In this thread, let's explore all sorts of different bold ideas from the past about economics. The ideas may seem strange, or not. I hope that this can expand our worldview and broaden our thinking. Please keep posts reasonably concise.
The most interesting thing I ever came across was Christophe who became the first "King" of Haiti around 1800. At the time the English, French and Spain all had various claims on the island. The French and it appears more from frustration than anything else abandoned Haiti to leave it to Christophe and Peiton (I believe that was his name) since they had taken all the wealth of the island they thought the plantation owners or the slaves would overthrow Christophe in very short order and the French could retake the island to open arms. There was nothing available in the way of currency or script so Christophe declared gourds as all belonging to the government (him) and had his soldiers go out and gather up all the gourds on the island and then informed the island that the gourd was the only currency acceptable for trade. Any one not accepting the legal currency of the island could be shot so people readily accepted gourds as their currency. Today in Haiti there currency is still called the gourd.
People have enjoyed coins that were silver and gold. These had real value to them. People don't like script because they know inherently that it has no real value. The Roman soldier was paid in salt where the term "worth his salt" originated. When Rome went to script Romans would no longer serve and the Roman army was then composed of Franks, Goths, Huns and stragglers of every other nation. This was the end of Rome. After WW1 the German hyperinflation took hold where wheelbarrows full of script were wheeled down the street to buy groceries. When Hitler took power he created his own mark and people very quickly learned that they accepted marks or they were shot. The British under Chamberlain laughed at Hitler as they "knew" that Germany was broke and it would never be a threat to anyone.
Anytime that a nation has put forward a currency that was not of value ( some type of script) that nation began to have economic problems.
I loved the post by John about the 'Gourd' currency, so bizzare it made me smile! Stranger than fiction in some ways?
I know of one bold idea.
During colonial times in India during the 20th century when India was seeking independence from British rule, Ghandi, the leader of peacful protest and opposition to colonial dominance and its stranglehold of Indian resources made the following appeal to all Indian citizens: Ghandi asked every Indian to spin their own yarn on small, highly portable hand held devices. This was because India, like so many third world producers even today was exporting most of her raw materials abroad (in this case to Britain to be spun into cloth in her mills) rather than 'adding value' by processing into finished products.
These mini spinning devices could be used while walking or doing other things. I'd need to research further as to whether the results were merely symbolic or produced a result that shook the complacency of their colonial rulers. Either way to me it symbolises the need for countries to be bold and add value to their raw materials rather than let the fat cats get all the cream.
Fair Trade products are going some way to achieving this but does it take political will and pressure on them (government) from individuals in the industrialised countries to make things more equitable?
A difficult one? If anyone knows more about the Indian spinning thing I'd love to hear about it.
This post was modified from its original form on 09 Feb, 3:30
We think of money as something like gold -- something we can own and hoard. If we would think of money as an exchange of labor, we would have a clearer idea of both money and the value we create.
Why not admit that wealth is based on labor and key units of labor to money -- not such a difficult task with computer aid. Money, exchange value, is not about useful objects or intrinsic values -- it is by its nature arbitrary. We do not exchange, ultimately, gold or diamonds, or even designed pieces of paper. What we are ultimately exchanging is the labor put into objects/ideas/resources that makes them useful or otherwise objects of desire. Why not get rid of this fiction of saying it is otherwise which only leads to poor resource management and insane worship of a place holder?
Hi Libramoon, your ideas sound very much along the lines of Marx's labour theory of value. By contrast, believers in the market would say that (marginal) supply and demand in the market are what determines the price, and they would say that this gives the best allocation of scarce resources. One of the problems with the current market approach is that it ignores externalities, such as pollution and climate change impacts. I wonder whether the labour theory of value might need to consider that same issue.
Economics for a Small Planet
The enormity of the economic chaos that sits before us is something that the majority of the planet did not cause nor did they have any action toward creating. Those few who predisposed the population of the planet to their whims, incompetence and greed are the same ones who will be the least affected by the current situation. There may be some who will have a lessening in status but on the whole this will merely be a chance for them to make money.
The situation as it currently stands is that companies have no credit lines to banks to extend their already overextended credit lines. The banks that they borrow from are entrenched in their own debts having floated millions, billions and even trillions of dollars and have no ability to lend and have required bail outs from government to even stay in business. The financial gurus tell you that it is merely cyclical economics and it has to happen for the markets to correct themselves. Governments are borrowing against the potential of their populations to pay off future debts that the government is shopping in the world market place. These governments of the world are committing their populations to a type of indentured servitude that they call taxation in order to borrow more money. This potential of the population to pay in the future is simply a hidden futures market and it is being bartered in the same way that other bonds, debentures, options, warrants and asset backed commercial paper has been shopped in the past. The US government has now pledged almost an equivalent amount to the national debt in the past few months. This does not even take into account the hundreds of trillions of dollars in commercial paper whereby the taxpayer is the ultimate source of final payment.
This is a drastically simplified view of the situation as there are thousands and thousands of economists and students who have written treatises on the current state of the economy and how they have isolated the causes. The current solution to the problem has been to borrow and borrow and borrow. This is somehow sound economics.
The borrowing and selling of future potential creates debts and further debts. The Western world has been duped into the belief that you should buy now whether you can afford it or not. The idea of saving money and purchasing something when you have bargaining power (as in cold hard cash) has become a thing of the past that you can see in old movies but really has nothing to do with the real world.
Economics as it is practised today is merely a method of manipulation of debt and credit. The basis of it lines the pockets of private banks usually under the guise of being how money is created for your benefit. In the US it begins with an entry in a ledger saying that the US Treasury owes the Federal Reserve (a private bank) seven hundred billion dollars. Then the Fed sends some paper to the US Treasury and they in turn send an order to print seven hundred billion dollars to the mint. They print this amount and hand it out to the friends of the private bank to put it into circulation. When all is said and done and those funds are retired from circulation then they go back to the US Treasury and the paper is returned to the Fed plus interest. So, in essence the Fed will make a couple of billion out of allowing the US Mint to print money to go into circulation.
Again this is not an in depth description of the entire process but a brief overview so there is an understanding of the process. Economics is actually a very simple subject. It has one basic datum. Produce the illusion that money has a value to individuals.
What is money? Money is very simply a medium of exchange. Money is given an arbitrary value against fluctuating rates for each commodity in which it can be purchased by any individual. Money is a very easy to transport and it benefits individuals in that they don't need to locate a car salesman that needs his house painted, accounting done, security services for his house or business or three hundred bushels of wheat in order to purchase a new car. People exchange money back and forth because they have confidence that these pieces of paper have value. If I took a picture of George Washington and glued it onto a piece of paper would it be accepted as one dollar? Perhaps by one extremely feeble minded but by no one else. If I gave you the same item and you knew that I was worth a significant amount and I wrote on the paper that I would honour this debt and give back at least the equivalent of one dollar in currency of your choosing, silver or gold would you do it? For most individuals they would look at the situation and evaluate it for themselves as to whether it was worth the risk that they would be repaid. Someone who knew me personally would have no difficulty in accepting this as they would have confidence in my ability to repay. Someone who didn't know me would be factoring in details or risk against reward, their need to move a certain commodity, and what ever other factors that they needed to evaluate the situation.
The US government have dollar bills throughout the planet with their pledge that these pieces of paper have value. What is backing the dollar that they can make this pledge? The future earning potential of American citizens is the stock in trade. The US government is the largest debtor in the history of the planet. It has created more debt in this century than in its previous existence. In my example above where I pledge to redeem a dollar it is someone who either is willing to take the chance on my integrity or someone who knows me who will accept that dollar. In the case of the US government everyone accepts those dollars, yet this is an organization that is broke and in more deb
Monica your steady state economy is essentially a fascist based economy. That may sound extreme but it is my viewpoint on it. It is a world in which all is dictated by the government and I'm sure you are well aware of the bang up job they have been doing for the last number of years.
If you go back into Keynes this nut wanted what the US currently has a tiered society where those at the top merely ruled those down the line as they were the miserable masses and they were there to work to support those on top so those on top (including Keynes) could drive solid gold Cadilacs because no one outside of those on top would even want such a car. The boys with the ecological based economics are on more of a right track as one must take care of the planet. However, they are so steeped in Keynesian economics that they are trying to fit their model into "standard economics". The only problem being is that "standard economics" does not work. It creates periods of growth and periods of chaos exactly as it was intended to do. It works like this so the rich can get richer and anyone stepping outside of their tiered life can be knocked down a few pegs to their rightful spot.
By the way I wouldn't mind having a solid gold Cadillac.
John - to reply to some of your points:
"It is a world in which all is dictated by the government" - I don't think so.
"I'm sure you are well aware of the bang up job they have been doing for the last number of years"
- that's why steady-state economists, and many others, want change.
I think that there may be a number of political systems in which a steady-state kind of economics can flourish. Perhaps we can turn our minds to this, in association with the group's interest in economics.