Monopoly power in legitimate private commercial agents is just about as problematic as monopoly paradigms wielded by illegitimate private financial agents.
This is why private money creation must be consigned to the dust bin of history by a publicly administered national banking system with the universal dividend and retail discount/rebate policies that monetarily empower the individual instead of enslave them, and why a government program I have suggested here before (the Dept. of Competition, Innovation and Ecological Sanity) is also vitally important to foment and where necessary enforce an economic ethic of subsidiarity.
There is no such thing as total freedom for consciously sensitive humans in the temporal universe, only freedom within known and ethical barriers. Paradoxically, the sooner we embrace the beatific chains of ethics….the sooner we will all be more free.
Michael Hudson has a fascinating discussion on his website here: http://michael-hudson.com/2018/04/bronze-age-redux/
wherein he effectively analyzes the history of debt jubilees and the recent history of the financial and globalist corporate problem. A debt jubilee aligns perfectly with the new paradigm of Direct and Reciprocal Monetary Gifting and yet it alone is an insufficiently penetrative and flowing integration of the new paradigm which the policies of the dividend and discount/rebate policies would be able to seamlessly accomplish, and a publicly administered banking system and attending and aligning governmental departments would help solidify.
A new monetary and economic paradigm is an opportunity for all agents to better prosper because that is the nature of a paradigm change. This must be impressed upon the wealthy and corporate elites as much as the individual. The only and yet essential difference is the locus of monetary power must be/will be transferred from the elites into “the many hands of the individual”.
The new paradigm terminally ends the dominating nature of the current paradigm of Debt Only and enables the re-retailization of the economy which is what Marx and every other political economist thought would occur with industrial capitalism, but which was usurped by private finance. A publicly administered banking and financial system would enable a seamless shoe horning of finance back into the end of the legitimate retail/industrial economic process where with the discount/rebate policy it could be used to further benefit all legitimate economic agents instead of being a huge parasite that benefits only finance and its largest globalist corporate allies.
The above shows how Keen’s disequilibrium/Minsky’s financial instability theory and Hudson’s financial parasitism both integrate with each other and align with my paradigm changing innovations and extensions of Douglas’s Social Credit. The only two things that they need to realize in order to see this is that the pricing, money and accounting systems are all digital in nature (debits and credits of equal amounts sum to zero) and the significance of the fact that the point of retail sale is:
1) the terminal ending point of the legitimate economic/productive process
2) the terminal summing point of all costs and so all prices for every item and service both at classical retail sale and also at the point of every “retail product” of every business model to the next business model throughout the entirety of the economic process
3) ultimate retail sale is also the terminal expression point for any and all cost and/or price inflation and
4) thus the discount/rebate policy, which utilizes the digital natures of the systems above….is all by itself a paradigm changing one and the universally applied accounting system and its conventions enables those paradigm changing effects to be seamlessly and immediately integrated into the economy.
I told Keen these things several years ago when he made the critical and correct observation that economists could get their PhD’s in economics without so much as taking a basic accounting course. It’s too bad he didn’t take my advice and look directly at the operations of day to day commerce and thus realize the significances above. There’s nothing wrong with looking for significances in abstractions of course, but if you don’t look directly at economics in the temporal universe you usually end up missing important facts.
Finally, looking at the temporal universe effects of policy is the acid test for whether one is more concerned with/too caught up in problems, or is focused on solutions, as theory is largely verbiage while policies a priori have their effects where we all exist.
JB: Craig, if we compare business to sports’ leagues, it is obvious that rules are not applied to the same degree in global business these days. It is both more challenging & more rewarding to operate across many poltical jurisdictions, is it not? Sharing the campus of my former university is a small tech firm (flow controls) with operations–R&D, production and/or sales–in well over 100 countries.
Me: The rules and conventions (specifically the cost accounting convention that all costs must go into price) of accounting are universal and if not universally applied….then one is practicing fraudulent accounting.
Neither turning a blind eye to following the agreed upon rules, nor lack of awareness of the digital nature of the systems I mentioned or the facts and economic significances of the point of retail sale detracts from or changes anything. Temporal commercial realities….rule.
Also, abusing the rules and fraudulently construing financial actions by private banks is just another excellent reason to end finance as a private business model. The truth is not terminatedly handling the problematic nature of private banking’s money creating abilities is a total and naive cop out.
Another point. If one believes that systems are made for man, not man for systems what matters most is what is real for the individual consumer and the enterprises that are ethical because they play by the rules.
Sorry about these serial posts, but serial cognition also occurs.
KZ: Craig, private money creation ought to be abolished. What’s its history? But monetary policies that empower rather than enslave the individual aren’t going to fix this problem. Assuming monetary policies are even necessary, they should empower communities not individuals. And communities should democratically establish money policies. Ethics is important, but it is also community-based. So, we’re back to decision making by communities.
Direct to the individual Monetary Gifting via universal dividend and discount/rebate policies ARE the policies that will resolve modern economy’s most basic problems of inherent scarcity of individual demand, chronic inflation and forever domination by elites. Depending on an economy’s level of productivity you may have varying levels of monetary gifting, but the fact is the individual and his/her freedom in a monetary economy is the essential and only true starting and ending point of the purpose of any economics worth its butter. And lest we forget, the individual actually is the community.
KZ: Craig, do you believe the Chinese Communist Party is applying cost accounting? I’d look to Confucius and Lenin rather than cost accounting.
All humans and institutions are what Bruno Latour calls, “actor networks.” Actor networks are the result of a history of interactions. Actor networks grow longer but their basis does not change. Which means, first that micro and macro are simply instances of actor networks. It also means that the human both influences actor networks via interaction and is influenced by them via the same process. Consequently, systems are made for humans and humans are made by systems. Which part is emphasized depends on the motives of the observer.
Humans do not act as individuals, but as members of one or more communities. Every advertising person knows this. If you want to change human actions, then you need to focus on the communities within which human lives exist. The only way it’s possible for humans to exist.
I’m not disputing any of your psychological, sociological or political insights. What I am saying is in order to resolve the deepest and most chronic problems of our economy and make it serve man it requires specifically targeted policies that actually do so. That and the following facts:
1) we live in a monetary economy
2) money and accounting are excellent tools for the integrated distribution of wealth….especially if we utilize their digital natures and economic insights regarding the point of retail sale to, again, craft policies that actually DO serve rather than enslave man.
Douglas was a contemporary of Keynes and had begun a world wide movement between the wars. Hidden amongst the verbiage of Keynes were several disguised theoretical plagiarizations of Douglas but the rejection of his specific remedies for the economy. If Douglas’s policies had been adopted the history of the 20th century would undoubtedly have been a lot less bloody because the monopoly paradigm of Debt Only would have been more balanced by Monetary Gifting and domestic economies would have been more stable within themselves and so there wouldn’t have been nearly the pressure to stabilize them via empire building/maintenance. It’s also true that Douglas’s ideas would have probably met the same morphing destiny that Keynesianism experienced because his policies lacked a full natural philosophical exegesis of its primary and underlying concept of grace, and likewise that concept’s full alignment with subsequent understandings regarding physics and quantum reality. My extensions and innovations of those policies accomplish the paradigm changes necessary to truly progress the discipline of economics.
Subsidiarity can be both an ethic and an organizing principle.
What I said was that the valid CRITIQUES of Keen and Hudson as well as my policy extensions and innovations all align with each other and, integrated, are the resolution of agreed upon thrusts of heterodox thinking.
The primary missed insight is that modern technologically advanced economies are inherently cost inflationary requiring a new monetary paradigm that can increase individual incomes without incurring additional costs, namely Monetary Gifting.
C: Responding to DT: Thanks. A comment on a minor confusion above.
So what is money? If it is debt, who would want to be given it, let alone given it back? It makes sense, though, if it is credit.
Money is credit and money is debt. Because debt is credit and credit is debt. “Credit” and “debt” are two words for the same “thing”, the same relationship, viewed from different directions. That is the classical, historical and uncontroversial understanding of those English words. My third sentence is basically a quote from Alfred Mitchell-Innes a hundred years ago.
I’ve not read any confusion about this absolutely fundamental point in older works. Only quite recent ones, mainly on the web. It is one of those “needless to say” things that end up not getting said enough – so people end up getting progressively more confused ideas about it. It is like thinking that there is something mysterious about my right being your left if two people are facing each other. That there must be an absolute right or absolute left, and one of those words is the only correct word to describe the situation. No, everybody understands that right and left can be relative to the speaker. Credit and debt being relative the same way is something embedded in all financial and economic and and legal and moral systems, and consciously understood, again, until quite recently.
It’s a free universe and we moderns are free to concoct new definitions. But they will make a tremendous amount of work and social systems unintelligible if read or understood anachronistically, And in fact nobody has concocted intelligible new definitions. Some just insist that there is some distinction between credit and debt as traditionally understood but never actually make the distinction or give any examples!
Nice succinct explanation of the synonyms of credit and debt. Now all we really need to do is recognize that one of the signatures of paradigm changes is that in significant ways the new is always conceptually in opposition to the old/current one, and is a single concept that fits seamlessly within most/all of the current structures of the present area of human endeavor that the new paradigm applies to and yet creates/transforms a whole new pattern by resolving its present chronic problems, evolving the entire area and increasing the abundance and survivability of same….always via an integration of a dualism, the inversion of a ratio/duality and/or replacement of the primacy of the old and new paradigm.
Like: Debt Only vs Monetary Gifting
Money Gifting fits seamlessly within the present natures of the money, pricing and accounting systems
Monetary Gifting resolves the paradox of thrift, resolves/transforms the chronic problems of scarcity of demand for both the individual and enterprise into an abundance of demand available to all, inverts/transforms the economic tendency toward chronic erosive inflation into painless and beneficial price deflation and saturates/largely replaces the old paradigm of Debt Only throughout the entire economy with the new paradigm making it then the prime one.
KZ: Craig, it is correct that most of the world in a monetary economy and that money and accounting are tools for the distribution of wealth. Two things to keep in mind, however. First, there are dozens of kinds of money. Knowing which kind(s) we’re dealing with in each setting is important in terms of effective and coherent choices, for the person on the street and the “professional” economist. Second, accounting is based on rules. Change the rules and accounting is changed. Look at, for example, the Enron robbery.
As I said fraud is fraud. And as I also said, “the sooner we all embrace the beatific chains of morals and ethics, the sooner we will all be more free.”
Me: This has been an excellent and erudite thread. However, perhaps the best way to sum it up is to remind ourselves that the ultimate signature and historic reality of a paradigm change is that everything about and within the area in which it occurs…adapts to the paradigm change and not the other way around.
What America, Europe, the world and economics needs is paradigm change via the integrative processes that are Wisdom itself, not the dis-integrative blathering of demagogues who claim the clothing of change and progress while unconsciously blundering along with orthodoxy or worse disguised self interest.
Me: In response to L…
“Another consequence of fiat money is that the government never needs to borrow.”
“It can create whatever amount it decides to spend.”
Correct, and also how, to whom and in whatever form it decides.
“Also, the effect of taxes is to decrease the money supply.”
Correct, and yet, except perhaps for a relatively minuscule percentage taxes are completely unnecessary with certain policies, .
“It is, however, necessary to avoid uncontrolled inflation.”
“When the real economy reaches full employment any addition to the money supply will cause inflation.”
This is where MMT begins to betray the fact that it is still bound to old paradigm thinking. Demand pull/”monetary” inflation is a misnomer and not the operative cause of inflation. It may be a facilitator of it, but the actual cause of it is the complete freedom, read chaos, of commercial agents to raise their prices…and, presently, the complete lack of freedom/ability of individuals to correct such chaotic “freedom”. And of course cost inflation, which is inherent in modern technologically advanced capital intensive economies, is a hidden/almost entirely missed source of inflation as well. Also, employment is fine and good and will always be necessary to one degree or another, but obsession with full employment is truly old paradigm thinking.
There is a better way with the various policies of the new paradigm of Monetary Gifting that cuts the Gordian knot kept entangled by the present monetary and financial paradigm of Debt Only. Cut it and all agents are better off and the system will finally attain free flowingness as well.