[p2p-research] The problems of debt

Mon Jul 12 14:09:02 CEST 2010

Michel, you're presenting a false argument IMO. Ryan is making the point that the entire system of capitalism (all strata included) is highly productive-- the most productive system so far in fact. Marx himself made the very same point...  

D

Date: Mon, 12 Jul 2010 13:12:48 +0700
From: michelsub2004 at gmail.com
To: p2presearch at listcultures.org
Subject: Re: [p2p-research] The problems of debt

this is of course very questionable ...

put capitalists in a room, and they are tremendously unproductive, they are only productive because workers are productive, but you could argue, that the organisation of production is a form of productivity ... yet most of that done is not done by capitalists but by a paid managerial class ... 

also, as we now know, the most well-paid were actually destroying the most value (there is a study of the NEF on that ... .. the added value of capitalists and financiers is actually negative)

so your statement that in capitalism, the more value you create, the more you consume, is a nice piece of mythology, but unwarranted and disproven ..

you also discount social movements ... the Nordic countries have very strong labour and social movements, could this be an explanation, rather than mysterious goodness, that explains their social system,

and is it a coincidence that the best-paid workers in the world, i.e. the Koreans, also have the strongest unions?

following your reasoning, the top 1% of the population mysteriously created lots and lots more value ... yet, growth rates declined dramatically since the 1980's

Michel

On Sun, Jul 11, 2010 at 10:58 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

In the past and present, people of enormous productivity (e.g. capitalists) consumed significantly in a way that others see as wasteful.  Indeed it is.  But they view this as a reward for their huge productivity.  Measuring productivity and value creation is hard.  No one knows exactly how to do it.  But we do know that people will argue that their capacity for value creation is greater than it might actually be.  In other words, people negotiate for their own benefit rather than society's.  If society does a bad job at evaluating value of productivity, systems become very inefficient, and the machines of society too often produce stuff people don't want as much as they could have if the machines had been used efficiently.  

In capitalism, the more value you create.  The more you get to consume.  In any other system, immediate imbalances are inevitable.  The only possible non capitalist system that can work, in my view, is one where moral responsibility to the society is a sort of currency...as in Nordic countries.  In those places, value producers subordinate their own desires to those of others.  Why?  Who can say. 

On Sun, Jul 11, 2010 at 10:50 AM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

Money is, in simplest terms, a machine.

It isn't like a machine.  It IS a machine.  It is a machine that either makes something others want (value) or it is a machine that makes things only a consumer wants (i.e. consumption).

If it makes consumption, it is used up.  If money makes value, like all machines that can be used more than once, it is a value multiplier.  

If someone uses money to create value, then they are productive.  Productivity leads to happier worlds because people have things others want.  In an eastern-styled anti-desire world, these systems do not apply...though there is ample evidence, given free choice, nearly everyone wants something that is scarce.  Wanting fewer things that are scarce is a sort of advantage in this new world, but it is a choice most would not want to make freely.  People like cars, tools, luxuries of all sorts...jewelry, prettier mates, etc.  These things cost machinery...money to produce.  If they don't create further value...then that is consumption.  Non productive consumption burns up capital.  It is a fire in the machine shop.  Granted, it is a necessary fire, but it is a fire none-the-less.

Build a good machine...and value is created.  Build a worthless life or machine, and value is consumed.    

On Sun, Jul 11, 2010 at 10:33 AM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

I've been asked to explain debt problems as influenced by technology.  I'll try.

Here's my "theory".  Many others share or have versions of something similar.  I claim no originality.  I've posted several versions on this list.

1. Growth occurs when someone produces something others value.  The sum total of value is the economy.

2. In the past, it was a matter of work and labour to produce something of value...like digging a hole where a hole was wanted.
3. People learned to take money that was not in use and to use it by borrowing it and then buying value-production which was then placed on sale.

4. The process of 3 entails risk.  Risk was rewarded by profit. 
5. The system of 3-4 really works quite well so long as profit is likely.
6. In a world where learning and high productive machinery requiring low skill levels is readily available (i.e. post 1990 or so) making profit is harder.  7. Item 6 is especially true if innovation is not protected by the state (e.g. through intellectual property.)

8. Because profit is harder especially in tangible goods and services (because of technology and learning distribution) credit is harder.
9. When credit became hard, the incentives to cheat increased.  People lent money badly and then cleverly sold the bad loans to others who didn't understand.

10. When 9 happened, the state had to decide whether huge firms fulfilling important institutional roles would die, or be saved.  
11. Nearly all states, especially in Japan and Europe, chose to save old institutions (e.g. Royal Bank of Scotland), or in the US, AIG.

12. There is now an open question as to whether markets can still create value (e.g. the iPod) in such a way that debt is justified.  If not, capitialism in the form that creates ready growth through using unused money is screwed.

13. When money goes unused, it is difficult to create new money and growth of value.  There is no/little incentive to innovate.  This can be called "deflation."
14. Deflation is more dangerous to capitalism by far than inflation.  Deflation means shrinkage of an economy because unused money becomes more valuable by sitting than by being used.  Thus, people become even more risk averse.

15. When 14 happens for a long time (e.g. Japan) then demographic and institutional patterns start to become unsustainable.
16. When 15 happens, we do not understand the long term outcomes, but they don't seem good.

-- 
Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands

(345) 916-1712

-- 
Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633

Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712

-- 
Ryan Lanham
rlanham1963 at gmail.com

Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712

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