[p2p-research] excellent contribution on flow money by Martien van Steenbergen
Ryan Lanham
rlanham1963 at gmail.com
Thu May 21 23:17:50 CEST 2009
If you have a replicator, all is good. If you don't you need goods
allocation. The most efficient system yet devised for allocating goods is a
global market economy. Perfect? Not even close. Room for improvement?
People do improve every day...and others cheat it, etc.
I concur with Kevin's and now your argument that production favors small
investors and manufacturers in many respects. Italy has a long history of
small precision industries hiding under government tax radars in basements,
etc. making expensive eyeglass frames, etc.
I doubt your system would work as well as the greedy managers. But before
we come to that conclusion, it is important to know 3 things:
1. What do you mean when you say "pay too much"?
2. What is the actual definition of "greed" and when does a profit maker
cross the line?
3. How do you adjust to median cost when efficiencies will vary all around
that price based on efficiencies, capital investment, innovation, labor
costs, etc.?
The market system has simple answers to all these. But they are extremely
difficult in the super-brain computer runs production world.
Ryan
On Thu, May 21, 2009 at 4:06 PM, marc fawzi <marc.fawzi at gmail.com> wrote:
> The argument I have is two fold and you seem to be dancing around it :)
>
> 1. Open Peer Production: who gives a damn if demand was mis-predicted.
> Short on some product? DIY it!!! open production allows that and Patrick's
> question re: peer producing for themselves is a very key question. After
> all, we're discussing peer production here, aren't we? If it's open,
> distributed and sustainable it can be replicated by networks of peers as
> demand erupts (your black swan)
>
> 2. If you leave it to predictive inventory systems and collective price
> setting based on standard costing models (regardless of how tedious it would
> be to build and maintain those models as everything starts out inefficient
> then gains in efficiency and so will the costing models) then that and open
> peer production will give us a workale model where price = median cost +
> fixed profit margin, and I don't see any perpetual motion here.
>
> It's obvious that without a profit margin it would not work for three
> reasons: lack of guaranteed incentive, inability to grow, and friction (or
> inherent efficiency or noise that cannot be eliminated from the production
> and delivery process)
>
> But with open peer production and predictive inventory management systems
> (as opposed to managers who can exercise a natural human greedy/manipulative
> side) give us a much more robust and fair system than what we have today.
>
>
>
>
> On Thu, May 21, 2009 at 1:39 PM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>
>> Marc:
>>
>> Yours is a sort of "visible hand" of technology driving management. It
>> may happen someday. For now, we need managers.
>>
>> Miscalculations occur continually and everywhere--too much shipping
>> capacity, not enough flu vaccine production technology, too many low-cost
>> mortgages, etc.
>>
>> Managers try desparately hard to be smart. Some of the brightest people I
>> have ever met are corporate managers. They screw up continually--it is
>> exceedingly hard to get production decisions right. Just take pricing of
>> securities when a company goes public--the price can move 20% up or down
>> (and regularly does) in a matter of days or even minutes. That is a case
>> where very well-compensated and very smart people are missing demand
>> forecasts hugely.
>>
>> Plus there can be long (very long) lead times involved in production
>> processes (as with a jet airplane or a ship). The designs for many products
>> take well over a year to go from concept to production. Demand can change
>> during that time as can literally thousands of other variables (e.g. input
>> commodity prices, competitor capabilities and pricing, etc).
>>
>> No computer program, no matter how smart and how linked is likely to
>> replace that vast array of human brain power involved--at least not in the
>> next few (10) years.
>>
>> The market economy is extremely complex--and yet people reengineer it
>> continually...day in and day out at every level from the macro (government
>> interest rates) to the extreme micro (Mom and Pop changing their store
>> display). Sometimes the system changes radically, but it is false or wrong
>> or errant. It is. It just is. What's more, it is extremely unlikely that
>> it goes away in any significant way in the next few decades. It may
>> stumble, break, get rebuilt, change a lot, etc., but markets are pretty
>> fundamental--they are arguably "natural."
>>
>> Finally, there is no "market price" of a good that has any staying power.
>> As we say in stock exchanges, there is a continual auction. The price is
>> set when buyers and sellers cross terms. What is the price of a share of GE
>> stock? Tell me the day and time and I can tell you--for a limited quanity.
>> So it is with all things ultimately. No program can anticipate that range
>> of demand shifts and complexities. It is hugely sophisticated with billions
>> of interconnections ranging from the weather to the health of individuals
>> involved to the availabilty of credit.
>>
>> Ryan
>>
>>
>> On Thu, May 21, 2009 at 3:14 PM, marc fawzi <marc.fawzi at gmail.com>wrote:
>>
>>> Here is an improved version of my last paragraph:
>>>
>>> But let's say that there was no way to set a price (as is the case in P2P
>>> Energy Economy where price is set collectively based on per-category costing
>>> models and demand prediction [for more accurate detail, see P2P Energy
>>> Economy]) then assume a black swan event occurs and the total supply of
>>> Tickle Me Elmos is exhausted. What happens? people won't over pay for one
>>> thing. And the next thing that will happen, based on the fact that all
>>> production in P2P Energy Economy is open peer production, people will
>>> download the schemes and make their own Tickle Me Elmos. In addition, an
>>> intelligent, predictive algorithm with tentacles throughout the economic
>>> network (for the given product) will learn the pattern leading to such a
>>> black swan in demand and become better at recognizing the corrolates for
>>> such eruption in demand, thus adding another layer of safety against supply
>>> exhaustion, but open peer production together with current predictive
>>> inventory systems (some of which are very intelligent, much more than my
>>> simple predictive algorithm [see P2P Energy Economy for detailed algorithm])
>>> give us a much more robust system and we don't need to resort to the
>>> mechanics of the falsely called 'market price'
>>>
>>> ~~
>>>
>>> I can defend the above assertion at the detail level so, for those
>>> interested in details, let's work through some examples.
>>>
>>> A simulation is long over due, but there are certain high level issues
>>> with the P2P Energy Economy that need to be resolved first, one of which is
>>> guaranteeing growth in energy flow, which requires some constraints that
>>> aren't present in the model at the moment.
>>>
>>>
>>>
>>> On Thu, May 21, 2009 at 12:59 PM, marc fawzi <marc.fawzi at gmail.com>wrote:
>>>
>>>>
>>>> Very quickly for now, but will get back with more:
>>>>
>>>> I reject the argument re: Black Swan and predictive inventory systems.
>>>>
>>>> The 'Tickle Me Elmo' demand explosion during one xmas shopping week many
>>>> years ago is a good example of a black swan in demand forecasting.
>>>>
>>>> So what happened when demand exploded all the sudden? Well, supply was
>>>> exhausted and people were left fighting each other for a toy and over paying
>>>> by as much as 100X over 'market price.'
>>>>
>>>> But let's say that there was no way to set a price (as is the case in
>>>> P2P Energy Economy where price is set collectively based on per-category
>>>> costing models and demand prediction [for more accurate detail, see P2P
>>>> Energy Economy]) then assume a black swan event occurs and the total supply
>>>> of Tickle Me Elmos is exhausted. What happens? people won't over pay for one
>>>> thing. And the next thing that will happen, based on the fact that all
>>>> production in P2P Energy Economy is open peer production, people will
>>>> download the schemes and make their own Tickle Me Elmos. In addition, an
>>>> intelligent, predictive algorithm with tentacles throughout the economic
>>>> network will learn the pattern leading to such a black swan in demand and
>>>> become better at recognizing the corrolates for such eruption in demand,
>>>> thus adding another layer of safety against supply exhaustion, but open peer
>>>> production together with current predictive inventory systems (some of which
>>>> are very intelligent, much more than my simple predictive algorithm [see P2P
>>>> Energy Economy for detailed algorithm]) gives us enough resilience against
>>>> so called black swans in demand.
>>>>
>>>> So Patrick's question is very important in this context: open peer
>>>> production and predictive gives us a much more robust system and we don't
>>>> need to resort to the mechanics of the falsely called 'market price'
>>>>
>>>> Marc
>>>>
>>>>
>>>> On Thu, May 21, 2009 at 9:52 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
>>>>>>>>>> p2presearch at listcultures.org
>>>>>>>>>>
>>>>>>>>>> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>
>>>>>>>>> _______________________________________________
>>>>>>>>> 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
>>>>>>
>>>>>
>>>>>
>>>>
>>>>
>>>> --
>>>>
>>>> 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
>>>
>>
>>
>
>
> --
>
> Marc Fawzi
> Facebook: http://www.facebook.com/people/Marc-Fawzi/605919256
> LinkedIn: http://www.linkedin.com/in/marcfawzi
>
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