----- Original Message -----
Sent: Thursday, July 17, 2003 12:30
PM
Subject: Re: [SOCIAL CREDIT] critique
of binary economics
Keith,
You are covering old
ground. For long time it has been clear that you do not accept that a
tree, cow, hydroelectric dam, machine and -- yes-- the sun have an
independent productiveness but the independence does not stop humans
co-operating with them or vice versa. Similarly, humans have an
independent productiveness but that does not stop humans co-operating with
each other or with a capital instrument. Either you understand that or
you do not -- and you do not.
Yes, nature is productive,
and so is capital. Cooperation, however, is a word which implicates
volition, and I have not yet encountered an engineer, ethologist or
anthropologist who is willing to say that the WILL which turns that
productiveness to human ends is contributed by other than human actors.
Kindly do not accuse me of deliberate
deceit. The concept of productiveness is no deceit -- it is an
analysis that helps people to understand that capital really
does contribute massively to the the production of wealth and,
therefore, the ordinary men in the street would be wise to start asking for
a share of capital if, as individuals, they are to have a genuine
productiveness (and enhanced consumer capacity).
So you think the man in the
street is too stupid to understand that a machine, good weather, healthy
fishing grounds, highly selected seeds and other items on your list increase
his productive capacity? I have never met a man who failed to be
tempted by the prospect of a new machine or tool that would make his work
easier, faster or more effective. You say I am being patronizing, but
you must really have a contemptuous attitude toward your audience if you
think they need fifty pages of exhortation to understand that a more
powerful machine will make them more productive. And you think they
are too dumb to be able to abstract this principle to the desirability of
having a piece of the entire factory? Every working man knows that
improvements of technology enhance production and also that they
eliminate jobs, allowing the owners to claim a larger share of the output.
Maybe you should try talking to some working people. They aren't
stupid, but if you persist in trying to push this line about independently
productive capital, I can easily imagine that they will form the impression
that you are.
Of course they would like to
be owners and coupon clippers. Why not get on with telling them how
they can go about it? By insisting so vehemently on this essentially
trivial point, the binary economists have aroused the suspicion
that the rest of the doctrine may not be very well-founded either.
That is certainly what happened to me, for as a virtual amateur in the
domains of finance and money I was quite entranced by the techniques for
democratizing capital ownership. Since then I have learned from more
specialized critics that there are some flaws in the techniques also.
Consistent with the worry inspired by the debate on
productiveness.
So it's deceit to wish to end rich-poor
division, is it? And it's deceit to wish to see a more even
distribution of wealth and income, is it?
You say my reaction to one
of the Austrian's passages is a bit extreme. What was extreme about
it? Very obviously, he does not understand that binary economics
finances both production and consumption at the same time. You don't
understand that, either.
I understand the claim very
well. I think the critic did too. He just doesn't believe
it.
The Austrian school upholds
the narrow ownership of capital. You have never understood that that
is the key issue. Norm Kurland has certainly not given up the fight,
thankyou -- but he naturally sometimes
prefers not to waste time on elists where people will do or say anything to
stop the widespread ownership of capital (while denying that they are
opposed to the wide ownership).
To be patronizing again, here
is your retreat to ad hominem again. I'm sure you have a
dictionary, Rodney. If you want me to talk to you as if
you were an honest scholar, check it out.
So the Austrian perspective is a reasoned one,
is it? Really? So why is it completely out-of-date (and
completely wrong) in, for example, its savings doctrine?
It is not out of date if it
is still the paradigm. And just because you have stated a different
position doesn't mean that you are right. I detect that this
latter may be a novel idea to you; try reading it a second time.) The
important contrast between binary economics and the Austrian doctrine is
that the latter had a very careful development and was vetted by quite a
large number of critcal cooperators. That is how it became a
paradigm. Binary economics has quite a long way to go before it
accumulates the same trail of scholarship and application. This doesn't mean
that the Austrian doctrine is correct; I haven't said that it is, and
neither has Ryan. (I am progressively inclined to the view that it is
wrong.)
But -- I am pleased to see -- you and Ryan are
up-to-date on savings doctrine yet -- isn't it strange? -- neither of you
see that Moulton's (or possibly somebody else's earlier insights) opens the
way to binary economics. You are in the same muddle as the
Austrian.
The last paragraph of your email is
deliberately patronising and offensive.
Rodney Shakespeare.
----- 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
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