Over all I tend to come down on Keen’s point of view on this issue, but again, the entire debate takes place squarely within the current paradigm of Debt Only when if the new paradigm of Direct and Reciprocal Monetary Gifting were implemented neither the dominating mercantilist/export platform nor the manipulative reserve currency strategy of national economies would be necessary…because domestic economies would create sufficiently abundant individual incomes to maintain free flowingness….without having to resort to such.

Furthermore, if nations didn’t have to worry about the negative monetary effects of unemployment due to a universal dividend and retail discount/rebate policies guaranteeing a satisfactory lifestyle, then they could industrialize/re-industrialize and therefore have even more robust and self sufficient domestic economies. And of course with abundant demand there would undoubtedly be much more employment…than if demand was left scarce anyway.

Me:  Ken,

You’re 5/27 post is exactly spot on. It is a litany of private Finance’s additional costs post retail sale and so lays bare its money creating power to be parasitic and illegitimate. It also accurately describes many of the means by which finance’s virtually monopolistic paradigm of Debt Only as the sole vehicle and form for the distribution of credit/money sucks the profits and vitality out of the rest of the legitimate economic/productive process. Systems were made for Man, not man for systems. I’m confident everyone here believes this to be true. They just don’t know how to make the system serve us.

Modern economies’ two primary and chronic problems are scarcity of free to spend individual income and price/asset inflation. A universal dividend begins to resolve the first problem, and the twin digital discount/rebate policies at the point of sale between business models throughout the entire length of the productive process and also the 50% discount at the terminal end of that process for every item or service at final retail sale….which point just so happens to also be the terminal expression point for all consumer price inflation….and so these three policies automatically double everyone’s purchasing power and not only resolves the chronic problem of inflation, but painlessly and beneficially accomplishes what has up to now been considered impossible, namely the integration of price deflation into profit making systems. That is far more than any theorist or politician has ever conceived let alone accomplished, and its not even the end of the benefits that follow on from them.

Such dramatic and definitive progress characterizes a paradigm change, and that’s exactly what we need.

KZ:  Craig, some good points but don’t forget all the things you want to fight are not accidental. A little history here. Lewis Franklin Powell Jr. (September 19, 1907 – August 25, 1998) was an Associate Justice of SCOTUS, serving from 1971 to 1987. Powell compiled a conservative record on the Court and cultivated a reputation as a swing vote with a penchant for compromise.” But before he was a Supreme Court Associate Justice, Powell planned the future we’re now living. On August 23, 1971, Powell was commissioned by his neighbor, Eugene B. Sydnor Jr., a close friend, and education director of the US Chamber of Commerce, to write a confidential memorandum titled “Attack on the American Free Enterprise System,” an anti-Communist, anti-Fascist, anti-New Deal blueprint for conservative business interests to retake America for the chamber. It was based in part on Powell’s reaction to the work of activist Ralph Nader, whose 1965 exposé on General Motors, Unsafe at Any Speed, put a focus on the auto industry putting profit ahead of safety, which triggered the American consumer movement. Powell saw it as an undermining of Americans’ faith in enterprise and another step in the slippery slope of socialism. His experiences as a corporate lawyer and a director on the board of Phillip Morris from 1964 until his appointment to the Supreme Court made him a champion of the tobacco industry who railed against the growing scientific evidence linking smoking to cancer deaths. He argued, unsuccessfully, that tobacco companies’ First Amendment rights were being infringed when news organizations were not giving credence to the cancer denials of the industry. That was the point where Powell began to focus on the media as biased agents of socialism. The memo called for corporate America to become more aggressive in molding society’s thinking about business, government, politics, and law in the US. It sparked wealthy heirs of earlier American Industrialists like Richard Mellon Scaife; the Earhart Foundation, money which came from an oil fortune; and the Smith Richardson Foundation, from the cough medicine dynasty to use their private charitable foundations, which did not have to report their political activities, to join the Carthage Foundation, founded by Scaife in 1964 to fund Powell’s vision of a pro-business, anti-socialist, minimalist government-regulated America as it had been in the heyday of early American industrialism, before the Great Depression and the rise of Franklin Roosevelt’s New Deal. The Powell Memorandum thus became the blueprint of the rise of the American conservative movement and the formation of a network of influential right-wing think tanks and lobbying organizations, such as The Heritage Foundation and the American Legislative Exchange Council (ALEC) as well as inspiring the US Chamber of Commerce to become far more politically active. CUNY professor David Harvey traces the rise of neoliberalism in the US to this memo. Powell argued, “The most disquieting voices joining the chorus of criticism came from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.” In the memorandum, Powell advocated “constant surveillance” of textbook and television content, as well as a purge of left-wing elements. He named consumer advocate Nader as the chief antagonist of American business. Powell urged conservatives to take a sustained media-outreach program; including funding scholars who believe in the free enterprise system, publishing books and papers from popular magazines to scholarly journals and influencing public opinion. This memo foreshadowed a few Powell’s court opinions, especially First National Bank of Boston v. Bellotti, which shifted the direction of First Amendment law by declaring that corporate financial influence of elections by independent expenditures should be protected with the same vigor as individual political speech. Much of the future Court opinion in Citizens United v. Federal Election Commission relied on the same arguments raised in Bellotti. Jack Anderson of the Washington Post made the memo public, claiming Powell was attempting to undermine American democracy. However, in terms of business’ view of itself in relation to government and public interest groups, the memo only conveyed the thinking among business persons at the time. The real contribution of the memo was to facilitate institution-building, particularly updating the Chamber’s efforts to influence federal policy. The memo was a major motivator for the Chamber and other groups modernizing efforts to lobby the federal government and shape the future of American society. Trump benefited from all this work, even if he couldn’t read the memo (too many big words).

Me:  Yes, I’m well aware of The Powell Memo. What we require is a new INTEGRATIVE Powell Memo, it being a mere reaction to liberalism. Integrating the best aspects of both the left and right economic perspectives so as to create a thirdness greater oneness is precisely what the policies I post about here will accomplish. Integration of truths and the simultaneous deletion of untruths is the very process of Wisdom itself.

Liberals and conservatives get stuck in their respective orthodoxies and miss the real point of logic and progress. The Thirdness greater oneness/trinity-unity-oneness process the dialectic [( thesis x antithesis) <–> synthesis ] gets lost in all of the heat but little light.

********************************************

Me:  The heart of the money problem is twofold:

1) How to remedy the inherent scarcity of free and available individual incomes in ratio to total costs/prices without causing/increasing inflation and
2) How the current monopolistic paradigm of Debt Only enforces the continual build up of debt/additional costs, and how it also prevents the establishment of the price deflationary/doubling of individual purchasing power remedies of the dual policies of a universal dividend and a retail discount/rebate.

KZ:  Craig, in my view the heart of our “money” problem is the belief by politicians and others involved in liberal democracy that compromise with capitalists is possible and should be pursued. In my view, it is not possible and is not worth pursuing. For most in the capitalist group the vision of America they hold is of a pro-business, anti-socialist, minimalist government-regulated America as it had been in the heyday of early American industrialism, before the Great Depression and the rise of Franklin Roosevelt’s New Deal. They see no need to limit the methods used to get to that end. After all, they are defending western civilization and fighting the takeover by socialism. But mostly they are assuring the rich, whom they represent stay rich, and poor remain poor. Mainstream economists mostly aid them in this effort with big words and high-sounding theories that are mostly just walls behind which to hide the intentions of their capitalist employers. Economists debate the theories and the math, but the debate is meaningless. Just a smoke screen for the deliberate effort to maintain the wealthy in their place in control and ensure the poor remain always poor. Keeping in mind Jay Gould’s description of this situation. Physicists are scientists, biologists are scientists, sociologists are scientists. Economists are not scientists. Economists pretend to be scientists, but their actual work is protecting capitalism and capitalists. I suggest we take economists for what they are, rather than what they pretend to be.

Me:  I was referring to the money problem itself, and you characterize the political part of the problem accurately. That could be most effectively addressed by showing how the best aspects of the agendas of both the left and right are accomplished by the paradigm changing policies I’ve long suggested here. For instance:

1) A universal dividend to everyone 18 years of age and older of sufficient amount and doubled in its potential purchasing power by the discount/rebate policies immediately accomplishes the heart of the liberal agenda of economic democracy and the end of poverty.

2) If every adult is assured a satisfactorily middle class lifestyle without employment this immediately satisfies the conservative agenda of frugality and downsizing government by enabling the elimination of all transfer taxation for unemployment insurance and welfare and their respective bureaucracies. This actually works for both the liberal and conservative agendas as both individuals and enterprise pat these taxes.

3) With the two discount/rebates policies linearizing price deflation throughout the entire economic/productive process the erosive effects of inflation are ended for both individuals and businesses

4) With the accomplishment of integrating monetary gifting into the now bounded and stabilized economy all but a small percentage of income taxes to keep the government legitimated (say 2-3%) will no longer be necessary because fiat monetary gifting…will be able to all but replace it. Taxation will return to its legitimate purpose of discouraging personal and economic vices instead of being a “necessary” burden on the individual and enterprise which in fact is just a way for finance to enforce austerity with its paradigm of Debt Only and also enforce the mistaken assumption that taxation is necessary to control inflation.

https://www.thenation.com/article/what-will-kill-neoliberalism/

That is an article with the right frame of mind, i.e. change, not just debate. The UBI/universal dividend idea is obviously an integral part of future economic systems because technological innovation/AI will inevitably be a greater and greater disruptive force and labor expense is the softest and most readily available means of cutting costs unless you do away with profit, competition, innovation and AI…so good luck with that. One of the tricks in paradigm change is a genuine integration of the truths, workabilities, applicabilities and highest ethical considerations of opposing sides…not the usual compromises that pols idiotically tend to craft that insures lack of agreement and no actual progress.

An actual integration is a cleansing/purification process that requires REAL statesmanship and generally a new insight to enable….a lot more statesmanship. That is why the discount/rebate policies I’ve suggested here are so important because they contain a new insight that has been overlooked by virtually all current theorists that show agents on both sides how they will benefit….rather than have to give up/suffer even more than they are suffering presently.

…deciphering and applying a paradigm change is several magnitudes of positive effect higher than any and all theorizing possible.

The recent back and forth between Steve Keen and several of the leading advocates of MMT dramatizes this well. Keen makes excellent theoretical points, but compared to the positive general economic effects and “knock on” beneficial and resolving effects in entirely separate areas of human endeavor that integrating the new monetary paradigm of Direct and Reciprocal Monetary Gifting into the economy would have….they all pale to virtual insignificance.

I also agree that some of the advocates of MMT seem arrogant, rigid and overly orthodox in certain ways. However, there is also the orthodoxy of the current paradigm itself. Until one clearly deciphers the old paradigm and understands the signatures all paradigm changes….all theoretical insights still fall within the orthodoxy of the current paradigm.  Paradigm perception where it is urgently needed and sorely overdue should be the first and last order of business. That is how true progress is accomplished, NOT with epicycle perturbations and theoretical fine points….that remain squarely within the old paradigm.

HS:  Thank you Lars, this has left us NO-WHERE-and will therefore lead us and all associated with us and this “Science” to NO-WHEREISM. It has long gone past the stage of neither here, no there.

Me:  Even though Lars levels a well deserved critique of Krugman, you are correct. All current theories are merely perturbations of the orbit of Mars via imaginary epicycles. What is required is the fundamental breakthrough known as a paradigm change, and that is characterized by inversions of current realities like from monetary scarcity to abundance, from inflation to deflation, from inherently halting, conflicted and confused unworkability to rationally and intelligently crafted free flowingness.

And all it takes for such change is a new look in a place no one is currently looking, and a new realization about an economic significance that exists there.

E:  Thanks for your excellent work on this, Asad, and I am distributing all three parts. I will simply offer that we can identify several elements in the development of freemarket neoliberalism as the dominant political economic philosophy since the 70s:

1. The publication of The Powell Memo in 1972, a document commissioned by the U.S. Chamber of Commerce that is a roadmap that lays out the institutional development needed to effect the corporate domination;

2. Pat Buchanan’s speech during the 1988 Republican Convention that declared cultural war on those of us who oppose this development;

3. The relationship between the Koch Brothers (and others) and the work of James Buchanan (no relation to Pat), as described in Nancy MacLean’s fine book, Democracy in Chains.

I could include some other stepping stones, such as the work of The Project for a New American Century, but these three are the most noteworthy in my view.

I will add that, although I agree with your timeline, my time at Berkeley in the 1960s showed me that far too many political liberal economists there were already hooked into Friedman’s freemarket ideology, even as they taught Samuelson’s version of Keynes.

Me:  Yes, this is all accurate history. One needs to ask oneself

1) who/what is the behind the scenes power that benefits from the return to Chicago School capitalist theories and

2) why was it so easy to morph Keynesianism into the neo-classical “synthesis”

And here are the answers:

1) The business model of Finance with its monopolistically dominating paradigm for the vehicle and form in which money is distributed, namely Debt Only. Of course multi-national corporations with global reach are complicit with Finance as they stand partially above that paradigm.

2) Keynesianism was only a reform. In fact it was Finance’s fall back position against another contemporaneously burgeoning world wide movement that was way ahead of its time, but would have probably been overturned as well because it still had the taint of general equilibrium theory. Innovating that movement’s policies plus adding a strategically placed third one and a structural change elevates them to paradigm changing status.

Reforms can be undone/reversed. Only a paradigm change is truly progress because as history shows us EVERYTHING adapts to a new paradigm NOT the other way around.

…of a new paradigm because of allegiance to a prior theory, then you’re utterly paralyzed by orthodoxy and just as thoroughly blinded by same.

…the absolute integrated/integrative grounding of commerce by double entry bookkeeping, and how its digital nature (equal amounts of debits and credits sum to zero), tuned to the terminal summing and ending points for costs and prices and the terminal expression point for all inflation, can unobtrusively yet powerfully reverse modern economies’ deepest problems with policies that ascend to paradigm changing status.

Me:  The way to tame/remedy capitalism’s suave dominance is the same remedy for socialism’s tendency toward rather un-suave dominance. Love and its active form grace/graciousness as a zeitgeist/ethic and applied monetary and economic policies that align with and effect its primary aspects. Like a universal dividend and discount/rebate policies at strategic points throughout the entirety of the legitimate economic/productive process. Abundant, direct and reciprocal monetary free gifting IS the new monetary and economic paradigm….because it will bring rational, ethical and good and appropriate order to economic systems.

KZ:  Craig, maybe it will bring torture and death squads. Lots of ways to solve the problems of group coherence and cooperation. Some you obviously like. Others you just as obviously do not like. What’s your plan when the job is done well by those you hate, as with fascist, racist, violent groups in America today? Once debated this issue in a Boston Unitarian Church. One of the panelists agreed with your proposal. But she said something interesting about the issue I’m raising. What if the offer of free gifting is met with violence? Her response – bury the bodies and pray, but don’t give up on the idea. Thankfully, we’ve not come to this yet. But it is something you ought to consider.

Me:  Violence as a reaction to receiving a gift is fundamentally unbalanced. Now you may have such anecdotal reactions, in fact you absolutely will have them, but the vast majority of individuals despite their not being perfectly rational or ethical will have positive and constructive reactions to it. Man is basically good yet flawed. To recognize this as true think about how many truly evil and incorrigible people you’ve met in your life compared to how many flawed but basically good ones you’ve known. We have a justice system to deal with broken and violent people. We must press on for evolution toward a society based on the wisdom of the natural philosophical concept of grace/graciousness and its reflective economic policies of monetary free gifting,and not let fear or hair splitting analysis get in the road of it.

DT:  Negative claims are debts –. The principle we have so often mentioned, that the State maintains existing debts, is better stated in the following way: “The State maintains in each
individual case both negative and positive debts,” or, if you like, ” The State maintains in each case both negative and positive claims.” When the State introduces new means of payment, this takes effect in reference to the negative and positive debts of each person, or – what comes to the same thing – his negative and his positive claims.

“Each individual has an amphitropic position in trade, i. e. he is in some quarters a debtor and at the same time in other quarters a creditor. This amphitropic position of the individual in
economic transactions was so obvious that it was completely overlooked.

“The objection of the layman to means of payment like the much-decried inconvertible paper money is always based on his mistake of looking at the position in economic transactions monotropically ; he thinks of himself as always creditor. He makes two mistakes : he regards such Chartal means of payment under their natural, not their legal aspect, and secondly, he considers his own position in trade monotropically, not amphitropically.”

Me:  Dave,  monetary gifting doesn’t alter the relationship between debtor and creditor. It simply makes the economic system workable and free flowing.

PB:  Ok. But remember banks enjoy a special legal status. Banks are uniquely and explicitly granted the legal right to commingle customer funds. Brokerages for example may not use customer funds to purchase securities. You or I cannot lend money we don’t have. Only bank charters explicitly give banks freedom to do these things. I think this fact holds great explanatory power when asking what money is and how the economy works. Richard Werner teaches at length about this.

Me:  Correct. For a single business model to have a monopolistic grip on the money creating right, and the even more deeply negative reality of the sole paradigm for the form and vehicle for money’s distribution, namely Debt Only,….is unworkability, dominance and felonious action waiting to happen.

The only reason why the individual, economists and economic pundits tolerate such nonsense is habituation and hence de-sensitization to that paradigm’s negative effects.

We need to wake up, stand up on our hind legs and demand that such obvious stupidity end yesterday.

Marcel Proust

My old foil Mish Shedlock has been on this development for some time now, and of course advocates against any idea of a universal basic income or government deficits. The deal between Lega and Five Star is another compromise/reform with the current paradigm of Debt Only and so will accomplish nothing in the bigger picture that actually deals with paradigms.

In fact it may actually result in a desired (by finance) invalidation of the concept of UBI/universal dividend because the Italians do not know how to implement it, and so inflation will inevitably result.

The trick is to increase individual incomes sufficiently to create a new paradigm while simultaneously implementing painless and beneficial price deflation. (It truly is tricky unless you understand the digital nature of the costing/pricing, money and accounting systems and the exact place and times to implement the policies).

The policies and structural changes (one of which is resigning private money creation to the dust bin of history and the creation of a National Public Bank with a confederate system of state public banks) of the new paradigm of Direct and Reciprocal Monetary Gifting will indeed “do the trick”.