[p2p-research] excellent contribution on flow money by Martien van Steenbergen
Ryan Lanham
rlanham1963 at gmail.com
Thu May 21 21:39:38 CEST 2009
Discussions of this sort inevitably lead to discussions of Pigouvian
Taxes--taxes on things people don't want to have as negative externalities:
http://en.wikipedia.org/wiki/Pigovian_tax
I should have thrown that in, too.
Ryan Lanham
On Thu, May 21, 2009 at 12:51 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> A couple of other points:
>
> 1. Consuming goods one produces for oneself is still economic production.
> You are choosing to not sell the goods presumably to achieve some benefit or
> efficiency. Thus, if I grow my own vegatables, the value is what the market
> might have paid me for them at the point they were consumed.
>
> 2. Profit as a term is not very useful. It implies a one-off transaction.
> Most producers continue to produce, so they invest in means of production.
> The reason is that machines are efficient. Investing in more efficient
> machines (and processes) allows one to drive costs lower in the
> marketplace. Profits lead to lost investment in favor of consumption.
> That's why real hard core capitalists like Sam Walton (Wal-Mart) drove an
> old pick-up truck and Warren Buffett has old suits. It is a spirit of
> continual investment by which they think they are the real great saviors of
> humanity.
>
> 3. A real problem of capitalism (and the toughest critique people on the
> left could ever make) is that it creates negative externalities (along with
> monopolies). A negative externality is a sort of collateral damage caused
> by an act. So I produce bottled water and the negative externality is that
> people throw the bottles into the ocean and we get dirty oceans. If I sell
> really cheap mortgages, perhaps people buy them without the ability to repay
> the bank I represent. I win by getting my commission, but I create a social
> externality for the bank (or, if bad enough) for the whole of society.
> http://en.wikipedia.org/wiki/Externalities
>
> There is great regulatory power in claiming the negative costs of
> externalities (e.g. climate change based on burning carbons). In essence
> the argument goes as follows: All of society is a consumer. If society
> incurs greater costs from the negative externalities of transactions than
> the productive gains of economic production, society becomes a bad form of
> perpetual motion machine...sooner or later it will crash.
>
> Over-consumption is a negative externality of capitalism. It is akin to
> alcoholism...a little bit of a good thing is a good, too much is an
> addictive and destructive evil--this follows lines somewhat similar to
> Marx's commodity fetishism, as I understand it.
>
> The hardest problem associated with negative (or for that matter..positive)
> externalities, is that it requires a political decision to recognize it. If
> political systems are "owned" by those who enjoy negative externality
> profits, they are inclined to simply keep making those profits and to suffer
> their own waste excess. In theory, government acts as a regulatory buffer
> to such processes. In practice, corruption happens...and sometimes reforms
> happen.
>
> 4. It is unlikely that a producer perfectly matches a plan for production
> with the economic demands of the market--particularly over the long run
> (however long you wish to make long...). Stores build inventories. Some
> things sell with high profits; others don't sell at all, or get stolen,
> etc. The balance of production with demand/profit goals is extremely
> difficult. Few get it consistently right. One way to assure you have the
> best chance is to "innovate" to invest in better or cheaper means of
> production or better quality outputs. A great advantage of capitalism is
> that producers manage their risk of getting their production decisions wrong
> in part by innovating. Innovation gives the world more for less--quite
> literally.
>
> Ryan
>
>
> Ryan Lanham
> rlanham1963 at gmail.com
> Facebook: Ryan_Lanham
>
>
>
> On Thu, May 21, 2009 at 11:52 AM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>
>> Marc,
>>
>> In theory, any good capitalist is against unfairness. That is not the
>> reality we both know. The question is, how do you redress the reality? Do
>> you throw away the system, or try to fix the ailments? Marx thought the
>> ailments were inherently part of historically inevitable process. To my
>> mind, you've got to take each one in turn and deal with them. Not nearly as
>> satisfyng as throwing away the whole or seeing some inevitable historical
>> path, but reality is messy. It's like trying to stay healthy. Stuff
>> happens. Transhumanism is an interesting attempt to replace the corrupt
>> body with a less corrupt machine/body. I am very interested in
>> transeconomicism in the same way. P2P is transeconomicism
>>
>> Predictive inventory systems isn't a workaround for the Black Swan that is
>> demand and innovation. Today everyone wants a red sweater...because it's
>> the bomb. Tomorrow, red is the worst thing you can own. Today, everyone
>> wants Coke. Tomorrow, everyone wants tea. It's impossible to predict. If
>> someone in New York wants tea, that means someone in Sri Lanka needed to by
>> a tractor. The reason markets work so well is that the best possible
>> decision process happens closest to the stakes.
>>
>> I agree with you that profits are excessive in a number of markets and
>> that monopolies and oligarchies (trusts) exist. We should break them up. I
>> also agree with Kevin that the rules have been unfairly structured to help
>> corporations...we should change them. But the answer is not in doing away
>> with markets--which make people very happy by and large. Who doesn't like
>> going into a well-stocked supermarket? Sure, I don't want a lot of the
>> poisen that corporations sell, but that's a different problem. I love the
>> fact that I can eat a strawberry in Michigan in November and get salmon in
>> Cayman at a fresh fish counter. Efficient? Different problem. If you want
>> to regulate, regulate. But that's a political problem...not a systematic
>> problem with markets.
>>
>> If you do away with currency, how will you allocate goods? Who decides
>> who gets what and when? How do you educate people to act selflessly and
>> morally when there is no evidence that any large scale human settlement has
>> done so for a sustained period in the face of plenty? Moreover, how do you
>> get people to go to work? The only answer is and can be that you COMPEL
>> them to these things. And when you compel, you will end up with corrupt
>> politics--always and every time. People will cheat for their uncles or
>> daughters or old school chums, etc. I notice that in Soviet-styled systems
>> the big shots were never skinny.
>>
>> Ryan
>>
>>
>> On Thu, May 21, 2009 at 10:35 AM, marc fawzi <marc.fawzi at gmail.com>wrote:
>>
>>> <<
>>>
>>>> Marc, your question is a direct answer to Michel's, since what
>>>> you propose is effectively a perpetual motion machine.
>>>>
>>>>
>>> >>
>>>
>>> On what basis do you assume that? That is totally a flawed assumption on
>>> your part, as far as I can see. But let's delve into your reasoning.
>>>
>>> <<
>>>
>>>> "Game playing" is the process of making decisions. That is why game
>>>> theory is fundamental to economics. People make decisions under the
>>>> pressures of time. We all have limited time, and therefore must allocate
>>>> resources as part of life. In short, we choose when and what to produce.
>>>> >>
>>>>
>>>
>>> There are fair games and unfair games. You can call everything a game in
>>> the game theoretical sense but people say "stop playing games" when they are
>>> experiencing unfairness not when fair decisions are being made. The context
>>> is the connotation of people playing games with unfair manipulation. The
>>> context (while it's very obvious from usage) is not the abstract game
>>> theoretical framework for decision making be it any of the models out there
>>> including the two I'm studying comparatively.
>>>
>>> <<
>>>
>>>
>>>> Fixed input systems are inherently unworkable because no one can
>>>> determine ahead demand.
>>>>
>>>
>>> >>
>>>
>>> That is a very outdated opinion given predictive inventory control
>>> systems, on which the P2P Energy Economy is predicated in part.
>>>
>>>
>>> <<
>>>
>>>> Demand changes and preferences change. Marginal utility changes.
>>>> People make decisions based on relative positions of their own situation and
>>>> those of the marketplace. There can be no "fixing" these levels because
>>>> then you doom yourself to sub-optimal levels of consumption. That is,
>>>> people don't get what they most want. When that happens, people simply
>>>> produce less.
>>>>
>>>>
>>> >>
>>>
>>> What we have today is sub-optimal level of consumption. There is
>>> artificial scarcity created through manipulation of supply or
>>> under-investment in supply in favor of extracting more profit! Money goes
>>> into higher prices when supply is manipulated not into higher production
>>> capacity. You should really read the full model description in P2P Energy
>>> Economy and argue against the logic used there, and if you do successfully
>>> I'd be delighted to give it another update. It has not received much
>>> feedback in the last couple of months and I can only take it to mean that A)
>>> it has become to hard for people to digest in full and/or B) no one is able
>>> to find critical flaws in the logic (and if they do that would be terrific,
>>> so I urge you to read it and make your arguments there rather than
>>> shooting-from-the-hip judgments that are founded in lack of understanding of
>>> the 'fixed cost + fixed profit margin' model.
>>>
>>> As far as perpetual motion goes, I'm not sure how a thermoeconomic system
>>> where the currency is basically an accounting energy flow growth can be
>>> anything but a while(growth) loop. If you believe that all conditional loops
>>> should be abolished then 100% of software out there would stop working. As
>>> long as energy flow grows the currency in circulation grows and accumulates
>>> and the key assumption there is that growth is continuous. If growth stops
>>> for whatever external or uncalculated reason (and I'd be interested in
>>> knowing how and why, if others can give examples in the context of the P2P
>>> Energy Economy) then currency issuance stops but no currency needs to be
>>> taken out of the system because the energy flow growth that the currency
>>> represents had been put into higher productivity, i.e. already consumed and
>>> already produced tangible output, so no need to reclaim the currency that
>>> had been issued as it was converted into work (or higher productivity)
>>> already before it was issued and all work done (in this model where there is
>>> an opportunity cost for energy) sustains growth.
>>>
>>>
>>> <<
>>>
>>>> Therefore, raw materials, labor and skill are in a constant price
>>>> tension. One cannot "fix" them because to do so is to establish the price
>>>> of bread without understanding the factors that change the price of bread
>>>> which include not only supply (inputs) but also demand.
>>>> >>
>>>>
>>>
>>> Predictive inventory systems SOLVED the problem of predicting demand
>>> about 40 years ago. It's time to get on the bandwagon.
>>>
>>>
>>> So given your argument is out dated in this regard, I'll let you argue
>>> against predictive inventory systems as the already working solution for
>>> rational supply-demand management! before I delve into deeper discussion.
>>>
>>> Marc
>>>
>>> So far as the world has determined to date, or at least so far as I
>>>> am aware, there are only two possible processes for determining how much of
>>>> any good or service to produce: 1) One produces what can be sold profitably
>>>> or, 2) One produces what one is commanded to produce from a central point.
>>>>
>>>> If one tries to produce a good without profit, then one is attempting to
>>>> complete a perpetual motion machine...building something that runs with an
>>>> inherent energy imbalance...where the output is continued even though the
>>>> energy in is greater than the value/demand out. A perpetual motion machine
>>>> violates conservation of energy much the same way running an unprofitable
>>>> business does. Money is the energy of an economic function. If you cost
>>>> more than the world values your good or service, you cannot run forever just
>>>> because your inputs + a profit = some number.
>>>>
>>>> In a nutshell, you've described why labor theories of value are
>>>> nonsense. They fix too many inputs and assume irrational assessments of
>>>> price. Price isn't determined by the seller/maker of a good, but by the
>>>> buyer and seller acting in agreement--by the way, that is a P2P agreement.
>>>>
>>>> Ryan
>>>>
>>>>
>>>>
>>>> On Thu, May 21, 2009 at 4:15 AM, marc fawzi <marc.fawzi at gmail.com>wrote:
>>>>
>>>>> Ryan
>>>>>
>>>>> It's all this game playing that needs to stop You're aware if it and
>>>>> describe it well. Why perpetuate it? It's possible that a feast is worth
>>>>> exactly the amount of total median energy it takes to produce it (based on
>>>>> 'raw resources + labor + skills' costing model for prepared food) plus a
>>>>> fixed profit margin (for reinvestment/growth)
>>>>>
>>>>> I do not find a single correct and complete argument that tells me why
>>>>> it's impossible to price things for what they cost in raw resources + labor
>>>>> + skills plus a fixed margin of profit.
>>>>>
>>>>> If you can present a coherent fully logical and logically provable
>>>>> argument as to why such pricing model would be unfeasible then that would be
>>>>> a surprise for me. I believe it is a lot of tedious accounting but not
>>>>> fundamentally flawed to price things at median cost in energy plus some
>>>>> margin.
>>>>>
>>>>> Marc
>>>>>
>>>>>
>>>>> On Wed, May 20, 2009 at 7:24 PM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>>>>>
>>>>>> Martien,
>>>>>>
>>>>>> 1. Please let me know if you still have mail problems. I don't think
>>>>>> I sorted them out.
>>>>>>
>>>>>> 2. I think your system involves a pricing fallacy. It is that prices
>>>>>> of goods and services can be accurately valued. They cannot. We don't know
>>>>>> what your blog is worth or what an hour's work building a wall is worth.
>>>>>> That's because we don't know what demand is for those things. Much as I
>>>>>> would love for something like this to work, it won't.
>>>>>>
>>>>>> Here is why:
>>>>>>
>>>>>> A. Money is a dynamic system. The reasons people "own" money is that
>>>>>> we store consumption until when it is advantageous. If I offered you a
>>>>>> feast immediately after you had a large meal, it is nearly worthless to
>>>>>> you. But tomorrow, you may want that feast very much. The makers of feasts
>>>>>> count on their own skill at calculated just how many feasts will be wanted
>>>>>> today or tomorrow.
>>>>>>
>>>>>> B. A pure measurement system would always look at fairness from the
>>>>>> point of view of a centralized plan. That cannot work because it will not
>>>>>> satify point A above. That is, there can be no standard set of "scales" nor
>>>>>> any standard "centimeters."
>>>>>>
>>>>>> C. Money is already a p2p system in the way in spends. It's just not
>>>>>> a p2p system in the way money is created. My recommendation to the
>>>>>> micro-currency crowd is to focus on money creation--how does money come into
>>>>>> the system.
>>>>>>
>>>>>> Most of he research focus now on this list is on trying to create
>>>>>> infinite consumption or infinite earning machines. These are like perpetual
>>>>>> motion machines and will not work.
>>>>>>
>>>>>> The dynamics of supply and demand are very difficult to challenge
>>>>>> without coercion. People simply want to make their own decisions when they
>>>>>> wish to make them. If you allow those things, then the question becomes one
>>>>>> of price.
>>>>>>
>>>>>> Price is inherently tied to the supply of money as well as demand. It
>>>>>> isn't about measuring production where money is interesting, but in
>>>>>> measuring the nature of where money comes from in the first place.
>>>>>>
>>>>>> Ryan Lanham
>>>>>> rlanham1963 at gmail.com
>>>>>> Facebook: Ryan_Lanham
>>>>>>
>>>>>>
>>>>>>
>>>>>>
>>>>>> On Wed, May 20, 2009 at 2:32 AM, Michel Bauwens <
>>>>>> michelsub2004 at gmail.com> wrote:
>>>>>>
>>>>>>> This contribution seems to have been rejected by the mailing list
>>>>>>> software, so I'm forwarding, it's an excellent explanation of what is wrong
>>>>>>> with a system based on compound interest.
>>>>>>>
>>>>>>> I'm really looking forward to seeing the other side of the story,
>>>>>>> especially the results of Ryan's research on the topic,
>>>>>>>
>>>>>>> Michel
>>>>>>>
>>>>>>> ---------- Forwarded message ----------
>>>>>>> From: Martien van Steenbergen <Martien at aardrock.com>
>>>>>>> Date: Wed, May 20, 2009 at 1:50 AM
>>>>>>> Subject: Re: [p2p-research] Fwd: [ox-en] No more money trickery
>>>>>>> propaganda please
>>>>>>> To: Michel Bauwens <michelsub2004 at gmail.com>
>>>>>>> Cc: Stefan Merten <smerten at oekonux.de>, p2presearch at listcultures.org
>>>>>>>
>>>>>>>
>>>>>>> To throw some more oil on the already bright fire...
>>>>>>>
>>>>>>> Compound positive interest is a system wide exponential pump that
>>>>>>> increasingly flushes money from the poor to the rich. It compells us to grow
>>>>>>> beyond sense. It results in Obsessive Compulsary Growth Disorder, if you
>>>>>>> will.
>>>>>>> This can be proven by mathematics, simulation and experience (as we
>>>>>>> all feel right now).
>>>>>>>
>>>>>>> Don't get me wrong, growth, development, evolving is good. But only
>>>>>>> asymptotinc s-curved growth, not only exponential unlimited growth.
>>>>>>>
>>>>>>> If you want to destroy a community, introduce a monetary system where
>>>>>>> money can be owned (‘saved’) and with compound positive interest. Introduce
>>>>>>> it in such a way, that people are willing and able, eager even, to play this
>>>>>>> system. Mankind has succeeded in that.
>>>>>>>
>>>>>>> Our current monetary system is like a cancer with metastasis into the
>>>>>>> smallest corners of our system. It cannot be treated. No irradiation, and no
>>>>>>> cutting will help. In fact, it will only fuel its self-destruction. Future
>>>>>>> monetary crises and crashes will happen more frequent, faster and will be
>>>>>>> deeper. The worst has yet to come, Schopenhauer would say.
>>>>>>>
>>>>>>> Compound positive interest also makes each and everyone extremely
>>>>>>> short-sighted. The economy at large warps itself into short-term profits and
>>>>>>> utter efficiency. Exact the opposite of sustainability, durability and
>>>>>>> long-term wealth (in the non-financial meaning).
>>>>>>>
>>>>>>> It's extreme focus on efficiency makes the system as a whole brittle
>>>>>>> and oversensitive to small changes. Flourishing systems have their dynamic
>>>>>>> balance somewhere in the middle between chaos and order—chaordic—with a
>>>>>>> slight preference for the chaotic side. Chaos is creativity searching for
>>>>>>> order. Likewise, order (efficiency) is destructivity searching for chaos.
>>>>>>> The sweet spot is an area (not a point) in the middle.
>>>>>>>
>>>>>>> This short-sightedness is due to the economist's Net Present Value<http://en.wikipedia.org/wiki/Net_present_value> calculations.
>>>>>>> Suppose you invest €1000 to obtain an annual revenue of €100 during a period
>>>>>>> of 15 years, so €1,500 in total you might think.
>>>>>>>
>>>>>>> An economist however will tell you that €100 in a year will be worth
>>>>>>> €91 now (with an interest rate of 10%). The €100 in year 2 will be worth €83
>>>>>>> now and in year 3 €75, and so forth. The €100 in year 15 is worth a meager
>>>>>>> €24 now. All in all, in 15 years, the total Net Present Value of the revenue
>>>>>>> will be €761, resulting in a loss of €239. In other words, not a profitable
>>>>>>> investment.
>>>>>>>
>>>>>>> This affects our behaviour to short-term financial gains. Combined
>>>>>>> with the interest pump from poor to rich, this leads to an instable and
>>>>>>> brittle system.
>>>>>>>
>>>>>>> Enter ‘flow money’ (a.k.a. demurrage of liquidity tax). Technically,
>>>>>>> flow money is a negative compound interest. Using exactly the same
>>>>>>> calculations and formulas as our economist did in the previous example and
>>>>>>> an interest of –10%, the first €100 is worth €111 now, the 2nd €123 and the
>>>>>>> 15th €486, adding up to a total of €3,857 and a profit of €2,857! Break even
>>>>>>> is during year 7.
>>>>>>>
>>>>>>> Together with the effect that your balance trickles away (into a
>>>>>>> larger commons fund), this affects our behaviour in such a way that we will:
>>>>>>>
>>>>>>> 1. tend to spend our money sooner rather than later (since our
>>>>>>> buying power now is greater than tomorrow), resulting in a lot of employment
>>>>>>> opportunities, no more unemployed; and we'll chop the forest later rather
>>>>>>> than now, since we don't want the money now as it will seep away;
>>>>>>> 2. prefer sustainable, durable, resilient an dlong-term projects
>>>>>>> over short-term ones; it gives all of us vision; we can see clearly now;
>>>>>>> 3. closing the gap between the rich and the poor; in fact there
>>>>>>> are only wealth people and som very wealthy people; and our planet
>>>>>>> replenishes itself too.
>>>>>>>
>>>>>>>
>>>>>>> If we can also get rid of the capacity to ‘own’ money, and we only
>>>>>>> use money for payment and measuring products and services, than no one is
>>>>>>> poor. Use money just like we use centimeters. We're never short of centimers
>>>>>>> (or inches or lightyears for that matter). Everyone is as wealthy as their
>>>>>>> activity in the community, small and large.
>>>>>>>
>>>>>>> Your monetary balance does not matter anymore, since it is of no
>>>>>>> value to own money; you can't even own it. What does matter is the number of
>>>>>>> times you touched zero when trading (either or not changing sign), since at
>>>>>>> precisely that moment you have contributed to the community the exact amount
>>>>>>> as the community contributed to you. You are in balance with your
>>>>>>> environment (that serves you so good and abundant).
>>>>>>>
>>>>>>> Every time you touch zero, your ‘trustwidth’ increases, since you
>>>>>>> just proved to balance your consuption woth your contribution. The
>>>>>>> trustwidth is parameterized by your turnover until now, a (damping) factor
>>>>>>> and a connectivity index (derived from the relative number of others you
>>>>>>> traded with; to avoid kartel and free riding). Just like with flow money,
>>>>>>> your trustwidth diminishes, decays, over time. So you need to stay active
>>>>>>> and add value to your environment to keep up your trustwidth.
>>>>>>>
>>>>>>> The trustwidth (like bandwidth) are the ‘credit’ and ‘debet’ limits
>>>>>>> for safe trade. Of course, if you like risk, you can go beyond someone's
>>>>>>> trustwidth, but you know that you risk losing your extra investment.
>>>>>>>
>>>>>>> It's just like scaling up micro credit to meso and macro credit. With
>>>>>>> our current technology level, it is a relative pievce of cake to implement a
>>>>>>> global digital chartal spreadsheet system (which is all we need;
>>>>>>> mind-boggling cheaper than all these expensive banks and their emplyoees who
>>>>>>> don't even understand their own products anymore).
>>>>>>>
>>>>>>> This (non-monetary) balance is essential on all scales as well. Just
>>>>>>> as the individual needs to balance receiving and giving to the community,
>>>>>>> the import and export of countries should enjoy a dynamic (chaordic)
>>>>>>> balance. Overshooting in either direction destroys your credibility als a
>>>>>>> good citizen or global player. Too much import increases your ‘debt’ to
>>>>>>> other countries, your promise to do something back. Too much export hoards
>>>>>>> employabilty, depriving other countries from adding value and wealth to the
>>>>>>> world at large.
>>>>>>>
>>>>>>> The balance and trustwidth are similar to energy economics (a topic
>>>>>>> on this list some time ago if I recall correctly).
>>>>>>>
>>>>>>> My quest is to find:
>>>>>>>
>>>>>>> - the extremely elegant formulas that take any financial
>>>>>>> transaction log and calculate the trustwidth between which a player can
>>>>>>> safely trade;
>>>>>>> - how to connect two ecowebs that have so far been developing
>>>>>>> independantly and suddenly touch;
>>>>>>> - design an immune system that keeps the system as a whole
>>>>>>> healthy, even when (severely) attacked;
>>>>>>> - the distributed, decentralized, peer-to-peer layers of
>>>>>>> infrastructure and humanstructure that make it feasable and completely
>>>>>>> self-everything (organizing, healing, supporting, etc).
>>>>>>> - the way to have a holarchy emerge that use a cascade of flow
>>>>>>> money for ever larger commons activities, up to the global level, while
>>>>>>> embellishing local wealth and unfolding.
>>>>>>>
>>>>>>>
>>>>>>> Succes en plezier,
>>>>>>>
>>>>>>> Martien.
>>>>>>>
>>>>>>>
>>>>>>> P.S. I've been plannig to write this up for a long time; I just now
>>>>>>> took 30 minutes or so to flow it out of my head into typing; so it's still
>>>>>>> quite rough.
>>>>>>>
>>>>>>> On 19 May 2009, at 09:22 , Michel Bauwens wrote:
>>>>>>>
>>>>>>> Stefan,
>>>>>>>
>>>>>>> you persist in wanting me to say that a cushion produces interest,
>>>>>>> obvious nonsense
>>>>>>>
>>>>>>> again, I do not want to enter in that game,
>>>>>>>
>>>>>>> obviously, if you had read the sentence as it was intented, in
>>>>>>> context and given the long previous arguments, you would have understood
>>>>>>> that keeping meant, keeping in the bank, in order to get interest, in other
>>>>>>> words the opposite of your nonsensical misinterpretation, which for some
>>>>>>> mysterious reason, you want to hold on to, even after repeated denials and
>>>>>>> explanations of my part. Assuming that you misread it once, what can be a
>>>>>>> possible explanation for holding on to that misinterpration after so many
>>>>>>> corrections????
>>>>>>>
>>>>>>> (the reaction of a normal person would have been: "sorry to have
>>>>>>> misinterpreted your phrase and having gotten into a irrational fit, I
>>>>>>> apologize, now let's move on and learn from each other's arguments")
>>>>>>>
>>>>>>> so let me repeat, perhaps this time in very simple terms, what the
>>>>>>> essential argument is, about the role of interest
>>>>>>>
>>>>>>> So, let's assume we have a negative interest rate, as was the case
>>>>>>> for the Worgl shilling, in the first renaissance of high middle ages, or in
>>>>>>> ancient Egypt.
>>>>>>>
>>>>>>> What happens for example in egypt is that you bring your rice to a
>>>>>>> depot, you get some 'vouchers' in return, but they loose some of their value
>>>>>>> every year, because of the price of stockage, and also, a certain profit for
>>>>>>> the mediator. In the middle ages, if I recall correctly, every four years,
>>>>>>> you had to change five coins for four. Same principle.
>>>>>>>
>>>>>>> In this context, hoarding money makes no sense, because it loses
>>>>>>> value over time, it 'rots', just like real commodities do. Historically what
>>>>>>> people would do is to re-invest in the productive economy, and the high
>>>>>>> middle ages are known for their high rate of technical innovation i.e.
>>>>>>> sometimes called the 'first industrial revolution', relatively high living
>>>>>>> standards such as a five day working week with extra 'blue monday' as day
>>>>>>> off for the family, long skeletons in cemeteries indicating good heatlh,
>>>>>>> etc.., a doubling of the population in 3 centuries, reclaiming and expansion
>>>>>>> of large swaths of formerly unproductive land). This system puts a break in
>>>>>>> the accumulation process, because accumulation loses value. The market is
>>>>>>> kept in check and does not outgrow the rest of the economy. Since your money
>>>>>>> is worth more today than say in ten years, you invest it, and this is in
>>>>>>> part the explanation for the crowdfunding of the Gothic cathedrals. This is
>>>>>>> actually what good money is intended to do, not to be used in speculative,
>>>>>>> non-productive activities, but to be used in the process of production
>>>>>>> itself, to enhance the living standards of all.
>>>>>>>
>>>>>>> Now say you replace this system with centralized royal money, with a
>>>>>>> positive interest rate. It now becomes interesting to keep your money, to
>>>>>>> hoard it, not in a cushion of course, don't be silly, but in the bank; or
>>>>>>> better yet, to become a banker yourself and to lend the money out. This way,
>>>>>>> without working yourself, you are getting rich while those that work have to
>>>>>>> pay a rent to you. This system strenghtens the tendencies for accumulation,
>>>>>>> created the conditions for increasingly centralized royal power, and created
>>>>>>> the deteriorated social conditions that started in the 14th century.
>>>>>>>
>>>>>>> But the systemic effects of compound interest are wider than that. If
>>>>>>> you lend out that money, and I have to pay your back approximately double in
>>>>>>> twenty years, which is about the going rate for buying a house now (or at
>>>>>>> least it was when I bought mine), even with inflation, you are going to need
>>>>>>> substantially more money than you have now. The result is that it destroys
>>>>>>> any possibility for a balanced growth economy, since that extra money has
>>>>>>> only two possible sources:
>>>>>>>
>>>>>>> - either you get it from people who have it in a static economy, in
>>>>>>> which case you create absolute poverty
>>>>>>>
>>>>>>> or:
>>>>>>>
>>>>>>> - you create a growth economy, i.e. capitalism, in which noboby can
>>>>>>> stand still, and so, you get the extra money from the ever-growing pie.
>>>>>>>
>>>>>>> Please, PLEASE, do not start now talking again about your cushion,
>>>>>>> and read again the section about keeping, without taking it out of context,
>>>>>>>
>>>>>>> Michel
>>>>>>>
>>>>>>> On Mon, May 18, 2009 at 5:19 PM, Stefan Merten <smerten at oekonux.de>wrote:
>>>>>>>
>>>>>>>> Hi Michel!
>>>>>>>>
>>>>>>>> Now I am really upset!
>>>>>>>>
>>>>>>>> 2 days ago Michel Bauwens wrote:
>>>>>>>> > read the sentence again, use your brain,
>>>>>>>>
>>>>>>>> I find it ludicrous that *you* ask *me* to use my brain. Obviously
>>>>>>>> you
>>>>>>>> stated nonsense and now *I* shall use my brain? COME ON!!!
>>>>>>>>
>>>>>>>> > and use the full context of the
>>>>>>>> > dialogue to understand that interests makes it indeed interesting
>>>>>>>> to keep
>>>>>>>> > your money in the bank.
>>>>>>>>
>>>>>>>> If you give money to the bank then you do **NOT** keep it. This very
>>>>>>>> sentence you wrote just makes no sense. It's nonsense again. And
>>>>>>>> it's
>>>>>>>> propaganda again because it is only said this way to invoke a
>>>>>>>> feeling
>>>>>>>> of injustice in simple-minded people. It hides facts to make a
>>>>>>>> certain
>>>>>>>> ideology look more logical and "just". It may not be your intention
>>>>>>>> -
>>>>>>>> and frankly I hope it is not your intention. But it is the intention
>>>>>>>> of those you have this propaganda from.
>>>>>>>>
>>>>>>>> If you give your money to the bank in fact you may get your money
>>>>>>>> back
>>>>>>>> *under certain conditions* being part of a contract. If you are in
>>>>>>>> bad
>>>>>>>> luck you may even not get it back at all, however - as people
>>>>>>>> learned
>>>>>>>> during the latest financial crisis once again.
>>>>>>>>
>>>>>>>> If I *keep* my money there is no such risk. I just keep it.
>>>>>>>>
>>>>>>>> It is very easy to see that there is a major difference here. In
>>>>>>>> fact
>>>>>>>> it is the difference between a pre-capitalist fortune keeper - who
>>>>>>>> really keeps her fortune - and a capitalist - who applies her
>>>>>>>> fortune
>>>>>>>> by giving it to others to make profit.
>>>>>>>>
>>>>>>>> > Explain to me how you would get interest under your
>>>>>>>> > cushion, I would be very very curious.
>>>>>>>>
>>>>>>>> Sorry, it was *your* claim that keeping money raises interest. If
>>>>>>>> this
>>>>>>>> would be true then I can keep it under my cushion with the same
>>>>>>>> effect. I'm just taking your statements serious.
>>>>>>>>
>>>>>>>> Taking statements serious is a simple necessity in a scientific
>>>>>>>> approach. To think about what a statement actually means is a very
>>>>>>>> simple test of an assumption against reality. It is basic scientific
>>>>>>>> work - by which you are obviously shocked.
>>>>>>>>
>>>>>>>> > I'm trying to put the conflict behind,
>>>>>>>>
>>>>>>>> I have no conflict with you. To me all this feels very much like
>>>>>>>> shadow boxing on your side.
>>>>>>>>
>>>>>>>> > but if you descend to such levels of
>>>>>>>> > ridiculousness, it makes it very difficult.
>>>>>>>>
>>>>>>>> I'm really sorry Michel, but that it all but ridiculous. The
>>>>>>>> question
>>>>>>>> whether you can keep your money or need to give it to someone else -
>>>>>>>> usually mediated by a bank but also in the form of shares - to get
>>>>>>>> interest is the all-or-nothing question here.
>>>>>>>>
>>>>>>>> > Please, let's put that behind
>>>>>>>> > thus.
>>>>>>>>
>>>>>>>> You are free to correct your statements so they make sense and - at
>>>>>>>> best - match the observable reality. It would be far better than to
>>>>>>>> leave the community just because someone says you are preaching
>>>>>>>> nonsense.
>>>>>>>>
>>>>>>>> Frankly I'm curious how long it will take that you at least agree
>>>>>>>> that
>>>>>>>> you can *not keep* your money and get interest for it. In science
>>>>>>>> that
>>>>>>>> would be simply to recognize the observable reality and modify your
>>>>>>>> basic assumption according to it. As you wrote above you are still
>>>>>>>> not
>>>>>>>> ready to modify your basic assumption - though you are now replacing
>>>>>>>> your basic assumption with sentences which are inherently
>>>>>>>> contradictory.
>>>>>>>>
>>>>>>>> With a scientific approach the next step would be to question what
>>>>>>>> happens with the money you just gave to others. That would be the
>>>>>>>> research step. And it would be easy because it is well-known that
>>>>>>>> banks give money to capitalists in the form of credit. In turn the
>>>>>>>> capitalists then apply it to labor force and machinery to produce
>>>>>>>> products they can sell for a higher price than they had themselves
>>>>>>>> for
>>>>>>>> the input. The logical conclusion is that interest is a share of the
>>>>>>>> profit of a capitalist. The amount of interest is directly coupled
>>>>>>>> to
>>>>>>>> the amount of expected profit and the risk involved to actually make
>>>>>>>> this profit [1]_. In other words: What you are trying to accomplish
>>>>>>>> with your [named above] stuff is what actually happens in capitalism
>>>>>>>> all the time. It's in fact the very core of capitalism.
>>>>>>>>
>>>>>>>> .. [1] Of course in a fully expanded exchange system at the end of
>>>>>>>> its
>>>>>>>> life cycle like contemporary capitalism it is a bit more
>>>>>>>> difficult. It's a interesting task to research that. But the
>>>>>>>> general principle stays.
>>>>>>>>
>>>>>>>> I, Christian and others explained all that over and over again and
>>>>>>>> it
>>>>>>>> is really not hard to understand. In fact it needs no theory at all.
>>>>>>>> It's all observable reality. But you constantly ignore this. Feel
>>>>>>>> free. But don't be shocked if others call this nonsense or - when
>>>>>>>> combined with an attempt to evoke certain feelings in simple-minded
>>>>>>>> persons - even propaganda.
>>>>>>>>
>>>>>>>>
>>>>>>>> Grüße
>>>>>>>>
>>>>>>>> Stefan
>>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> --
>>>>>>> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
>>>>>>> http://www.dpu.ac.th/dpuic/info/Research.html -
>>>>>>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>>>>>>
>>>>>>> Volunteering at the P2P Foundation:
>>>>>>> http://p2pfoundation.net - http://blog.p2pfoundation.net -
>>>>>>> http://p2pfoundation.ning.com
>>>>>>>
>>>>>>> Monitor updates at http://del.icio.us/mbauwens
>>>>>>>
>>>>>>> The work of the P2P Foundation is supported by SHIFTN,
>>>>>>> http://www.shiftn.com/
>>>>>>> _______________________________________________
>>>>>>> p2presearch mailing list
>>>>>>> p2presearch at listcultures.org
>>>>>>> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> --
>>>>>>> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
>>>>>>> http://www.dpu.ac.th/dpuic/info/Research.html -
>>>>>>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>>>>>>
>>>>>>> Volunteering at the P2P Foundation:
>>>>>>> http://p2pfoundation.net - http://blog.p2pfoundation.net -
>>>>>>> http://p2pfoundation.ning.com
>>>>>>>
>>>>>>> Monitor updates at http://del.icio.us/mbauwens
>>>>>>>
>>>>>>> The work of the P2P Foundation is supported by SHIFTN,
>>>>>>> http://www.shiftn.com/
>>>>>>>
>>>>>>> _______________________________________________
>>>>>>> p2presearch mailing list
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>>>>>>>
>>>>>>>
>>>>>>
>>>>>> _______________________________________________
>>>>>> p2presearch mailing list
>>>>>> p2presearch at listcultures.org
>>>>>> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org
>>>>>>
>>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> Marc Fawzi
>>>>> Facebook: http://www.facebook.com/people/Marc-Fawzi/605919256
>>>>> LinkedIn: http://www.linkedin.com/in/marcfawzi
>>>>>
>>>>
>>>>
>>>
>>>
>>> --
>>>
>>> Marc Fawzi
>>> Facebook: http://www.facebook.com/people/Marc-Fawzi/605919256
>>> LinkedIn: http://www.linkedin.com/in/marcfawzi
>>>
>>
>>
>
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