Fw: [SOCIAL CREDIT] critique of binary economics

[Keith Wilde]

Thanks for these details, Rodney. Comments inserted [COMMENT]   ----- Original Message ----- From: Rodney Shakespeare <[EMAIL PROTECTED]> To: Social Credit <[EMAIL PROTECTED]> Sent: Wednesday, July 16, 2003 5:43 PM Subject: Re: [SOCIAL CREDIT] critique of binary economics > Keith, > 1.    I have already stated on this list that "On another matter, I think I > may have made a mistake in reading a previous > email, construing "quantity" for "quality"  or vice versa."   COMMENT:  OK, I did see the caveat and wondered if it applied here, but I am still mystified about the context. I assume it is of no consequence? > > 2.    I said "To take another example -- b.e very clearly believes that > binary growth  comes about through the wider distribution of productive, > full payout capital achieved through a simulfinancing of both supply and > demand >  ('simulfinancing' is  an admirable Kelso word).  Quite how the author > comes  to believe that b.e. is not involved with supply I just cannot > imagine." > >      To which you replied, "I have read the critique carefully and am unable > to locate anything that  lends support to your interpretation (above) of the > author's intent, either by direct statement or by inference from general > commentary." >     You then asked me to explain my interpretation. > >     Well, perhaps you would like to explain this passage from the author-- >     "For binary economists, then, the key to economic growth is the > increasing of demand for consumer goods, a la Keynes, rather than the > increasing of the capital stock to allow greater production of consumer > goods at lower cost. Yet capital goods must be produced if the capacity to > produce consumer goods is to increase, and increases in the capital stock > are actually integral to Kelso's "general theory" plan for capital > dispersion and growth." > >     The passage quoted lectures binary economics for, allegedly, not > understanding that capital goods must be produced if the capacity to produce > consider goods is to increase.   COMMENT:  Well, this does explain your reaction, but I think it is a bit extreme--which is why it was puzzling to me.  It would be hard to  justifiy from his remarks that the critic believes capital to have no part in "supply", and your last sentence just above therefore sounds a bit hyperbolic.   > >     The great clue as to why the author got himself into such a muddle > comes in the sentence directly after the passage quoted above.  It says:- > "Somehow, binary economists have even managed to conquer the > capital/consumption tradeoff that has been with us from time immemorial" COMMENT:  He may turn out to be wrong, but the critic is not in a muddle. As Bill Ryan pointed out in announcing the article, it is written from the "Austrian" point of view.  You would not have know that had you not been told, because no one in the binary movement seems to have studied economics enough to be able to situate b.e. within the general context of economic doctrines and make a cogent argument of why and how it is superior. To do that , some of you are going to have to study the economics literature.  The "Austrian" perspective is a very thoroughly reasoned one.  To simply dismiss it as old fashioned and irrelevant is not going to score points for binary economics among the kinds of people whose intellectual support you would like to have for the Global Justice Movement.   >     That sentence in a nutshell explains why the Austrian (and > possiblypeople like Ryan) cannot understand binary economics .  It is > patently impossible for him to understand a financing that finances both > production and consumption at the same time -- it's called "simulfinancing". > The Austrian, moreover, is quaintly old-fashioned (about 65 years out of > date -- see Harold Moulton in the 1930s) in his savings doctrine -- he does > not understand that financial savings are not necessary before investment is > made (although collateral may be necessary) since, today, money can be, and > is, created out of nothing.  It is also a question today whether, in > practice, there is any need for physical savings since for many types of > investment, there are physical substitutes for things , or a need to pay a > higher price, rather than an absence of things. COMMENT:  This is indeed the attractive element in Kelso's analysis. And when Ryan posts his commentary on the Terrell article I predict that he will say the idea is older even than Moulton.  That is, he will agree that the "Austrian" is importantly mistaken in respect of the saving/investment relationship as it involves finance. He will point to C.H. Douglas as well as Keynes, and possibly to Joan Robinson and other Keynesians. In other words, there is lots of support for the main idea in your paragraph above from the literature of standard economics.  It isn't news.  In spite of all the experience and ink that has been expended in its exposition and demonstration, however, there is still a strong current of "Austrianism" in the priesthoods of economics and finance. Binary economists are not going to make a dent in their armor by simply dismissing them as "old-fashioned".       >     Keith, the Austrian is opposed to wide capital ownership for all and, > all such people ultimately reveal themselves as selfish, narrow-minded -- > and muddled. > > Rodney Shakespeare. >   COMMENT:  Rodney, I have heard a lot of whining from binary economists (more from Norm than from you, I acknowledge) about ad hominem attacks when the arguments were going against them.  In recent months your position vis-a-vis people who disagree with you has hardened into two points: 1.  You don't have a better solution to propose; 2.  Your opposition to binary economics is based in a malevolent intent to maintain gross social inequities.   For the first of these I have some sympathy; you are involved in a political campaign and are impatient with either hangers-on or detractors who insist on dithering over fine points of cogency.  In defence of the latter, I can only say that some of us, perhaps economists in particular, are reluctant to make fools of ourselves by endorsing a formula that has some obvious holes, even if the overall intent is attractive.   Your second position, however, is a straightforward exemplar of the ad hominem--attacking a person's motivations or character rather than answering his argument.   It has been impossible for me (and others) to not notice over the past four years that although binary economists' favorite defense is that their detractors are not intellectually honest, the binarians are in fact by far the worst offenders in this respect.  The position you have adopted (the two points above) is a manifestation that you have run out of cogent arguments.  Norm has given up the fight, and you have seen my essay of encouragement for his decision.  Binary economists are wasting their energy in attempts to get the endorsement of careful social scientists.  You are all inflamed with the vision of a utopian ideal which floats on a cloud of independently productive capital and you cannot tolerate anyone who threatens to prick the bubble.  There are some elements of truth and hope in your vision, but the blindness of your religious zeal is a barrier to communication with serious scholars.  Of all the binary economists I have encountered, only Stephen Kane seems to have the instincts of an honest scholar.     Quite a  long time ago you admitted to me that the primary utility of the independent productiveness idea is to help persuade the man in the street that the Kelso vision is a possible one.  I can appreciate that point, but it is a rhetorical device entailing belief that the end justifies the means.  Deliberate deceit, in other words, in the cause of social justice.  Personally, I am revolted by deceit, which is why in spite of my acculturation and my acknowledgment of  many positive aspects in the success of Mormonism, I am revolted by its golden bible science--and spotted the same instinct immediately in the stance of binary economists.  As an admirer of Mortimer Adler, I believe that the pursuit of truth is a critical function in the search for effective solutions, and I have been appalled that Adler's legacy has been so blatantly perverted through his association with Kelso.  My encouragement to Norm was completely serious and sympathetic, Rodney.  I am all in favor of social justice, and if you can realize it by selling binary economics I will applaud.  But your natural audience is among the economically semi-literate and credulous.  The current crop of binary economists is never going to make it among the ranks of honest scholars.  But you could eventually win by following the Mormon example of first acquiring strength of numbers among the credulous and becoming sufficiently successful financially and politically that issues of truthfulness can be dismissed as trivia. Just don't expect me to enjoy the smell of deceit.   Keith           ==^^=============================================================== This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. 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