[Ripple] Are profits evil? (fork from ripple & demurrage)
Jorge Timón
thread is already big enough.
2012/1/3, Apostolis Xekoukoulotakis <xeko...@gmail.com>:
> Jorge, I think that innovating and improving the production process doesnt
> make profit.
> What would happen if we had perfect compettion and every one was able to
> innovate the same. Then as you correctly say, profit would be zero.
>
> Why are companies, that are interested in profit, innovating then?
> For one simple reason, to become better than their competitors, so that
> they could charge more than the cost of production. From that point on, we
> stop being in perfect competition.
They want to be better than their competitors to earn profits.
That's competition. Not sure what you mean by "perfect" competition here.
> We also see, that there is an incentive to control a percentage of the
> market and not allow others to participate since it is the difference in
> power that makes profit. I also dont think that innovation is the only way
> to protect their share. There are many more darker ways.
That's what we have the state for: to monopolize coercion.
They want to have the greatest market share, but they're not supposed
to sue coercion for that, they can only improve their products or
reduce their costs.
It's sad that so many times companies lobby to use the coercion of the
state in their own interest. Setting regulations to impede new
competitors to enter the market.
Try to start your own bank and then tell me we're on a free market.
> But lets assume for a while that people invest to make profit and that one
> day we reach perfect competition. I dont think investors would be
> interested to make factories or innovate with their money when there is no
> profit to make and there is the risk of investment. They would withdraw
> from the economy and the economy will shut down.
With capital-money, real capitals tend to yield as much as the (basic)
interest. If the interest becomes to low, they hoard they money until
it is restored (leaving aside the interest rates manipulations by
central banks and fractional-reserve-by-law we have today).
If we had, freigeld, the incentive to invest is to not lose their
savings by demurrage.
> The only way to have an economy with perfect competition is if we get rid
> of the incentive for profit making and replace it with the incentive of
> cheaper , better quality products created in less hours by the workers.
Profit is the incentive to make cheaper (less man hours mens cheaper)
, better quality products.
I don't get your point.
Kurt Padilla
Profits are evil because those who garner them, the capital
owners, do so without having worked for them. Meanwhile, the workers who
actually worked to produce a product only see a fraction of its sale price in
the form of wages. The capital owners steal from the workers by the power of the coercive state.
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Kevin
> Profits are evil because those who garner them, the capital owners, do
> so without having worked for them. Meanwhile, the workers who actually
> worked to produce a product only see a fraction of its sale price in
> the form of wages. The capital owners steal from the workers by the
> power of the coercive state.
I disagree with that statement being a broad truth, although I am
sympathetic to it. The real world does resemble it in some ways.
If there is a shortage of labor, the workers can demand a larger share
of the profit. When there is a surplus of labor (which has usually been
the case for the last couple hundred years), the capital owners have the
upper hand, and often abuse their position.
> > But lets assume for a while that people invest to make
> profit and that one
> > day we reach perfect competition. I dont think investors
> would be
> > interested to make factories or innovate with their money
> when there is no
> > profit to make and there is the risk of investment. They
> would withdraw
> > from the economy and the economy will shut down.
Even with perfect competition, there are opportunities for profit. Some
people and some places will always be more efficient than others. For
example, the best computer programmers are about 10x more productive
than those near the bottom. Even with automated factories, some will be
better maintained, some will have better supply purchasing negotiators,
some will be located nearer transportation hubs. If prices are set based
on demand, efficient producers will have higher profit margins. If they
are set based on supply costs, inefficient producers will have prices
too high to sell anything.
But the whole idea of "perfect competition" is pretty academic. We could
move in that direction, but we're not going to come close in my
lifetime, even if we had governments with that as their goal.
I think profit as a motive is a practical and effective system. I also
want a lot of protections against abuse of monopoly power, and I want
far more transparency than we usually get (I am not a fan of huge
companies). I also wish the world had a lot fewer people, because then
everything would be far easier for us, but it's too late for that.
Kevin
Jorge Timón
Land rent, is a rent. The state can create rents by providing
privileges too. But business profits need work. Better than work, we
should say that business need to "create value for someone else".
The worker also works for a "profit" (the wage). People usually spend
their time and resources to benefit others rather than themselves only
for a profit. When people voluntarily act without expecting a profit
they do it for charity.
But if the economy relied only on charity (google gift economy), we
would not be talking through the internet, because the satellites,
wires, routers, etc, wouldn't be there.
If you're providing a good or a service to other who freely trades
with you, both parties benefit.
Managing a business is also a work. In most business (the small ones),
the manager is also the owner and his wage is the business profits.
I understand you don't like the free market and prefer a planned
economy. If that's not the case, please, explain your system with
freedom but without profits.
My own position is kind of strange: I'm for free market but against
capitalism. That confuses many people because for them they're just
synonyms.
This series of short videos is very simple and educational, check it out:
www.youtube.com/user/praxgirl/videos
I know I'm going to disagree with her when she makes a chapter for
interest (and probably also money), but I think no one can deny
reasonably most of her logic.
Maybe she can make you love the free market (thus freedom) better than I can.
Kurt Padilla
@Kevin: So long as the working class does not own the means of
production, the ruling class, which does own the means of production, will make
the labor surplus persist. For the ruling class, labor shortages are
unprofitable.
If the working class should ever come to control the means of production, profit will cease to exist. Instead, workers will enjoy surpluses that they receive according to the work they do as opposed to the capital they own.
@Jorge: I think markets are useful, but as long as the means of production are owned by a non-working elite, the workers will always operate at a loss, despite their efforts to compete for higher wages. Only workers should participate in markets, and they should only trade the product of their labor. There should be no markets for products obtained through capitalist exploitation.
Apostolis Xekoukoulotakis
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Sincerely yours,
Apostolis Xekoukoulotakis
Kurt Padilla
Apostolis Xekoukoulotakis
Jorge Timón
Ok, now I get your point, but I disagree.
First, I think you're confusing perfect competition with zero profits.
It's possible to have profits under perfect competition, they just
tend to disappear. From wikipedia:
"In contrast to a monopoly or oligopoly, it is impossible for a firm
in perfect competition to earn economic profit IN THE LONG RUN..."
I say that profits drive competition and ideally, when there's profits
to make, entrepreneurs will seek those profits and remove the
possibility from making them anymore (what you call perfect
competition). Until the opportunity appears again (or someone makes it
appear innovating).
You say that when there's profit to make, there will always be there.
That profits don't tend to zero by competition.
Well, I agree but only partially. The same way as (business) profits
are a subtype of gains, interests (and capital yields) are a subtype
of profits. So what I've said about profits would be valid only for
profits that are not interests/capital yields.
Using money-capital as the medium of exchange, there will always be a
sustained source of profits (rents), which is the basic interest.
Production goods (so called real capital) will not be financed if
they're not going to yield at least as much as the basic interest.
Thus competition between capital goods (say factories) is limited by
the money-capital.
If all factories (of the same type) yield Y% of their construction
costs, then a new factory will yield Y-c%. And will also make all the
other factories yield the same, because they compete for the profits.
If Y <= interest, no rational investor will fund the construction of
this new factory.
But the construction of the new factory would create jobs and make the
products cheaper for consumers. The fact that the yield of the
factories is greater than zero, proves that the demand for the product
being produced by those factories is not fully satisfied.
Thus, there will never be full employment and there will always be
unsatisfied needs when the medium of exchange is capital-money. The
capitalists (never mind if you own the factory or the money itself and
you lend it), on the other hand will always enjoy this source of
unearned profit (rent). Perfect competition is therefore impossible
under a capitalist monetary system. Ironic, eh?
With free-money, on the other hand, there's no minimum interest, they
can get lower and lower until reach zero. When we reach the point at
which factories yield 0%, all the gains from the factory during its
entire life would equal its costs of construction.
Although Gesell didn't, I consider mutual credit systems (such as
Ripple) another form of free money. If the everybody were using Ripple
as the medium of exchange, I predict interest (not including the risk
premium here, counting that just as an insurance service rather than a
rent) would tend to zero too.
Since you don't believe in the free-money theory of interest, please,
tell me which of this categories you fall into:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/6.htm
2012/1/5, Apostolis Xekoukoulotakis <xeko...@gmail.com>:
--
Jorge Timón
Martin
> Profits are evil because those who garner them, the capital owners, do so
> without having worked for them. Meanwhile, the workers who actually worked
> to produce a product only see a fraction of its sale price in the form of
> wages. The capital owners steal from the workers by the power of the
> coercive state.
ownership of natural means and other means (like inherited property)
to which the owner has added no value, is a useful propriety, because
it creates a market in the means of production. Prices emerge from
this market. These prices permit entrepreneurs to distinguish
resources based upon their marginal utility in different productive
organizations. Permitting prices to emerge in a market is essentially
the only effective method of distinguishing resources this way.
Central planners can't do it, no matter how clever they are.
That said, I favor title expiration and a progressive consumption tax,
not to limit profits but to channel profits away from the marginal
consumption of the very wealthy and toward more productive
organization satisfying free laboring consumers (toward investment).
This reorganization is costly and benefits everyone. A more profitable
organization adds more value to productive resources than a less
profitable organization.
Title expiration is an alternative to estate taxes. An estate tax is
counterproductive, because it enriches the state. It simply transfers
wealth from a wealthy individual to a far wealthier, more powerful,
more central and thus remote organization, the state.
With title expiration, most of the estate of a wealthy proprietor is
auctioned upon his death, but no authority is entitled to spend
revenue from the auction. Instead, money which the bidder has borrowed
from a banking system is removed from circulation. In terms of a
central banking system, the money returns to the central bank. I'm
already discussing a minarchist policy here, but the central banking
approach obviously doesn't appeal to me. In terms of a decentralized
system like Ripple, I haven't thought much about realizing title
expiration. Establishing property rights in the first instance is
always problem.
A progressive consumption tax is essentially a tax deferred investment
account (like an IRA or 401k) with unlimited contributions combined
with progressive income tax rates approaching 100%. This policy also
presumes a state, but I'm not an anarchist strictly speaking. The
anarcho-capitalists disagree, but a widely respected standard of
propriety hardly seems possible without a state.
Kurt Padilla
@Martin: I never said anything about central planning or abolishing markets. I’m talking about workers owning the means of production rather than non-workers. Work centers would operate democratically, with the interests of the workers always in mind, instead of operating at the directive of non-working dictators (employers) whose interests conflict with those of the workers. The absence of employers doesn’t preclude markets.
Apostolis Xekoukoulotakis
>"In contrast to a monopoly or oligopoly, it is impossible for a firm
>in perfect competition to earn economic profit IN THE LONG RUN..."
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Martin Brock
central planners with decentralized planners (private proprietors)
exchanging productive means in a market seeking profit.
First, I'm discussing an ideal here, not defending the U.S. economy or
anything similar.
My employer (presumably an organization) governs various resources
that I use to produce, including my relationship with other employees.
It governs the resources, because it bears the risk that the resources
do not yield a profit (do not produce goods satisfying consumers
sufficiently). My employer doesn't dictate to me, because I have many
employment options.
I don't know what "operating democratically" means to you. Someone
must decide who uses resources and for what purpose. I cast my vote
when I either purchase resources myself or join an organization of
resources. If I join an organization, I choose to be subject to other
employees enacting the rules of the organization.
Market organization is most democratic. I govern myself by choosing my
associations, including an employer if I want an employer. I can also
choose self-employment, and I can choose to employ others who choose
to have an employer. All of these options are available to me.
I don't want to decide how you produce or what you produce otherwise.
If we don't choose to interact, if I no path joins us in a social
network like Ripple, I have nothing to say about your work, and you
have nothing to say about mine. That is democracy. Majoritarian
plebiscites electing committees making decisions for everyone are not
democratic.
Apostolis Xekoukoulotakis
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Martin Brock
alternatives based upon their utility in many different productive
processes, most of which a particular engineer does not understand. A
particular engineer knows that option A costs more than option B and
that A adds too little value, compared with B, to justify the
additional cost in his process, but the engineer does not know
precisely why A costs more. Some other engineer weighing A against B
in some other process knows why, because in the other process, A does
add enough value to justify the additional cost.
I don't need to be an employer to be a production engineer, but
someone decides which product I produce on a given day and the means
of production available to me, and someone bears the cost of deciding
poorly. An engineer may play all of these roles if he chooses.
On Jan 5, 3:33 pm, Apostolis Xekoukoulotakis <xekou...@gmail.com>
wrote:
> engineer, why does he take the risk and not all those people that work
> under him? They are the ones that have knowledge of the amount of risk
> taken. He is just a guy with money.
market. If products fetch less than expected, the employees possibly
lose employment, but they do not lose what the employer has already
paid them. An employer is a guy deciding how to spend money, and
ideally, he earned the money previously or must repay it in the
future.
Of course, if an economy is only a system of cartels commanded by
lords of various monopolies practically guaranteed to sell their
products at established prices, you're right, but I'm not discussing a
fascist economy here. I'm discussing a free market economy.
>What is our conclution. Money creates money for those that have money.
Apostolis Xekoukoulotakis
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Martin Brock
Everyone doesn't want to take entrepreneurial risks, but everyone has
money. That's what Ripple is all about. Everyone doesn't have the same
established right to govern resources other than their own labor, and
I'm not defending established propriety in general here. Much of it
offends me. Treasury securities are not proper in my way of thinking,
even if a judge declares them "property". Shares of Lockheed-Martin
are not proper either. Lots of things called "property" these days are
improper in my way of thinking.
Nobel Prize economists probably make poor businessmen, and in general,
economic progress does not occur because the best and the brightest
govern resources. Progress occurs because organizations satisfying
consumers survive while other organizations dissolve. It's more like
evolution by natural selection than the design of a brilliant
economist, and the most brilliant economists understand that.
Apostolis Xekoukoulotakis
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Martin Brock
Risk aversion is a personal choice. I'm a skydiver. Most people (like
99.99%) are not. They aren't cowards. They just don't share my
preference. Entrepreneurship involves more stress than some people
prefer. Different strokes for different folks. If you want to be self-
employed and own all of your means of production and accept all of the
risk, you should do it, but most people prefer to pool risk with other
employees of an organization.
Natural selection is not a random process, because the surviving forms
are not random. In economic terms, the "fittest" are economic
organizations, not individual human beings. No one wants economic
reorganization to kill individual human beings, but we do want it to
dissolve organizations that don't satisfy free laboring consumers.
Jorge Timón
> @Jorge, It is difficult to discuss when we use different definitions. I
> will give you the translation so that we understand each other.
>
> (please dont use the word 'gains' differently than the way I defined it)
Sorry I thought I understood your "gain" vs "profit" definition.
> Competition: A property of the market, thus a property exterior to any
> company. To say that companies compete means they are affected by this
> common state.
>
>>I say that profits drive competition and ideally ...
>
> Companies are driven by profit(an interior property of the company).
> Because of their behavior, they enter into a state of competition.
>
>>You say that when there's profit to make, there will always be there.
>>That profits don't tend to zero by competition.
>
> No, Competition as a property of the market lowers profit.
> What I say is that due to the internal property of companies to serach for
> profit, they do everything to disallow the others from entering the market,
> ie disable the competition. Innovation is one of those ways(I will explain
> why even though i already did somehow.)
Ok, I disagree with this as well. Unless there's some form of
coercion, you can't prevent your competitors from copying your
innovations.
You cannot disable competition no matter how much profits encourage
you to try it.
This is without coercion. Or with a state that monopolizes coercion
and doesn't use it to benefit any private party.
> >From wikipedia:
>>"In contrast to a monopoly or oligopoly, it is impossible for a firm
>>in perfect competition to earn economic profit IN THE LONG RUN..."
>
> Jorge I gave you the link so as to give you a broad explanation of perfect
> competition. That doesnt mean I agree. Since you agree on the 'long run'
> part, I will show why this doesnt work exactly the way it says.
Thank you for the link anyway. It will help us discuss and it's very
interesting to me.
> Lets say it works this way and lets take only a sector of the economy
> called S and lets say that only one innovation event happened during this
> period. Also, lets agree that there is no difference in skill by the actors
> to simplify things.
>
> A->B->C
>
> What it says is this. There are three states of this sector.
>
> In A and C all companies have zero profits.
> In B one of them , 'R' , is having profits. I could say that the others
> will have loses in this state but lets assume for some miraculus easons ,
> they have 0 profit.
>
>
> Since there is no difference in skill, in state A there is an equal
> possibility p for each company to innovate.
> In state C, we assumed that the others miraculusly managed to keep up.
>
> The difference now between the companies is that R has a surplus of money.
> May I ask then Jorge whether they have equal opportunity to innovate?
> Do they have the same ability to bride officials, to advertise their bad
> products etc?
Bride officials is only useful if the officials "sell you" coercion
based privileges.
In the long run, advertising won't be enough. The money for the
advertisements will be spent and the quality of the product is what
will count in the end.
But, yes, they could use the surplus to maybe research another
innovation and be ahead for more time.
> What happens in reality is that when someone innovates, he uses that power
> to block the others however he cans.
>
> In conclution, perfect competition(external property) can never exist if
> profits are the driving force of the economy.
I would say that is not possible if coercion is another resource to
trade within the system.
Still, profit is the driving force of production. The driving force of
the economy is demand.
> If it existed then if there is no innovation event, profits would be zero,
> thus the abandonment of the economy by investors, if an innovation event
> occured, that would be the end of perfect competition.
I deny this too. If the investors didn't have a way to perfectly store
abstract value (everlasting money-capital), if scarce money did have
demurrage, investors would invest even for zero profit.
According to Gesell and investor could, for example, build a house,
rent it and be happy to just equal with all received rents all
construction costs during the life all the building, with no profit
nor capital yield.
Apostolis Xekoukoulotakis
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Martin Brock
We want economic organizations that add value. We don't want
organizations subtracting value (consuming more value than they
produce), except organizations serving the disabled and the like.
A high price can signal coercion, but a price reflecting added value
is not a coercive price. Perfect competition does not result in every
organization pricing goods at cost, because free consumers prefer
organizations adding more value. A system compelling goods priced at
cost is highly coercive and also counterproductive.
On Jan 12, 6:11 am, Apostolis Xekoukoulotakis <xekou...@gmail.com>
wrote:
> as problems.
> a> Power gives people the ability to coerce. Thus having rules that stop
> coercion are useless if there isnt a power to protect them.
> b> I have a broader definition of coercion. I think that whenever we are
> not in "perfect competition", we are forced to pay a product at a higher
> price than its actual cost(innovation included). On the other side poor
> people are forced to be paid low wages simply because they have no other
> choice.
>
> Do you know that it has been observed that for an economy(capitalist) to
> work well, it needs a percentage of people to be unemployed? My Prime
> minister has worked on this theory. http://en.wikipedia.org/wiki/NAIRU
>
> Anyway, this is a long discussion which we should make along the way as we
> work together. We dont have to agree right now.
>
>
>
>
>
>
>
>
>
>
> > 2012/1/5, Apostolis Xekoukoulotakis <xekou...@gmail.com>:
Jorge Timón
> The only differences we have are these although I think you aknowledge them
> as problems.
> a> Power gives people the ability to coerce. Thus having rules that stop
> coercion are useless if there isnt a power to protect them.
Yes, you're probably right. That's what I meant when I said that "the
state should monopolize coercion".
> b> I have a broader definition of coercion. I think that whenever we are
> not in "perfect competition", we are forced to pay a product at a higher
> price than its actual cost(innovation included). On the other side poor
> people are forced to be paid low wages simply because they have no other
> choice.
Let's distinguish between "perfect competition" the abstract model you
linked me to in wikipedia and "fulfilled competition" (feel free to
pick another term): a state of the market in which profits are zero
(what prefect competition markets tend to in the long run).
Are you including the profits of "unfulfilled competition" in coercion?
As Martin says, they can just be caused by added value that the
competitors aren't providing yet.
The poor people that are forced to be paid low wages may be suffering
a "lack of work demand".
> Do you know that it has been observed that for an economy(capitalist) to
> work well, it needs a percentage of people to be unemployed? My Prime
> minister has worked on this theory. http://en.wikipedia.org/wiki/NAIRU
>
> Anyway, this is a long discussion which we should make along the way as we
> work together. We dont have to agree right now.
That's interesting. I haven't read it deeply but it seems compatible
with Gesell's thought.
According to Gesell, there won't ever be enough factories for
everybody to work while they have to yield (like money) the basic
interest.
2012/1/12, Martin Brock <reston...@gmail.com>:
> A price higher than cost can reflect added value rather than coercion.
> We want economic organizations that add value. We don't want
> organizations subtracting value (consuming more value than they
> produce), except organizations serving the disabled and the like.
>
> A high price can signal coercion, but a price reflecting added value
> is not a coercive price. Perfect competition does not result in every
> organization pricing goods at cost, because free consumers prefer
> organizations adding more value. A system compelling goods priced at
> cost is highly coercive and also counterproductive.
I agree overall but...
Perfect competition (as in the wikipedia) results in zero profits on
the long run, because competitors will accept smaller and smaller
profits.
In perfect competition, goods end up being priced at cost. Not because
"it's their value" nor because of coercion, just through the force of
competition.
Apostolis Xekoukoulotakis
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Jorge Timón
> Companies can create great value to society without that being reflected in
> profits. In my opinion, it is the difference in value per cost between
> companies that creates profit. that is why i started talking about perfect
> competition, to make this remark clear. If we break the barriers such as
> patents and capital accumulation to a few, profits will decrease for
> companies but society will get more value.
I agree.
But any attempt to suppress profits is denying prices. Prices tell us
what people value and that is very important.
Profits are not the source of our pains but a symptom.
As you say, if patents and other barriers to competition disappeared,
profits would be lower but the society as a whole would be much
better. We should pay attention to profits for what they're trying to
tell us. Sometimes they're just telling us "this good is very valuable
but there's not enough people producing it". But other times they're
pointing with their finger to "illegitimate gains", to unfairness.
Whether are patents or the profits of a landlord when her state taxes
imported food, it doesn't matter. Someone is getting something she
doesn't deserve.
I don't want to fight directly against profits but I want anything
that prevents them from falling to disappear.
The same thing I want for the basic interest, an emergent quality of
markets based on flawed money, on capital money.
Most people just think I'm crazy: "For free market and against
capital? Give me a break".
> Recently I got inspired by this project.
> http://opensourceecology.org/wiki/Main_Page
Yes, I knew it. I watched some videos a some months ago. Quite cool.
There's a lot of other open hardware projects that make me very
optimist about the future.
http://www.arduino.cc/
http://en.wikipedia.org/wiki/RepRap
Apostolis Xekoukoulotakis
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On Jan 20, 2012, at 4:52 AM, Apostolis Xekoukoulotakis wrote:
> What about a market where the means of production is only considered an aditional cost of production, in other words, where consumers together with workers decide for the production and for the costs of such a production.
>
> There are still prices, there is still an incentive to be productive, and you are not afraid that this company will close because there are no profits, (even if it is valuable to consumers).
> There will be no advertisements, consumers wont try to fool themselves to buy more than they need, there will be no incentive to hide information about bad products etc. there will be no unemployment. People will just work less and production will be at full capacity, at what is needed.
>
> No wasted work, products.
> I really find it astonishing that consumers dont enter into a long lasting contract to provide them for some necessary goods.
>
Some consumers have this
http://en.wikipedia.org/wiki/Mondragón_Cooperative_Corporation
I think the key to their success has been the wage regulation.
Alex
Jorge Timón
> What about a market where the means of production is only considered an
> aditional cost of production, in other words, where consumers together with
> workers decide for the production and for the costs of such a production.
>
> There are still prices, there is still an incentive to be productive, and
> you are not afraid that this company will close because there are no
> profits, (even if it is valuable to consumers).
> There will be no advertisements, consumers wont try to fool themselves to
> buy more than they need, there will be no incentive to hide information
> about bad products etc. there will be no unemployment. People will just
> work less and production will be at full capacity, at what is needed.
>
> No wasted work, products.
> I really find it astonishing that consumers dont enter into a long lasting
> contract to provide them for some necessary goods.
You seem to be talking about cooperatives. They're fine. They can
share the profits among producers or sell cheaper.
Yes, people should consume more responsibly.
> What you say is that profits is a good way to guide investment. I say it is
> not required.
Then we disagree on this point.
Not only are good for guiding investments but also for signaling bad
regulations and flaws in the system.
Martin Brock
> what people value and that is very important.
> Profits are not the source of our pains but a symptom.
rent is the value of forcibly excluding others from a particular
resource. A monopoly rent exists where no effective competition
exists. A patent royalty is a pure, monopoly rent by definition,
because all of its value is a product of its uniqueness (the lesser
utility of competing, unpatented designs), though the patented design
is not scarce at all. The rent on a small parcel of land typically is
not a monopoly rent, because the parcel competes with practically
identical parcels nearby.
A profit by contrast is the difference between the market value of a
product and the cost of producing it. It is the entrepreneur's wage.
Profits are not the source of pain at all. They are the measure
successful economic organization (satisfying free producer/consumers)
and a source of endlessly growing wealth.
Libertarians debate the utility of various rents but generally oppose
monopoly rents.
Kurt Padilla
Martin,
By your terminology then, you would call the difference between a product's sale price and the cost to produce it, including wages for the workers who produced it, as collected by an employer, rent, no?
Kurt
Sent from my HTC Incredible 2.
Martin Brock
Interesting. I suppose corporations limiting executive compensation
this way could compete successfully in the U.S., but I wonder how much
business the Mondragon companies do with the state. The wiki article
doesn't say much about the ownership model.
Martin Brock
No. The difference between a product's market price and the cost to
produce it, including the wages of workers, is the profit. I used the
term "entrepreneur's wage" loosely. The entrepreneur doesn't receive a
"wage" <em>per se</em>. He pays wages.
If we define the entrepreneur's profit as a "wage", then your
statement is tautological, but economists typically distinguish
"profit" from "wage".
Rent is a product forcible exclusion. Profit is not necessarily a
product of forcible exclusion. It can be the product of organizing
resources to add more value, in the opinion of consumers, than
competing organizations of practically identical resources.
Apostolis Xekoukoulotakis
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Kurt Padilla
Martin,
But employment does involve forcible exclusion. The workers pay rent to their employer such that they might have his permission to work the means of production to which he holds the property rights. You call this rent the "entrepreneur's wage", but it doesn't really differ from what one might call a "landlord's wage" or a "patent holder's wage".
Kurt
Sent from my HTC Incredible 2.
Martin Brock
Yes, employees effectively rent the entrepreneur's resources, but
these rents aren't necessarily monopoly rent. Employees don't decide
what the products of an organization are worth. Consumers decide.
Employees negotiate wages in a competitive labor market before
consumers make this decision. The price of labor is independent of
consumer prices, because consumers are sovereign. Consumers have a
will independent of the will of employees and employers negotiating
wages.
No. What I called the "entrepreneur's wage" is not necessarily a rent.
An entrepreneur organizes resources, including the labor of employees,
and he sells the product of this organization. Two different
entrepreneurs might possess/employ identical resources but organize
them differently and produce different products with different market
values. One of these entrepreneurs profits more than the other, though
the rental value of their resources is the same.
An entrepreneur need not own productive resources. He may rent them
himself from others. An entrepreneur essentially rents his employees
for example. If an entrepreneur owns resources, then he essentially
rents the resources from himself, i.e. he bears the opportunity cost
of owning rather than renting. All of these rents are his costs. His
profit is the difference between the market value of his products and
these costs, and consumers alone determine this profit (in a
competitive, free market).
Productive resources don't organize themselves.
On Jan 20, 8:06 am, Kurt Padilla <kurt.padi...@gmail.com> wrote:
> Martin,
>
> But employment does involve forcible exclusion. The workers pay rent to
> their employer such that they might have his permission to work the means
> of production to which he holds the property rights. You call this rent the
> "entrepreneur's wage", but it doesn't really differ from what one might
> call a "landlord's wage" or a "patent holder's wage".
>
> Kurt
>
> Sent from my HTC Incredible 2.
Martin Brock
difference is crucial.
Kurt Padilla
The “entrepreneur’s wage” is monopoly rent. It comes from a monopoly over a given means of production via property rights from the state or a lease from a capital holder who does hold the property rights. In the absence of such a monopoly, the “entrepreneur’s wage” has no basis; the product of labor belongs entirely to the workers.
Entrepreneurs, employers, or whatever you call them often do work the means of production that they happen to control and for that they deserve a share of the product in proportion to the work that they contributed to produce it. Workers in worker-cooperatives recognize such organizational duties as work and compensate the workers who take on such roles accordingly. However, employing, selling temporary permission to workers to work otherwise idle machinery (or farmland, or whatever), in and of itself, is not work and therefore does not deserve compensation.
I see the difference between profit seeking and rent seeking. Workers in worker-cooperatives seek profit, or as they call it, surplus, among other things. Employers, to the extent that they desire others to work for them, consciously or not, seek rent.
Kurt
Of course, profit seeking and rent seeking are not the same thing. The
difference is crucial.
Martin Brock
No. What I'm calling the "entrepreneur's wage" and "profit" is not a
monopoly rent. Monopoly rents exist, but profit is not necessarily a
monopoly rent. We're discussing semantics here, but my use of
"profit", and the distinction I make between "profit" and "rent", is
standard among economists, including classically liberal economists.
"Rent seeking" is a term of abuse among liberal economists. Seeking to
satisfy consumers by organizing resources to produce goods that
consumers value is not rent seeking. It is profit seeking.
Again, two different entrepreneurs can employ the same resources,
including the labor of employees, with the same cost and produce from
these resources different products with different market prices and
thus earn different profits. Consumer preference, not coercion,
accounts for the difference. Even if coercion accounts for the
entrepreneur's cost of renting the resources, it does not account for
the difference between these costs and what consumers freely pay for
the products.
The entrepreneur himself is a worker. He assembles the resources into
a productive organization. His customers are his employers. The profit
is the marginal value of his contribution.
Of course, the difference between cost of production and the market
value of produce can reflect monopoly rents if a particular
organization has a forcible advantage over other producers, but
profits are not rents or monopoly rents in general.
If workers want to own their means of production and accept the
entrepreneurial risk, that's fine with me. If a group of workers wants
to incorporate somehow and own particular resources collectively,
that's also fine with me. They'll still need people doing the work of
entrepreneurs.
Entrepreneurs routinely buy temporary permission to use otherwise idle
machinery. An entrepreneur may also choose to own machinery. An
employee owned corporation has the same options. The rental business
involves a lot of work.
I desire everyone producing goods that I consume to work for me, and I
expect also to work for them.
If a company does not sell enough of its product to make a profit, are
you saying that employees should be liable for the loss? Employees
should give back a portion of their wages?
Apostolis Xekoukoulotakis
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Jorge Timón
>> Profits are not the source of our pains but a symptom.
>
> Here, you seem to confuse profits with rents (or monopoly rents). A
> rent is the value of forcibly excluding others from a particular
> resource. A monopoly rent exists where no effective competition
> exists. A patent royalty is a pure, monopoly rent by definition,
> because all of its value is a product of its uniqueness (the lesser
> utility of competing, unpatented designs), though the patented design
> is not scarce at all. The rent on a small parcel of land typically is
> not a monopoly rent, because the parcel competes with practically
> identical parcels nearby.
>
> A profit by contrast is the difference between the market value of a
> product and the cost of producing it. It is the entrepreneur's wage.
> Profits are not the source of pain at all. They are the measure
> successful economic organization (satisfying free producer/consumers)
> and a source of endlessly growing wealth.
>
> Libertarians debate the utility of various rents but generally oppose
> monopoly rents.
What I'm saying is that rents may be confused with profits. If profits
don't drop by competition they're rents. Silvio Gesell (quite
libertarian, although most austrians insult him calling him Keynesian)
said that basic interest and certain part of the profits from land are
rents. He also said that money transfers its capital quality to the
complex projects that need financing through the basic interest. If
money wasn't capital, producing goods would not be capital neither.
Therefore, is it possible to have free market without capitalism.
If you're interested on his thoughts:
http://www.community-exchange.org/docs/Gesell/en/neo/
--
Jorge Timón
Jorge Timón
> Jorge, have a read on this. Read parts of it or all of it if you like it or
> have time.
> http://softwareandsilicon.com/
>
> http://en.wikipedia.org/wiki/Pieter_Hintjens
>
> Pieter is an open source activist whose software is used by banks to do
> trades on the New York Stock exchange.
> He talks about serious matters in a comedian way.
> He is also a good singer, lol.
> http://www.youtube.com/watch?v=XiitAbKbA3g
I don't think he's a good singer but thank you for the links, he seems
an interesting guy.
Martin Brock
>If profits don't drop by competition they're rents.
markets are dynamic. Entrepreneurs compete to provide goods at lower
cost in order to profit more, and they also compete to provide new and
different goods at a higher profit than current goods. Because this
competition benefits consumers in a free market, profits never fall to
zero. Free consumers want producers to profit.
>... basic interest and certain part of the profits from land are rents.
Land rent is possible only because an owner monopolizes use of the
land; however, a portion of the value of a parcel of land can reflect
a man's improvements, and a corresponding portion of the rental value
of the land reflects the improvements. This portion of the value of
the land is the man's profit, not a rent.
Suppose you and I obtain identical parcels of land with identical
rental value. After we improve our respective parcels, your parcel
fetches a higher price than mine. Assuming that we invest other
resources with the same value in our improvements, your profit exceeds
mine, but this difference is a consequence of the preference of free
consumers, not the coercion securing our monopoly over the parcels.
Interest plays many roles, and rent isn't really one of them, because
money has no intrinsic value and so has no rental value.
When you "borrow money" to buy a house, you don't really borrow the
money. You borrow the house or a portion of the house that you don't
yet own, and you pay rent on it. The house has a rental value, not the
money. A portion of the "interest on money" is this rental value of
the house.
When someone extends you credit to buy a house, he risks a loss
associated with your possible default. Part of the "interest on money"
is an insurance premium insuring the creditor against this loss.
Extending credit itself is a costly business requiring much labor and
other resources. Part of the "interest on money" pays for these
resources.
And different creditors compete to extend credit more effectively and
thus to provide consumers of their service more value. Part of the
"interest on money" is the profit that more effective creditors earn
by satisfying consumers more.
>If money wasn't capital, producing goods would not be capital neither.
capital, but money itself is not capital. Capital is a means of
production, like the land used to grow crops.
>Therefore, is it possible to have free market without capitalism.
is possible without capitalism. A capitalist owns productive means.
Someone must own productive means. If the state owns all means of
production, then we have one, incredibly wealthy capitalist, and we
all rent capital from it. If you think that many independent
capitalists competing for your loyalty exploit you, try a world with
only one.
Employees of a corporation can own all of the company's stock. I've
worked for such a corporation myself, but I wouldn't compel everyone
to work for such a corporation. This ownership model is not all it's
cracked up to be.
Jorge Timón
Capital would be means of production that present rent. A profit that
is sustained by the effect of basic interest in the financial market.
Money is not always capital, but gold, for example is capital-money
and has rents.
Anyway, this discussion is complex and I would prefer that you read
Silvio Gesell's book and tell me what assumptions or reasonings are
wrong before continuing. Most of the austrians I've discussed this
issue with don't understand Gesell's viewpoint and I don't have the
energy to repeat the same things again.
http://www.community-exchange.org/docs/Gesell/en/neo/
2012/2/12, Martin Brock <reston...@gmail.com>:
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Jorge Timón
Martin Brock
>is sustained by the effect of basic interest in the financial market.
using a resource.
A parcel of land is valuable to me as soon as as I effectively exclude
others from using it without paying me for the privilege, even if I
never improve the land and only bear the cost of excluding others from
its use.
If I add to the value of a parcel by improving the land by my own
labor, to make it more useful for some purpose, then the added value
is not a "rent" in this sense, even if I charge more nominal "rent" as
a consequence; however, if someone other than me receives the value I
add by excluding others from its use, without compensating me, then
the added value is a "rent" again.
I could also say that additional rent that I may charge as a
consequence of adding value with my labor is proper rent and that
other rent is improper.
Again, as a practical matter, "interest" describes the many things
summarized above, particularly the rental value of collateral securing
credit.
Also, as a practical matter, rents reflecting value added by a laborer
are difficult to distinguish from rents reflecting only the force of
statesmen. I certainly acknowledge this difficulty.
>Money is not always capital, but gold, for example is capital-money
>and has rents.
words mean only what people mean by them; however, in more recent
usage, gold is not money. Gold is a valuable commodity that can be the
standard of value for extending credit, and promissory notes
accounting for credit are money. I use "money" strictly in the modern
sense, to avoid confusion.
Under a gold standard, interest is not the rental value of gold
primarily, if at all.
>Anyway, this discussion is complex and I would prefer that you read
>Silvio Gesell's book and tell me what assumptions or reasonings are
>wrong before continuing.
I can't read them all, but I'm scanning Gesell's chapter on Basic
Interest now. He writes, "Whether interest, as the socialists aver, is
the result of forcible appropriation, of an immoral abuse of economic
power, or whether, on the contrary, the orthodox economists are right
in ascribing it to the economic virtues of order, industry and thrift,
is of little importance to the dispossessed workers, to the
proletariat which has to bear the burden of interest."
Again, the rental value of collateral securing credit is a major
constituent of what we typically call "interest on money", and "rent"
by (my) definition is the value of forcibly excluding others from
using a resource without a proprietor's consent. Rent need not be a
consequence of any value the proprietor himself adds to the property,
so I see some room for agreement with Gesell; however, I see no way
around some rent as a practical matter. "Necessary evil" is a
contradiction in terms, so rent is not fundamentally immoral. Limited
entitlement to rent is necessary, so it is not evil. The question is:
what are the proper limits?
I pay interest on a home mortgage precisely to compensate workers that
build the house, not to exploit them. Other actors in the economy
possibly exploit workers in some sense, but I don't see how these
workers receive timely compensation for their work if I don't pay
interest on the mortgage.
>Most of the austrians I've discussed this issue with don't understand Gesell's
>viewpoint and I don't have the energy to repeat the same things again.
speaking. Ultimately, I'm a Martinist and nothing else.
Martin Brock
Gesell writes, "The merchant can therefore force the possessors of
wares to make him a special payment in return for the fact that he
refrains from arbitrarily postponing, delaying, or, if necessary,
preventing the exchange of wares by holding back his money."
Gesell apparently refers to creditors hoarding a standard of value.
This hoarding is a weakness of a gold standard, particularly when gold
is a statutory legal tender, i.e. when statesmen require all creditors
to accept gold and all debtors to pay in gold, regardless of the terms
of specific contracts. I make this point myself frequently at
freebanking.org.
Without a gold monopoly, creditors accepting promises of gold have no
similar power, because people do not promise gold when gold becomes
scarce. They promise something else instead, silver for example. If
creditors hoarding gold drive their obligors into bankruptcy, they
only hurt themselves, because people then prefer to pay in silver
notes or notes promising something else.
Jorge Timón
I exclude profits.
Gold is still money. In some places is used directly for commerce and
is also an international currency. But I don't like the people that
(like JP Morgan) say "Gold is money, everything else is credit". USDs
are definitely money today. I don't like the distinction some
austrians make between "money" and "currency".
I said gold because it has the properties of the money Gesell
criticized, namely being scarce and non perishable. If I said dollars
you could say that dollars perish rot by inflation, and I would have
had to say "nominally perishable".
About the interest being caused by risk...
This is the formula that summarizes Gesell's view:
Real interest = basic interest + inflation premium + risk premium
Gesell only identified the basic interest as a rent. For more on this:
http://www.community-exchange.org/docs/Gesell/en/neo/part5/7.htm
The sentence you picked from Gesell is not particularly interesting. I
would say is intended to convince the the proletariat that Marx
approach was wrong more than anything else, but it says nothing about
his theory on interest and hasn't any interest for our conversation.
I still recommend you the book. Although I don't fully agree with
Gesell's views (I don't want the state to issue money, for example),
his viewpoint is very original, consistent and unfairly ignored by
both Austrians and Keynesians.
Are you martinist? Seriously?
http://en.wikipedia.org/wiki/Martinism
2012/2/13, Martin Brock <reston...@gmail.com>:
Jorge Timón
If everybody uses the same material (even paper money) the same
properties apply.
He doesn't mean creditors and debtors. He means merchants and producers.
He means the wares (in a very general sense that includes labor) need
to pay a tribute to money for reaching the customers and that tribute
is the source of basic interest. Don't confuse it with the wage of the
merchant, that should be accounted separately.
2012/2/13, Martin Brock <reston...@gmail.com>:
Martin Brock
how they can be eliminated altogether. No one earns the value of land
in its natural state, for example, but granting titles to this land is
nonetheless useful, because the titles create a market in the land. A
market in capital is the only effective means of allocating capital to
its most productive use.
>Gold is still money. In some places is used directly for commerce and
>is also an international currency. But I don't like the people that
>(like JP Morgan) say "Gold is money, everything else is credit".
Morgan's idea is archaic. I like Ron Paul, but I differ with him on
this score.
>USDs are definitely money today. I don't like the distinction some
>austrians make between "money" and "currency".
Money is anything that I accept from you only to exchange it later for
something else. Money is "currency", cause I accept from you a
quantity of money reflecting our current assessment of the value of
the good I surrender.
>I said gold because it has the properties of the money Gesell
>criticized, namely being scarce and non perishable.
value for extending credit. Ideally, a standard of value is common,
perishable, has an elastic supply and is valued primarily as a
consumption good. I often debate hard money advocates on this point.
>If I said dollars you could say that dollars perish rot by inflation,
>and I would have had to say "nominally perishable".
currency, but state money depreciates because of counterproductive
state spending, and I do have a problem with counterproductive state
spending.
Notes promising milk would have depreciated over the last century,
because the cost of producing milk and delivering it to market fell.
Milk consumers paid lower prices, so a note promising a gallon of milk
would have fallen in value. This sort of inflation is cause for
celebration.
>This is the formula that summarizes Gesell's view:
>Real interest = basic interest + inflation premium + risk premium
collateral securing credit and also incorporates the costs of
extending credit (paying accountants, actuaries, bank tellers and the
like) and the creditor's profit. I have no fundamental problem with
any of these things, but monopoly rents are always questionable.
I'm a different Martin. This other guy's Martinism is a vulgar bore,
but mine is the height of erudition, of course.
Martin Brock
else that you wish to obtain from someone else who will accept the
gold or my note, and you may accept it. Anything we exchange this way
is money. At various times, one money is more common than others, but
people use many things as a medium of indirect exchange, unless a
state imposes a monopoly.
>If everybody uses the same material (even paper money) the same properties apply.
forcibly.
>He doesn't mean creditors and debtors. He means merchants and producers.
frontier, the proprietor of a general store was often your creditor.
No financial intermediary issued promissory notes. You promised the
merchant some gold or whatever after your harvest, and he made a note
in his accounting ledger. Often, no one in a settlement had any gold.
>He means the wares (in a very general sense that includes labor) need
>to pay a tribute to money for reaching the customers and that tribute
>is the source of basic interest.
standard is sufficiently scarce, people effectively must rent the
standard for the duration of a loan, rather than obtaining it as
needed to make installment payments; however, interest plays other
roles as well, and this monopolistic role is not the most significant
in my neck of the woods. At least, it hasn't been for a long time.
Nowadays, the taxes I pay directly to statesmen are far heavier.
Jorge Timón
>>In my lexicon rent is something closer to "unearned income". Note that I
>> exclude profits.
>
> I accept "unearned"; however, unearned rents have a place. I don't see
> how they can be eliminated altogether. No one earns the value of land
> in its natural state, for example, but granting titles to this land is
> nonetheless useful, because the titles create a market in the land. A
> market in capital is the only effective means of allocating capital to
> its most productive use.
Yes, I understand that. But I think taxes on land (ala Georgism) is
probably the most legitimate form of tax. But skip the first two parts
of "the natural economic order", let's focus on money.
>>Gold is still money. In some places is used directly for commerce and
>>is also an international currency. But I don't like the people that
>>(like JP Morgan) say "Gold is money, everything else is credit".
>
> Gold is still a medium of exchange in some contexts, but I agree that
> Morgan's idea is archaic. I like Ron Paul, but I differ with him on
> this score.
Actually Ron advocates for a free monetary market. But, yes, I guess
that like many austrians he believes that precious metals would win
that one.
>>USDs are definitely money today. I don't like the distinction some
>>austrians make between "money" and "currency".
>
> I'm not familiar with this distinction.
Listen to Mike Maloney, for example.
> Money is anything that I accept from you only to exchange it later for
> something else. Money is "currency", cause I accept from you a
> quantity of money reflecting our current assessment of the value of
> the good I surrender.
Totally agree.
>>I said gold because it has the properties of the money Gesell
>>criticized, namely being scarce and non perishable.
>
> Right. I sometimes suggest fresh, Grade A, Whole Milk as a standard of
> value for extending credit. Ideally, a standard of value is common,
> perishable, has an elastic supply and is valued primarily as a
> consumption good. I often debate hard money advocates on this point.
Interesting point. Why the standard of value must be perishable. Why
can't it be for example oil?
I'm really curious about how you've arrived to that conclusion.
>>If I said dollars you could say that dollars perish rot by inflation,
>>and I would have had to say "nominally perishable".
>
> I agree. I have no fundamental problem with a slowly depreciating
> currency, but state money depreciates because of counterproductive
> state spending, and I do have a problem with counterproductive state
> spending.
Do you have any problems with money with demurrage like Gesell's
free-money/freigeld (well, that demurrage goes to the state) or
http://www.freicoin.org/ ?
> Notes promising milk would have depreciated over the last century,
> because the cost of producing milk and delivering it to market fell.
> Milk consumers paid lower prices, so a note promising a gallon of milk
> would have fallen in value. This sort of inflation is cause for
> celebration.
That's what many austrians think about deflation. What are your
thoughts on deflation?
>>This is the formula that summarizes Gesell's view:
>>Real interest = basic interest + inflation premium + risk premium
>
> With this formulation, basic interest incorporates the rental value of
> collateral securing credit and also incorporates the costs of
> extending credit (paying accountants, actuaries, bank tellers and the
> like) and the creditor's profit. I have no fundamental problem with
> any of these things, but monopoly rents are always questionable.
You mean the bank costs (and profits). That's excluded too.
You may argue that then basic interest doesn't exists. But he argues
that it's in fact relatively constant through history. If you don't
have the time to read the 3 parts about money, this is probably one
the most important chapters:
http://www.community-exchange.org/docs/Gesell/en/neo/part3/11.htm
Martin Brock
>probably the most legitimate form of tax. But skip the first two parts
>of "the natural economic order", let's focus on money.
two reasons. First, the unearned value of undeveloped land varies, so
taxing only this value is not straightforward. The taxing authority
must distinguish earned value from unearned value and will ultimately
tax earned value. Second (and more importantly), undeveloped land is
not the only resource with unearned value. Many other forms of
capital, including intellectual property and hereditary title, involve
unearned value.
I favor a progressive consumption tax instead, with disputes over the
definition of "consumption" settled by common law.
>Actually Ron advocates for a free monetary market.
effectively permits gold or silver exclusively as a legal tender. I
oppose any legal tender imposed over the terms of contract, but if the
state imposes a legal tender, I don't want it to be either gold or
silver, and I certainly don't want it to be gold exclusively.
>Why the standard of value must be perishable. Why can't it be for example oil?
discusses. A durable standard with inelastic supply is subject to this
problem. A perishable standard with elastic supply is not. A powerful
few could monopolize all means of producing the standard, but in this
case, the supply is not elastic by definition.
Hoarding a perishable good with elastic supply is self-defeating, so
creditors can't effectively charge rent on the standard. A debtor
obtains the standard from a producer as needed to pay his debts. He
does not obtain the standard from a creditor or system of creditors
that may hoard it.
Basically, any perishable good that a common laborer can produce is a
proper standard of value for extending credit in my way of thinking.
With this sort of standard, unemployment hardly exists by definition,
since any common laborer may produce this standard and pay his debts
with it.
If many people are producing the standard and its value is falling,
creditors will employ these people to produce something else. This is
essentially what I want monetary policy to do, so if I wanted a legal
tender, I'd want this sort of legal tender.
Hoard oil is more difficult that hoarding gold, but monopolizing the
means of producing a valuable good from oil is certainly easier than
monopolizing common labor.
>Do you have any problems with money with demurrage like Gesell's
>free-money/freigeld (well, that demurrage goes to the state) or
>http://www.freicoin.org/?
fundamental problem with debtors collecting it.
As a minarchist, I accept the utility of limited, forcible propriety,
but I do not assume that the enforcers are good guys. They're just
guys entitled to use force, and they must be checked.
Forcible property rights are supposed to be "proper", but that's just
a word. In practice, forcible property rights are whatever the
enforcers say they are, and they're often counterproductive in
reality.
>That's what many austrians think about deflation. What are your
>thoughts on deflation?
with money. I accept money only to exchange it for something else, not
to hold it. Money itself is not an investment, definitively in my way
of thinking. Since people hold appreciating goods and sell
depreciating goods (other than consumption goods), an appreciating
good cannot be money.
If a standard of value appreciates very much, it ceases to be standard
of value, because creditors holding it prefer to risk something else
and people seeking credit prefer to promise something else.
>You may argue that then basic interest doesn't exists.
borrowers must actually hold the standard (some of it at least) for
the duration of a debt, rather than obtaining it as needed to service
the debt, then I argue that basic interest should not exist. I also
argue that this interest does not exist much in contemporary finance;
however, I don't like the central banking solution to the problem.
Marx and other state socialists led socialism down the wrong path in
this regard.
Needless to say (around here I suppose), nineteenth century, American
mutualists like Benjamin Tucker called themselves "socialists", but
these people are the ideological forebears of today's "anarcho-
capitalists". Politics does strange things to the language.
Jorge Timón
>>Yes, I understand that. But I think taxes on land (ala Georgism) is
>>probably the most legitimate form of tax. But skip the first two parts
>>of "the natural economic order", let's focus on money.
>
> I understand the logic of the "single tax", but I don't accept it for
> two reasons. First, the unearned value of undeveloped land varies, so
> taxing only this value is not straightforward. The taxing authority
> must distinguish earned value from unearned value and will ultimately
> tax earned value. Second (and more importantly), undeveloped land is
> not the only resource with unearned value. Many other forms of
> capital, including intellectual property and hereditary title, involve
> unearned value.
Yes, determining the tax for each peace of land doesn't seem as easy
as Gesell describes to me. I agree.
But the second reason... Yes, basic interest would be the main other
source of "unearned value", the one I'm most concerned with.
Legacies are not "unearned value", Your elder earned it and gave it to you.
I'm directly against so called "intellectual property". The term
itself is misleading as Richard Stallman can explain you.
Also, it doesn't deserve to be called property, since its origins and
purposes are completely different:
http://www.gnu.org/philosophy/not-ipr.en.html
http://mises.org/journals/jls/15_2/15_2_1.pdf
> I agree, but he also interprets the constitution in a way that
> effectively permits gold or silver exclusively as a legal tender. I
> oppose any legal tender imposed over the terms of contract, but if the
> state imposes a legal tender, I don't want it to be either gold or
> silver, and I certainly don't want it to be gold exclusively.
Well, we agree we want a free monetary market. But I don't know, maybe
for fines, taxes, etc. it is necessary.
But we both want a free monetary market, that's the important thing.
>>Why the standard of value must be perishable. Why can't it be for example
>> oil?
>
> A perishable standard avoids the hoarding problem that Gessel
> discusses. A durable standard with inelastic supply is subject to this
> problem. A perishable standard with elastic supply is not. A powerful
> few could monopolize all means of producing the standard, but in this
> case, the supply is not elastic by definition.
>
> Hoarding a perishable good with elastic supply is self-defeating, so
> creditors can't effectively charge rent on the standard. A debtor
> obtains the standard from a producer as needed to pay his debts. He
> does not obtain the standard from a creditor or system of creditors
> that may hoard it.
>
> Basically, any perishable good that a common laborer can produce is a
> proper standard of value for extending credit in my way of thinking.
> With this sort of standard, unemployment hardly exists by definition,
> since any common laborer may produce this standard and pay his debts
> with it.
>
> If many people are producing the standard and its value is falling,
> creditors will employ these people to produce something else. This is
> essentially what I want monetary policy to do, so if I wanted a legal
> tender, I'd want this sort of legal tender.
>
> Hoard oil is more difficult that hoarding gold, but monopolizing the
> means of producing a valuable good from oil is certainly easier than
> monopolizing common labor.
Really interesting thought. I like the idea of denominating ripple
IOUs in real consumable products. But I was thinking that each one
would use the things they can produce as denomination instead of
everyone using a standard.
I was almost convinced that an unelastic cash (with demurrage, so
freicoin) combined with highly liquid credit systems like Ripple was
the way to go but probably I should put more thought into your
proposal.
>>Do you have any problems with money with demurrage like Gesell's
>>free-money/freigeld (well, that demurrage goes to the state) or
>>http://www.freicoin.org/?
>
> I have a problem with the state collecting it, but I don't have a
> fundamental problem with debtors collecting it.
You mean negative interests? No, it's not that. The point is to pay
the demurrage when you hold the money, not when you lend it.
In freicoin, the demurrage goes to miners (the people that maintain
the network secure) instead of the state.
There wasn't proof of work chains (bitcoin) when Gesell proposed freigeld.
>>That's what many austrians think about deflation. What are your
>>thoughts on deflation?
>
> Basically, deflation (appreciation of the standard) is inconsistent
> with money. I accept money only to exchange it for something else, not
> to hold it. Money itself is not an investment, definitively in my way
> of thinking. Since people hold appreciating goods and sell
> depreciating goods (other than consumption goods), an appreciating
> good cannot be money.
>
> If a standard of value appreciates very much, it ceases to be standard
> of value, because creditors holding it prefer to risk something else
> and people seeking credit prefer to promise something else.
Good not to hear "There's no problem with deflation" or something similar.
It's me or some bitcoiners (and other austrians) prefer sound money over logic?
https://bitcointalk.org/index.php?topic=11627.0
>>You may argue that then basic interest doesn't exists.
>
> If basic interest is the rental value of the standard of value, if
> borrowers must actually hold the standard (some of it at least) for
> the duration of a debt, rather than obtaining it as needed to service
> the debt, then I argue that basic interest should not exist. I also
> argue that this interest does not exist much in contemporary finance;
> however, I don't like the central banking solution to the problem.
> Marx and other state socialists led socialism down the wrong path in
> this regard.
Even if central banking suppresses basic interest (which I doubt), it
introduces new problems that are probably worse.
Gesell is very critic with Marx, on the other hand, it defends Proudhon.
Gesell doesn't identifies the financial market as the source of
interest but commerce. Is the "tax" wares (including labor) must pay
to get to the market.
> Needless to say (around here I suppose), nineteenth century, American
> mutualists like Benjamin Tucker called themselves "socialists", but
> these people are the ideological forebears of today's "anarcho-
> capitalists". Politics does strange things to the language.
Yes it does. Words get "dirty". Socialism is a dirty word in the USA
just like Capitalism is a dirty word for most people in Spain.
I would probably define myself as a "free market anti-capitalist" or
something of the sort. Not like Kevin Carson, he doesn't see any
problem with basic interest.
--
Jorge Timón