CORRECTION: A previous version of this article uncritically repeated David Graeber’s claim that government debt is inversely correlated to private sector debt. I was presented evidence that contradicted this claim, so I edited the article.
In your example of the village with the apple tree and 300 people - if some jerk called Elon nicked 250 apples he wouldn't last long in the village. The people wouldn't stand for it (or, as per your monopoly board, they would stand - they wouldn't bend over and take it, let's say). He would be taught a lesson, and if he repeated his unsocial behaviour then he'd be ostracised...
At present, money is an undefined, irrational, and thus, unscientific measurement system. That makes no sense to an engineer (retired) who specialized in metrology (the science of measurement), knowing all our other measurement units have evolved historically as “fixed amounts” of something measurable, which are available for public comparison, and now have unprecedented precision, based on such technological marvels as laser interferometers and caesium atomic clocks.
Despite the fact that, in whatever form it appears, money always carries just two simple markings, a numeral and a symbol, defining money seems to defeat us. Our humble Australian one dollar coin ($1) is stamped with the numeral “one” and the symbol ($), of which only the latter requires either definition or, in its absence, interpretation, but our Australian government (like all others) refuses to provide either a definition or an interpretation of that fundamental symbol. It wont specify the “value” of this currency unit, and has only ever passed a “Currency Act” which defines its NAME, thus: “The monetary unit, or unit of currency, of Australia is the dollar”, which gets us no further ahead. So, as far as I can see, we are attempting to measure something which is, categorically and legally, undefined.
That symbol ($) does represent the “unit of measurement” of the “something” you are trying to define, which you might call “value in general” but, as your articles show, that is proving troublesome. My tentative suggestion here is that we try calling it a specific form of “value”, which I’ll designate “Exchange Value”, but noting that the adjective is a little misleading in this context because anyone holding that “$1” token at the moment did not receive it in an “exchange”, a process in which, by definition, “value” is given AND received by BOTH parties.
Whoever holds that “unvalued” token gave someone “something of value” – Graeber would say, as a gift - and has an “unvalued” circular piece of aluminium-bronze as the result of her “valued gift”. If you believe “a $1 coin” is “something of value” in that “purchase transaction”, then you have created a unique (but useless) definition of what the symbol “$” stands for in Australia, which only applies to that one specific transaction.
But if you want to use the word “exchange” to describe what the lady did to obtain that token, you have to at least qualify it in some way and here I’ll suggest calling it an “INCOMPLETE (or PARTIAL) exchange” because that token is basically useless for any other practical purpose except “re-exchange” for “something of value”, equivalent to the value of the original “gift”. What the “$1” token she holds will enable her to do is COMPLETE her originally-INCOMPLETE exchange later in time, to obtain “valuable goods or services”, possibly from just one person, or from several different people in different places and at different times.
So, for me, money is presently an undefined token which records (measures?) the extent to which “partial (or incomplete) value exchanges” remain uncompleted.
Now, if you want to go further and come up with a scientifically precise unit of “exchange value” for this token ($) you need to look to the ancient wisdom of the Exchange Ratio between universally recognized, freely traded commodities of known (or precisely defined) chemical and physical description. For example, if a “1 oz. bar of 99.99% pure Gold” trades for a “70 oz. bar of 99.99% pure Silver” in a truly free market, giving an Exchange Ratio of 1:70, you could create coins marked “$1” from each metal, one of which (Silver) will be exactly 70 times heavier than the other (Gold). It doesn’t even matter whether you weigh them in ounces or grams. They can also be arbitrarily huge or relatively small, provided the RATIO of their weights is 1:70. And all you need to ‘prove’ the weight ratio of these two “reference coins” is a precisely constructed beam balance with arms having the Length Ratio of exactly 70:1 (by measuring them with a laser interferometer?). And you only ever need one pair of such “standard coins” to be manufactured to establish that UNIT DEFINITION as a matter of LAW. In the end it all comes down to Weights and Measures (which are ALWAYS RATIOS, relative to a defined Standard Unit).
With variable market ‘prices’ for G and S, a “1-year running average” of the Exchange Ratio can help smooth out “market noise” and even in an extreme case, if the designated Exchange Ratio (i.e., G/S) does experience a sudden, significant and permanent change, only one of the two standard coins needs to be adjusted in weight to reflect that change. The other coin could remain permanently unchanged, effectively becoming the permanent physical realization of the “the legal definition” of the currency unit “$1”.
The inherent nature of a “weight-for-weight Exchange Ratio” is independent of any specific type of money which might be used to buy gold or silver. The Exchange Ratio can be calculated from gold and silver prices measured in Rupees and it will be the same as the ratio calculated from $USD prices of gold and silver at the same time. Being independent of “money” is the vital feature which makes such a weight-for-weight Exchange Ratio a suitable basis for the legal definition of every currency “unit” to be used as “money”.
Money creates an enormous overhead for everything we do. So much extra labor has to go into a monetary system that no rational person would ever choose it willingly. It divorces us from trusting each other and instead we trust the idea that people will do what we want for money because they are desperate or greedy for it. And desperation and greed are crap values for forming a society around.
It's the chosen system by oligarchs because it is a tool of controlling other people's lives by imposing desperation to keep people showing up at those jobs that primarily serve the upper class in some manner. It also is a kind of warfare where countries whose currency trades at a high value effectively enslaves those whose money is near worthless, oh and what a coincidence that the countries whose currency trades highest also have the most weapons.
This should provide a clearer picture than the first chart I posted. I couldn't find charts where the time scales match exactly, and there's a difference between nominal and gross GDP ( Nominal is not adjusted for inflation) but the trend is clear to see. Both US public and private debt rose together over the same time period.
USA: Total Public Debt as Percent of Gross Domestic Product
The problem I have with guys like David Graeber is that they start with a premise, then set out to prove it. That's not how science is supposed to work. You gather data, propose a hypothesis that explains the data, then attempt to disprove the hypothesis. You don't search for facts that support your argument while ignoring those that don't. This is so often the case that I've just about given up on contemporary economic theorists. They all seem to have an ideology they're promoting and they often get quite nasty when you challenge them on fundamentals.
Graeber self-identifies as an Anarchist, which right away tells me he's not going to present anything that refutes his belief in Anarchism. The Buddha warned us about attachments. He didn't just mean attachment to material goods, he also meant attachment to ideals.
I always go to the Tao Te Ching for inspiration, and I always seem to find it.
24 - Nature rarely speaks
Those who are on tiptoe cannot stand firm.
Those who straddle cannot walk.
Those who display themselves cannot illuminate.
Those who define themselves cannot be distinguished. <----
"If the government goes into surplus, the private sector goes into deficit. If the government reduces its debt, everyone else has to go into debt in exactly that proportion… This isn’t a theory, it’s simple math."
Really? Then where's the inverse correlation here?
Hmm... I'm guessing that the answer to that would that now that there is a single global financial system, that you'd have to look at the global picture. I'll have to look into that, though. Interpreting financial data isn't my strong suit, and often that data is manipulated for propaganda purposes.
Do you agree with my main point, though? That there is a finite amount of wealth in the world and that the richer the ultra-rich are, the poorer everyone else is?
Maybe my case would be stronger without David Graeber's Peter-Paul principle. The whole concept of public and private is part of the problem. Public theoretically means "belonging to the people but administered by the government for the public good" but in practice means "belonging to the government".
What I'm getting at is that the more wealth is privatized, the less there is to go around. The best example of this is land. The enclosure of the commons never ended. People are getting squeezed harder and harder, and the PTSB are now trying to put a price tag on "ecosystem services" (see Whitney Webb's work on Natural Asset Corporations) to keep the pyramid scheme going for as long as possible, but at a certain point it will inevitably crash, because you can't get blood from a stone.
The "Great Reset" is a propaganda term for the inevitable collapse of capitalism.
"Do you agree with my main point, though? That there is a finite amount of wealth in the world and that the richer the ultra-rich are, the poorer everyone else is?
I hate to keep dragging Korzybski into the conversation but I'm afraid I have to. What is wealth? How do you define it? There's no empirical formula you can use to measure it objectively, it's an abstraction and thus completely subjective.
I spent a lot of time in Mexico back in the 80's and 90's around the time of their economic crisis and currency devaluations. I always hung out with locals on those trips and on one occasion I got in a conversation with a truck driver. At the time I was driving tankers for a major oil co. and the guy couldn't believe that I could afford a vacation in Mexico. In his eyes I was wealthy because I could do that, until I explained to him the difference between the cost of living in Canada vs. Mexico, but even so, I was still nominally wealthy compared to him. I could afford to buy a car, pay for a nice home AND take a vacation abroad, none of which was possible for him.
However, back home I was anything but wealthy in Canadian terms. I was just another working class schlub with a bit of money in the bank and a ten year old car which I fixed myself. Around that time there was a crash in the Vancouver RE market. Hard to believe, but at one point that actually happened. A lot of nominally wealthy folks as measured by their home appraisals were suddenly underwater on their mortgage and in deep trouble. I wasn't because at the time I was renting, but I'd have been screwed too if I'd taken on a mortgage. So who was wealthier after that debacle?
As for there being a finite amount of 'wealth' in the world, again I disagree. Wealth is not something that's fixed, it's something that's created, and not always at someone else's expense. I'll give you an example from personal experience. Back in 2006 I bought shares in a uranium exploration co. that made a major find in the NWT. I had about $10K invested. So the stock went up 4 fold on the news and the project was eventually bought by Cameco. I sold into the rise and walked away with about $40K. So who lost in that transaction? Not me. Not the people employed by the company, or its principles who owned the stock. Not the company that bought us. They now had an economic site they could develop into a product to sell to power plants who also made a profit from the sale of electricity.
Here's what I mean by wealth is created. Something valuable, in this case uranium, but it could have been oil, copper or iron ore was sitting in the ground waiting for someone to find it and put it to productive use. That's how wealth is created. It's still an abstract construct of course, but at least you can measure it in terms of energy require to find and extract it vs the energy thereby gained.
Let me make an important point here that illustrates the open-ended nature of the equation and why wealth is not a fixed thing. All of our energy ultimately comes from the sun, either in the form of the elements created in the initial nova which condensed to form our planets (uranium), or in the subsequent geological processes (coal, oil & gas) or by the constant stream of radiation that powers the plants (and animals) we eat. It ALL comes from the sun, and it costs us nothing. You just have to figure out how to convert it into something useful that improves our lives.
Granted the distribution of the 'wealth' thereby created is uneven, and guys like Marx sought to correct that, but the problem is not a zero-sum game where A has to lose because B gained. That's only true in a limited sense and is a function of social relations, not of the production process itself whereby 'wealth' is created by the extraction and/or conversion of energy from the sun. If that weren't true, the industrial revolution would never have happened. If that weren't true, farming would be impossible, in fact life itself couldn't exist.
The formal description of this process is called "negentropy." It wasn't fully formulated until the 20th Century, so Marx wasn't aware of it and didn't include it in his calculations. Same goes for Malthus and other early social theorists.
The 'inevitable collapse of capitalism' is itself a propaganda slogan used by Soviet economists who chose to ignore Kondratiev because his research didn't fit their preconceived notions of how economies actually work.
Capitalism itself is not an ideology. We've made it into one, but at its core it simply describes a method of organizing economic activity independent of political ideology. It has its own hidden assumptions of course, just like communism, fascism or for that matter anarchism, but in concrete terms it comes closest to describing the actual processes by which economic activity occurs.
What Kondratiev identified is that capitalism operates on a long cycle where wealth is created, but also destroyed by accumulation and mal-distribution which is ultimately (albeit painfully) self-correcting over the long term. Stalin didn't like that because it suggested that capitalism would survive, and that contradicted official doctrine. There was no reward for being right about stuff like that in the USSR, and although he was 'rehabilitated' in 1987, by then it was too late.
CORRECTION: A previous version of this article uncritically repeated David Graeber’s claim that government debt is inversely correlated to private sector debt. I was presented evidence that contradicted this claim, so I edited the article.
If anyone wishes to see David Graeber's argument, you can find it here: https://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus
In your example of the village with the apple tree and 300 people - if some jerk called Elon nicked 250 apples he wouldn't last long in the village. The people wouldn't stand for it (or, as per your monopoly board, they would stand - they wouldn't bend over and take it, let's say). He would be taught a lesson, and if he repeated his unsocial behaviour then he'd be ostracised...
At present, money is an undefined, irrational, and thus, unscientific measurement system. That makes no sense to an engineer (retired) who specialized in metrology (the science of measurement), knowing all our other measurement units have evolved historically as “fixed amounts” of something measurable, which are available for public comparison, and now have unprecedented precision, based on such technological marvels as laser interferometers and caesium atomic clocks.
Despite the fact that, in whatever form it appears, money always carries just two simple markings, a numeral and a symbol, defining money seems to defeat us. Our humble Australian one dollar coin ($1) is stamped with the numeral “one” and the symbol ($), of which only the latter requires either definition or, in its absence, interpretation, but our Australian government (like all others) refuses to provide either a definition or an interpretation of that fundamental symbol. It wont specify the “value” of this currency unit, and has only ever passed a “Currency Act” which defines its NAME, thus: “The monetary unit, or unit of currency, of Australia is the dollar”, which gets us no further ahead. So, as far as I can see, we are attempting to measure something which is, categorically and legally, undefined.
That symbol ($) does represent the “unit of measurement” of the “something” you are trying to define, which you might call “value in general” but, as your articles show, that is proving troublesome. My tentative suggestion here is that we try calling it a specific form of “value”, which I’ll designate “Exchange Value”, but noting that the adjective is a little misleading in this context because anyone holding that “$1” token at the moment did not receive it in an “exchange”, a process in which, by definition, “value” is given AND received by BOTH parties.
Whoever holds that “unvalued” token gave someone “something of value” – Graeber would say, as a gift - and has an “unvalued” circular piece of aluminium-bronze as the result of her “valued gift”. If you believe “a $1 coin” is “something of value” in that “purchase transaction”, then you have created a unique (but useless) definition of what the symbol “$” stands for in Australia, which only applies to that one specific transaction.
But if you want to use the word “exchange” to describe what the lady did to obtain that token, you have to at least qualify it in some way and here I’ll suggest calling it an “INCOMPLETE (or PARTIAL) exchange” because that token is basically useless for any other practical purpose except “re-exchange” for “something of value”, equivalent to the value of the original “gift”. What the “$1” token she holds will enable her to do is COMPLETE her originally-INCOMPLETE exchange later in time, to obtain “valuable goods or services”, possibly from just one person, or from several different people in different places and at different times.
So, for me, money is presently an undefined token which records (measures?) the extent to which “partial (or incomplete) value exchanges” remain uncompleted.
Now, if you want to go further and come up with a scientifically precise unit of “exchange value” for this token ($) you need to look to the ancient wisdom of the Exchange Ratio between universally recognized, freely traded commodities of known (or precisely defined) chemical and physical description. For example, if a “1 oz. bar of 99.99% pure Gold” trades for a “70 oz. bar of 99.99% pure Silver” in a truly free market, giving an Exchange Ratio of 1:70, you could create coins marked “$1” from each metal, one of which (Silver) will be exactly 70 times heavier than the other (Gold). It doesn’t even matter whether you weigh them in ounces or grams. They can also be arbitrarily huge or relatively small, provided the RATIO of their weights is 1:70. And all you need to ‘prove’ the weight ratio of these two “reference coins” is a precisely constructed beam balance with arms having the Length Ratio of exactly 70:1 (by measuring them with a laser interferometer?). And you only ever need one pair of such “standard coins” to be manufactured to establish that UNIT DEFINITION as a matter of LAW. In the end it all comes down to Weights and Measures (which are ALWAYS RATIOS, relative to a defined Standard Unit).
With variable market ‘prices’ for G and S, a “1-year running average” of the Exchange Ratio can help smooth out “market noise” and even in an extreme case, if the designated Exchange Ratio (i.e., G/S) does experience a sudden, significant and permanent change, only one of the two standard coins needs to be adjusted in weight to reflect that change. The other coin could remain permanently unchanged, effectively becoming the permanent physical realization of the “the legal definition” of the currency unit “$1”.
The inherent nature of a “weight-for-weight Exchange Ratio” is independent of any specific type of money which might be used to buy gold or silver. The Exchange Ratio can be calculated from gold and silver prices measured in Rupees and it will be the same as the ratio calculated from $USD prices of gold and silver at the same time. Being independent of “money” is the vital feature which makes such a weight-for-weight Exchange Ratio a suitable basis for the legal definition of every currency “unit” to be used as “money”.
Money creates an enormous overhead for everything we do. So much extra labor has to go into a monetary system that no rational person would ever choose it willingly. It divorces us from trusting each other and instead we trust the idea that people will do what we want for money because they are desperate or greedy for it. And desperation and greed are crap values for forming a society around.
It's the chosen system by oligarchs because it is a tool of controlling other people's lives by imposing desperation to keep people showing up at those jobs that primarily serve the upper class in some manner. It also is a kind of warfare where countries whose currency trades at a high value effectively enslaves those whose money is near worthless, oh and what a coincidence that the countries whose currency trades highest also have the most weapons.
This should provide a clearer picture than the first chart I posted. I couldn't find charts where the time scales match exactly, and there's a difference between nominal and gross GDP ( Nominal is not adjusted for inflation) but the trend is clear to see. Both US public and private debt rose together over the same time period.
USA: Total Public Debt as Percent of Gross Domestic Product
https://fred.stlouisfed.org/series/gfdegdq188S
USA: Private Debt: % of Nominal GDP from Dec 1951 to Dec 2023
https://www.ceicdata.com/en/indicator/united-states/private-debt--of-nominal-gdp
(press the MAX button for the longer time frame)
Hmmm... okay I'm looking into it and so far I don't have a good answer for you. You can check out David Graeber's argument here: https://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus
I suppose I'll have to print a correction if I can't figure this out soon.... fortunately my main argument works without that part...
The problem I have with guys like David Graeber is that they start with a premise, then set out to prove it. That's not how science is supposed to work. You gather data, propose a hypothesis that explains the data, then attempt to disprove the hypothesis. You don't search for facts that support your argument while ignoring those that don't. This is so often the case that I've just about given up on contemporary economic theorists. They all seem to have an ideology they're promoting and they often get quite nasty when you challenge them on fundamentals.
Graeber self-identifies as an Anarchist, which right away tells me he's not going to present anything that refutes his belief in Anarchism. The Buddha warned us about attachments. He didn't just mean attachment to material goods, he also meant attachment to ideals.
I always go to the Tao Te Ching for inspiration, and I always seem to find it.
24 - Nature rarely speaks
Those who are on tiptoe cannot stand firm.
Those who straddle cannot walk.
Those who display themselves cannot illuminate.
Those who define themselves cannot be distinguished. <----
Those who make claims can have no credit.
Those who boast cannot advance.
To those who stay with the Tao,
These are like excess food and redundant actions
And are contrary to Natural Law.
Thus those who possess the Tao turn away.
"If the government goes into surplus, the private sector goes into deficit. If the government reduces its debt, everyone else has to go into debt in exactly that proportion… This isn’t a theory, it’s simple math."
Really? Then where's the inverse correlation here?
https://www.economicshelp.org/blog/6775/debt/total-us-debt-public-private/
1982 to 2012 they all went up together. Not so simple after all.
Hmm... I'm guessing that the answer to that would that now that there is a single global financial system, that you'd have to look at the global picture. I'll have to look into that, though. Interpreting financial data isn't my strong suit, and often that data is manipulated for propaganda purposes.
Do you agree with my main point, though? That there is a finite amount of wealth in the world and that the richer the ultra-rich are, the poorer everyone else is?
Maybe my case would be stronger without David Graeber's Peter-Paul principle. The whole concept of public and private is part of the problem. Public theoretically means "belonging to the people but administered by the government for the public good" but in practice means "belonging to the government".
What I'm getting at is that the more wealth is privatized, the less there is to go around. The best example of this is land. The enclosure of the commons never ended. People are getting squeezed harder and harder, and the PTSB are now trying to put a price tag on "ecosystem services" (see Whitney Webb's work on Natural Asset Corporations) to keep the pyramid scheme going for as long as possible, but at a certain point it will inevitably crash, because you can't get blood from a stone.
The "Great Reset" is a propaganda term for the inevitable collapse of capitalism.
"Do you agree with my main point, though? That there is a finite amount of wealth in the world and that the richer the ultra-rich are, the poorer everyone else is?
I hate to keep dragging Korzybski into the conversation but I'm afraid I have to. What is wealth? How do you define it? There's no empirical formula you can use to measure it objectively, it's an abstraction and thus completely subjective.
I spent a lot of time in Mexico back in the 80's and 90's around the time of their economic crisis and currency devaluations. I always hung out with locals on those trips and on one occasion I got in a conversation with a truck driver. At the time I was driving tankers for a major oil co. and the guy couldn't believe that I could afford a vacation in Mexico. In his eyes I was wealthy because I could do that, until I explained to him the difference between the cost of living in Canada vs. Mexico, but even so, I was still nominally wealthy compared to him. I could afford to buy a car, pay for a nice home AND take a vacation abroad, none of which was possible for him.
However, back home I was anything but wealthy in Canadian terms. I was just another working class schlub with a bit of money in the bank and a ten year old car which I fixed myself. Around that time there was a crash in the Vancouver RE market. Hard to believe, but at one point that actually happened. A lot of nominally wealthy folks as measured by their home appraisals were suddenly underwater on their mortgage and in deep trouble. I wasn't because at the time I was renting, but I'd have been screwed too if I'd taken on a mortgage. So who was wealthier after that debacle?
As for there being a finite amount of 'wealth' in the world, again I disagree. Wealth is not something that's fixed, it's something that's created, and not always at someone else's expense. I'll give you an example from personal experience. Back in 2006 I bought shares in a uranium exploration co. that made a major find in the NWT. I had about $10K invested. So the stock went up 4 fold on the news and the project was eventually bought by Cameco. I sold into the rise and walked away with about $40K. So who lost in that transaction? Not me. Not the people employed by the company, or its principles who owned the stock. Not the company that bought us. They now had an economic site they could develop into a product to sell to power plants who also made a profit from the sale of electricity.
Here's what I mean by wealth is created. Something valuable, in this case uranium, but it could have been oil, copper or iron ore was sitting in the ground waiting for someone to find it and put it to productive use. That's how wealth is created. It's still an abstract construct of course, but at least you can measure it in terms of energy require to find and extract it vs the energy thereby gained.
Let me make an important point here that illustrates the open-ended nature of the equation and why wealth is not a fixed thing. All of our energy ultimately comes from the sun, either in the form of the elements created in the initial nova which condensed to form our planets (uranium), or in the subsequent geological processes (coal, oil & gas) or by the constant stream of radiation that powers the plants (and animals) we eat. It ALL comes from the sun, and it costs us nothing. You just have to figure out how to convert it into something useful that improves our lives.
Granted the distribution of the 'wealth' thereby created is uneven, and guys like Marx sought to correct that, but the problem is not a zero-sum game where A has to lose because B gained. That's only true in a limited sense and is a function of social relations, not of the production process itself whereby 'wealth' is created by the extraction and/or conversion of energy from the sun. If that weren't true, the industrial revolution would never have happened. If that weren't true, farming would be impossible, in fact life itself couldn't exist.
The formal description of this process is called "negentropy." It wasn't fully formulated until the 20th Century, so Marx wasn't aware of it and didn't include it in his calculations. Same goes for Malthus and other early social theorists.
https://simple.wikipedia.org/wiki/Negentropy
https://en.wikipedia.org/wiki/Negentropy
"The "Great Reset" is a propaganda term for the inevitable collapse of capitalism."
Here's another guy whose name starts with 'K' who if Stalin had paid attention to the USSR would probably still be with us today.
https://en.wikipedia.org/wiki/Nikolai_Kondratiev
The 'inevitable collapse of capitalism' is itself a propaganda slogan used by Soviet economists who chose to ignore Kondratiev because his research didn't fit their preconceived notions of how economies actually work.
Capitalism itself is not an ideology. We've made it into one, but at its core it simply describes a method of organizing economic activity independent of political ideology. It has its own hidden assumptions of course, just like communism, fascism or for that matter anarchism, but in concrete terms it comes closest to describing the actual processes by which economic activity occurs.
What Kondratiev identified is that capitalism operates on a long cycle where wealth is created, but also destroyed by accumulation and mal-distribution which is ultimately (albeit painfully) self-correcting over the long term. Stalin didn't like that because it suggested that capitalism would survive, and that contradicted official doctrine. There was no reward for being right about stuff like that in the USSR, and although he was 'rehabilitated' in 1987, by then it was too late.