----- 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
