dividend (using fiat currency created by the state without bank debt), say, $10,000 per adult and $5,000 per dependent child.

Here is a discussion of this movement from a Catholic website: http://www.whatswrongwiththeworld.net/2011/11/the_social_credit_movement.html

“…The idea here is that, as efficiency in production increases, fewer workers are required to produce the essential goods of society. The workers and entrepreneurs who would otherwise be involved in the production of essential goods are then diverted, in a capitalist economy, to wasteful and frivolous “work” for the sake of making money – money needed to buy essential goods, along with the wasteful and frivolous output of their own “work”. One social credit writer noted that society would be better off paying 50% of American workers to stay home so as to minimize the damage they are doing.

“Therefore, social credit theory proposes that it is better to pay all citizens a “social dividend” – a guaranteed income without any strings that is deemed to be a natural surplus, the rightful inheritance of everyone. WORK WOULD THEN BE ENTERED INTO WITH MORE CARE TOWARD ITS ACTUAL VALUE RATHER THAN ITS MERE PRICE IN THE FORM OF WAGES. Under the present rule of capital, in which wages are of paramount importance, lots of valuable and important things that need doing are not done at all, or not done well. Which is the obvious consequence of too many people doing too many things that they shouldn’t be doing. Presently it is the wage that allocates labor: price conquers value. And so we have become a nation of wage-earners and consumers who know the price of everything and the value of nothing.”

(part 1)

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • (part 2)

The article above references “The Social Dividend to All” by Louis Even, written in the form of frequently asked questions. Here’s to me the critical part, from the Catholic Michael Journal: http://www.michaeljournal.org/soufin7.htm

“— A SOCIAL DIVIDEND TO ALL? But a dividend presupposes a productive-invested capital!
“Precisely. It is because all members of society are co-capitalists of a real and immensely productive capital.

“… financial credit is, at birth, a property of all of society. It is so because it is based on the real credit, on the country’s production capacity. This production capacity is made up, certainly in part, of work, of the competence of those who take part in production. But it is mainly made up, in an ever-increasing part, of other elements which are the property of all.

“There are, first of all, natural resources, which are not the production of any man; they are a gift from God, a free gift that must be at the service of all. There are also all the inventions made, developed, and transmitted from one generation to the next. It is the biggest production factor today. And no man can claim to be the only owner of this progress, which is the fruit of many generations.

“No doubt that one needs men of our present times to make use of this progress — and they are entitled to a reward: they get it in remuneration: wages, salaries, etc. But a capitalist who does not personally take part in the industry where he invested his capital is entitled, just the same, to a share of the result, because of his capital.

“Well, the biggest real capital of modern production is really the sum total of the discoveries, progressive inventions, which today give us more goods with less work. And since all human beings are, on an equal basis, coheirs of this immense capital which is ever increasing, all are entitled to a share in the fruits of production.

“The employee is entitled to this dividend and to his wage or salary. The unemployed person has no wage or salary, but is entitled to this dividend, which we call social, because it is the income from a social capital.”

Given Pope Francis I’s concern for the poor, perhaps he’ll be on the forefront in this effort. Wouldn’t that be wonderful!! (What kind of war would the crony capitalists wage on him? It would need to take a different tack than they’re used to…)

1 month ago • Like

1

 

Follow Richard

Richard Wright • Lori, thank you for that link. Actually, although I may come across as a “godless communist”, I am really a practicing Catholic. Pope Francis I is a Jesuit and clearly reflects their devotion to helping the poor. I am certain that he is aware of the unfairness and inequality of modern big banking systems. He has the moral authority, but not the money to really trouble crony capitalists.

1 month ago • Like

1

 

Follow Angela

Angela Courtney • Hi Richard, the other problem is the Vatican, internal serious dysfunction AND external networking; I have seen them operate at the UN obstructing Council for the Status of Women resolutions against violence against women, in company with Iran and similar cohorts. Can they even get theology right?
Permit me to digress from compond interest while I copy and paste a poem to deal with my stuff 🙂
THE VIEW FROM THE ISLANDS OF THE NORTH ATLANTIC
The storm has abated
The night is on the water
a titanic gloom settles;
Peter’s barque is holed below the waterline
Diagnosis; internal combustion of the hierarchy.
Fuelled by fear, secrecies and a culture of control
the din of dogma and deafness to the voice of the master.
Quietly the spirit whispers in the darkness
“Whatever you did to my little ones you did it to me
Better to have a millstone around the neck and be cast into the sea”.
Those who can, take to the lifeboats
Constructed from the stuff of their soul
Others cling to the vessel’s wreckage
The sound of ritual and empty rhetoric carries on the wind
We wait and hope and trust that the dawn will reveal the shore
And light up our pilgrim path once more…
©Angela Postle 8 Sept 2010

1 month ago • Like

3

 

Follow Richard

Richard Wright • Angela, good imagery in your poem. You are of course right about the Church, Pope Francis I has a good deal of housecleaning before he can embark on helping the poor. The Vatican Bank is scarcely a model for honest and open banking. Also the Church, as an institution, until now appears to be unable to get a grip on the 21st Century and continues to be stuck in the Middle Ages (not true for all religious orders or individual priests and nuns).

1 month ago • Like

2

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

Regarding doing good, especially large corporations (and their present and past CEOs). The seventh of the Seven Signs of Ethical Collapse in organzations ( http://www.scu.edu/ethics/practicing/focusareas/business/bcep/meltdown-signs.html ) is “Goodness in some areas atones for evil in others.” Here’s a link to an interview by Lynn Parramore with Jim Chanos, one of America’s best-known short-sellers, famed for his early detection of Enron’s fraudulent practices. He teaches a class at Yale on the history of financial fraud, instructing students in how to look for signs of cheating and criminal activity on business fraud: http://bit.ly/10I3aFZ

“JC: …looking down through the years where we’ve seen patterns continue. One is a wonderful checklist, the Seven Signs of Ethical Collapse in an organization. Some are clearly intuitive, such as a board full of one’s cronies or an obsession with making earnings forecasts. But some are not so obvious, for example, doing good to mask doing bad.

“LP: Good deeds can be a sign of fraud?

“JC: One of the more interesting observations in the world of fraud is that some of the most egregious frauds were some of the most philanthropic companies in their communities. In some ways, if you look at Bill Black’s theory of the corporation as both a weapon and shield (we teach a lot of Bill Black’s things in my class), you can begin to see that that would be one way in which the bad guys in corporate suites would basically use the corporation as a shield. They’d say, well, look at all the wonderful things we do in the community, how many people we employ. We give to hospitals, we give to the Little League team, and so on….

“LP: One look at your Yale syllabus shows that fraud has been rife through business history. Yet for the last 20 years, many people have insisted with near-religious conviction that markets are efficient and therefore resistant to fraud. Where is this belief coming from, and why is it a problem?

“JC: It rests upon an assumption that is deeply flawed, and that is that the people who are stewarding your capital in the marketplace — the boards of directors and the people that the boards hire – management — are acting not only in your best interest, but are playing by the rules all the time, so that, for example, the accounts that the company puts together for the accountants (and keep in mind, management prepares financial statement, not accountants, not the auditors) are accurate. The auditors simply review them, and that’s an important point I always stress to my class. If there are games being played, and if you read the boilerplate of any auditor’s opinion, it says “we rely on the statements of management” – and so if, again, the people in the corporate suite have ethical flaws, we have a system based on truth-telling that may not be exactly always accurate.

“I point out to my class that in 1998 there was a survey– Business Week (which is owned by McGraw-Hill) and McGraw-Hill (which also owns Standard and Poor’s) had a conference for the S&P’s 500 chief financial officers. They asked these chief financial officers if they’ve ever been asked to falsify their financial statements by their superior. Now, the chief financial officer’s superior is the chief executive officer, or the chief operating officer—basically the boss. It was a stunning—of course anonymous – survey. 55 percent of the CFOs indicated they’d been asked, but did not do so. 12 percent admitted that they’d been asked and did so. And then 33 percent said they’d never been pressured to do that. In effect, only one third of the companies in the S&P’s 500 at that time did not have a CEO or COO try to pressure their financial officer to falsify financial results.”

[][]
The CEOs and ex-CEOs of the S&P 500 companies are the Big Boys–the same ones who are now “donating” half of their money to charity…

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Alan and Richard (and All),

I’m really looking for people to help summarize the approaches of binary economics and social credit to see how each could be implemented, can one learn from the other, do they have facets that can be combined, how can we get there from here, etc., etc. Any takers?? The more perspectives the better! Thanks!

1 month ago • Like

 

Follow T.A.

T.A. Balasubramanian • Lori

Re: Capitalists and charity

My point is that the capitalists who want to give it all away are under no compulsion to do so – in fact Bill Gates clearly understands the contradictions of capitalism – and speaks out on these issues at every forum …

[][]

http://bit.ly/17kcwhA

BILL GATES POINTS OUT THE CONTRADICTIONS OF CAPITALISM

Speaking at the Global Grand Challenges Summit March 12-13, Bill Gates did something that most successful capitalists would never dream of doing – he rebuffed the idea that “the market knows best”.

Voicing his frustrations over the lack of funding for research on diseases like malaria (that mainly affects poorer populations), he admitted that it is the very nature of capitalism that means that there is more funding available for middle-class vanities like male baldness than for programs that seek to redress inequalities or cure diseases in developing nations.

“Our priorities are tilted by marketplace imperatives,” he said. “The malaria vaccine in humanist terms is the biggest need. But it gets virtually no funding. But if you are working on male baldness or other things you get an order of magnitude more research funding because of the voice in the marketplace…”

Gates feels that because of this glaring contradiction between market imperatives and what the world actually needs, philanthropic organizations like his Gates Foundation need to step in to compensate for this “flaw in the pure capitalistic approach”. With the continual push back from the Right wing, neoliberals and libertarians against state interference in market mechanisms, sadly this seems to be the case. However, expecting NGOs and charity organizations to step in to fix the negative externalities of the capitalist system – such as climate change, global poverty, hunger, and disease – is hopelessly flawed.

As long as the neoliberal capitalist system continues to operate to maximize profits, environments and labourers will continue to be exploited and degraded – and as long as the state continues to operate with the central task of managing and enabling the economy (or the utopian ‘free market’), then it will never have the political power needed to actually make the changes needed to address climate change. The state will continue to be lobbied and crippled by the interests of Big Oil/capital, and Big Oil/capital will continue its quest for profits at the expense of the environment (in terms of extraction, pipeline construction, oil spills, etc., and in terms of all of the negative effects of climate change).

The North American lifestyle that we’ve come to take for granted is not sustainable; it’s only been made possible by securing cheap carbon (through war) and by neo-colonial activities that have impoverished the rest of the world.

Unless we are willing to reign in the unrealizable “American Dream” along with the purely individualistic interests of capitalism, no political leaders or charitable organizations will be able to stop the runaway train of warming temperatures. Nor will they be able to stop global hunger or suffering from curable diseases, for that matter.

From the mouth of Bill Gates himself : unregulated capitalism will never solve global issues – only, maybe, male baldness.

[][]

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

Thanks for the article. I noticed that Gates saw the solution as him stepping in as charity, not changing the system. The author of the article, in fact, bemoaned this and pointed out GATES’ thinking flaw:

“However, expecting NGOs and charity organizations [i.e. Gates and his elite “benefactor” Robber Barons] to step in to fix the negative externalities of the capitalist system – such as climate change, global poverty, hunger, and disease – is hopelessly flawed.”

1 month ago • Like

 

Follow T.A.

T.A. Balasubramanian • Lori

I wonder if anyone – even a multi-billionaire – can just step in and ‘fix’ the entire capitalist system? However, one can see that your LOI is in no mood to be unconvinced that all the super rich are “robber barons”!

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

Thanks also for introducing me to the “Utopian Dreaming” blog site! It’s “just what the doctor ordered”–another perspective on the interrelated problems of our current economic system.

1 month ago • Like

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

If the elite can’t step in, who can–other than large masses of people whose consciousness has been raised?

If Gates and the other elites used just a tenth of what they’re donating to charity to instead work towards constructive change of the entire system, we wouldn’t NEED those huge charities. That’s what this whole thread is about. I compare the super rich to Robber Barrons because they were/are ruthless in dealing with competition, just like the Robber Barons, and they accept that system. Gates used every means at his disposal–legal and otherwise–to stay on top–and it produced inferior products. He was willing to pay fines for his illegal means because it was just “the cost of doing business.” Did you read the article I posted on the rampant fraud in the S&P 500? That was in 1998, and it’s obviously gotten even worse today–it seems it’s the only way businesses can survive!

IMO, it’s hard for the elites to see the negatives in what they’ve done because of confirmation bias. Perhaps your LOI is in no mood to be unconvinced that they’re having trouble seeing those contradictions…

1 month ago • Like

1

 

Lorraine (Lori)Unfollow

Lorraine (Lori) Filipek • Tabby,

I apologize for using the term “Robber Barons.” I knew it bothered you, yet I used it anyway. That was childish of me. Let’s move away from Gates, since neither of us can read his mind, and also away from charity toward more long-term sustainable, constructive solutions.

The Gates and fraud articles, the recent bank scandals, the 2008 crash, and the jobless “recovery” all suggest to me that the present “pure capitalist” system, as Gates called it, is not the best road to positive innovation, nor does it produce a society that serves us all. Rather, as presently practiced, it plays to our poorer nature—greed, hyper-individualism, and short-term thinking—and is bankrupt.

The blog you linked us to for the Gates article has another article and a video that really point out the problems with our present system, IMO: http://utopiandreaming.com/2013/02/07/the-endgame-of-capitalism/

The question is: From an ST perspective, what are the pros and cons of various options for the future, in terms of different possible monetary and economic systems? Are there hybrids that build in good negative feedback loops and/or virtuous cycles for all of society, not just the lucky few?

29 days ago • Like

1

&

Tagged on: , , ,