[p2p-research] excellent contribution on flow money by Martien van Steenbergen

[Martien van Steenbergen]

Andreas,

On 27 May 2009, at 16:07 , Wittel, Andreas wrote:

> First, it is true that objects in general lose their value over time.
> What Gesell does not mention however is that the value of objects  
> which
> are used deteriorates quicker than the value of objects which are not
> used. A pair of shoes that stays in the cupboard for three years  
> clearly
> has more value than a pair of shoes being worn on a daily basis for  
> the
> same period of time. Gesell does not reflect at all on this issue.

I must disagree. I had two loadspeakers on the shelve for a couple of  
years, did not use them. Gave them to my son the other year, but the  
rubber rim of both woofers pulverized on first use.

Similar speakers, used daily, have been working for more than 20 years  
now.

So, it depends. Some stuff that is not used decays quicker than when  
it's used. Even a car shows these kind of symptoms.

In fact, everything decays over time, whether used or not. It's called  
entropy. Note the ‘thing’ in ‘everything’. A thing is  
(in)formed: some ordering process caused its form to emerge. Left  
alone, it will gradually deform, turn back into chaos (or pure  
energy). Stuff, material, is ‘slowed down energy’, according to  
quantum physicists.

>
> The second point is more important. Gesell's theory can only work in
> small and local settings. If two people on an island develop  
> exchanges,
> they do not need money or any other mediators to measure exchange.  
> Thus
> they do not need to implement interest. However they would have to
> negotiate by when Robinson is supposed to get back the clothes and the
> sacks of wheat that he gives to the stranger. If they don't talk about
> time for reciprocity the stranger might decide that he could return
> clothes and wheat 40 years later, and til then keep borrowing things
> from Robinson. In an extremely localised setting (two people on an
> island) this negotiation does not need to be formalised, it would sort
> itself out eventually (at some point Robinson would stop lending if he
> doesn't receive anything back.

If I understand you correctly, the point is that sometimes the lender  
needs things back in a timely manner. Well, negociate and agree on the  
time period and perhaps a fair price for use. Perhaps we should not  
call this interest. It's just pay for use. E.g. it sounds fair to me  
to pay a certain percentage of price of an object for each day that I  
use it. Rent.

It's the exponential aspect of compound positive interest that kills  
the system. An annual interest of 3% doubles the amount in 20 years.

See http://en.wikipedia.org/wiki/Interest and http://en.wikipedia.org/wiki/Usury

Striking that the Interest entry in wikipedia does not show an  
claryfying exponential curve...

> Let's assume a non-local market, where control over all transactions  
> and
> exchanges becomes impossible for the individual participants. Let's
> assume they don't have money. In this setting the framing of  
> reciprocity
> with respect to time becomes very important. If it is not  
> established by
> when the clothes and the wheat given to a person should be returned,
> individual participants (with no interest in fair trade) could play  
> the
> system, and borrow clothes and wheat from person A in one year, and
> froom person B the next year, and keep going borrowing without ever
> returning. As this non-local situation is not a commons (with the
> possibility to control the behaviour of all people involved)
> participants would need to establish rules that guarantee reciprocity.

True. But everyone can simply pay for borrowing the goods, right? And  
they can make formal agreements for returning the good. Pay upfront,  
pay later, pay over time, malus, bonus, what have you. But no compund  
positive interest, please!

> They would have two choices. They could either set up a deadline by  
> when
> the clothes and wheat has to be returned, or they could introduce the
> notion of interest. The first possibility is not very practical as  
> this
> contract would have to established for every single transaction. The
> second one (interests) is much more practical. It would make sure that
> the one who receives goods makes sure that he or she returns them as
> quickly as possible. Interest in this non-monetary system would work  
> as
> an incentive to give back sooner ratherv than later.

Right. Yet this doesn't have to be compound positive interest, now  
does it? Simple rent would do. Perhaps with an extra bonus when  
brought back before or on the deadline (rather than a penalty when  
returned too late). You can also agree that you pay for the full thing  
up front and repay the difference on return). A myriad of elegant  
solutions pop up.


> Interest, I would argue, is not intrinsically linked to money as such,

True. It is a characteristic of a money system. One of the dials one  
can turn to influence the flow of money through the system.

> but to the idea of measurement. Any model of exchange that operates on
> the basis of measurement (of the commodities and of labour) is bound  
> to
> end up introducing interest.

I do not see this. Please elaborate. Or prove that a system without  
compound positive interest will fail.

> The problem is that there is no just way to
> measure the value of individual labour.

It's about time we put some thought and work to that, then.

Can you discriminate between one hour of a dentist and one hour of a  
janitor? Is there a relative difference in valuation?

Just like we agreed that one meter as the distance travelled by light  
in free space in 1⁄299,792,458 of a second, we can agree that one  
hour of a janitor equals a value of 100 (whatever unit we like to use;  
Gessel, say :-).

Then, we can relate all other valuations against that standard.

I still remember the standardization around computing power. It used  
to be that 1 MIPS (Million Instructions Per Second) VAX MIPS, where  
computers were measured on a task and their performance rated against  
the VAX 11/780 that was marketed as a "1 MIPS" machine.

So, what is our VAX 11/780 equivalent of one hour of human labour?

> Only those economic models that are established on the idea that
> everybody should contribute with as much labour as he or she wishes to
> donate to the commons could avoid operating on the basis of interest.

Yes. Contribute what you want, when you want it. If it gives you a  
happy live, enjoy it. If you want more, create more industry, get  
busier, generate more turnover and touch zero more often to increase  
your trustwidth.

> Obviously in this economic model individual participants could also  
> play
> the system. But would they? This is a question about human behaviour.

Right. So we need to design simple and smart rules into the system  
that educes the right behaviour.

Succes en plezier,

Martien.