----- Original Message -----
Sent: Thursday, July 17, 2003 5:49
PM
Subject: Fw: [SOCIAL CREDIT] critique of
binary economics
Thanks for these details, Rodney.
Comments inserted [COMMENT]
----- Original Message -----
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
