[p2p-research] Who Issues the Money that National Governments then Borrow?

[Kevin Carson]

On 7/22/10, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> If you feel this way, start a bank and lend money without interest.  It
> could be done.  Any credit union could do it.  Why don't they?

Because the terms and conditions on which an institution is allowed to
lend money are controlled by regulations that reflect the primary
interest of conventional capitalist banks in restraining competition.
Even the issue of secured loans against the borrower's collateral,
which is strictly speaking not even a loan at all but rather the
monetization of property, requires the "lending" institution to amass
some artificially high level of initial capitalization as a condition
of licensing.  In other words, the incumbent players impose a cost
structure on the competition that's totally unrelated to the actual
costs of doing business, as an entry barrier.

Efforts like Greco's credit-clearing system, to the extent that their
activities can be plausibly interpreted as "lending," are on the very
risky border of illegality when they operate without meeting the
licensing and capitalization requirements of the regulatory regime.
The regulatory regime is premised on the assumption that "credit" is
something advanced against past savings, and that money is primarily a
store of past value rather than a measure for denominating the
exchange of present and future goods.

It's analogous to a situation in which the government mandates capital
outlays on extremely expensive, product-specific machinery on the
Sloan model as a precondition for undertaking auto production, even if
you want to do it on a networked/flexible manufacturing basis.  You
might as well argue under those circumstances that you're free to
enter the market and undertake decentralized flexible manufacturing,
so long as you have the money to do it on the regulatory terms
prescribed by your high-cost competition.

Another analogy is the old regulations the funeral home industry used
to have, as described by Mitford in The American Way of Death.  They
mandated the purchase of a casket even for bodies that were being
cremated.  So you could say, if you don't believe in burial, you're
free to be cremated--so long as you're willing to buy a casket anyway.

The whole point of most regulatory regimes is to mandate high-cost
modes of operation, in order to protect high-cost operators against
low-cost competition.

So long as the alternative economy is forced to compete in a cost
structure defined by subsidies and state protections to its
competitors, it will be a yuppie lifestyle choice forced to swim
upstream against market forces.

I believe interest-free credit systems *will* emerge from the time of
troubles.  But they will be technically illegal--which means it runs
up against the same scruples you've expressed re file-sharing.  The
emergence of the counter-economy will be what Robb calls an
open-source insurgency, in direct defiance of the corporate state's
regulations and artificial property rights.

I think this gets back to the heart of our old, fundamental difference
on how the law works.  You tend to treat it as some sort of social
technology, based on the social consensus and where "society's" head
is at at any given time, and thus having some moral authority.  I view
it as rooted in a power structure built to serve certain particular
class interests, and having no more moral authority than slavery.

-- 
Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
The Homebrew Industrial Revolution:  A Low-Overhead Manifesto
http://homebrewindustrialrevolution.wordpress.com
Organization Theory:  A Libertarian Perspective
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html