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After the Future

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Learning from Our Grandparents

Or great-granparents, as the case may be. I want to spend some time with Polanyi in part because he has a fundamentally conservative temperament and POV. I'd argue that he's…

Or great-granparents, as the case may be.

I want to spend some time with Polanyi in part because he has a fundamentally conservative temperament and POV. I'd argue that he's more of a Burkean conservative than most to the conservative intellectuals who are obsessed with the tyrannic threats posed by big government. I like reading The American Conservative, as contrasted with other conservative  partisan rags like The National Review or The Weekly Standard, because TAC for the most part gets that while the Big State creates significant problems, the market as a disruptive force is far more destructive of human liberties and well-being than the state is. TAC is opposed to Liberalism as a mindset, and in that I largely agree with them, but I also believe that the Liberal State is a necessity for living in a country with 310 million people and on a planet with over 7 billion.

Large scale governmental bodies are with us in the long run; it's silly to think otherwise. The challenge is to organize them in such a way that they allow for as much freedom as possible where people live on the ground while at the same time making sure that power and wealth don't aggregate into the hands of too few. That is job #1, and that requires creating a mindset in which the basics tenets of social democracy are broadly accepted in such a way as to push every other ideology to the fringes. This was the hard-fought accomplishment our  grandparents, the folks in Polanyi's generation in the thirties and forties, after having learned the hard way that nothing else works.

It's a lesson we've forgotten, and so we are having arguments on the ethos level when we should be having arguments on the logos level. We need consensus about basic political  values, so that we can argue about the most practical way to solve pressing practical problems. The current domination of Neoliberal ideology among our elites has been a regression to the mindset of  late 19th-century Liberalism. Our grandparents learned that that mindset leads to disaster, and now it looks as if we'll have to learn it again. But it is a lesson we will learn for good sooner or later because nothing else but social democracy in a subsidiarist key will work. And social democracy cannot work unless there is broad acceptance that it is the best way to organize things in the political sphere. It will be hard enough to make it work when there is consensus about it, but it's impossible for it to function in any practical sense without it. 

Comments

23 responses

  1. Mark Avatar
    Mark

    How are you defining “social democracy”?

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  2. Jack Whelan Avatar
    Jack Whelan

    Social Democracy is what all the developed Western countries developed in the wake of WWII in which a balance is struck between the free market and government regulation and controls through the democratic process.
    Its roots in Europe are with the Reform Socialist who split off from the Revolutionary Socialists and came to shape the consensus in every industrialized European country. In the US, its roots are in the Progressive movement and was less ideological and more experimental in its development, but resulted in the New Deal and the basic compromise between government and markets that shaped a bi-partisan consensus concerning the welfare state, the importance of unions, the use of the tax code as a redistributive tool, and the need to regulate markets, particularly financial markets. This consensus lasted through the 70s. Both the U.S.and the industrialized European countries arrived at more or less the same balance between private and public sectors but from different directions.
    The goal of Libertarian/Neoliberal ideologues in the US has been to dismantle institutions founded during these thirty years and to return the U.S. to a conditions very similar to the one that characterized the period between the Civil War and the Great Depression. These market conservatives were always really classical liberals with a southwest/mountain-state, rugged individualist ethos. They hated the way the state grew in the post war period, and their agenda was always to dismantle it in the name of freedom.
    They were considered cranks, like Goldwater was, until the 70s when the cultural backlash to the anything-goes excesses of the sixties and seventies so offensive to Main Street America kicked in. That cultural backlash was exploited by people like Reagan in the U.S. and Thatcher in the UK to provide the political energy on which to piggy back their agenda to dismantle social democratic institutions. My argument is that it’s one thing to make needed adjustments; it’s quite another to dismantle, and because the program to dismantle has been largely successful, we will have go through a rather painful learning curve to get back to what we understood during the ‘trente glorieuse’, the thirty years between ’45 and 75.

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  3. Mark Avatar
    Mark

    Oh ok. Then I don’t support that. The reason it’s failing, perhaps, is because the “balance” treated symptoms without treating the root cause. Social credit money treats the root cause (which is usury). Welfare and coercive redistribution are ridiculous (though possibly necessary in bad circumstances) post-facto ameliorations that only make sense in an economy broken on a more fundamental level already.

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  4. Jack Whelan Avatar
    Jack Whelan

    The Welfare State is necessary because market capitalism is so disruptive in its essence. If we accept that the disruption creates a net positive because of its innovativeness and wealth creation, then we have to have some way to mitigate the enormously negative impacts that it has on people whose lives have been disrupted, and we have also to find a way to insure that power and wealth don’t aggregate in the hands of an elite minority.
    The only way I see to do that is to have a state or some other publicly accountable political entity that is big enough and has teeth enough to counterbalance private sector predators who get too big. I’m arguing for the basic principle, not for a particular program. But whether it’s with anti-trust laws or the use the tax code to fund programs designed to mitigate the disruptive impacts of market capitalism–unemployment insurance, medical insurance, nutritional and educational support for children born in poverty–or whatever. Those are simply practical problems to be solved by sane people who recognize them as problems and understand that the state has a critical role to play in solving them. Right now we have no capacity to solve practical problems because the State on the federal and on the state level is either gridlocked or in complete possession by ideologues who think the state ought not to play any role along those lines.
    I’m all for social credit and any other mechanism that support economic self-reliance and interdependence, but I’m not clear on how it provides a way to confront the problem of predatory bigness in the private sector and provides a comprehensive solutions for the problems market capitalism creates.

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  5. Jack Whelan Avatar
    Jack Whelan

    Here’s the problem, as I see it. Nobody wants an overreaching state.We all hate bureaucracy the technocratic mindset that comes with it. Nobody wants the kind of corruption that inevitably comes when power and money are at the disposal of elected officials and their appointees. Some of it is inevitable, but it becomes more inevitable when citizens become cynical or are paralyzed by an ideology that believes that the only solution to the problems associated with big government are to get rid of it and let the market decide.
    When ccitizens refuse their responsibility to be vigilant they allow the foxes to rule in the hen house, and this is precisely what we’ve allowed to happen since 1980. I grew up in a political culture when even the appearance of a conflict of interests was headline news. Now it’s accepted as ‘whatever’.
    I’m for keeping government just big enough to do what is necessary. I do not want government to overreach, and I do not want government to solve all problems in a top-down way. But there are some problems that can’t be solved on the local level because they require high levels of coordination in a world with 7 billion people in it. Climate change and other natural disasters, the massive unemployment that comes with cyclical recessions, the intractable problems associated with chronic structural poverty.
    There are no market solutions for these problems. If markets play a role in their solution, it will be subordinate to the role played by decisions made in the political sphere. That means that there must be the political will to solve them, and that’s precisely what we don’t have because we are so riven on the ‘ethos’ or values level. Let there be debates about the most practical way for the state to solve problem, but not whether the state has a role in solving them.
    This is Polanyi’s point about markets. Yes, there have always been markets, but they were subordinated and regulated in ways to prevent them from being disruptive to good social order. Whether the way they were subordinates was a good or a bad thing can be debated, but they were subordinated right up until the demise of mercantilism.
    The challenge is to find the right balance between allowing the market to do its thing freely and preserving some good social order and the health and well being of ordinary people. It is absurdly naive or ideologically cynical to argue that the free market will find this balance. It never has and it never will; if anything, it makes things worse than they need be.
    So that’s my point about social democracy as providing that balance. Maybe sometimes you need more freedom, and at other times you need more regulation. Those are pragmatic considerations to be argued in the legislatures by representatives that a sane, vigilant citizenry elects to do its business and by whom they should be held accountable.
    Right now our citizenry is neither sane nor vigilant. It is either besotted by ideologically delusional thinking or it has become cynically passive. And maybe for now the cynics are right; there is nothing much that can be done except to let this whole thing collapse of its own dead weight. I for one cannot bear to watch the national political news anymore. But at some point there will be an opportunity for us to become again meaningfully engaged, and when we do, it should be in support of something like what our grandfathers developed in the 30s and 40s; the other possibilities are intolerable. I see the work I’m doing in the political sphere, if nothing else, preparing for that day

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  6. Jonathan Avatar
    Jonathan

    How do you envision our society would be different, were this politics of “sane vigilance” to be implemented? Because a country like France pretty much has what you’re talking about. They more or less invented “social democracy.” Actually, they’re up to the Fifth Republic now, so they’ve invented it five times over. I don’t know how well you know the country. I know it reasonably well, have spent a lot of time there. I’d say I’m a Francophile of sorts. But they do have some major problems. I think it was Camus who said the French have only two passions: intellectualism and fornication. A Frenchman I know says that’s better than our two passions, money and fornication.

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  7. JP Avatar
    JP

    “Let there be debates about the most practical way for the state to solve problem, but not whether the state has a role in solving them.”
    The problem is that the state needs to be “regulated” for the similar reasons that the market needs to be “regulated”.
    These two things are tools that have specific uses. The corporation, in and of itself, meaning corporatism, parasitically consumes. It is useful for specific tasks in specific ways.
    That state, in and of itself, meaning bureaucratic legalism, mechanizes and demeans. It is useful for things that it is useful for.
    You are really uncomfortable with the political process because of the place we are in the economic-political wave at this point.
    Gridlock is to be expected and normal in the post-unraveling era.
    Have you noticed that the catabolic impulse to tear down everything has diminished? Nobody has the psychic energy to tear down any further. That wave is exhausted.
    You will have to somehow develop a networked rhizome system that takes advantage of the point I keep hammering about Dunbar’s number.
    However, we haven’t even *started* the basic work on that yet. And it does not appear that we will do that until after Faustian civilization crumbles to dust.
    I’m overworked here at the moment, so I will possibly comment later.

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  8. Jonathan Avatar
    Jonathan

    Yeah, kind of along these lines I don’t understand why Jack assumes that the only two major forces going forward will continue to be Big Government on the one hand and Big Business on the other. And the world of the 30s-60s was, like all historical epochs, contingent, unique. What satisfied then will not satisfy now, hence the cynicism Jack identifies. As the present state of Europe plainly reveals, all the public works and regulations in the world can’t put a culture back together again. Something like the WPA had symbolic resonance for Americans. You can hear it loud and clear listening to Woodie Guthrie, for example. That spirit is gone and it’s not going to come back, no matter how “sane” it might be.

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  9. Mark Avatar
    Mark

    “The Welfare State is necessary because market capitalism is so disruptive in its essence.”
    Depends how you define “market capitalism.” I don’t believe it is disruptive without usury and with social credit. For example, Social Credit gives everyone a basic income WITHOUT taking it from anyone else. It originates money in the hands of society, it does not tax-and-redistribute.
    “If we accept that the disruption creates a net positive because of its innovativeness and wealth creation”
    The thinking behind logic like this has always been odd to me.
    The idea is that the incentives of the free market, competition, etc…drive innovation and greater absolute material abundance…but that we then need to, post-facto, skim a great deal off the top and redistribute it to everyone to make sure things remain liveable.
    This is what I mean by “treating symptoms.” But it also simply doesn’t make sense to me in its own inner logic. Capitalists are not stupid. If people know they are going to be taxed at huge amounts, that the wealth they acquire is going to be inevitably re-distributed coercively…this is going to effect their incentives just as much as if we didn’t allow them to acquire the money in the first place.
    The whole logic behind “capitalism drives wealth-creation, so we have to allow it…and then redistribute” relies on some notion that, like, the incentives of capitalism won’t be affected by the re-distribution. But people have foresight. There is little incentive in “winning” only to have your winnings immediately taken from you and redistributed to everyone. Do you think business owners are taking risks for the sheer glory of the win and then don’t care if everything is forcibly re-calibrated after-the-fact??
    That’s silly. Either you have to leave the natural incentive levels in place, or you have to expect that a redistribution scheme will correspondingly dampen the wealth-engine aspect. You can’t have both. A prize is only an incentive if you’re allowed to keep it. But if you’re going to be taking it away from people post-facto anyway…it’s unclear why it’s necessary for the system to work to have it designed so that it ever accrues to them in the first place.
    Taxing can’t change how desire works. No one is going to be willing to work 10 times as hard as someone else…only to be able to keep twice as much money. There is simply diminishing marginal utility at that point. People are very strangely affected (in a bad way) by a system that requires them to constantly do a calculation something like “I need to make 50,000 dollars…so that I can really keep 35,000 net after taxes.” That gross/net difference “trickles down” too and gets built into prices etc.
    You’re adding a totally unnecessary step. What is the point of setting up the system so that someone fights to earn a billion dollars so that they can “really” keep 250 million. Why not just set it up so that they earn only 250 million in the first place (but get to keep all of it)?
    “The only way I see to do that is to have a state or some other publicly accountable political entity that is big enough and has teeth enough to counterbalance private sector predators who get too big.”
    Antitrust is an interesting question (and different than tax-and-redistribute). Indeed, antitrust is about PRESERVING a market and competition.
    But, I think it’s really moot. The only reason some firms get “so big” that they eat all competition is because they are being beefed up by the illicit “steroids” of usury, given to them by their allies their financier-investor bankers who have a monopoly on monetizing credit, which should really be understood as a social, not a private good.
    Vicious competition is not the problem, really. The financial methamphetamine of usury is the real issue. The whole system is shaped by the nature of the monetary system, like the shape of a snowflake is determined by the shape of the dust particle at its center. Change the nature of money, and you’ll change the whole system without needing to try to engage in massive coercive social engineering and economic interventionism.
    “Those are simply practical problems to be solved by sane people who recognize them as problems and understand that the state has a critical role to play in solving them.”
    I’m ambivalent about ameliorating symptoms. On the one hand, it seems the humanitarian thing to do. On the other hand, I wonder whether keeping the poor dependent and JUST barely content on the dole…has prevented them from rising up and demanding REAL change, real structural change against the injustice of the usurious debt-money system.
    Part of me, then, is against welfare and all that exactly because I want to see the system forced to “break” and for history to play out as it would if we weren’t “paying off” the masses to stop them from revolting, keeping their heads “just barely above the water” through welfare enough so that they don’t feel like they have nothing to lose and so currently aren’t willing to die for change (because, hey, at least they get their bare subsistence and cable TV).
    “I’m all for social credit and any other mechanism that support economic self-reliance and interdependence, but I’m not clear on how it provides a way to confront the problem of predatory bigness in the private sector and provides a comprehensive solutions for the problems market capitalism creates.”
    I think you have a Marxist-red-herring view of what problems market capitalism really creates. I’m not at all convinced that if a social credit monetary system was to replace the debt-money usury system of finance we have currently…that the “predatory bigness” problem would be inherent to capitalism at all.
    There is a surplus value being stolen from the worker, but Marx was wrong: it isn’t being stolen at the point of labor and production, it’s being stolen from all of us at the point of money creation.

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  10. Jack Whelan Avatar
    Jack Whelan

    Mark, there’s a lot in what you say, but the bottom line really is motivation, isn’t it? I’d argue that creative people are intrinsically motivated and that they don’t need a big payday to do what they do, but they do want to live comfortably or that they at least work better when they don’t have to worry about paying their bills. Dan Pink’s book ‘Drive’ is enormously instructive in this sense and points to how the basic assumptions that humans are essentially ‘homo economicus’ are just wrong. We can live in an innovative, creative, wealth producing society without money being the primary motivator.
    The motivations based on greed and power are pathological, but the current system and the thinking that supports accepts that “Greed is good”, to quote Gordon Gecko, so it creates a space for sociopaths to dominate the system, and the rest of us let them because we don’t care.
    My point is that innovation and wealth creation are possible without the sociopaths, but before we do anything constructive, even creating a system where there is the remotest possibility for policy embracing your ideas about social capital, we must find a way to constrain the sociopaths. There has to be the political will to do it because as long as the sociopaths are in control and their values shape elite thinking about what is and is not possible, then nothing else is possible except that greed and will to power dominate in the economic and political spheres.
    So I’m arguing that nothing fundamental changes until there is broadly based political will to push back against greed and will to power, that the sociopaths need to be constrained so that the rest of us can live in peace and security. And the political system that will embody that political will, even if it takes another two hundred years before we have it in this country, will be a social democracy. I see the social democracy of the ‘trente glorieuse’ as simply its first phase, and as performing mostly the ameliorative functions that are discussed above, because that was the job that needed to be done then, and it was successful until the seventies, when adjustments were called for. But instead of evolving the system with some timely adjustments, maybe along lines that would have provided more space for something like social capital, we regressed instead to a system that is justified only by a late 20th century version of Social Darwinism a la Ayn Rand, which, though it is a philosophy that justifies sociopathy, is our new normal since at least 1980.
    I think that JP is right, and it’s a point that I’ve argued here frequently, that we’re in a decadent or unraveling phase, and perhaps nothing more is possible except for this everyone-out-for-himself ideology, but it won’t last forever–it can’t–and in the meantime we have to do what we can that is ameliorative and to fight against destroying whatever constraints remain left over from social democracy 1.0 of the period ’45-75 that keep the sociopaths in check. And even the most basic social democracy is a requirement to do that. When we move to a more positive, constructive phase we can start talking or arguing about innovative programs like social capital and others that meet human needs in more deeply satisfying ways that is allowed for under the current arrangements.

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  11. Mark Avatar
    Mark

    “Mark, there’s a lot in what you say, but the bottom line really is motivation, isn’t it? I’d argue that creative people are intrinsically motivated and that they don’t need a big payday to do what they do”
    Ok…so then why the need for the “two step” process of leaving capitalism in place as a wealth-engine…but then redistributing after-the-fact?
    The notion seems to be something like…that in order to maximize total production/abundance…we need to let capitalist firms and entrepreneurs fight for as much as they can can make (as long as, as a side effect, society gets its cut of the earnings to be distributed by the State at the end of each round to everyone else regardless of which capitalist wins).
    But why the two-step process? If the capitalists know they are only going to get to keep a certain share of what they make, and there is an intuitive sense that a good amount actually belongs to society…why the two-step process of letting it all accrue to the capitalists FIRST, and THEN coercively RE-distributing it to society afterwards? Why not design the system so that there is no “extra step” of letting it accrue to the capitalists in the first place and then relying on the State to “take it from” them and redistribute it?
    Indeed, this is what I would argue that Social Credit money does to distribution: it results in the just distribution the first time around. Currently, the way production and distribution are related is perverse.
    On the one hand, participation in production is seen, falsely, as the “natural” mechanism or criterion of distribution (hence all the Anglo-American-Protestant work-ethic stuff about needing to work for your living). This is seen as “only fair,” if you aren’t part of production, why should you get a share? If you could get a share without pitching in, no one would. Arguments like that.
    On the other hand, everyone sort of senses that this is on another level unfair (because we do in fact produce enough without needing everyone to labor, and indeed some people are inevitably excluded from the ability to, such as the infirm and elderly and socially disadvantaged, etc). But instead of fundamentally changing the presumptions about the fairness of requiring work to get a living…we leave that paradigm or system in place (allegedly to drive wealth-creation and motivate people to work hard etc)…but then do a “mulligan” at the end of each round (which everyone anticipates anyway; so it probably affects the incentive calculations) where we “cheat” the rules of the first half of the paradigm (which say to have to earn your own keep by participation in production) for the sake of giving those who DON’T earn their own living (because really humanity can be supported by a lot less than all of humanity working) a basic subsistence (in the form of dependence on the State, however).
    This is an absurd “winking.” It’s like “We’re going to have a rule that bootstraps an income to employment…but not really because at the end we’ll do a ‘jubilee’ anyway. We’ll forcibly correct for the fact that this rule doesn’t really work or correspond to reality.”
    Social credit says…why not change that rule/paradigm then, about the relation of income to employment. Not in the form of taking it from someone who got it through employment to give to someone who wasn’t employed, but in the form of changing the nature of money creation so that money originates in the hands of all society in the first place, prior to any question of employment.
    “My point is that innovation and wealth creation are possible without the sociopaths, but before we do anything constructive, even creating a system where there is the remotest possibility for policy embracing your ideas about social capital, we must find a way to constrain the sociopaths.”
    Yes, but I think you’re focusing on the wrong people. The real enemies are the bankers and financiers. Business owners may be a problem too inasmuch as the bankers/financiers are their “drug dealers,” the ones who “sell them the steroids.” But I say go after the steroid producers/distributors. Not the steroid users (who, after all, are just stuck in a race-to-the-bottom where they virtually have to take them to stay ahead since everyone else is doing it).
    The steroid sellers are the usurious bankers who have a monopoly on monetizing credit. Go after them. Not the capitalists. I firmly believe the distributist creed that “the problem with capitalism is not too many capitalists, it’s too few.”
    Capital distribution would be much more equal and competition much more fair if all entrepreneurs (and heck, even the small-time stock owner) could compete without certain mega-monster-competitors who are pumped-full of the steroids of usury debt-money that makes competing against them impossible.
    This is, again, Marx’s fundamental error: he went after the owners of capital instead of the financiers (perhaps his own background gave him biases there.) There is a surplus value being stolen, but it’s not being stolen by the fact that workers don’t own the capital they work on, it’s being stolen by the fact that the new money to represent the new value created isn’t release “for free” but rather at a fee (a fee for doing nothing). Society has to “pawn” its own collective production to the bankers merely in order to get the tokens (money) to allow said production to be bought! It’s ridiculous.
    “There has to be the political will to do it because as long as the sociopaths are in control and their values shape elite thinking about what is and is not possible, then nothing else is possible except that greed and will to power dominate in the economic and political spheres.”
    Well yes, you propose a Catch-22 here. We can’t implement change because those in charge of the process are already too powerful to allow it and have everyone bamboozled. I suppose we should just despair and give up hope! (I’m being sarcastic).
    But as long as we do admit of some hope through popular action…then I fail to see why pushing for social democracy’s symptom-treating half-measures is any better than just pushing directly for the fundamental structural reform of social credit money.
    (I don’t know what “social capital” is…it sounds like socialism or communism to me, something social credit definitely does not support. Social credit fully supports real capital being privately held. The only industry it is essential to socialize or nationalize…is credit/finance itself. Credit and money is the ultimate social/public good. Factories and all that can and should be privatized, even utilities etc. Only the banking system need be socialized, and everything else will fall into place.)

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  12. Jonathan Avatar
    Jonathan

    I guess Ezra Pound was a social crediteer. Read Canto XLV. And if you really want a kick, listen to a recording of Pound reading that canto.

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  13. Mark Avatar
    Mark

    Wow, that’s a good canto.
    For some reason it reminded me of the part from “Howl” (one of my favorites):
    “who lost their loveboys to the three old shrews of fate
    the one eyed shrew of the heterosexual dollar
    the one eyed shrew that winks out of the womb
    and the one eyed shrew that does nothing but
    sit on her ass and snip the intellectual golden
    threads of the craftsman’s loom”

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  14. Jack Whelan Avatar
    Jack Whelan

    I’m all for small-is-beautiful capitalism, but I don’t see how social credit insures against the aggregation of power and wealth in the hands of the few in the long run. Bigness and concentrations of power and wealth will always pose a threat, because the sociopaths we shall have always with us. So how in your ideal political economy do you protect against the threat posed by predators in the private sector?
    It always comes down to some kind of state power protecting the interests of the little guy, and that’s in essence what social democracy is designed to do. There’s no specific social democratic program. It’s just the structure that when set up does the best job of insuring the broad social welfare because its advocates embrace the idea that economic values must be subordinated to social values. And a social credit scheme would be a program that could only be instituted in a political economy that, first, developed a broad consensus that it was in the public interest to have it, and, second, had power enough to protect it from the predators that would otherwise eat it up.
    I think of myself as a pragmatic meliorist, and my argument–and Polanyi’s–is not that the social democracies developed in the mid 20th century were the end of history. They were simply a step in the right direction after hard lessons learned from experiences with predatory sociopaths in the late 19th and early 20th centuries. We took a step forward then, and we have since taken a step backward, and in doing so we have given free rein to the sociopaths.
    Job number one is to break down aggregated power-yes, for sure, in the financial industry, but elsewhere too–and then to insure against the sociopaths’ getting hold of the reins of power. This requires a persistence of political will and vigilance from a well-informed and public spirited citizenry. It’s easy to be well informed; it’s not easy to muster the political will public spiritedness. But this is simply what is required of a mature republicanism. I don’t see any other way.

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  15. Mark Avatar
    Mark

    You are assuming big predatory firms just arise naturally in capitalism.
    I believe otherwise. I believe such a problem is the result of an infusion of investment of dirty money ( which is any money under the current system) from usury-financiers who coin their own money (when it should accrue to society as a whole, not just these private bankers) and then use it to create these goliath companies and to gamble in the Wall Street casino-economy.
    Without the mechanism of wealth-concentration which is the trickery of usury…I really don’t see the other problems emerging. Usury is what causes/enables all of them through its trick of forcing everyone to pawn their own production in order to monetize its value which is why wealth concentrates.
    Perhaps you’re not realizing how much slower individual wealth would grow without usurious mechanisms. It would be impossible for rich people and companies to passively let their money “snowball” for example, as that whole dynamic of the rich getting exponentially richer the more they already have…is itself dependent on the usury mechanism. Get rid of that, and such high-flying illusory finance disappears, and capitalists are left earning only the value of what they actually produce, not the value plus a surplus scooped up at the usury casino.

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  16. Jack Whelan Avatar
    Jack Whelan

    I’m not persuaded that social credit is the panacea you see it to be. It could very well be part of a larger solution, But I think we are much farther away from a consensus about social credit than we are about the basic balance between the private and public sectors that social democracy strikes. We’ve been there; we’ve seen that social democracy works We’ve not seen that for social credit, and it seems, at least for now, rather a fringe idea, and one that would be rather a hard sell to the broader public.
    And policing it would be a lot like policing bootleggers during prohibition, don’t you think? Maybe I’m nitpicking, but my point is that you would need a fairly powerful state to insure the integrity of such a system, and there would have to be a very broad public consensus to support its implementation. it’s hard to see how any groundswell of political support could galvanize around it. It’s like asking th public to eat spinach rather than ice-cream. The political pressure for increasing the money supply would be hard to resist over the long run, and surely black markets would emerge to provide usurious credit where legal social credit was unavailable. How do you police that kind of thing? How do you prevent offshore lenders from destabilizing such a system? I”m not saying it can’t work, but this is an idea whose time is yet to come.

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  17. Mark Avatar
    Mark

    I’m not sure what you mean “police.”
    Usury only works in the modern world because it’s allowed to, because the government directly participates. It depends on the monopoly given to the banks through the federal reserve system to loan money into existence backed by the fed. It falls apart if that backing is removed and legal tender is treated differently. If the system was changed, bankers would have to literally counterfeit money (digital or currency) to go against it. But if the threat of counterfeiting is your objection…then you’ve not raised an objection to social credit, you’ve raised an objection to money in general. Yet counterfeiting isn’t a huge issue in the US; certainly not enough to ruin the integrity of the money supply.
    As for illegal usury…I’m not sure how that would work. The social credit I imagine still has loans at interest, it’s just not fractional reserve so there is no “money multiplying.” But there is no way to do that sort of multiplicatory lending without the participation/backing of the fed. So, again, there wouldn’t be a need to “police” it, merely for the central bank to stop participating. Without their participation, doing it on ones own becomes rather impossible short of counterfeiting (which, again, should pose the same level of threat whether money is social credit or not).
    The problem isn’t that the bankers are doing something apart from the State that the government needs to stop. It’s that the federal reserve debt-money established by the government already makes the banks and the States partners in a monetary cabal. But take away the partnership of the State, and have the fed issue social credit instead of enabling the banks’ fractional reserve trickery…and they literally can no longer accomplish that trickery.
    As for political pressure to increase the money supply more than needed to represent the new value each year I’d say merely: the Fed’s interest rate decisions are pretty shielded from politics. You might say “not really,” but the influence is at the very least quite dampened and indirect given that they aren’t an elected body. Their successor in a national credit board would not be elected either, would have long terms like the current fed or Supreme Court, and by law would be required to use a certain algorithm to increase money supply relative to GDP, so it’s not like they get to make an arbitrary decision; the formula is fixed and pre-set. The only real thing for them to determine would be “what was GDP this year.” But as long as their estimate is even remotely correct, it would work.

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  18. Mark Avatar
    Mark

    I guess my point is this: you seem to be imagining that the State is a separate actor from our economic oppressors and can “restrain” them.
    The sad truth is that the State, at least since the Federal Reserve system was established under Woodrow Wilson…IS part and parcel with our economic oppressors. It enables the whole scam through the fed and how federal reserve money works.
    Of course, we have a division of powers, so sometimes “the left hand doesn’t know what the right is doing” in government, and so for a while we could have both this dynamic AND social democracy. But ultimately a house divided against itself cannot stand, and one or the other interest will win out.
    Well, history has shown us that the State’s interest in the monetary cabal was more powerful in the end. At this point, dreaming of “going back” to the social democracy of the 30s through 60s to “re-learn the lesson we should have already learned” is as naïve as the “golden age reactionary” tendencies of the conservatives you denounce. It’s not that somehow we learned something and then hit a mysterious roadblock that caused progress to somehow reverse. It’s that this outcome today IS the natural logical progression of the system as it was established. To get anywhere, we need to move forward. Not backwards (nor even “backwards to move forward again, correcting for the previous wrong turn.”)
    Welfare and such, I would posit, are essentially “bread and circuses” to stop the masses from rising up against the debt-money system. The government gets in bed with bankers in the form of the Fed, but then pays the poor just enough to keep them appeased and complacent.
    You speak as if the bad guys are “out there” and the State needs to simply defend people against them (but you also problematize the issue of the State being able to “police” them).
    The sad truth is, the State and the “bad guys” are now so incestuously intertwined in the form of the monetary system that they ARE the self-same agent. Unless Congress decommissions the Fed.
    So your questions about “policing” seem a misunderstanding of the whole situation to me. It’s like if a law was passed against charging a federal income tax and you asked “Yes, but how would the government enforce that?” Well…by following its own law and simply not collecting one! The reforms I propose are not a matter of the State forcing outside agents to act a certain way…they’re a matter of the State choosing to, itself, act a different way. Because the State’s participation is an essential ingredient in the current usurious system. It only works by State participation in the form of the Fed. If the State stops participating, there is no need to “police” anyone else, because as soon as the State stops enabling it, your problem is solved.
    The State and the usurers are in a parasitic codependence. The State can only end the problems by leaving that relationship (and leaving the usurers to suffocate in the State’s absence). The idea that the State is a benevolent actor who can fight off the wolves is laughable at this point. Sadly, the State (under the name of the Federal Reserve system) IS the mama wolf off whom all the other wolves suckle. That she occasionally throws some salt-licks to the fawns is not really beneficent, it’s mainly as bait so that her real cubs can easily hunt them.

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  19. Jack Whelan Avatar
    Jack Whelan

    The State is involved in everything–that’s the point. We’ve been bamboozled into thinking that free markets exist apart from the state. But the argument Polanyi is making is that the State in promoting free markets is promoting the interests of a particular class of capitalists because Liberal market ideology holds that they are the wealth and job creators, and in doing so has allowed the creative destruction of markets to have an extraordinarily negative impact on everyone else.
    So it should be clear by now that the biggest problem for me is preventing concentrations of wealth and power. Do you really think that all our problems with wealth and power concentration would go away by abolishing fractional banking? I suspect it would make things worse. There’d be slower growth and more hoarding by those who already have enormous wealth.
    The system you propose might have a chance if we started from square zero, but I doubt it, unless there were also state enforced prohibitions against getting too big. But too many actors are already too big, and you have to account for how social credit will affect the role these already big actors play in the political economy even after social credit were instituted. We have to start from where we are in historical context, not in some historical vacuum.
    I’m also not sure if I think that the best remedy is to abolish the Federal Reserve. Instead of abolishing it, perhaps it should be transformed into a monopoly state-owned bank that controls all credit. Isn’t that kind of what you are promoting? The problem isn’t the Federal Reserve; it’s the way, as you correctly point out, that it props up the private sector financial system.
    Anyway, everyone I’ve known to make arguments about abolishing the Federal Reserve has been a gold-standard, hard-money, right-wing crank–I’m not saying you are, but I am dubious and suspicious of arguments about abolishing the Fed, and would have to do a lot more research than I am motivated to do to be able to confirm or refute my suspicions.
    I’m suspicious because any policy that tightens the money supply, and social credit would surely do that, is not something that historically gets populist and small business support. It’s the already wealthy who like a tighter, if not deflationary, money supply. Do you disagree?

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  20. Mark Avatar
    Mark

    “The State is involved in everything–that’s the point. We’ve been bamboozled into thinking that free markets exist apart from the state. But the argument Polanyi is making is that the State in promoting free markets is promoting the interests of a particular class of capitalists because Liberal market ideology holds that they are the wealth and job creators, and in doing so has allowed the creative destruction of markets to have an extraordinarily negative impact on everyone else.”
    I agree with the point that “the State is involved in everything” and the general idea behind “free markets don’t exist apart from the State.” What I’d disagree with is that, apart from usury, free markets promote any one particular interest or class.
    I agree that if we assume usury (given that it is the current de facto reality)…defending “free” markets is actually, in disguise, defending the interests of the capitalist class. But I think the problem there ultimately boils down to the fact that the market is not really free because it is in a “false vacuum” due to the theft of surplus value through usury, through the banks’ monopoly on monetizing credit that should really accrue to all members of society equally.
    A true “freedom” of the market…doesn’t mean allowing theft! But that is essentially what the State does nowadays: it refuses to protect people against theft (and, indeed, positively throws it’s muscle behind the thieves) in the name of “freedom.”
    I agree with this. I just, again, don’t think the ire really needs to be directed at the capitalists or the REAL concept of a free market…it needs to be directed at the financiers and the fact that, on account of usury mainly, the market is not really free.
    “So it should be clear by now that the biggest problem for me is preventing concentrations of wealth and power.”
    The concentration of power is caused by the concentration of wealth. And the concentration of wealth is caused by usury.
    Consider: if you allow interest in a fixed money supply…it inevitably results in the bankers eventually owning everything. Why? Because If I loan you 10 (out of, say, 1000 in existence) dollars and expect 15 back…next time I can loan 15 out and expect 22.5 back. And then I can loan that out and expect 33.75 back. I can “snowball” it. Without “doing” anything except having money, I can eventually acquire all of it. This is the unnatural logic of usury.
    Now, I’m not against interest absolutely. In a system where the money supply isn’t fixed, interest on loans in itself isn’t necessarily usury. But the same principle can apply in a non-fixed money supply in the form of the debt-money fractional reserve system: it is the mechanism for the unnatural concentration of wealth, because it allows forms of “investment” (really just theft and chicanery) that snowballs money and makes money out of having money for doing nothing not even taking any real risk.
    “Do you really think that all our problems with wealth and power concentration would go away by abolishing fractional banking?”
    Well, assuming that what replaced it was a social credit dividend and a price rebate to close the gap between purchasing power and prices AT the point of purchase. Pretty much.
    “I suspect it would make things worse. There’d be slower growth and more hoarding by those who already have enormous wealth.”
    Why slower growth? Finance doesn’t cause growth. Real labor and production causes growth. Finance is just the book-keeping that decides how it’s all allocated in the end.
    “The system you propose might have a chance if we started from square zero, but I doubt it, unless there were also state enforced prohibitions against getting too big.”
    The thing is, as people started getting their dividends, private individuals would be more free to invest. As people started investing, more and more people would own stock, and so the overall ownership of capital would become more equal. There would be “more capitalists.” Everyone would be a capitalist. You wouldn’t need to enforce anything, really. Once you pierce the barrier that is stopping the gradient from equalizing…it will inevitably equalize more. It’s never going to be perfectly equal (nor should it be), but things will be a lot more like what people imagine as the ideal (or even just what they imagine it is currently) than what they really are currently:
    http://www.youtube.com/watch?v=vttbhl_kDoo
    Usury forms a sort of “Maxwell’s demon” (to make a physics reference) that causes wealth to concentrate against nature. Without that demon though, a true natural equilibrium is inevitably reached just by the laws of entropy:
    http://en.wikipedia.org/wiki/Maxwell%27s_demon
    “But too many actors are already too big, and you have to account for how social credit will affect the role these already big actors play in the political economy even after social credit were instituted. We have to start from where we are in historical context, not in some historical vacuum.”
    Even if Maxwell’s Demon has already trapped all sorts of fast moving particles in one side of the chamber, such that it is much hotter…as soon as you remove the demon…the temperature naturally begins to equalize. The nature of social credit would begin a slow deflation of the big actors as soon as it was implemented, because the usurious financial “gates” that allow wealth into their circles at a greater rate than it leaves (hence a constant net gain and concentration) would be gone, and so natural equilibrium would start to set in since nature abhors a vacuum. Turn off the air-conditioner…and your house will inevitably start heating up again and equalize with the outside environment. Nothing more is needed. You don’t need to actively heat the house at all. You just turn off the air-conditioner and wait.
    “I’m also not sure if I think that the best remedy is to abolish the Federal Reserve. Instead of abolishing it, perhaps it should be transformed into a monopoly state-owned bank that controls all credit.”
    That’s one method, and I certainly wouldn’t oppose that. That’s vaguely equivalent to social credit, as I’ve said: socializing/nationalizing the banking system.
    However, there are several problems that doesn’t solve, such as inflation and the question of incentives (why would the individual bank branches make good lending decisions if they weren’t in competition?)
    Nevertheless, if we reach a day where every citizen starts getting his equal dividend check from an equal division of the total profits of the entire banking system that year…then I’ll certainly admit this is a great leap forward and be quite happy.
    Heck, I’d be rather happy just if savings accounts started really getting a true share of banking interest rather than a token “interest” that really has no relation to the bank’s lending income.
    “Isn’t that kind of what you are promoting? The problem isn’t the Federal Reserve; it’s the way, as you correctly point out, that it props up the private sector financial system.”
    Well, but the Federal Reserve also, in itself, operates according to the methods and logic of those private banks. And there are intrinsic issues with those methods and with that paradigm of what money is/means.
    “Anyway, everyone I’ve known to make arguments about abolishing the Federal Reserve has been a gold-standard, hard-money, right-wing crank”
    You shall not crucify us on a cross of gold!
    Social credit is the OPPOSITE of a gold-standard (or even bimetallism). Social credit believes pegging the money supply to an arbitrary commodity is idiocy. A gold-standard also still doesn’t answer the question of “how do we represent monetarily the new value, the surplus value, society creates each year, and who gets that newly created money?” I’ve never really heard gold-standard folk supporting a Universal Basic Income. Indeed, they all seem to buy into the ruthless “to deserve an income, you need to be employed” ethic.
    “but I am dubious and suspicious of arguments about abolishing the Fed, and would have to do a lot more research than I am motivated to do to be able to confirm or refute my suspicions.”
    Well then you’re not going with reason. You’re going with vague cultural affinities and a nostalgia for the 30s to 60s. Which are exactly the sort of approaches to politics I thought you critiqued.
    Just because a solution isn’t “mainstream” (yet) doesn’t mean it shouldn’t be looked into or considered, or that it should be rejected.
    I’m fine being on the leading edge of the envelope even if those people always look a little kooky.
    “I’m suspicious because any policy that tightens the money supply, and social credit would surely do that, is not something that historically gets populist and small business support.”
    Social credit doesn’t tighten the money supply. This is so funny, because the critique of social credit I always get from the OTHER side is that it would be massively inflationary! So which is it? Does social credit lead to inflation or deflation? Does it produce too much money, or not enough? It’s attacked from both sides! By both accusations!
    The truth is, social credit’s price rebate mechanism of closing the purchasing power gap (which inevitably results from the creation of surplus value, and which gap is currently closed by debt) AT the point of purchase…is actually designed to be ZERO inflation or deflation. It’s designed deliberately to make money supply pegged EXACTLY to how much purchasing power is needed to enable the buying up of all (desired) production. Not just putting money out there and hoping that by “turning on and off the hot and cold water” we eventually reach a vague correspondence between money and real wealth.
    “It’s the already wealthy who like a tighter, if not deflationary, money supply. Do you disagree?”
    I don’t know why you bring this up. It’s true but it has nothing to do with social credit.
    Social credit involves a universal basic income NOT drawn from taxes (but from new money), and a price rebate that allows society to collectively buy all the goods it produces without collectively going into debt to buy up its own production (which is an absurd situation…do you disagree? Why should society have to go into debt to bankers just to be able to buy its own production? The production already exists, so it’s obviously not “beyond our means”…so what exactly are the bankers charging people for other than providing the tokens that represent the goods and services that ALREADY exist!)

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  21. Jack Whelan Avatar
    Jack Whelan

    Sorry, man. I hear what you’re saying, but we’ll have to agree to disagree. I just think you are mistaken that social credit and banning usury will change the game as significantly as you think it will.
    The economy is a social construction. There are no laws that govern its operations, there are just rules to the game that people who have power and wealth make up to protect their interests. That’s just a fundamental assumption I make about how the world works. And so it lies with an educated vigilant public to set up the rules of the game so that the broadest common good is served, and that’s why we need a robust social democracy.
    I think markets have a role to play, and I also think the state has a role to play in setting and enforcing the rules. That’s my basic argument, and you don’t seem to disagree with that; we do disagree about the extent of the role the state should play. I’ve argued here that if the principle of subsidiarity plays a role in shaping people’s imagination of the relationship of the centralized state to the lives of people living on the local level, and if the citizenry is vigilant in limiting over-reach by the state, especially in forcing things on people top-down, the right balance can be struck, and I would have no problem with the state owning utilities, the banking system, the health insurance system, the airwaves and the internet, and other areas where the public good just isn’t served by competition in the market place. Let every other area in the economy be free, and I’d probably have no objections to a social credit financing system laying the infrastructure for that kind of small-scale market activity.
    But it’s hard for me to see social credit being effective in dealing with the problems of global scale that we are confronting. You need big, publicly accountable systems to finance and coordinate activities on that level, and I’m sure you have a comeback for these objections, but let’s let it rest for now.
    I would, however, like to hear a debate between someone like Joe Stiglietz with social democratic leanings and whoever is the foremost proponent of social credit to see where they would share common ground and where they would disagree. I’m more in the Stiglietz camp until I’m persuaded that he’s full of it.

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  22. Mark Avatar
    Mark

    I’m not sure Stiglietz has even heard of social credit. Most people are caught in a false dichotomy because they don’t even know other options exist because the conceptual deck of politics has been stacked from the start in order to hide the real source of the problem (the monetary system) “in plain sight.”
    Indeed, try to mention social credit and you’ll hear “Printing money just leads to hyperinflation like in Germany. It’s not a solution!” As if that engages the real idea at all. Or, worse, something like “Social credit seems linked to antisemitism, therefore let’s not consider the ideas on their own merits.”
    Seriously, I’m not sure who the biggest social credit booster is today. It may in fact be me! The folks at The Michael Journal still promote it…but I went to one of their meetings when I was living in Canada and they were, as you put it, cranks. Conspiracy theorists who seemed to barely understand the economics of Douglas’s ideas other than liking the idea of getting their dividend in the mail each year without having to work. It was sad.
    But I don’t despair. I figure I keep talking and explaining why the common objections to social credit are based on misunderstandings, and I figure maybe I raise it’s profile a little bit.
    All I know is that I have never been satisfied by any other explanation of unjust wealth concentration. All the other explanations leave out either a “how” or a “why.” Which is to say, the mechanisms they critique and propose to disrupt (with State power usually) either do not have (for me) a convincing causal explanation (a how) for why that mechanism leads to wealth concentration…OR they fail to explain why exactly the determination and allocation of value under such a mechanism is in fact unfair or false. Only social credit’s unmasking of the usury-money system gives me a clear answer for A) how the money-concentration trick works, and B) why it is in fact a trick rather than a legitimate allocation of value to the various players or agents.
    So can you explain to me, in a way that doesn’t ultimately rely on the ability of bankers to loan money into existence out of nothing and then expect interest on the loan…how the economic elite are getting all their wealth, and what injustice they’ve engaged in (again, other than usury) to get it?
    Because if you have no explanation for the exact causation of the problem (and why it’s a problem)…proposing solutions seems to be putting the cart before the horse. You see symptoms you don’t like, to be sure, in the ills of inequality. But point to me at what step in the process things went wrong. I think we both agree there is a surplus value that is being stolen and concentrated in the hands of the few. So explain to me, if not by usury, HOW exactly are they stealing it, and why that mechanism constitutes stealing.

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  23. Mark Avatar
    Mark

    Actually, the end part of my last reply made me realize just what the issue I find with your “mainstream” (and it is rather mainstream economic leftism) paradigm.
    Namely, that the story told involves something like a series of in-themselves moral (or, at least, not absolutely immoral) acts leading to an unjust situation, an unfair system or structure. No particular crime or absolute instance of injustice can be identified (other than a vague condemnation of “greed”…which to me always winds up sounding as absurd as Obama’s notion that companies would voluntarily forgo legal ways to lower their taxes) and yet the end result is clearly bad, and so the “two step” process has to remain in place, wherein the system is allowed to continue as is (because no particular moment in the process can be pointed to and problematized) but then, post facto, we have to readjust or recalibrate it because the system as a whole that emerges is bad on its face, even though no particular unethical act can be identified in the chain of causation leading to it (and so targeted for before-the-fact criminalization, etc).
    To me this is nonsense. An unjust order does not arise out of a series of in-themselves ethically allowable decisions. If an unjust order is emerging, it must be because at some point (or several) actual concrete injustices are being committed. Intrinsic injustices, not just things like “You should pay your workers more out of the goodness of your heart even though neither the law nor the market-rates require you to.” No, the moral law doesn’t set any sort of “minimum wage”…so it’s all up to prudential judgment at that point. Unless we can identify an absolute intrinsic injustice taking place…
    Well, the conclusion is that the resulting situation is not, in fact, unjust and does, in fact, represent the just and correct allocation of value accruing to individuals. In this sense, the Republican conservative types are actually more logical and consistent: if no one is willing to identify a specific moment (other than a vague “spirit” or “attitudes”) where an absolute injustice takes place…then how can the outcome be called unfair or the incorrect allocation?
    I do, in fact, identify an actual concrete “point in the process” where an unnatural act (usury) takes place, which throws the legitimacy of the entire allocation after that into question as no longer being the correct allocation (because it is rooted, at least in part, by an injustice which creates a false, and thus unfair, equilibrium). Modern economic liberals, on the other hand, just sort of have this baffling idea that somehow a series of individually licit and unobjectionable acts (albeit, perhaps, carried out with “greedy motives”) somehow nevertheless leads to an unjust order that thus needs to be corrected after-the-fact (because there is no particular act during the process itself that can be singled out for criminalization).
    But to me that view is schizophrenic morally, logically, and economically. A series of in-themselves objectively licit acts does not lead “tragically” to an unfair order that then needs to be retconned. If an unfair equilibrium, a false equilibrium, is emerging…something, some specific unjust practice (or practices) must be skewing things, must be the source of the equilibrium becoming unjust and out of whack.
    I know what I think that practice is. I have no idea what you think it is, or whether you even think anything can be singled out like that, or rather perhaps just think that the solution is “Building a culture where people are less greedy, combined with State after-the-fact recalibrations to account for the fact that fallen human nature never will, actually, be less greedy.”

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