Bob Moriarty: Solving Our National Problems Starts With Sound Money

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Grover, not saying you are wrong. I do have a different perspective, and it’s neither right nor wrong, it’s just a different way of looking at the same problem. As to solutions, I think this is a little unrealistic, no?
We have rapidly disappearing natural resources, pending climate catastrophes, a sham of a two party government system, and crumbling mainstream economic theories unable to explain what happened yesterday let alone predict what will happen tomorrow, and you want solutions?

 

It took us nearly 400 years to get where we are today, it is not going to be solved in a blog post, and there is growing realization that it will never be solved at all. In the meantime, I would propose that we can help ourselves by not incessantly claiming that we can reverse the negative effects of our political economy by simply changing currency attributes- again the tail does not wag the dog.

 

 

Hrunner, Keen’s description of the dialectic theory is 180 degrees opposite from Greek or Hegelian dialectic. The 15 min band I mentioned in the video does a good job of outlining these differences.

Regarding commodities, we have to broaden the definition to move past mainstream understanding of things like pork bellies and soy beans, past the vision of factory workers chained to machinery engaged in mass production. The definition of commodities is both abstract and concrete, and both must be discussed.

To the concrete, virtually all objects are commodities, the computer I type on, the desk I sit at, the car I drive, and the IT infrastructure and software used to write this post. Entertainment is a commodity. The most important commodity however, is the commodity of labor power. Labor power is the most ubiquitous of all commodities (followed by money-also a commodity).

While so-called knowledge workers in technology vocations tend to exclude themselves from the hoi polloi of collective labor, the laws of commodity exchange are not suspended just because one produces software or provides a labor based service. It still reduces to an individual selling a commodity (labor power) for money- which is used to purchase other commodities.

In the abstract, commodities can be defined as any object or service that can be reproduced using socially necessary labor power. Money represents remuneration for labor power, and is used as a contrivance for universal purchase of other commodities (as well as a store of wealth).

Everyone in a wage labor economy participates in the exchange of commodities, factory workers, knowledge workers, consultants, software producers- everyone. This concept, far from being outdated or obsolete, is even more relevant today than it ever was. In fact, it would not be overreaching to suggest that the core activity of our economy-perhaps even our civilization- is the exchange of commodities- to the exclusion of virtually everything else.

Our interaction with other people is predominantly through the exchange of commodities. Whether buying a cup of coffee at Starbucks, grocery shopping, or going to work, the vast majority of our human interactions are centered around, and enabled by, the exchange of commodities.

Again in the abstract, one of the more interesting attributes of commodity exchange is that the process of exchange obscures the social relations. This is a very important principle. Is it not strange that an act so central to our human interaction, in and of itself obscures the true nature of ourselves? When you buy a undershirt at Walmart (or wherever) the social relations used to produce that shirt are completely transparent to you- you don’t know who produced it (a 14 year old girl in Bangladesh?) and she does not know who bought it.

These characteristics of disconnect produce side effects like alienation, which have profound consequences for our society.

In turns out that this obfuscation is essential to the function of our economy.  It turns out there is not much of a market for goods produced by slave or child labor- even in faraway countries. It turns out there is not much of market for goods produced by knowingly destroying the environment, or depleting natural resources en masse.

So the beat goes on.

 

https://www.youtube.com/watch?v=O6OSIDh1-ng

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Grover,Agree with your rhetorical question- no, bankers should not be rewarded with massive amounts of money for serving in a utilitarian function similar to a manager of a water-treatment plant or an electric utility.  Seems they should be paid, in a wealth-backed monetary world, whatever those highly capable utility managers are paid, since they would be in essence moving money around society like a water treatment plant manager is moving water around.
Your utopian example of a tribal group of perhaps 20-30 people is romantic, yet has no bearing on the world we live in, where, as I write this, I am connected by communication and by commerce to several billion people instantaneously.
True, it might be a nice world to live in a tribe of 20-30 people, but that is reality for only an infinitesimal fraction of the current population.
I was addressing a money system for the remaining 99.99999999999999% of the world.
Good discussion.
H

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[quote=Hrunner]2.  John Mauldin once said "there are only two ways to increase GDP (aka wealth), increase your population and increase your productivity".  While I think I might be able to come up with a couple of additional ways, his point is well taken. 
If your GDP/ wealth is shrinking, according Mauldin then either your population is shrinking (ala Japan) or your productivity is shrinking.  If you live in a wealth-backed dollar country and the population is shrinking, that may have some benefits to you that will offset some of the loss of wealth.  There will less people therefore more land and resource per capita (the "capita" is shrinking, the land and renewable resources are staying the same).
If your productivity is shrinking, then you've got some bigger fish to fry, and it sucks to be you, living in your country.  You as a citizen had better figure out why productivity is shrinking and address it, or suffer the consequences of living in a productivity-shrinking country.  Is is education?  Lack of capital investment?  Government has grown to an out of control size and is wasting your dollars?  Are you voting the rascals out of office and replacing them with more fiscally-responsible politicians?  Are you and your fellow citizens being too stingy in investing your savings in new ventures? 
[/quote]
Hrunner - great conversation going on here…I would like to again address a single point out of many fine ones you have raised, and it centers on the construct Mauldin has advanced, which is actually the centerpiece of current mainstream economics.
The problem I have with the idea is that it ignores natural capital, or, more accurately, assumes that the only limiting factor to economic growth is how many people you have and how diligently they advance their value generating processes.
But this is obviously and tragically incomplete.
Consider, for the moment, Saudi Arabia.  They have a rocking GDP that has advanced smartly over time. As measured in terms of per-capita spending power, they are doing great.  Their population is also expanding rapidly.  In conventional economic terms, they are doing great.
But are they really?
For all practical purposes, Saudi Arabia's GDP is due entirely to the extraction of oil.  As long as they have oil to extract, they will have an economy, and as long as they have enough oil to both consume and export, they will have a rising GDP due to the effects of a rising population, just as Mauldin articulated.
But what happens on that eventual day when internal oil consumption outpaces domestic production? Then it becomes painfully obvious that instead of economic activity being a function of people x productivity, Saudi Arabia will discover it was mainly an artifact of the draw-down of the principal balance of a natural resource. 
And what is true for Saudi Arabia is true for the rest of the world, only it's not quite as obvious because SA is an extreme case that lays bare the issues in black and white terms.
The actual formula that Mauldin should be offering has to include (population) x (productivity) x (resources).  The old way of simply assuming that resources are never a limiting factor in the economic equation, and therefore ignorable, needs to be modified and we have to finally understand that the natural world is not a subset of the economy because it is the economy that is a subset of the natural world.
 

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Interesting thread. I have yet to find an economic model that hasn't omitted something from it so that it can have an inherent logic. Such is deductive reasoning. I'm not sure why we keep looking for it. Godel and Pascal already proved this, but yet we omit their findings and continue searching. That's probably why I'm always playing the devil's advocate on this site:) I came to the conclusions awhile back, like Darbikrash, I don't believe there is a model or system that will solve our predicaments (Chris, as you have said, predicaments can not be solved). But that shouldn't be mistaken to mean we shouldn't act on what we know…in some ways it requires a leap of faith.
To me, sound or stable money will not be an answer to our woes because it ignores or omits too many things. Gold, Bitcoin, even Fiat currencies all have an inherent logic as long as you omit or dismiss certain things from them. For instance, a lot of context, historical or otherwise, has to be stripped from all of these types of currencies for them to even work within their logical framework. Realities such as our current corruption, manipulation, organized crime, futures/derivatives, excessive mining at the expense of people and the environment/externalities, size of corporations/govt., the friction between the concept of the individual and the collective, are just some of the realities that have to be omitted or ignored to some degree in some or all of these models for them to work.  Too many flawed assumptions are made. General equilibrium is flawed, the concept of utility, sound money, are all flawed. There will always be something that lies outside of whatever system you choose that causes that system to be incomplete. And thank God for that!! Otherwise, the mystery of life is gone!

So in my opinion, Darbikrash is right in that it comes down to one's perspective. Again I've gone back to earlier writers, and currently I've been fascinated with John Stewart Mill's writing. What an enigma. It's not very useful to read his Wiki page as it is very incomplete and some of it is, well, just wrong. All the things we are discussing were being discussed back then, and he had an interesting perspective on how and when capitalism, socialism, and their attributing concepts might work in different contexts. His ideas on utility are interesting as he tries to make room in economic analysis for the "dreamer," the pure scientist, resources, and for laziness and/or irrational enjoyment. Go figure. He was also an advocate for women's rights.

Darbikrash, I also agree that alienation is a big reality that is overlooked by all economists, well at least, in a quantifiable way. How can we even begin to measure it? But yet we know it's there, even if only intuitively. Technology is our greatest disseminator of alienation, but yet it is what we are basing our current and future economy. The paradox continues.

Many thanks to all of you!

 

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Hrunner,

I think it has more relevance than you give it credit. The social needs were met when money wasn't the basis for exchange. It wasn't a utopian society - it was a brutal existence that was made tolerable by help from others when the need arose. Someone who didn't help was socially castigated. Enough transgressions and they were excommunicated. That meant that they had to face the brutal future alone.

Today, we have money to facilitate the exchange of goods. There are too many of us to keep all the accounting straight without a ledger. We can maintain a few hundred to a few thousand nonwritten accounts at most. As you note, you are [potentially] connected by communication and by commerce to several billion people instantaneously. I'd hazard a guess that you've only actually communicated with a very small percentage of those billions.

Our modern day tribes are much more varied than the ancient ones. Back then, the tribe had to satisfy all the social needs … simply because that was all there was. Today, we have our family and close friends, our neighborhood community, our coworkers, hobby groups, and even internet based communities (like this one) to fill the tribal needs that we have. Have you heard the end of the national TV news where the anchorman says, "I'll see you here tomorrow." We long for the personal connection enough that we want to believe that there actually is a personal connection there. How absurd is that???

And yet, because of money, I can hire complete strangers to satisfy my most basic needs without any direct social interaction. Does the farmer who grows the corn really care that I ate corn flakes for breakfast? Should he/she? What about the miner who digs up iron ore to make the tractor that the farmer buys? Is it imperative that the money system we adopt carry the social needs with it? That is a little too much to ask of it. It is enough to ask the money system to facilitate the exchange of goods without distorting the social interactions. Our debt based money system works for exchanging goods, but negatively distorts the social systems. It gives too much power to the first users. That isn't right.

Grover

PS I don't know if you've got fat fingers or you were exaggerating to make a point. From reading your posts on other threads, I believe that you understand what 99.99999999999999% means in a discrete system such as human population. For those who don't, it means that the 20-30 tribal members represent 1 part in 10 quadrillion. So, that directly implies that there are 200 to 300 quadrillion people in the world. How absurd is that??? We're about 7 1/2 orders of magnitude fewer.

If I've told you once, I've told you a million times - don't exaggerate!