Me: Wally has presented material showing the non-self liquidating nature of the financial and banking system. The Banking system is basically the accounting system for the nation as well. Simplified cost accounting shows that in any given period of time the individual incomes actually available to be spent to liquidate all consumer prices (which must also include capital costs like equipment etc.) is less than the total costs of production…even without the additional need for profit without which any and each business cannot survive. Does every billionaire spend his savings every month and every business spend its profits? Of course not. And even if they did spend or invest them the time lag between investment and generation of additional individual incomes throws the economy back into a disequilibrium. Thus we ACTUALLY progress toward diamond covered skyscrapers and wasteful production while the mass of individuals’ purchasing power increasingly erodes and debt builds up as well, which makes the system increasingly non-functional.
The realistic recognition that this is the root of the economy’s disequilibrium is denied by mainstream economists only because they have an agenda to believe that it is not actually so (DSGE economists as Steve Keen is happy and correct to de-bunk) or they must cling to a merely reactionary holding up of a Disequilibrium hypothesis (a la Minsky) and/or refuse to advise policies that ACTUALLY resolve the situation….both of which perfectly characterize Steve Keen’s current nascent Social Credit position. In other words he is stuck with either Minsky’s mere reactionary NON-solution and/or the inability/unwillingness to recommend the policies that will terminately and actually solve the problem, namely the dividend and discount mechanisms of Social Credit which will finally bring an actual equality of usable individual incomes and consumer prices…continuously through time.
b
Me: No Bob it doesn’t. The “Gap” consists of and is caused by more than just interest and profit. It also includes the time lag between savings and profit being re-invested….and actual individual incomes…becoming an actually created reality…and then that income is not equal to the total costs re-invested and needing to be liquidated anyway because the incomes paid to workers is not equal to the total paid to whatever construction company building such re-investment. (and of course not all savings or profits actually are re-invested and so that fact adds to the gap as well). It also does not account for the stupendous amount of economic sabotage that goes on continually and is simply accepted as the way things are (incomes paid for things not actually intended to be consumed….by anyone, think weapons manufacture, or for jobs which in many cases are completely superfluous, think many bureaucratic/executive jobs)….and yet that income STILL is not enough to fill the gap! And of course robotics is inevitably going to eliminate the very sizable total of those incomes….and so the gap is only going to increase.
Even if you socialize Banking, healthcare and energy the re-distribution of incomes necessary to guarantee a dignified and livable existence for the burgeoning unemployed inflicted upon the diminishing number of jobs rationally needed for those and all industries….simply will not add up to an equality.
The gap is real, its only going to get wider and its only actual solution is a supplemental, continuous periodic free gift of individual income and a discount to prices for the consumer. The system as it is has neither momentary nor continuing equality of individual incomes and prices that must be liquidated if the system is to have the possibility of equilibrium. It is entropic, increasingly entropic and REQUIRES a non-entropic solution. Hint: Grace is abundant and so is productive capability. Austerity and self denial are reflective of neither.
Many of the assumptions you make about costs are specific to a capitalist economy. One of the difficulties here is envisioning what an economy would look like if were not subject to such a value system, since we’ve never really experienced what we’re speculating about. Also, it’s worth noting that a large percentage of goods and services never circulate after their consumption, so creating stability between the money supply and the circulating goods and services may not be as imbalanced as you project.
However, this is not to deny the effects of a rational economic system and the requirements–including the distribution of free credit and the transformation of land from ownership to rental–that would democratize the economy and the political system, call it social credit or a form of socialism.
Bob
Me: And I think you mean that some production does not get purchased and thus does not circulate, but this is just another description of the income scarcity and wastage problems. Unfortunately both socialism and finance capitalism have poor histories. This is largely because both are “sticky wickets” that require more and more heavy handed regulations by either self interested financial or political elites and consequently fall further and further away from an actually free system. Social Credit’s mechanisms however, penetrating to the core of the problem, are able to give businesses sufficient demand and a non-intrusive choice that enables them to find their price first without manipulation and then rebates the discount back to the business as well, so its rationally a choice….they cannot refuse. In fact this freedom, freeness and free flowingness for both the individual AND the system is the very signature of Social Credit. Its policies THEMSELVES are freeing, and the basis for deciphering the amounts of those policies is mathematics and mathematical formulae…..not easily corrupted financial or political elites.
Freedom, the ethically correct consideration of the individual first and control by the many hands of individuals as well, are Social Credit’s three aces “in the hole”.
I suggest that the economic sphere lacks the insight to see into the areas beyond human profit seeking to fully understand the depth of the hole into which they are forcing all biology on the planet Earth. Astronomer, Rene Heller, writing in the Scientific American this month, suggests that the earth is a planet beyond its prime and that humanity should be looking for more stable “earth-like” habitable planets. I would suggest that this group has a pivotal role to play in helping humanity come to grips with how to make the best of the planetary system they find themselves part of before they go off looking for other worlds to devastate.
We must find a way to create the funds needed to allow individuals everywhere to engage in those maintenance activities needed to stabilize the area around them for the life that can exist there as well as their own sustenance. This is a very different model than either capitalistic success or simple social credit theories.
Alan Page
This is a timely corrective to much of the discussion on this list, which generally ignores the implications of the eco-crisis and resource scarcity for finance, while often advancing obscure utopian speculations. I have argued elsewhere (in my book The Ecology of Money: Debt, Growth, and Sustainability, out in paperback next month) that the prime engine of economic growth has been the institutionalization of a privatized usurious credit system, first in Britain in the eighteenth century, and subsequently worldwide. Once key sectors of the economy came to depend on usurious credit — what Alexander Hamilton called “the English system” — the compulsion to grow economically was built into the system. The result was a worldwide rampage of growth exploiting resources and labor to the point where we have exhausted the planet while concentrating obscene amounts of wealth and power in the hands of a small financial oligarchy. Having reached the limits of growth, this system is now in crisis. It will probably fall of its own internal contradictions. It’s hard to see how it can be reformed in the meantime. It is important, however, to realize the cause of the crisis, and to look at alternative, non-usurious financial systems, so that the survivors don’t make the same mistakes all over again. Any functional economy need finance, that is, credit, to fund future projects; that credit, however, has to be tied in to the ability to repay, and has to be free of usury, which I would define as any carrying charges for credit which exceed the replenishment of the resources consumed in spending the borrowed money.
Adrian Kuzminski
Me: I must correct the last two posts. The assumption is that Social Credit is a mere economic and financial reform when it is actually “the policy of a philosophy.” That makes that assumption in actual fact a false economic projection onto a Wisdom tradition. Did C. H. Douglas conceive and propose Social Credit so that we could all have 3 boats and 5 jet skis? Hardly. This is a direct quote:
“Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic.”
Social Credit is much more about Wisdom than it is economics. Wisdom is the outer concentric circle of human activity and bodies of thought, and economics is merely the most urgent body of thought that Wisdom needs to be applied to. Even ecology is a more inner concentric circle than Wisdom. Balance, Equilibrium and Flow are Social Credit’s watch words…and so are these the watch words of economics and ecology, but let us not make the mistake of believing Wisdom to be less integrated and so less wise….than economics or even ecology.
Social Credit is the economic philosophy that will best actualize Wisdom,and so set technological innovation, artificial intelligence and profit making systems free to REDUCE the utilization of resources that will enable us to live in balance, equilibrium and flow on this planet. Why? Because the logics of innovation, artificial intelligence and profit making systems….are all…efficiency….that is IF they are guided by…Wisdom.
Alan Page: Hi All,
I hope to learn a lot from the Wisdomics Blog Steve provided. His concept is so far from the application of systems in the world that I inhabit that I must plead ignorance of their existence. My main point is really about the funding of proactivity and how it is disabled by the current command and control mentality of the existing credit creation system and how all other systems have been pulled into line by the control of the funding that we all must use.
So my point is that there is no global authority with the presence or real intellectual ability to appropriately allocate credit for very local application. Even public banking is not up to the job unless it becomes very local to the point where neighbors can cooperate in helping each other create the currency needed to enable any able bodied person to take the actions they are capable of when they are able. Control of out of control spending is a concern that must be addressed. This may become a spiritual issue. It is now a status issue based on who is more virtuous those who spend or those who do not??? I find no reason or way to trust anyone in the economic arena today to make appropriate decisions.
Me: Wisdom is all relevant data and every possible relevant situation integrated in the most optimally ethical fashion. Therefore, by definition, it cannot NOT include….all relevant realities…often including those realities that others will not consider…because the consideration of them being “unrealistic” actually blocks their entry into their minds. Couple that reality with the sociological fact that research has shown that when only about 10% of the general populace begins to believe something new is true its nearly impossible to stop it from becoming generally perceived as such and a few million man marches plus a focused and determined insistence upon very concrete and imminently doable policy mandates and you’ve got a mass social movement that herds the entirety of the political apparatus toward an actual solution.
I don’t lack data. I don’t lack study or awareness of the various fragmented bodies of thought humanity calls its “sciences” both hard and soft. And neither does anyone else here. What everyone lacks, including myself is a sufficient awareness of the power of Wisdom which by the definition above must also include the integration of human consciousness of itself and of ethics. And when you also begin to see how the highest concepts and experiences of the world’s major Wisdom traditions perfectly align with the stated goals of economics (amongst other studies) and can also align its policies with such philosophy/Wisdom so that they effect precisely what is intended…that is when fear or despair or cynicism becomes confidence.
In my opinion there should be no global authority established. That is precisely what Finance capitalism is attempting, and that is why individual states must awaken to the policies that will effect stability and freedom for both the individual and the system. That, in any state, but most particularly a significant state like the US is what will show everyone….just how workable and freeing such a system can be.
Social Credit/Wisdomics/Gracenomics/ Gracientialism 