----- 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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