Free Market II – The Return to Abundance

Now that I’ve had a prod at the notion of ‘freedom’ as it pertains to ‘free markets,’ it’s time to ponder the extent to which a word like “free” might be useful as we define new perspectives and understandings of trade in the transition from capitalism to X. Because money is the deepest functional component of economics, and because money is the mechanism which ‘decides’ what is distributed to whom in which quantities, it is money’s effect on ‘freedom’ that is of interest here. Money is not in any way ‘value free’ as asserted by its High Priests – nothing which is important to humans can possibly be ‘value free’ – in fact money is probably the most potent symbol shaping society and culture today. There is therefore no more important area of study so overlooked and misunderstood as money. There is, of course, good reason for that:

The paradigm we’re living with is a monopoly of bank debt money. That is the thing that nobody questions. ... It is NOT a good idea in an academic career to talk about the money system. ... Paul Krugman told me personally that it was crazy to talk about the money system. “Didn’t they tell you? Never touch the money system!” ... You’re killing yourself academically if you touch the money system.
Bernard Lietaer. (Professor of Economics)

Sadly, the economic sciences have often been exposed as mathematically faulty, and therefore as unscientific and a pure propaganda tool of the financial elite, by, among others, Nobel Prize winner George Stigler 50 years ago.
Franz Hoermann. (Professor of Economics)

Economists are not economists at all, they're propagandists of money value.
John McMurtry. (Professor of Philosophy)

It should then be no surprise that understanding money has become as self-referential as defining the smell of your nose. Typically, adroitly kept ignorant of the salient details, we all ‘just know’ what money is, exactly as we once ‘knew’ the world was flat. We use money as effortlessly as we use our limbs. It makes ‘intuitive’ sense to earn it through labour, then spend it on desired and needed things. Money has been presented, via shadow theatre and myth, as a story easy to understand: It is an unbiased rewarder and punisher of saintly and devilish human nature, keeping us in line in direct proportion to our deeds. It is free of notions of morality and politics, paves no road to anywhere with any intentions whatsoever. It can’t care about good and bad, it just quietly does its job and leaves the rest to us. And yet behind this expertly painted scenery, money, though ‘just a tool’ with a particular application, is also a designed solution which exacts costs on us all over and above the immediate and comparatively visible cost we call usury.

The costs money brings with it, the effect it has on behaviour, the slow-drip of its power to shape culture and socioeconomics, should, in my view, be teased out primarily via analysis of money’s logical attachment to scarcity. As I have come to understand it, scarcity generates fear of want, obsessive self-protection, addiction to differential advantage, rabid competition, entrenched social divisions, and so on. I think of these costs as direct organic outgrowths of economic activity … activity, that is, as filtered and affected by money. I also believe that any attempt to define markets and economics without explicitly considering these deeper, broader effects can only be unsatisfactory, incomplete and deceptive. Thus, whatever ‘freedom’ there is in monetary systems – ignoring the cosmetic differences between concentrations of power called The State and those called Big Business, and the phony war these titans put on to keep us bewitched – must be studied in terms of purchasing power and power generally, and power’s chronically uneven distribution throughout society.

In short, money cannot be the neutral, ‘value free’ medium promoted by its controllers. Such neutrality is impossible simply because money is so very useful. It is in fact so useful that having none can ruin your entire life, while having millions makes access to material plenty a snap, though likely ruins your emotional and/or spiritual life. Money is an exquisitely refined tool of control – especially when allied with compound interest – a tool no self-respecting elite will lightly relinquish. It follows that any system guided and shaped by money cannot ever be ‘free’ in the sense suggested by Free Markets™.

So, if “We, The Sheeple” want freedom, or some valid approximation of it, we must look elsewhere for it. Happily, a foretaste of the alternative is in clear sight today, though appreciating its broader ramifications takes an act of will. There is a market now in operation which does not use money to determine who can afford what. It’s called The Internet and is a pseudo-example of a non-monetary economy of abundance open to all. (I’m leaving the entry fee out of the discussion, not because I consider it tiny or ‘value for money,’ but because the behaviours of market participants, once ‘through the gate,’ are relevant to this exploration, not the cost of entry.)

To a very significant extent The Internet is a moneyless market; blogging is free, search engines are free, there is free software to download, poetry and literature to read, articles, newspapers, social clubs, comics, films, music, and so on, all a typed address or mouse-click away. At last we can talk of demand as ‘pure.’ That is, in such open conditions demand is no longer money-demand, it’s just demand.

The enthusiasm with which ‘suppliers’ offer their wares for free demolishes the argument that humans are ‘lazy by nature.’ We see ‘work’ blurring with ‘fun’ as digital technology allows boundless access to all who care to consume. In this market place there is simply not enough time to consume what’s on offer, nor is there sufficient demand to meet supply. Also clear to see is that demand is in fact not infinite at a price of zero. Infinite demand is flat out physically impossible, and for blindingly obvious reasons, such as needing to sleep, eat, bathe, having only the one brain to process all that information, and so on.

The Internet, like capitalism, like socialism, like everything, is far from perfect. Addiction is a problem. Pornography is a problem. Disinformation is a problem. And yet considering the state we are in as a species; considering our education; considering the enormous influence of advertising, public relations and propaganda; the might of Big Business and The State; hierarchical and structural social rigidity; the rampant corruption and decadence, aren’t these growing pains fully understandable? The Internet is the first ‘free’ market humanity has known, and we’ve exposed ourselves to it quite suddenly after millennia of scarcity-based, fear-based thinking and doing. We find ourselves face to face with an open and egalitarian playing field while trapped in a stiff, hierarchical society.

And hierarchies everywhere are panicking, some have broken already. The Internet’s presence (alongside the very serious issue of ‘peak everything’ that is becoming increasingly obvious) demands of us a radical change of direction.

What we see in the negatives thrown up by The Internet is characteristic of children set loose in a candy store, or teenagers at college finally out from under their parents’ watchful eyes – sometimes with tragic consequences of course. We are still deeply stained by a system designed from top to bottom to produce obedient and emotionally immature consumers. Perpetual growth and conspicuous consumption are still systemically required to drive the economy faster and faster, which means the economy still needs a steadily growing influx of mindless consumers unthinking enough to see happiness stuck on the other side of the next purchase. Everything revolves around this insatiable hunger, money whips the world on and on, faster and faster, but of course it cannot go on like this. To be wise enough to deal maturely with the arc of our development, we need to build a far freer society from the ground up.

So, finally, what does “free” mean? I believe the word is going to be useful in the sense of "optional." For example, education must be optional by being open and unforced. Work must be optional to the extent that citizens no longer have to exchange their labour just to afford shelter, food, warmth, transport, health care, and so on. Such ideas most likely seem absurd to most, and right now, today, perhaps only a handful of us could actually deal with the freedom we think we have, let alone the type of freedom I’m describing here. To produce humans mature enough for the very open society we are so stumblingly bringing down upon us, we have to trust ourselves to be able to look after ourselves, trust that we in fact want to contribute our talents freely to the functioning of a society which strives to benefit all.

We have nothing to fear but our enforced ignorance, which, though very dangerous indeed, is not insurmountable. In the end it will become clear to us all that accomplishment is reward. Success is reward. Imagine no more nanny state, no more big brother corporations, and let that vision inspire you. For only after their demise can we cope with the effective freedoms waiting for us on the other side of inevitable collapse.

The Face of America

Via Jessie, Yves Smith at Naked Capitalism brought a very interesting Bloomberg interview with Jeffrey Sachs to my attention. For me the look on the face of the interviewer as Sachs delivers a few truths to the listeners is priceless. Here it is:



I'm very troubled by this interview. It shouldn't be revelatory. It should not be that the information delivered is shocking, yet it is. More troubling still, despite the 'anti rich' tone, is the absence of any mention of the money system, of steady state growth, of the necessity of sustainability. These obvious and vital points are still gazillions of light years away from mainstream American opinion, thinking, imagination. This cannot end well. The US is not capable of a revolution as peaceful as that accomplished in Egypt.

I wrote the following at Naked Capitalism, but want it up here at Econosophy too:

What pleased me most about the Sachs interview was the man’s exasperation. It was palpable. I know little about Sachs or his views, past or present, so can make no judgment as to any change of heart on his part. However, the interview was revealing because obvious and simple truths were spoken which shocked and are shocking to a country which does not know the wider world any more, nor even itself. America has declined in status dramatically over the last few decades, and that decline is accelerating. The laughable circus it trots out day after day and calls democracy is an embarrassment to humanity. In pursuit of profit it has blindly dumbed down its people to ignorant consumers, consumers who tote guns and shout slogans as programmed automatons, and those slogans most often are some salivating, Pavlovian grunts to do with ‘freedom.’ The irony is bitter indeed. It is as if the US’ founding fathers were in fact Monty Python script writers: “Yes, we’re all different!”

America was once Europe’s dream of what might be. Something happened on the way to the bank though, something dank and fetid. The stench is rising. The explosion is going to be stratospheric.

Watch the whole thing.

This "Free Market" you speak of ... What is it?

What exactly is a ‘free market?’ Can such a thing be put together on purpose, or must it grow organically to be ‘free?’ Is a market only free, when it is free of intent and design?

Obviously, unless we insist humans are devoid of free will and intent, of the ability to plan, to desire particular outcomes they can imagine bringing about, we need to explore the former possibility; putting a free market together on purpose, in a part planned, part ad hoc manner. How have humans done this, how have markets come to be and in what sense might they be considered free?

(In this exploratory exercise I’m leaving aside the differences between price-control by the state in a planned economy, and the ‘floating prices’ of ‘free’ markets, because the word “free” implies, purposefully I feel, an untruth. Corporations plan, of course – they are not price takers – and cartels plan in concert, all it takes is power to control prices, not just a government. Furthermore, The Market’s favourite nemesis, The State, can’t not be involved. And calls across the western world by lobbyists (interference in the state, perhaps?) for further market deregulation are not directed at socialist governments. For these reasons and others, it is clear ad nauseum use of the word “free” serves a clever deception in obvious need of piercing. (As a side note, see Steve Keen’s “Debunking Economics” for a thorough debunking of supply and demand price determination.))

Let’s go back to a notional ‘beginning,’ and consider which circumstances might give rise to market activities. First, groups of people must come together to trade, to want to inter-operate in a market of some kind. This is highly unlikely to be accidental. Without this deliberate ‘coming together’ there can be no market, thus, we can already state that a social impulse is a prerequisite for markets. In their simplest form markets cannot be 'value free.'

Let’s look a little deeper into the prerequisites. In order to want to trade at a market, people must:
1. have stuff they neither need nor want;
2. want or need things they cannot make or find lying around; and
3. know they have a very good chance of finding what they’re looking for, where the market is.

For example, you already have a table and don’t need another one. Why would you build another? To trade it. But why trade? Because the energy you spent specializing your knowledge means you have no time or ability to grow your own food; you must trade. So you build an extra table, and take it with you in search of people selling various foods. But, if you are not sure where to find these people, you risk starvation wandering through the wilds.

So to trade at all, you need around you a community of people you know are making/growing things you can’t, because you have specialized in X. You take this ‘risk of specialization’ because you know for sure others are specializing their knowledge, and rely on you as you rely on them. Without this foundational trust trade is impossible. First community, then specialization, then trade. Not, as neoclassical economics would have it, so; first competition, then trade, then trust … maybe … someday, after I've maximized my personal interest.

“Central to [the] problem is the assumption that when asked a question, the individual gives an answer which will maximize his personal gain. How good is this assumption? I doubt it is very good. “Where is the railway station?” he asked me. “There,” I say, pointing to the post office, “and would you please post this letter for me on the way?” “Yes,” he says, determined to open the envelope and check whether it contains something valuable.
Amartya Sen quoted on p99 in “Econned,” Yves Smith.

Right off the bat we see trade cannot be ‘free,’ whatever ‘free’ really means. Trade inherently requires deep trust and interdependency, and is an inescapable consequence of specialisation (prior to abundance). It is complex, involved, embedded in community and custom, can only be free of, or uninfluenced by, those factors which are irrelevant to it. Trade implies, in its simplest form, cooperation, which requires agreed rules. The competition associated with trade arises when people specializing in what you do, trade where you trade. Like all things, this is ‘good’ and ‘bad.’ ‘Good,’ because it can motivate improvements in quality and prevent monopoly/oligopoly build up, and offer more choice, etc.; ‘bad,’ because it inspires cheating, cost cutting, keeping knowledge secret from the community to maintain competitive advantage, etc.

Naturally, the community trading in the early form of market here conceptualized shares a language and a religion of some form. Its members will therefore have similar sensitivities to fairness and just price, and fair knowledge about the labour of their trading partners – knowledge, though, which is far from full; by definition specialization makes “information asymmetry” inevitable.

This sketched community, because it is small, can establish relatively uncontroversial and simple laws, or rules of trade, that keep things more or less on an even keel. But change is the only constant, no matter how ‘free from interference' our market place is. As time moves on the trading sphere expands. Laws become increasingly complex as trade reaches out across cultures and religions and as media of exchange enable more complex trade. This ‘mission creep’ is inescapable, because, contrary to economics’ assumption of the total uniformity of all market participants (human beings), people are in fact very differently motivated and skilled, and reality is far beyond human control. Furthermore, there is an ever-present pressure to game the system (being rich is definitionally better than being poor), which means a corresponding requirement to ‘interfere’ in the market to ensure stability over time. That bears repeating; there is an ever-present pressure to game the system. Intervention of some kind or another is an increasing necessity, regardless of the inherent ‘intervention’ of establishing ground rules for even the smallest market, ground rules which themselves can only grow out of the soil of pre-existing cultural sensitivities.

So we come to intervention. What is it? I think of it like this; you can’t not interfere. For example, I’m walking along the riverbank and notice a drowning child. I can rescue her, because I’m a good swimmer. If I choose not too, am I intervening or not? My choice, whichever it is, affects the flow of events. I might feel guilty for the rest of my life if I don’t dive in, or, if I do, become a hero and marry my childhood sweetheart. Maybe the rescued girl grows up to be an actor. Maybe she becomes a murderer, and so on.

Doing and not-doing are both choices which have consequences. ‘Non-interference’ is a choice, a preference, a style if you will, with consequences which differ from its so-called opposite. That is to say, non-interference is an interference at the level of affecting outcome. ‘Non-interference’ is as much a conscious choice as ‘interference’ is, if there is awareness that a choice is to be made. If there is no such awareness, then there’s nothing to debate, nothing to talk about, no issue to address. The point becomes moot, the supposed dichotomy vanishes.

So what is ‘free?’ I honestly don’t know. People deploy the word when Pavlov rings his liberty bell, not fully sure why they’re drooling it out. I don’t believe anyone knows what a ‘free’ market really is. As soon as you start to describe such in detail, the ‘freedom,’ perceived dimly in the distance, evaporates like morning mist. The perfectly competitive market, that Camelot which in economic theory prevents the build up of market-manipulating power, has preposterous, supernatural properties, not one of which is even remotely possible in the real world.

And thus I have absolutely no idea what a ‘free market’ is, or could be. I have not answered my own question. Epic fail. Yet I cannot accept the claim that an unplanned, unmanaged market is 'free,' or even that there can be such a thing. There is always planning, there is always management, and with money running the show, there is always concentrated power lobbying the playing field in its favour. Interference is the name of the game, and it's no surprise that the side in control of the MSM frames the debate. Bleat after me: "Freedom! FREEDOM! FREEEEEEDOM!!!"

A cynical thought just struck. What if 'free markets' are insisted upon by those who benefit from the system. 'Free' could be code for 'keep you hands off my fucking money!' Hmmm … Could that be what Freedom™ is? Elite freedom from the mucky masses?


Addendum (02.20.2011)
I just wanted these more mechanical points attached to this article:
1. At the heart of the economy is the money system. Free marketeers insist that only the market can 'know' how much money is the right amount, which means money must be produced for profit by private businesses, which means debt-money and interest, which forces growth. Growth must be perpetual or the system fails. Somehow money must be borrowed and borrowed and borrowed. When the consumer is tapped out, the market forces the government to intervene to save it: Government as Borrower of Last Resort.
2. Consumers are only as free as their purchasing power allows.
3. Marketing, advertising, public relations, propaganda (see The Century of the Self) are incontrovertible evidence that 'freedom' is a buzz word to defend a system designed to keep a particular group at the top of a particular hierarchy.

Fructose Foments

Strawberry, plump king, sunned
to sleep, dreams red juice.
Raspberry, his tumble-jester, bounces
through court, delicately free. Fat-faced
Blueberry mumbles complaint, the best
purple advice. Bramble works the fields,
setting with tangle and tang
the limits of neat. Cranberry
sucks its mouth and cleans on, firm
in kitchen and home, while Huckleberry,
too sweet for some, plays
all summer long. Autumn looks
to winter, and weeps sour
the unpicked Gooseberry, a fool
her only hope!



Hat tip to Rupert for the culinary suggestion. You, sir, are a darling!

The Economy™

The Economy™ runs smoothly only when there's enough money in circulation. How much is enough? How long is a piece of string!

Your challenge is to keep the amount of money in circulation optimal. This isn't as easy as you might think! The Economy™ is designed to leak like a sieve! Not only that, but ever increasing amounts of money gravitate towards the rich. But hey, it wouldn't be any fun if it were easy, right?

Your only way of getting more money into The Economy™—while it leaks like an incontinent—is to lend, lend, lend! That's right, you have to find growing numbers of people ready, willing and able to borrow your funny money, or the game comes to a riotous halt.

One last thing... You have very little control over how quickly money passing through the banks makes it into the economy. Casinos are so much fun, and thanks to modern technology, never further than a mouse-click away. Banks are businesses after all, right?

Good luck!

The Economy™. For sociopaths of all ages.