Are they saving capitalism for a dying planet?

Indeed ... compound interest does not require growth ... it requires that an activity yields gross profit income that can be used to pay interest after the costs have been recouped and the principle repaid ... and that is something that is quite possible in a steady state.

The requirement for economic growth is to provide private economy employment in the face of expanding labor forces and improving productivities ... under capitalist institutions, if the collection of private labor markets and quasi-markets are slack, then productivity growth increases profit share at the expense of labor share, and that is not something that is compatible with a steady state.

The two solutions are to abandon capitalist institutions in the private economy, or to abandon the practice of allowing the aggregate of individual decisions in the private economy to determine employment in the aggregate.

If the government provides a Job Guarantee at a living wage and for as many half-day shifts as demanded to the statutory full time, then there is a price floor on individual labor markets and quasi-markets, and there is no longer a political-economy need to continuously increase the amount of private labor demanded in order mass unemployment.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 08:59:11 AM EST
[ Parent ]

Re: well as you know (none / 0)

Economic Growth is DEFINED in units of money which are created by banks as debt.

It is not defined in "Money's worth" of assets or of production from assets or anything else constituting "Value" - as opposed to a bank-created CLAIM on Value ie "anti-Value".

Wherever Money is created as Debt, then at the instant of creation, the money to pay the interest on the newly created debts does not exist, and must be created.

So the money supply grows exponentially, and the economy - MEASURED in these deficit-based units - must grow too.

You refer to only two solutions.

I am pointing out that there is now emerging another solution which is the change of the nature of money and capital itself which actually results from using:

(a) mutualised (without a credit intermediary) credit creation through a "Guarantee Society" approach which is interest-free, but not cost free, because defaults and admin costs are shared;

(b) mutualised investment through "co-ownership" of productive assets ie the sharing of production or revenues as between Capital providers and Capital users.

In this "Open Capital" model there are no "jobs" or "employment" in the sense of "Labour" working FOR the "Financial Capital" Marx wrote about (ie the legal claims over value of "Equity" and "Debt").

Instead individuals work WITH Capital to mutual advantage: there is no "Profit" and no "Loss" in such a quasi partnership.

Governments are reinvented as networked participative "partnerships of partnerships" in which citizens are Members.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jun 17th, 2007 at 09:31:23 AM EST
[ Parent ]

No, economic growth is defined in terms of increased sales of newly produced goods and services after correcting for inflation.

There is a profound confusion here between stocks and flows. The money created as debt and destroyed when debt is repaid may be reused an indefinite number of times in income circulation. So the total amount of income, out of which interest payments are made, and the total stock of money do not have a fixed relationship.

The bulk of the money stock is indeed leveraged off of the stock of fiat currency created when the government purchases (and destroyed when the government collects taxes and other payments), and some of the primary drivers of that leveraging process are also drivers of the income-multiplier process, so that when the central bank does not interfere with a particular broad monetary aggregate, it tends to track income growth.

But the argument about interest payments requiring creation of new money is a simply fallacy, confusing a stock quantity and a flow quantity.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 11:29:16 AM EST
[ Parent ]

Re: well as you know (none / 0)

I think you are confusing "dynamic" value in circulation and static value.

The vast bulk of money created - around 70% in the UK -came into existence as mortgage loans, and - due to the nature of fractional reserve banking - is the direct cause of property (actually LAND) price inflation.

Much other credit=money is also secured against assets, and again, is not actually in circulation, but is "static".

Clearly it is the case that is only a relatively small amount of credit=money which circulates as Society's "working capital".

Some of this is created by banks and is being recycled in the way you mention ie short-term credits. But there is a huge amount of other value in circulation - interest-free - as well, and that derives from "trade" credit.

As far as economists are concerned, I suspect that this trade credit barely appears on the radar screen at all, since it is not bank-created credit.

Correct me if I am wrong: I am not familiar with the Alice in Wonderland World of national accounting. It does my head in.

The simple fact of the matter is that wherever a business barter system - such as the Swiss WIR, or proprietary barter systems like Bartercard - allows participants "time to pay" aka bilateral trade "credit", then the result is a "bank-less" monetary system requiring a "Value Unit" - typically a "Trade Pound" or a "Trade Dollar".

This demonstrates empirically that Banks are entirely unnecessary credit intermediaries and could quite easily provide their only REAL value creation (that of a guarantee of a borrower's credit) as a service provider instead.

What you are missing is that it is the payment of interest on the enormous "fixed capital" stock that is driving the requirement for economic growth.

This is the real Inconvenient Truth which virtually all schools of economic thought gloss over through the use of faulty assumptions.

Capital - by which I mean assets, such as land, intellectual property,anything "owned" by companies and so on, which are the subject of property rights - is "productive", in the same way that Labour is productive.

Both have a value in use, and they combine to create "Value" - which is indefinable, but which I prefer to call "Money's Worth".

Conventional economics would have it that when a factory is automated through vast capital investment, the sole remaining employee who switches it on and off magically becomes infinitely "productive".

Complete balderdash.

However, it suits those who (increasingly) own the bulk of assets that any consideration of the inequitable distribution of capital assets, and particularly property rights in "commons", should essentially be defined out of discussion or consideration.

No equitable taxation system would fail to tax the privilege of private property rights over commons such as land and knowledge.

But our modern day to day narrative does not even permit consideration of such a possibility.

I digress.

My point is that you simply ignore the fact that the driver for economic growth is nothing to do with the financing of money in circulation (which actually need cost nothing, other than shared costs of administration and defaults) and everything to do with the financing of a nation's "Capital Stock".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jun 17th, 2007 at 07:00:24 PM EST
[ Parent ]

No, stocks and flows are basic dimensions. (none / 1)

Much other credit=money is also secured against assets, and again, is not actually in circulation, but is "static".

All money except fiat currency itself is secured against assets ... but the speed of the velocity of a certain type of commercial bank liability that can be used, in some transaction, as money is entirely a matter of flows.

A money stock exists at a point in time. If we could take a snapshot of all commercial bank balances at a point in time, and add up the total bank liabilities that function as money at that point in time, that is the stock of money.

A monetary flow exists through time ... it is a count of a number of monetary transactions that occur within some period. The "static" idea above is simply a flow of zero, which is certainly possible for some commercial bank liabilities that function as money, especially for short periods such as a month or a week.

But At All Times in a reserve banking system, barring shenanigans in which an insolvant bank is being temporarily hidden from the bank examiners, total commercial bank assets equal total commerical bank liabilities, with the account liabilities that function as money providing the lion's share of the money supply, and fiat currency in circulation (rather than held by commercial banks as assets) providing the remainder of the money supply.

That supply is a stock. There is no necessity for the stock to increase in size in order for the total amount of monetary transactions in a period to increase, since the average velocity of circulation of a unit of currency can increase instead.

However, since commercial banks create additional purchasing power as an immediate side-effect of extending new credit (and with nothing whatsoever to do with the need to allow interest to be paid), money stock broadly measured does tend to move with the income-expenditure cycle that is in part driven by that extension of new credit.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 08:00:51 PM EST
[ Parent ]

Re: You are referring to Bank Money (none / 0)

As I have said often enough on this site, Bank (Deficit) Money bears the same relationship to Value as anti-Matter does to Matter. It is an IOU or a "claim over Value".

Money as it really is - as opposed to the toxic bank-created Object we are accustomed to - has no "cost" any more than an inch or a kilogram has a cost.

At any given point in time in the global accounting universe or "Ledger of Ledgers" comprising all accounting transactions there is:

(a) a complete equal and opposite set of "Accounts Receivable" and "Accounts Payable" ie a global "transaction repository".

(b)a complete set of who "owns" or has rights of use in what - ie a global "Title Repository".

The former is essentially "working capital" and the latter is essentially "fixed capital".

In sum, this may be thought of as "Capital". It is both "Static" Value and "potential" Money.

"Money" is the result when "transaction" messages pass within this accounting universe - and changes are then made in the database in relation to creation and settlement of obligations, and transfers of title to assets.

But "Money" in reality is ephemeral - it is "Dynamic Value", existing only in the transient moment of the transaction event.

Money is a Relationship, not a bank-created Object.

Banks as credit intermediaries are simply not necessary. They are not a necessary part of the accounting universe in fact.

There is in truth no REAL money "stock" - we have simply been fooled into thinking that bank-created credit constitutes Value, rather than its antithesis. There is only a stock of POTENTIAL money aka Capital.

Capital is to Money as Matter is to Energy: Economics is the Physics of Value.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jun 17th, 2007 at 09:07:58 PM EST
[ Parent ]

Its a liability. (none / 1)

As I have said often enough on this site, Bank (Deficit) Money bears the same relationship to Value as anti-Matter does to Matter. It is an IOU or a "claim over Value".

Bank money is a promise from the bank to clear a payment provided you have been credited with a sufficient amount in the correct account. Provided they fulfill that promise, it functions as a medium of exchange, store of value, unit of account, and standard of deferred payment.

Its a good thing that it is not valuable in its own right, but instead is valuable, as with any other financial asset which is a liability of another party, to the extent that the other party fulfills its promise. Having intrinsic value would interfere with its functioning as money.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 18th, 2007 at 02:31:01 PM EST
[ Parent ]

Re: Its a liability. (none / 0)

You are setting out the attributes of that "Object" which is Bank-created deficit-based Money.

The existence of this is a very large part of "the problem".

My point is that banks as credit intermediaries are simply unnecessary, when an alternative monetary system comprises:

(a) a barter network;
(b) bilateral credit, with a mutual guarantee, backed by a default fund;
(c) a "Value Unit",
(d) a Credit Manager formerly known as a Bank - as service provider.

Money is a relationship, not an object.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 07:18:00 PM EST
[ Parent ]

No, I am setting out the attributes of ... (none / 1)

... money. Bank liabilities have not always served as money, but for something to serve as money, it should function as a medium of exchange, store of value, standard of deferred contract payment, and unit of account.

Of course money is a relation, not an object. Social institutions are not objects, even when they feel like objects in use.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 18th, 2007 at 07:49:23 PM EST
[ Parent ]

Re: No, I am setting out the attributes of ... (none / 0)

You say "something" ie some thing, or some object.

But the point is that "Money" is not in fact a "thing".

A Value Unit is abstract, and is a necessary part of the Money relationship.

A Value Unit is a "Unit of account" and also a "Medium of Exchange".

As for "standard of deferred contract payment", yes, a monetary system exists to split barter transactions over time.

But a "Store of Value"? Conventional interest-bearing money operates in this way, of course.

But in reality, definitely not. A "Store of Value" is what "Capital" is all about.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 08:14:16 PM EST
[ Parent ]

Re: well as you know (none / 0)

Indeed ... compound interest does not require growth ... it requires that an activity yields gross profit income that can be used to pay interest after the costs have been recouped and the principle repaid ... and that is something that is quite possible in a steady state.

but without economic growth one person's "gross profit income" is someone else's loss...

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Sun Jun 17th, 2007 at 10:23:58 AM EST
[ Parent ]

is that true? I mean someone will have gained a item or a service that the person who profited will have provuded.

(I may be completely wrong or irrelevent here as my total theoretical economic knowledge could be written on the back of a postage stamp)

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Sun Jun 17th, 2007 at 10:31:18 AM EST
[ Parent ]

No, that's about it. An ongoing enterprise sells a product, which "earns" an income to be divided between those stakeholders allocated a share based on agreeing to have their labor managed, and those stakeholder allocated a share based on the social institution of property ownership.

The neoclassical fantasy was that there was something intrinsic about that allocation of the earned income between wage income and profit income, when it is, after all, a social system rather than a physical one. Many traditional marginalist economists still cling to that fantasy.

But as long as the fresh injections into the spending-income-spending loop are stable and the proportions leaking out of the same loop are stable, then any arbitrary allocation of profit and wages that allows those working in the ongoing enterprise to survive (whether they gain their allocation as a wage share, profit share, or mix of both), then that system is reproducible.

The sustainable steady state benchmark is a far more useful benchmark than the traditional economic fantasy of general equilibrium markets all around. A sustainable steady state is not sufficient for sustainability ... the system also has to be able to respond to shocks upsetting a sustainable steady state and settle back into a sustainable steady state ... but it sure as heck is necessary.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 11:46:53 AM EST
[ Parent ]

Well thanks that's got me to two postage stamps ;-)

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Sun Jun 17th, 2007 at 12:20:07 PM EST
[ Parent ]

No, in a steady state ... (none / 1)

... total earned incomes plus indirect taxes equal total expenditures, so as long as the income drivers are stable and at a steady state (eg, business investment in productive capacity and government investment in complementary productive infrastructure equal to depreciation of same, Net Exports of 0, residential construction equal to depreciation, consumer acquisition of durable goods equal to depreciation, etc.), and propensity to consume, tax, and import are stable, gross profit is reproducible at a constant rate.

If there is pure technological progress leading to pure productivity gains (and not simply gross labor productivity, which has often over the last four centuries been accompanied by greater resource intensity per labor hour), then a pure steady state is not required, but since pure technological progress tends to ebb and flow in waves, it is important for strong sustainability to have an economic system that is capable of sustaining a steady state, and as well as of accomodating productivity gains as they occur without loss of the ability to sustain a steady state.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 11:35:21 AM EST
[ Parent ]

Re: Saving capitalism for a dying planet: a theory (none / 0)

It's all about timing, as usual.

But this place has a life of its own now.....

You can't be me, I'm taken

by Sven Triloqvist on Sat Jun 16th, 2007 at 05:33:59 PM EST

Tips for idle chat! (nmi) (none / 0)

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Sun Jun 17th, 2007 at 01:25:39 AM EST
[ Parent ]

Re: Saving capitalism for a dying planet: a theory (4.00 / 2)

Really excellent diary. So, who are the new leaders and what criteria are we to judge them by? I mean, what's to stop a new leader repeating the tiring methods of the old leaders? New ideas, I suppose. What will take the place of capital accumulation, given that some humans need to feel themselves "somewhere near the top" of whatever cultural tree we're climbing...really excellent diary Cassiodorus...summing up the bind we're in. Assuming for a moment that Chris Cook's idea about value transaction societies, where you start with something of value to someone else and then exchange brings culture...then the question is: how to get from here to there? What does who need to hear or see or taste or smell or touch or...well...I think, as melo has said, that the rich need to kick back, work less, take a pay cut, enjoy what they have, walk about their property rather than driving and flying from here to there. Take a stroll around the neighbourhood rather than sitting inside with everything switched on. Buying stuff and then not buying any more stuff because they're too busy using the stuff they bought...I remember a guy, this is many years ago, he was a computer guy earning good money for inserting a floppy disk into a computer, moving a few files, then clicking on an .exe file and waiting ten minutes....we'd chat in those ten minutes...he must have been loading all of our computers, so there were a series of ten minute chats. He was into music software and hardware. I wanted to buy a digital recording studio, but I wasn't sure. A computer and digitial recording software seemed more feasible. But there was this one digital recording box, it was....a lot of money. He bought one. So the next time I saw him I said, "So, what's it like?" "You know what?" he said. "I haven't had time to take it out of the box." Next time I met him he still hadn't taken it out of the box. And the next time after that he'd bought another two shiny toys, not to mention the sports car he was lusting to rent. "You pay X a month. When you run out of money, you give it back."

So...leadership, at all levels, from the individual up and back down to the individual...the Universal Declaration of Human Rights. How to negotiate the change? No politician wants that responisibility, it seems, or can think clearly within that headspace. Too kooky! Life cannot be that much in peril. So yes, highlighting the number of species dying out. A friend of mine said, "The large mammals are all dying out." Except for us, cows, pigs, sheep, dogs....

...hey! Great writing, great reading!

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Sat Jun 16th, 2007 at 08:04:56 PM EST

Who are the new leaders? (none / 0)

So, who are the new leaders and what criteria are we to judge them by? I mean, what's to stop a new leader repeating the tiring methods of the old leaders? New ideas, I suppose.

Say, aren't you Parisians having an International ecosocialist meeting sometime in October? You should find leaders there.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Sat Jun 16th, 2007 at 08:27:31 PM EST
[ Parent ]

Biocapital accumulation ... (none / 1)

... let those who wish to strut like peacocks because of their wealth do so because of the biowealth that has been added to their land that decade ... as measured by a highly professional service and widely publicized.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 08:02:28 AM EST
[ Parent ]

a dying planet: a theory (4.00 / 2)

That is why organizations without leaders, non-hierarchical systems, self-organizing systems, bottom-ups, cooperatives, horizontal networks, communitites and all the other alternative methods of structuring human activity, are so interesting, and, possibly, the only way to get all of us out of the unhappy mess we are in.

You can't be me, I'm taken

by Sven Triloqvist on Sun Jun 17th, 2007 at 09:00:21 AM EST
[ Parent ]

Re: a dying planet: a theory (none / 0)

What percentage of the world's population would you say is currently either

a) supported by an organisation without hierarchy

b) at least part-supported by one

c) has an open-invitation one economically close to them

I wouldnae know.

I think another factor (the "kill the bastards" factor) is: How many of these organisations are being activiely harrassed, undermined, and generally attacked--and killed--because their non-hierarchical organisation is sitting upon a valuable resource--and not making all the profit they could...I mean: how will and do such groups survive the unhappy arrival of the local mafioso and his or her henchpersons?

But first, what percent are we at, and how fast is it growing--if it's growing at all?

Melo had a quote from someone which made the claim that we are now at the "over 50%" point for people who "get it"--who understand more or less what's going on. This is supposed to be a tipping point figure (it was five per cent in the sixties)...he can explain it better than me, I'm sure...but once you have minds prepared you need organisations prepared...as melo writes in his comment here, "Your pension needs bombs and oil"...so okay, I'll let go of my pension...

...The self-organisation will have, or does have, an internal cohesion--a resistance to attack and a method of development...but how early are these early days? We can learn so quickly, and if a person is not plagued by mental hang-ups, the techniques of a successful non-hierarchical X will be easy to replicate...and maybe dealing with the plagues of mental hang-ups across the planet is part of that...heh...for those enlightened, is the...is the...hey, is there a boom in the number of co-operative registrations across the planet?

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Sun Jun 17th, 2007 at 09:47:55 AM EST
[ Parent ]

I'm just happy because its Saturday and my legs .. (4.00 / 4)

... can rest. During the week, as a summer job (by the class instructors do not have a regular salary, after all), I sling boxes at a local warehouse operations. Boxes for a major, unnamed, US chain are put into trucks when they get to port, or at some factory somewhere in the US, and shipped off to a regional center, where they are taken off the trucks and put onto pallets for the individual stores.

There is, in other words, a substantial amount of the back breaking work with easily learned skills that Wal-Mart wants to send to Mexico with the NAFTA Super-Highway.

And since I cycle in excess of an hour and a half to get from home to the warehouse, by the time I get home, my legs are really tired.

So no woes about not being in Paris ... sitting at home all day Saturday has been enough to make me content.

Of course, this box slinging will change in a sustainable world. Much of the box slinging will be reduced, since goods will tend to be produced more locally for local consumption, and shipment will be along established track or other electric traction fixed guideways. So far fewer shipments of goods, in standardized containers, will be repacked into mini-containers to go to their specific stores, which will be much more numerous, and in most cases will not have massive fixed inventory of extra-regional products shelves, but will rather receive those boxes on order ... it is local products and a few staples that will be on the shelves.

IOW, suburban sprawl will re-cluster into suburban villages strung together by rail or some form of light rail (generally ... trolleys or monorail or Aerobus or whatever) ... and the General Store will be next to the local truck farmers market, and nobody would dream of shipping anything 2000 kms if it has not been ordered.

Luckily, some of that manual work with readily learned skills will be available in the process of dismantling complex manufactures into the components that can be recycled locally and the components that are returned, at the manufacturers expense, to the point of origin or a regional specialist in that component.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 01:14:43 AM EST

Re: Saving capitalism for a dying planet: a theory (none / 1)

i voted 'no' because i don't think they will be able to save capitalism as we know it, and if it will survive it will follow the kind of participatory model chris espouses.

right now it's co-option of the ignorant masses by the unprincipled few, share in the winnings, and we won't talk about who had to die to get them....where's paris?

hey your pension plan is dependent on oil and gun stocks continuing to climb!

if you want the gravy, you have to buy the gloss.

it's a mindfuck of mythical proportions, and it's costing us our dignity as a sentient species, at the very least of it.

maybe if enough of us realise how powerful our unity could be, we'd see more positive change..

the very rich stroll their property and peruse the view, the starving african wanders the bush in search of firewood, perusing the view (and justice).

the ones in the middle classes are stuck in traffic, chasing the buck, wondering how it came to this...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jun 17th, 2007 at 05:07:18 AM EST

Saving capitalism for a dying planet is clearly .. (4.00 / 2)

... infeasible as an outcome ... the point of the diary is that is the target of the current working system.

When the current working system is targetting the impossible, that means there will be a/some crunch(es) somewhere(s) and somewhen(s).

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jun 17th, 2007 at 09:02:24 AM EST
[ Parent ]

i wonder what the first capitalistic act of man was...one of the tribe didn't tell the others about a stash of honey, so he could barter it for more in a different season?

is hoarding inherent to capitalism?

could you have a non-hoarding kind?

can capitalism refine itself into a purely non-coercive model?

can you have an enlightened socialism that preserves some of the apparent advantages of a more competitive model?

we'll just have to wait and see, i expect the two lines to continue to converge and if there is a future meeting point, they will be both unrecognisable from where we stand at present.

our true capital is resources we haven't carbonised yet, this numbers game of 'wealth' is a gossamer illusion we agree to be bound by, till we shuffle off the mortal coil, or are forced to return to hunter-gathering through social breakdown.

the only way out i see is for us to become hyperaware of how much our lifestyles are built on the backs of the poor, and seek not to inveigle others into becoming entranced by the glitter of consumerism, and help turn their focus to the vast global imbalances, and see how together we can wean ourselves off the habits that enrich those who see us as prey, giving up excess for a lifestyle that could be emulated by billions and not cost the energy of several planets to share in.

real capital is what's left of worth after a crash, at which time all the zeros in corporate bank accounts in the world aren't going to be worth anything.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jun 17th, 2007 at 08:55:03 PM EST
[ Parent ]

i wonder what the first capitalistic act of man was...one of the tribe didn't tell the others about a stash of honey, so he could barter it for more in a different season?

The name "capitalism" refers to a system in which the main form of domination is the exploitation of wage labor to produce a surplus. Systems of barter, by definition, are not capitalist, as barter is typically an exchange system taking place in the absence of a money economy.

is hoarding inherent to capitalism?

Yes -- capital accumulation is inherent to capitalism.

can you have an enlightened socialism that preserves some of the apparent advantages of a more competitive model?

More competitive than what? A "capitalism" in which the working class never strays far from its roots no matter how hard it "competes"? Marx describes a meritocratic system in the Critique of the Gotha Program:

What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society -- after the deductions have been made -- exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Mon Jun 18th, 2007 at 12:05:42 AM EST
[ Parent ]

Marx shared with conventional economics the assumption that all Value is created by Labour, and that Capital itself is not productive.

All economies are barter economies - it is the use of "split barter" or "time to pay"/ credit that gives rise to a monetary system - which is the "working" capital of circulating "Value" or "Money's Worth".

"Capital" itself - accumulated "wealth"- requires Property rights and the Property relationship between the Subject individual and the Object eg land, machinery, or other assets.

We are accustomed to think that "Property" is an object, but it is in fact a relationship. Similarly Money is not a (bank-created debt) Object but a relationship.

I am pointing out that it is possible by using "Open" Corporates such as the UK Limited Liability Partnership to provide mutualised forms of credit on the one hand, and "Capital" on the other.

These applications of "Open" Corporates are even now emerging independently of any work I might be doing (and I am doing a lot)- I am observing the increasing use of this new - optimal - legal form and believe that I can add considerable value using it.

The outcome of "Open" Capital is essentially a "Cooperative" form of Capital where there is no requirement to make returns to "rentiers".

The "Cooperative Advantage" lies in this freedom from paying returns to rentiers.

There is no "Profit" and no "Loss" within a partnership, merely the creation and exchange of "value" in all its forms - and of course bank-created credit is not a form of Value but - as Marx identified - a legal claim over Value he called "Finance Capital"

The other form of Finance Capital is the legal claim over Value which is that toxic legal protocol we know as the "Joint Stock Limited Liability Corporation".

This form of "asset-based" finance was all Marx knew of course, and all we know. But in fact there are at least two other forms of legal vehicle or "wrapper" we may use to invest in producticve assets.

I believe that this reinvention of the Corporate, allows us to literally reinvent Capital, and I observe that this process has already begun in the commercial world because it works.

My optimistic view is that those enterprises - public, private: and whatever the "aim" (commercial, social, charitable) - who do not use the "Open" Corporate form to raise their necessary capital, are at a disadvantage to those who do.

The pre-condition for "emergence" is just such a comparative advantage, and I beleieve that the system has already begun to consume itself, in a process of "partnerisation" and Internet-driven direct connection/ disintermediation I call "Napsterisation"

"Open" Capital is therefore already commencing the necessary quiet revolution, and demonstrates, merely by existing, the flaws in conventional economic assumptions.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 04:26:59 AM EST
[ Parent ]

Marx shared with conventional economics the assumption that all Value is created by Labour, and that Capital itself is not productive.

Was Leontieff a conventional economist? Because his input-output model clearly lends itself to a definition of productivity in which everything is productive to some degree.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Mon Jun 18th, 2007 at 04:47:07 AM EST
[ Parent ]

Not sure about Leontieff.

I have been interested for some time in "Binary Economics" and the work of Kelso and his followers.

Kelso actually had some success in relation to widening of capital ownership in US corporations through ESOP's.

But beyond this Binary Economics falls down in the difficulty of the transition.

To me, Binary Economics is analogous to Newtonian Cosmology - ie the Earth of Labour revolves around the Sun of Capital, rather than vice versa.

Conventional and Marxist economics are still stuck in an anthropocentric paradigm, regrettably.

Firstly, as Einstein had it, I believe that it is all relative.

ie neither Capital nor Labour is central - since "Money" and Property" are relationships - so that it is the relationship between Subject (Labour) and Object (Capital assets) that is productive, as opposed to Labour or Capital individually.

Secondly, we need to go beyond Newtonian absolutes and look at the role of Time in these relationships in a new way.

This is where what I call "Open" Capital (ie the use of Capital for an INDEFINITE period - you share revenues or production for as long as you use the Capital) transcends the dichotomy in existing forms of Capital between the Absolute/Infinite (eg Equity, and Freehold land) and the Absolute/Finite (eg debt, leasehold land)

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 12:01:03 PM EST
[ Parent ]

Firstly, as Einstein had it, I believe that it is all relative.

Huh? Einstein's theory of relativity is about what is absolute and independent of the observer. The theory shows that space and time are relative but it does not purport or intend to show that all is relative.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Mon Jun 18th, 2007 at 05:44:09 PM EST
[ Parent ]

What is binary economics.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Mon Jun 18th, 2007 at 05:45:11 PM EST
[ Parent ]

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

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 06:59:00 PM EST
[ Parent ]

We are accustomed to think that "Property" is an object, but it is in fact a relationship. Similarly Money is not a (bank-created debt) Object but a relationship.

And so, indeed, value is a relationship as well. And this is the problem Marx called "alienation," because under capitalism we are producing things for their value -- by which he meant market value -- and so our labor is no longer our own.

The alternative relationship Marx proposed was that of "worth" or use-value. One can see how this relationship forms the cornerstone of the Ecosocialist Manifesto.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Mon Jun 18th, 2007 at 12:31:32 PM EST
[ Parent ]

Re: Saving capitalism (4.00 / 2)

Indeed Value is a relationship.

It was E C Riegel who referred to Value as "the Relativity of Desire".

The problem is that we insist on trying to define the indefinable, confusing "price" (market value) with "value".

Wilde's definition of a Cynic is relevant here.

"Someone who knows the Price of everything and the Value of nothing"

It is the question of the metaphysical assumptions which underpin Economics which is at the heart of the problem.

I build upon Pirsig's "Metaphysics of Quality" (which I call a "Metaphysics of Value" - since Quality, Value, God .....it's all One - or, at least, Not Two!) in order to ask better questions of Reality, and to provide assumptions better able to inform Economics..

So, yes indeed, Value is definable ONLY in relative terms, and by reference to a "Value Unit".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 01:21:22 PM EST
[ Parent ]

The problem is that we insist on trying to define the indefinable, confusing "price" (market value) with "value".

Marx got around this by distinguishing value (exchange-value) from worth (use-value). His distinction makes more sense in German than in English.

A price is merely an example of exchange-value located at a particular time and place.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Mon Jun 18th, 2007 at 05:36:34 PM EST
[ Parent ]

I understand "capitalism" to mean a system in which economic decision-making is tied to capital ownership. "Exploitation" of labour more or less follows from that, but I don't see it as a defining characteristic.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Mon Jun 18th, 2007 at 04:46:16 AM EST
[ Parent ]

Ownership and control being synonymous is one of the defining characteristics of that toxic legal vehicle, the Joint Stock Limited Liability Company - "the Corporation".

But it the relationship of ownership and control that is simply but radically different in the "Capital Partnership" attainable using LLP's and LLC's.

In this enterprise model the interests of Capital provider/Owner and the Capital User are aligned, so that "Control" is no longer an issue.

Labour does not work FOR Capital in this model but WITH Capital.

Which is what Marx was on about when he referred to "the Abolition of Labour" in his early work.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 12:09:12 PM EST
[ Parent ]

Labour does not work FOR Capital in this model but WITH Capital.

Now you're confusing everyone.

Capital, by definition, does not work. Capital accumulates. "Labour," by definition, works. The reason we distinguish the former from the latter is to reveal labor's alienation to capital.

A real model of liberation would have labor working for the laborers, individually, personally, as collectives, and as a society.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Mon Jun 18th, 2007 at 05:40:41 PM EST
[ Parent ]

What is your definition of capital? Money?

How about capital goods? Are those "capital"? Does a machine "work" while it's running?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Mon Jun 18th, 2007 at 05:42:16 PM EST
[ Parent ]

It always comes back to definitions of course.

Which is why we have to begin by reinventing the "narrative" or Rhetoric, and everything else follows.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Jun 18th, 2007 at 06:56:35 PM EST
[ Parent ]

What is your definition of capital? Money?

I suppose that if the capitalists are those who own the means of production, and if capitalism is a state where the means of production are owned privately, then the capital is that means of production which they privately own.

Labor, for its part, builds the whole thing for the sake of its own survival. In this era the laborers of the First World get a portion of the surplus, but not much proportionally: the top 1% of wealthiest Americans, for instance, owns half of non-home capital assets. It's definitely not guaranteed like life for the capitalists.

How about capital goods? Are those "capital"? Does a machine "work" while it's running?

That's what Marx called "dead labor."

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 01:51:52 AM EST
[ Parent ]

So Marx opposed mechanisation because it replaced live labour?

Oh, and is land productive? And is a wind turbine productive?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 03:23:06 AM EST
[ Parent ]

So Marx opposed mechanisation because it replaced live labour?

No, Marx merely pointed out that, under capitalism, dead labor does not make the live stuff obsolete; it merely increases the laborer's productivity out of all proportion to the amount he/ she is paid.

You know, all of Marx is online, and I'm not really telling you anything that isn't available in a standard guide to the topic.

Oh, and is land productive? And is a wind turbine productive?

No. Look at the other planets of the solar system. They've got plenty of land, and what do they produce?

A wind turbine is productive because it is the product of living labor. More dead labor at work.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 03:52:10 AM EST
[ Parent ]

http://www.opencapital.net/papers/Valueknowledge-based.pdf

No one is saying "Labour" is not productive.

But the productiveness of Labour pales into insignificance compared to the productiveness of Capital (defined as Property) and NEITHER is independently "productive".

ie as said elsewhere, it is the relationship between Labour and Capital which is productive.

Property rights, and private ownership, are key of course. Capital consists of "Property" in all its forms, and particularly "Intellectual Property".

I don't believe in private ownership. Nor do I believe in State ownership.

When we distinguish the Public and Private sectors we are in fact referring to Private as "owned by a Joint Stock Limited Liability Corporation".

A Corporation is of course a legal claim - as is debt -over assets and production. The difference between these two forms of "Finance Capital" - as Marx had it - is that one is permanent and the other temporary and they are irreconcilably conflicting claims.

But both are obsolete IMHO. I am pointing out that the existence of the "Open Corporate" - of which the UK LLP is the first example - allows a new "enterprise model" - neither Public nor Private but both - whereby assets are held in trust on behalf of "the People"/ the Community, and Users of these assets, and Investors in these assets, share the production.

Using an "Open Corporate" as a "wrapper" we are able to encapsulate the entire property relationship in a new and optimal way, thereby synthesising Equity and Debt as a contnuous class of what I call "Open Capital".

The increasing primacy of Intellectual Property - the "Value" it constitutes, and its nature as productive "Capital" - is a challenge for Marxists in a not dissimilar way to the challenge the "ownership" of Knowledge represents for muslims.

The Islamic prohibition on "ownership" of the Commons ie Water, Fire and Pasture would surely have been extended to "ownership" of Knowledge had the Prophet been alive today.

Equally, if Marx had been alive he would have had to completely re-visit his thinking.

was presented to the Institute of Advanced Studies at Lancaster University, and I guess I was one of the few
not coming from a Marxist perspective.

Marx's concept of Surplus Value was a great achievement and much of his analysis, as far as I understand it, was pretty accurate.

But his basic assumptions were faulty. The Sun of Capital does not go around the Earth of Labour.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Jun 19th, 2007 at 04:57:20 AM EST
[ Parent ]

I still don't get it (none / 0)

But the productiveness of Labour pales into insignificance compared to the productiveness of Capital (defined as Property) and NEITHER is independently "productive".)

Under technologized conditions, the power of dead labor (i.e labor-saving technology) appears to dwarf that of living labor (i.e. the individuals operating that technology). What one doesn't see, in a cursory observation of the modern factory, is the labor that went into creating the labor-saving technology. Marx counts that, too, in his reckoning of the productivity of labor.

Sure, nature is "productive," too, but not in the sense that it is someone's "property." Property, as Locke asserted two-and-a-half centuries ago, is a person's legal relationship to a thing. Now, the Nature Conservancy might own a chunk of "property" for the sake of keeping it out of production altogether, and thus said "nature" would not be productive altogether.

I don't see why it's necessary to take the terms of the Labor Theory of Value, mix them around a bit, change their definitions here and there, and re-present it as a whole new defense of socialism.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 10:07:30 AM EST
[ Parent ]

Re: I still don't get it (none / 0)

I don't see why it's necessary to take the terms of the Labor Theory of Value, mix them around a bit, change their definitions here and there, and re-present it as a whole new defense of socialism.

Are you claiming the word "productivity" in exclusivity for the Labour Theory of Value?

What is the "whole new defence of socialism"?

Who said anything of the sort was "necessary"?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 10:12:09 AM EST
[ Parent ]

Re: I still don't get it (none / 1)

What one doesn't see, in a cursory observation of the modern factory, is the labor that went into creating the labor-saving technology. Marx counts that, too, in his reckoning of the productivity of labor.

What happens when the amount of labour saved by technology dwarfs the amount of labour that went into creating the technology? Does that mean that all the saved labour needs to be paid in advance when "buying" the technology, or does it need to be paid as "rent"?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 10:15:48 AM EST
[ Parent ]

Re: I still don't get it (none / 1)

Does that mean that all the saved labour needs to be paid in advance when "buying" the technology

The point of the labor theory of value is not to try to recalculate everyone's wages so as to make them "fair" in some ideal society where labor is paid its "fair value" by some capitalist who is going broke for the hell of it. Rather, it is regarded as a given that exchanges aren't "fair," that under capitalism labor isn't paid its "fair value" because the exploitation of labor drives the whole system, and that the best way to ameliorate this state of affairs is to not have capitalism, or capitalists. The alternative proposed by ecosocialists is a union of free producers, in which the collective project of humanity is re-oriented to the goals of ecological integrity, or what Enrique Leff calls "ecological production."

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 10:45:55 AM EST
[ Parent ]

Re: I still don't get it (none / 0)

The alternative proposed by ecosocialists is a union of free producers, in which the collective project of humanity is re-oriented to the goals of ecological integrity

Does the "union of free producers" involve forced collectivisation? And how does the reorientation of the collective project take place, and who then decides how well the "free producers" are following the goal of ecological integrity?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 01:05:41 PM EST
[ Parent ]

Re: I still don't get it (none / 0)

And how does the reorientation of the collective project take place

Not for me to decide.

Generally speaking, ideas of "socialism" do not consist of utopian templates to be imposed willy-nilly upon the world without its permission. Socialism isn't a George W. Bush game of "I'd rather be dictator." This, besides the critique of capitalism given in "Capital," is the revolution in socialist thinking that was promoted by Marx and Engels. Leaders such as Stalin and Mao chose a different path because the conditions they faced were impossibly inappropriate to the propaganda they used to promote their regimes.

who then decides how well the "free producers" are following the goal of ecological integrity?

Ecosocialism presumes general social approval of the goal of avoiding ecological collapse. Modern capitalist society, on the other hand, heedlessly transforms the world into parking lots, lawns, buildings, and monoculture farms while waiting for ecological collapse to educate it toward a better way -- or more likely to kill it outright.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 02:19:59 PM EST
[ Parent ]

Re: I still don't get it (none / 1)

And how does the reorientation of the collective project take place
Not for me to decide.

But that is crucially important: how to get there from here.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 05:08:29 PM EST
[ Parent ]

Let's see. Suppose there is this field. You have a plough and I don't. You can only work the field for half of the day. So you decide to enlist me and to work shifts. That way we get twice as much work done in teh day as you could have on your own. But the plough is still yours. Without your plough I could till a corner of the field with a stick.

So, is the plough productive? And, since 1) I cannot be nearly as productive without borrowing your plough; 2) you don't need my labour to provide for yourself with your plough; shouldn't your ownership of the plough be worth something?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 05:46:56 AM EST
[ Parent ]

The plough is the product of previous labor... so the enhanced productivity of the man with the plough compared with the man without the plough is that of the plough maker.

When you bought the plough you exchanged the labor that went into making the plough with something else. If you're making money by buying ploughs and lending them to others for working fields, you're exploiting in a form of usury the ploughmaker.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Tue Jun 19th, 2007 at 09:43:43 AM EST
[ Parent ]

What if you're the ploughmaker? Do you either 1) sell the ploughs at such a high price that nobody can afford them; 2) lease them to people for a sizeable fraction of their product as yearly rent?

Note that just because you can make a plough doesn't mean you know how to use it - or that you have the land to use it. In other words, to the blacksmith the plough is relatively useless, and the value of the materials and labour that went into it is not commensurate with the productivity gains resulting from its use.

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 09:48:03 AM EST
[ Parent ]

What if you're the ploughmaker? Do you either 1) sell the ploughs at such a high price that nobody can afford them; 2) lease them to people for a sizeable fraction of their product as yearly rent?

Under capitalism, if you're a ploughmaker, you do "what the market will bear." Socialism, as Marx pointed out again and again and again, is not some impossible state of affairs where all exchanges are "fair."

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 12:22:20 PM EST
[ Parent ]

So how is socialism unfair?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 12:24:06 PM EST
[ Parent ]

Socialism is not about exchange.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 01:59:56 PM EST
[ Parent ]

Off topic (4.00 / 2)

Cassiodorus: You know, all of Marx is online, and I'm not really telling you anything that isn't available in a standard guide to the topic.

Would you call yourself a Merxist? In that case, we have a standing challenge that you might be inclined to respond to:

techno: let's organize a debate about the future. You find someone who has a traditional Left / Marxist / Socialist worldview, and I will act as closely as possible like a 19th-20th century Minnesota Populist. Since Populists taught that every example used in organizing should be something anyone could confirm by looking out a window, I will insist that I can use modern examples. Otherwise, I will attempt to be a completely authentic Populist.

I predict that even with the "handicap" of 100 year-old political theory, my historical Populism will better explain current political / economic / environmental / technological reality and offer more constructive ways of addressing our civilization ending problems than any other form of leftist / progressive thought.

Are you interested?

Can the last politician to go out the revolving door please turn the lights off?

by Carrie (migeru at eurotrib dot com) on Tue Jun 19th, 2007 at 06:31:31 AM EST
[ Parent ]

This isn't about me (none / 0)

I'm merely interested to point out that if you're asking me questions such as "So Marx opposed mechanisation because it replaced live labour?" then you've got something new to discover about the labor theory of value.

The point of said theory is to make clear the idea of the surplus -- that portion of the productive process which constitutes the capitalist's potential profit-margin. Capitalist production produces to maximize that surplus, which goes a long way toward explaining why it is unsustainable.

The alternative, as Joel Kovel (among zillions of others) pointed out in The Enemy of Nature, is production for use-value, or "worth," production for human needs rather than "effective demand."

My perspective is not "traditional Left / Marxist / Socialist worldview." Do explore my diaries with DailyKos.com, then come back and tell all what you've discovered.

"Imagine all the people/ Sharing all the world" -- John Lennon

by Cassiodorus on Tue Jun 19th, 2007 at 10:25:36 AM EST
[ Parent ]