JV: Although Keynes was 100% right in his observation, his “cure” rests on the present being a fait accompli. And thus he’s unable to seek a prevention of both the past’s wrongs that had led to the present and those wrongs of the past repeating themselves in the future. In other words, all he’s doing is mitigating wrongs that presently (i.e. statically) are. A more penetrating insight takes into account that the present is both a resolution of costs, acquired during past production, and an acquisition of costs to be resolved in the future. If because of dropping wages, presently acquired costs due to new production are less than they were previously, they are insufficient to resolve previously incurred costs at present.
Perhaps at first sight this interpretation doesn’t differ enough from the Keynesian one to supplant it. But it should help to further emphasize a distinction by forgetting the whole process as taking place in terms of an accumulation of depletable material output (positives), and rather as just an acquisition and later resolution of economic debt (negatives). The positive identity of economic output in this alternative view remaining instead submerged within the economy, only to appear as consumable final goods outside the economic production sphere, as being the end result of the entire process. Now from this new inverse perspective, conclusions can become drawn that are unreachable for Keynesians. Keynesian economics doesn’t differentiate from an NC approach for instance, that by earning money and saving a portion of it, the means to liquidate personal debts that were incurred in the past become available. However if disbursed income by employers is held as a to be resolved negative already, and the economy is to continue as a dynamic process without incurring losses (say in terms of employment) along the way, then those on the receiving end of debt liquidation now become obligated to substitute for the foregone direct spending of the saver.
This puts a whole new dimension on the term “odious” debt, as meaning income to creditors, that becomes permanently withdrawn from direct spending; which brings us full circle to my contention that Keynesian “cures” are no more than band-aid solutions to the structural wrongs of the economy’s institutions. The real solution to cure economic woes is to make creditors aware that their bragging days about exorbitant profits on their balance sheets are over, and institute a non-profit financial sector. Aggregate profits in the financial sector are not self-realizable but occur at incurred losses elsewhere.
Me: John V,
Correct. Keynesianism was finance’s post war fall back position to the burgeoning world wide social credit movement before WW II. Are you aware of C. H. Douglas and social credit? In your post above you’ve basically expressed his cost accounting flow of funds analysis.
Social credit was a superior analysis and theory to Keynesianism and any other theory for that matter since it was proposed almost 100 years ago because it was aware of the focusing tool of double entry bookkeeping and its subset of cost accounting which is probably one of the top 4-5 inventions mankind has ever developed. The problem with social credit was its advocates partially fell back into the fallacies of DSGE, did not fully recognize the power of the point of implementation of one of its two major policies at retail sale and also did not do or comprehend the concept of the new monetary and economic paradigm and hence it remained simply a superior theory….instead of a paradigm change. Again, are you aware of social credit? When I mentioned to Steve Keen, who has basically mathematically re-discovered the insight of social credit with his observation that a dip in the rate of change of credit creation means the economy has entered recession, that Douglas was the first disequilibrium theory he said he would have to investigate Douglas, so even the most insightful current economists are unaware of him and his movement which has been buried rather effectively because it has the potential to philosophically and policy-wise end finance’s monopoly paradigm of Debt Only.
I believe I told you before, but apparently it didn’t stick, so here goes once more… Douglas was a money crank, who rejected the only valid attribute of money: a unit of account. His cockamamy A+B theorem supposedly “accounts” for a lack of sufficient effective demand existing at all times on the retail level. In a normally developing economy with a rising debt associated with additional real capital formation, the opposite is true, cf. the Prebisch article in the current WEA. As far as I can tell, there are no redeeming values in his “social credit”. Sorry to burst your bubble.
Me: There’s no bubble to burst he wasn’t a money crank. Keynes’ and every other economist’s definition of effective demand is faulty because they believe the quantity theory of money and the velocity of its circulation adds to effective demand….when it doesn’t. The classic illustration of velocity erroneously shows businesses fraudulently treating their business revenue as if it were their individual income….which it is not.
As for its redeeming values, if there is no scarcity of individual incomes and no systemic austerity….then why are heterodox economists like Steve Keen and Michael Hudson advocating for UBI, QE For The People, and “a modern debt jubilee” in order to exit debt deflation costs in excess to incomes to pay them?
A very good reason….because Douglas was right.
Now if we’ll just take the additional and extended policies of Wisdomics-Gracenomics we will be able to complete Keen’s and Hudson’s theories and accomplish the new paradigm in economics and money systems.
When you hear someone calling someone a “crank” it’s a dead give away that they have only read someone who referred to another as a “crank”, ….but has actually read little or nothing of that person’s actual work. That’s how orthodoxies deflect truth and insure only the further regurgitation of same.
Sorry to burst your bubble.
You see Douglas was the first disequilibrium theorist long before Minsky and Keen. He was the first one to recognize that we truly lived in a monetary economy not the obfuscating “veil over barter” that neo-liberalism tried to force everyone to stumble around in the dark with. Douglas was aware of both the statistical datums of cost accounting and the rate of flow deciphering nature of calculus and integrated those studies long before Keen realized the importance of accounting and system dynamics.
Douglas was aware of the ancient’s use of debt jubilee as a means of ending the de-stabilizing effects of continuous debt build up way before Hudson’s recent book described it, and his universal dividend and compensated retail price policies were continuous if not paradigm changing ways of attempting to deal with it. They were also more direct and effective means of distributing money in an austere economic system than the indirect governmental stimulus of Keynes and the deficit spending advocated by MMT.
Douglas recognized the significance of the summing, ending, terminal expression and tipping point of retail sale for policy that no economist stuck in abstraction and complexity has yet fully mentally “broken through the sound barrier” on.
And the “only” thing I’ve done is cognited on and taken these prior insights of Douglas to all of the recent iconoclastic and unconsciously derivative economists, and with my additional adult studies of the scientific method, philosophy, the world’s wisdom traditions and of the signatures of historical paradigm changes themselves….again cognited on the fact that the basic nature of the cosmos and thus the temporal/natural universe that economics is inextricably embedded in is an abundant, dynamic, interactive, integrative flow that reflected the natural philosophical concept of grace and then applied its various relevant aspects to Douglas’ and his decedent’s theories…and so, elevated them to the level of paradigm change.
All of the above of course are worthy, erudite and well intentioned scholars. But paradigm changes are the destroyers of prior mindsets and the orthodoxies that have too long grown up around them.
JV: You’re probably a nice fellow Craig, but you’ve got way below zero credibility on the subject. Want to change that? Provide us with an analysis of how, under your proposal, the value of the economy’s unit of account either is of no valid concern or remains stable. If you can’t, you might as well consider giving it all up. Why continue pissin’ into the wind?
Me: EVERY bit of economic orthodoxy you just spit out is invalidated by the single economic and monetary insight that retail sale is both the terminal summing and ENDING price point for every consumer item or service….because IT’S WHERE PRODUCTION BECOMES CONSUMPTION, and it’s also by dearth of same the terminal expression point for any and all forms of inflation.
Hence, (and I have probably posted this here at least a dozen times and apparently your addiction to one or another kind of orthodoxy undoubtedly made you either not read it or not perceive it) …IF YOU ACTUALLY LOOK AT IT you realize that retail sale is the single aggregative/macro-economic and individual/commercial/micro-economic INTEGRATIVE point in the entire otherwise wizbang, Rube Goldberg perpetual motion machine of the economy…and that’s incredibly important to understand because it’s also a fulcrum/pivot/tipping point.
If you understand basic physics that’s where one can move, change the entire direction of, or in the case of an individually and systemically austere economic system, with enough direct and reciprocal gifting of its primary factor (money) totally invert it’s basic scarcity of total actually free and available to spend individual incomes in ratio to total costs….into an abundance of same…..AND WITHOUT INFLATION because garden variety inflation is only low single digit and hyper-inflations only occur after major wars where a nation’s productive capacity is almost entirely destroyed and they are left with all consuming debts and so the central banking and the political elites decide to leverage up speculators that short the currency and so hyper-inflate.
A 50% discount/rebate policy at retail sale enables us to inject virtually as much money into the economy as we so choose….with only beneficial empirical monetary and economic effects for the individual, commercial enterprise and the entire system that I have enumerated here a dozen times. Sure, there will be some irrelevant low level inflation by the greedy and anti-social, who despite having received the incredible benefit of almost tripling the available individual income/business revenue for their goods and services by the two primary policies of a universal dividend and the discount/rebate,…but that’s what a few regulations and targeted sin taxation is for.
Play the 50% discount/rebate policy out on paper with the summing/ending/terminal expression/tipping points in mind until you see its how it changes everything…or just keep on regurgitating old paradigm orthodoxies if you choose….it won’t make a damn bit of difference in the empirical temporal universe results of the new paradigm.
JV: When retailers become confronted with the result of your proposal, they’ll do in unison what comes natural to them. They raise prices, with all taxes passed on to the consumer. You’re dreaming in technicolor if you think they won’t. Good luck in getting the support of like-minded fantasizers about what money as a thing can do. I’ll stick to logic, dynamics, and the real world; with non of it reflecting orthodox thinking.
Me: “When retailers become confronted with the result of your proposal, they’ll do in unison what comes natural to them. They raise prices, with all taxes passed on to the consumer. You’re dreaming in technicolor if you think they won’t. Good luck in getting the support of like-minded fantasizers about what money as a thing can do. I’ll stick to logic, dynamics, and the real world; with none of it reflecting orthodox thinking.”
Uhmm….no they won’t….because one of the rules of being able to participate in the discount/rebate is to not raise their prices for any reason other than an increase in actual costs. And as the combination of a $1000/mo universal dividend and the 50% discount/rebate everyone 18 and older will have $2000/mo. guaranteed purchasing power which means all transfer taxes for welfare, un-employment insurance and social security IMMEDIATELY become redundant and so can be eliminated….it’s therefore going to be very difficult to justify any cost increases by any enterprise. 🙂 And of course if just ONE of your competitors agrees to obey these “onerous” rules and can get the entirety of his full competitive price despite offering the consumer a 50% discount….just how long is a greedy, anti-social unappreciative businessman, who even in the face of the above REALITIES also raises his prices….going to remain in business?????
The recognition of the paradigm changing power of a 50% discount/rebate at the point of retail sale clarifies the mind of the fog of many old paradigm orthodoxies. It’s the invention of the telescope and the discovery of the ellipse of economic theory.
Paradigm changes are always simple, but elegant and powerful. Try the above one….you’ll like it. Or, rant on about old paradigm orthodoxies until you can hear the rising volume of laughter from those who ACTUALLY LOOK AT the temporal universe realities created by the above policies. The choice is
And as for businesses before retail sale raising their prices precipitously, purchasing agents aren’t stupid, if one of their providers raises his prices….they’ll simply buy from someone else. And if such businesses collude to do so that’s “in restraint of trade” number one, and number two a nice little regulation like a 110% tax of the difference between what they earned by the price rise and what they would have garnered by not doing so might keep them in line. Of course their business revenues will probably show decreases from such price rises anyway which ought to be reason enough for them to cease and desist.
Macro-economists get so involved with their abstractions that they forget basic micro-economic realities which will apply even more sternly than they did before the paradigm change. And if forensic accounting is necessarily the new growth area of the economy in order to keep enterprise honest….so be it! I’d be happy to sic Bill Black and a million of his minions on dishonest and greedy businesses. It will give him a much bigger and better crusade to right wrongs than advocating MMT which is absolutely correctly pointing at an aspect of the problem, but is not a paradigm changing theory like Wisdomics-Gracenomics.
RL: A large financial sector is a drain on the economy. Expand your coverage of the sustainability of firms, which is a major theme in manufacturing and business, all but ignored by post-autistic economists.
KZ: Authoritarian values endorse the priority of tough security to protect the tribe against threats from outsiders, adherence to conventional group norms, and loyal obedience to tribal leaders. The danger of this combination is that Authoritarian-Populism corrodes principles and practices at the heart of liberal democracy. Unshackled by checks and balances, claiming to speak for ‘the people’, strongman leaders trample upon norms of live-and-let-live fair play, constraints on partisanship, the protection of civil liberties, and the value of consensus-building; the importance of a bright line clearly separating personal and political interests; the unambiguous rejection of political violence and the active defense of human rights; the value of tolerating a multicultural diversity of lifestyles, beliefs, and ideas; and the importance of cosmopolitanism, open borders, and multilateral cooperation. Over the last two decades authoritarian populists have disrupted politics in many societies, as exemplified by Donald Trump in the U.S. and Brexit in the UK. Authoritarian populist parties have gained votes and seats in many countries, and entered government in states as diverse as Austria, Italy, the Netherlands, Poland, and Switzerland. Across Europe, their average share of the vote in parliamentary elections remains limited but it has more than doubled since the 1960s and their share of seats tripled. Even small parties can still exert tremendous ‘blackmail’ pressure on governments and change the policy agenda, as demonstrated by UKIP’s role in forcing Brexit. Authoritarian populist Donald Trump was “elected” President of the USA without winning a majority of votes cast and has created crisis after crisis in both governing and maintaining liberal democracy in the USA.
Me: Very correct Robert. The truth is a fully constitutionally arms length publicly administered banking/central banking system can do everything constructive a private money creating system can….and as we saw before the GFC do a helluva lot less that is destructive. The Sparkassen are an excellent example of such and of German managerial intelligence. It’s just that they don’t finish the job because they haven’t recognized the economic and monetary paradigm changing nature of a policy like a 50% discount/rebate at retail sale which enables us to end private finance’s monopolistic paradigm of Debt/Burden/Additional Cost Only and which over the millennia has become such a titanic mental neurosis that economists can’t think outside of the box on.
KZ: Robert, Pippa Norris agrees with your assessment, as do I. The important question, as illustrated by Trump’s actions (immigrant bans, military on the border, government shutdown, corruption, etc.) is how much harm to everyday people and to liberal democratic values and institutions will authoritarian populists inflict this time round before they’re defeated? And if there is active conflict, will it remain political, or involve physical violence, perhaps even armed combat?
Me: Ken, Precisely. That is why the rule of law must be re-inforced and Trumpism be unmistakably intellectually and politically resigned to the dust bin of history.
Populist “Fourth Turnings” are the chaotic historical signatures of humanity’s chronic failure to accomplish integrative thirdness greater oneness.
KZ: Craig, that’s right. But populism will return. It’s over 4,000 years-old. So, this is not its swan song. Plus, less authoritarian versions of populism have often benefited humans and their civilizations.
Me: Ken, your second point has occasionally been true, but as paradigm changes are supreme integrative of opposites type events populism’s impetus will be largely eliminated by the crashing realization of the significance of a 50% discount/rebate policy at retail sale.
KZ: Craig, I don’t believe populists of any variety are likely to go along with anything, economics or otherwise that doesn’t grow out of “power to the people,” even if its people power just to serve an authoritarian dictator. Think your proposals can handle that?
Me: Ken, They can absolutely handle the deepest problems of the economy and money system. As for populists who admire and follow authoritarian leaders probably some if they’re not utterly given over to authoritarianism. Populists like everyone else have various psychological motivations. But what’s the relevance of asking?
Come to think of it though acculturating grace/graciousness, although a more psychologically complex and so necessarily longer process, could ultimately yield a much more psychologically healthy and much less irrational society. But, one paradigm change at a time.
JV: I showed before how a market clears in principle, without additional “money”, so measures (by a deus ex machina) can be taken to assure it coming to pass as a reality.
Me: That’s just some derivative tweaking of DSGE which of course will be gamed and de-stabilized by the gambling obsessions of private banking and deep pocketed multi-national corporations with global reach who have the power of money creation and profitability to do so.
JV: By what analysis did you decide to double the standard socred dividend? Why not triple or quadruple it? In other words, what are your assumptions leading to the logic of your proposal?
Me: The logic is the temporal/flowing universe abhors and cannot maintain a static “equilibrium” but it aligns with an abundantly free flowing one. That’s where Douglas and his present advocates tripped up. They didn’t fully recognize the aspects and power of the concept upon which their theory was based.
The definition of the natural philosophical concept of grace is a dynamic, interactive, integrative and abundant free flowingness which also describes the cosmos and the temporal universe on the planet we live on.
The human universe is inextricably also an ethical one because if you are conscious and sensitive to pain and fairness…then so is everyone else (except for that small minority who simply choose to deny such status to others). Consciousness of and sensitivity to self and others EXISTS no matter whether you attribute such to god or the cosmos itself.
So called free markets are a delusive confusing of freedom with what they actually are which is increasingly the absence of ethics also known as chaos which is overseen by our less than ethical and obviously dominant economic and monetary institutions and entities. Hence the answer to that chaos is to take rational, ethical, abundant and benevolent control of markets, the money creating power and the economic process all of which adjectives are aspects of grace.
The beatific scientific and ethical chains of the natural philosophical concept of grace need to be cognited upon by economists….so that policies that reflect that concept can be implemented and the economy become continuously free flowing etc.
Finally, the answer to the complete financialization of commodity and stock exchanges Is the re-retailization of them. And you accomplish that by taking benevolent and rational control of the money creating process, strictly regulating speculation and if necessary creating rival/competitive exchanges that have the ethical fortitude to obey actual economic values instead of the greedy, gambling obsession to “make a killing” that such markets are now driven by.
That’s being both real and ethical….which of course are aspects of grace.
RL: A clever intellectual, killed in the battle of the Marne in 1914, made the distinction between “mystique” and “politique” when discussing ideologies, “mystique” is what you believe about your utopia, “politique” is what you argue about ideologies you oppose. This is the sensible distinction.
Me: Correct Robert. And the integration of the truths, workabilities, applicabilities and highest ethical considerations of those two opposing perspectives is wisdom and its pinnacle natural concept of grace. Why settle for mental dualities when mental and temporal thirdness greater oneness is imminently possible? Consult the Hegelian dialectic.