Tuesday, June 28, 2011

Escape's End

Make us in your father’s image.
Break us on your wheel.
Shape us with the binds tight
to your fierce love. We turn

at your command, around and around,
head over heels, dazzled with sky.
Against your industrial heat
clouds scatter, rain baulks

at your factory winds,
its promise sent nowhere.
Disgust from your eyes is
the only weather we know,

a tempest driving us on
up out of now, through growth
into the glittering infinity
your cold stars spin anew.

Beneath your crystal frenzy
writhes and slithers the teeming slime
your revulsed frown excites.
In the greying light, growing

confusion and decay.
A disjointedness weeps out
of the left-behind, steeps
as it rots, colours as it kills.

Direction has collapsed. Here
the spinning wheels we are
throw out their high-pitched sound
from which new bonds are spliced

while matter, our very stuff,
coalesces to clones of clones
in the gusting fear. All we know
is somehow, that’s all. Somehow

this is how it is. Yet in forgotten muck
a protest made of oldest time
finds eyes again, slips fingers
onto feminine hands

and smooths itself to life.

Wednesday, June 22, 2011

Questions and Observations on Hoermann's Proposals

Well, the last ten or so days have thrown up some thoughts and questions regarding the (very incomplete) Hoermann solutions presented, which I’d like to sketch out here before I wander off over the horizon. I’d be grateful for any responses, since, as I always say, this is up to us, not one guy sitting in his office penning elegant solutions no one has ever tested. Criticism is the lifeblood of getting solid ideas down before real-world experimentation can begin, as is continuing personal involvement in the process. Direct democracy cannot happen unless everyone participates, passionately, wisely, flexibly and maturely. A tall order I know, but there it is.

My thoughts and questions on my two recent Hoermann posts (which represent but a fraction of his proposals, so I could be barking up the wrong trees here) are:

1. Money created in direct and immediate ‘response’ to societal contribution sounds like a must to me. Time Banks do this already, though I’m not sure if the system will be flexible enough to take the load. So how will the appropriate amount (‘price,’ ‘wage’) be quickly and efficiently discovered, across the board? No way can a central authority do this, so the process must be market-based, that is, democratic. In one-to-one exchanges of services, a bit of discussion and bargaining, mixed with experience, should make trade and price discovery easy. Perhaps information from such trades could be fed, upon completion of the transaction, into a database accessible on the Internet (or Internet-like infrastructure). But what about manufactured items like cookers, MP3 players etc., how will ‘price’ for them be discovered, and how does money flow to those who worked on their creation? And when a car is rented, to whom does the ‘money’ flow? To a company? What is a company in the new system (see question 3)? And when people do unpleasant work like rubbish collection, does the community decide how much this is worth, how many points you earn for this? I prefer market solutions (in the correct money system!), so imagine ‘private’ or community-based enterprises providing such civic services, though the devil is indeed in the detail; how might this work? More on this below…

2. If the guaranteed income is an overdraft facility of some type (no interest incurred), is it zeroed monthly to represent a constant income? If an account is net positive by some amount at the end of the month, would that mean that account ‘loses out’ because there was no negative balance to zero out? Or perhaps a separate accounting circuit for guaranteed income might be helpful? Perhaps the electronic units would flow into an individual’s account, but be flagged to expire at the end of the month, in the sense of a 100% demurrage. That way guaranteed income would not accumulate, could not be hoarded. Or, as I’ve read elsewhere (perhaps also translated here at Econosophy), Hoermann hinted that accounts can slip deeper and deeper into negative territory. Perhaps this is limitless. The deeper the negative, the less the person is net-contributing to society, the less healthy, on many levels, that person is. If this negative crosses a particular threshold, a metaphorical red lights goes on, and the Life Guide leaps into action, to find out why the person is not contributing, and tries to re-motivate him or her. The assumption in this paradigm is that it is not at all fulfilling only to take from society, that to be in that imbalance is bad for the soul. I agree with this. We all like to feel needed, to contribute. As such a negative account balance is a helpful source of information.

3. What will companies actually be, legally speaking? What kind of entities? Under what legal terms will people work for them? Ad hoc? Guaranteed income destroys the need for a pension, but such questions as payment for work-based services need to be thought through. Also, how are company profits distributed? I believe such should be equal, but flexibility will be critical. The fewer laws the better.

4. Who rewards Hoermann’s materials scientists? How is the ‘value’ of their contribution determined? How do they get access to the raw materials they need? Who/what ‘owns’ the raw materials? Does this system have any chance at all of success at the national level? Does it have to be global from the get go? Resources are randomly scattered across the planet.

5. How are services like medical assistance paid for? Who pays ambulance drivers? What would hospitals be, legally speaking? To whom would they be answerable? To everyone perhaps, but how? Over what channels?

6. Money creation again. Personally, I picture a YouTube-like affair, where it does not ‘cost’ or incur debt to judge someone’s contribution. Hoermann mentions accounts going up upon a sale, and down upon a purchase. Nothing new there. But isn’t that a zero-sum process? Wouldn’t the balance of all accounts be zero if that were the only way money ‘changed hands’? Well yes, unless purely positive money creation also occurs, perhaps along YouTube-like lines. But how do we do this, and who/what is empowered to? If the money system is to be democratic, then we all should be allowed to create money, albeit not willy-nilly. If people earn more for doing unpleasant work, who pays them, and how much? Let’s say we need a scale. We could start, after much discussion and direct democracy consensus building, with something like this: rubbish collectors earn ten points an hour, sheep shearers 12, slaughter house workers 15, and so on. Then we’d have to set up fair and open mechanisms for recording the numbers of hours worked, and away we go, adjusting and tuning according to supply-and-demand information. Here the points that flow into the workers’ accounts are directly created by their societal contributions. No individuals go into debt as a consequence, except by the back-door of money being a claim on future and existing goods and services. Unspent money is a claim on society’s produce, society’s ‘debt’ to itself. Perhaps this direct democracy process of wage determination would be far trickier with things like brain surgery. Although, in theory at least, direct democratic processes should be able to arrive at flexible consensus even with specialized and highly skilled work. There are issues such as time invested to acquire skills like brain surgery, time spent net-taking from society until one can contribute. But perhaps all it takes is thorough and open discussion of the relevant information, hard as that is. If we don’t manage to set up a ‘deliberate’ or goal-oriented market-like process, we’re left with a centralized, power-based process.

7. A problem I see with the above is the absence of money destruction. The money supply would only expand. This is where tax – forgetting morality for a moment – is so elegant, and, therefore, where state mechanisms have their uses. In MMT tax is characterized as trash. We can think of tax as relieving pressure in the system. I believe, though, this taxation process could be automated, set up democratically, but here, as ever, the devil is in the detail. Who would be taxed and how much? (And is inflation even possible in this system, seeing as it is the antithesis of consumerism?) Could tax-like, pressure-relieving mechanisms be activated by some inflation-threshold. If yes, then how, and from whom would the money be taken? Perhaps another process, other than taxation, could destroy money. Perhaps an aggressive demurrage would progressively kick in if account levels exceeded a certain threshold. In a societal atmosphere not characterized by consumerism and conspicuous consumption this might be an effective pressure-relieving device that could be a design-property of each individual account. In the end, just as an excessive negative represents imbalance, so would an excessive positive. Although, we should not want an absolutely flat account-profile. Sustaining equality of opportunity is what counts. Equality of outcome – the opposite of diversity – is the enemy of life.

8. Trust. Unless the infrastructure enabling and the atmosphere surrounding our social and economic interactions fosters trust, the types of systems suggested above will be ripped apart by deception and fraud. Nothing whatsoever will work differently to today unless the very foundations of what we set up have as their core intent openness, cooperation and trust.

On the death of consumerism briefly. The model we suffer under today goads us into ever increasing consumption levels 24/7. This is a money makes right society; might makes right is for yesteryear. See “The Century of the Self” for further details on how skilled, pervasive and insidious the propaganda – sorry, I mean public relations – machinery is.

In a steady state system we would live to develop ourselves for ourselves and for society, for the fun of it, the challenge of it, to be. Life would not be about ownership and accumulation. Private property would dwindle down to personal trinkets of emotional value, and value would be freed from its narrow materialist confines. Transport, housing, white goods, would all be rented, and if a RBE were to emerge, would just be accessed. This change, from consumerism to (let’s call it) 'contributionism' changes money, and the nature of society’s need for money, so deeply, we can hardly imagine, from our vantage point, what it would be like to live in such a society. GDP growth would no longer be a systemic necessity, cooperation would be more encouraged than competition, advertising would be unnecessary, ditto accountancy, etc. So the framework for addressing these questions and assessing, imaginatively, the ramifications of proposed solutions, cannot be today’s. That makes this process difficult and error prone. Only actual ‘doing’ will yield solid information and feedback.

Sunday, June 19, 2011

Hoermann's Ideas for a Possible Way Forward II

As the WienTV interview is edited to begin with Hoermann answering an unheard question, I will too, although I've started a little way in, cut out his opening comments on “Zeitgeist, Moving Forward”. English speakers can watch the interview if they want though, because there are subtitles. But the subtitles are not good, miss and misrepresent plenty. As with my most recent translation, I've translated WienTVs questions loosely, only attempting to catch the spirit of the question, rather than stay true to every colloquial detail.

Without further ado:

Franz Hoermann: What we today think of as money, a thing we still associate with solidity and material, [or as] a value we pass around among ourselves in exchange, does not actually exist. It is pure information, a number, and needs therefore no medium, not even paper. It could exist, for example, solely on computer disks, which it does, of course, already, and is created there too. This is – if you've been reading between the lines – the problem behind the current financial crisis.

Money is created by a booking entry in private banks. Private banks have a monopoly of money creation. Not central banks, not democracy. And the way in which they extend their balance sheets, always and only with further debt issuance – debt bearing compound interest! – is the root of today's problems. That is, everyone has debt, debt is exploding, exponentially, and [this debt] cannot be paid back.

WienTV: Yours is a very provocative thesis, namely that 2011 will be the end of money. Why?

FH: Well, “the end of money” has multiple meanings. On the one hand, today's money is nothing more than a rule of the game. This rule says that individuals, groups, institutions and states must repay their debts with interest on top. If you take a careful look at this, you'll see that for most industrial nations, this year, the numbers don't add up. What is actually happening with all the Euro Bailouts is nothing more than paying old debts with new debts. These news debts bear, of course, interest. That means we can predict that these debts will explode, that they will be, because of the rules of the game, unpayable. That is the end of money from one perspective.

The second perspective is that the public will finally understand, that what we see as money never actually existed. Money created by book entry can have no substance, and cannot therefore have any intrinsic value. After we've finally come to terms with this, we'll be able to establish something similar to money, namely numbers, with which we can organize human action anew, namely democratically, legally insured, transparently, in a way understood by all, and helpful for human development.

WTV: What will money look like in 2012?

FH: If we're successful, if the international network of scientists I belong to succeeds with the ideas we are putting forward, then [money] would be an electronic accounting unit which has purchasing power. It would only be created as 'payment' for human contribution and skill. People will have individual accounts 'equipped' with a certain 'overdraft facility' which we see as a guaranteed income. [Not sure how this word work – refreshed every month? – Toby] With this people can shop. They'd have purchasing power. Then, for every contribution they bring to the community – networked electronically, organized for production – they'll be rewarded with [further] purchasing power, according to clear and transparent rules, rules which will be changeable at any time.

Our goal is to divide these contributions into two categories, namely pleasant (fun, good for personal development), and unpleasant (chores, boring work that simply must be done). Both categories will be paid, but the unpleasant jobs will be better paid. But, if anyone is especially creative, in that they come up with some solution that leads to their redundancy, and therefore frees up many others from having to perform that unpleasant work, they will receive a 'super premium,' so that they can further develop themselves in other areas.

WTV: Who will be the winners and who the losers in this new system?

FH: Interestingly, since the new form of social organization we propose would not be a zero-sum game – though most people understand this, seeing money as a pot of a finite amount gold coins – we would be able to declare all social classes simultaneous winners, because the system would encourage cooperation. There would be no more competition.

WTV: Are the Internet and Open Source a virtual model for what you propose?

FH: Yes, we see the Internet as the system's infrastructure, and Open Source is a good analogy for it. We can found society as an Open Source Society. A quick example: it won't be necessary for each car manufacturer to produce an entire car (Mercedes, Audi, BMW, Toyota), since this automatically brings them into competition with each other, and they try to do each other down. These manufacturers will [instead] specialize in component manufacture, which, in a 'Lego module concept' will then be assembled into a whole car. This should ensure that cars last for, say, thirty years, since it will be easy to swap out only those 'Lego components' that are actually broken. In this way car companies would work together rather than compete with one another, cooperation instead of competition. This would of course mean redundancies across the board, but this wouldn't be a problem , since they would receive ongoing purchasing power and could develop their personal skills as they so wished, and that at a higher level which would be more useful to society generally.

WTV: Re cooperation instead of competition. I've heard that before –

FH: Yes, the welfare state [laughs]!

WTV: but would this also mean a more environmentally friendly set up?

FH: Yes. Our new money system, as I've already pointed out, consists of electronic numbers which are generated solely by human behaviour [societal contribution]. For inorganic matter, e.g. raw materials or half-finished products, we would set up a separate accounting circuit. These things will not be valued. Inorganic matter, objects, will have no value. Manufacturers will no longer ask for a component to be made of, say, aluminium, they define which criteria the material must have, e.g. rigidity, melting point, etc., and materials specialize will work to meet these demands. So it won't be competition over scarce raw materials, we will focus on functionality instead. People who need it will be provided then with some 'pure material.' Should this fail, new materials will be synthesized, which is the responsibility of the specialists, who would receive bonuses for their work and creativity.

When we pay people only with electronic numbers for their skills and contributions, the advantage is that we automatically have a fair system, since everyone can develop their skills, but not everyone can [work on/benefit from] the legacy of/inheritance from a company.

WTV: Isn't the end of poverty also the end of wealth and therefore communism and bland uniformity?

FH: No. We'll just think in other categories, that's the trick. There won't be rich and poor as we currently have them, there'll just be people in different stages of development. The very young just beginning to develop their skills, people who've been at it a while, people who have taken time out to reconsider their career and look at alternatives. And for all these stage the new bank employees will be there – we call them “Life Guides” – who, almost as psychological coaches, will accompany their charges for life.

WTV: Well, that sounds very utopian –

FH: Indeed! [“Tja!” says Hoermann, which is very hard to translate, kind of like “What can I say, you've got me!”, but I chose “Indeed.” – Toby]

WTV: [Laughs.] It seems to me that the guaranteed income is absolutely essential.

FH: Correct. We can organize this by giving everybody an account via, for example, their social security number. We will all begin with an 'overdraft' range, which has purchasing power, and this represents the guaranteed income. In this system then, those who deliver a product/service see their account increase, those who receive see theirs decrease. This exchange is recorded neutrally as [simple] numbers [without what Hoermann calls “dimension”], so there's no need for suffixes like Dollars or Euros [I believe he thinks of currency as a dimension of the number].

In reality price is nothing more than a value-relationship. The dimension [i.e. currency?] cancels itself out in the relationship. 3 meters to 2 meters [3:2] is 1.5 without need for a further [explanatory dimension]. Historically, Marks and Krone etc. are nothing more than seals of dominance which assigned to the sphere of the sovereign control of economic activity generally. After the French Revolution and the usurpation of the nobility, upon which money creation was taken from the royalty and handed over to the banks, the banks maintained the seals as a way of empowering their money, or affecting consensus to use it as money, and then called their money a thing with intrinsic value. Materialism arises out of this construct, that is, the currency misrepresented as commodity money, with which currency speculators can excite [make volatile] exchange differences, and from this generate unearned income. Firms in the real economy on the other hand suffer from this volatility, are forced therefore to hedge against it, an insurance which the banks again benefit from. That is, in brief, the context for all this.

So while we understand the numerical [accounting] unit as a thing with intrinsic value, we are all confronted with these paradoxes, such as particularly successful nations suffering as their currency gains in value, and vice versa, from which, actually, only counterproductive effects emerge which can only benefit speculators.

WTV: How should we proceed as collapse unfolds? What should people do?

FH: Firstly we need to disconnect our sense of happiness, which is just a feeling, from property ownership and bind it to self-determining the shape and pattern of our lives, so that we have more control over the development of our skills and activities, and this will be the new definition of happiness. The money we have today should be spent as quickly as possible into the real economy, which people are in fact doing anyway – which has been misunderstood by conventional economics and interpreted as a recovery! Should currencies really break – which is probably something we cannot avoid – it would be enough if we reassigned money creation, that is one account for everyone, to, for example, a social ministry. We all have social security numbers. For the new electronic banking system we need nothing more than a new bank sort code and can use existing infrastructure. Every citizen receives, via his or her social security number, an account in the new system, money creation then becomes the responsibility of the social ministry, and with that we can dispose of the finance ministry [Treasury I guess – Toby].

So, the rest of the interview, which is just one question and answer, you can check out for yourselves. It's about how to treat the criminal (elites), which Hoermann answers along the lines of, we seek no enemies, we're trying to establish a solution everyone can be more or less happy with.

And that's it from me for a while. I'm off for six weeks ten days from now, and need next weekend to prepare for the holiday, attend to domestic stuff. I hope the repetition here of some ideas is not too bothersome. Hoermann speaks fast and says plenty, and one thought leads quickly to another and each depends on former and future expressions. In that sense the more the better (and editing it is a bloody nightmare). Also worthy of note, again, is that these ideas are suggestions for us to take and run with, to make our own. They are not instructions. There's no leader to follow but you. We must make the system our own if it is to be an improvement on today's. And we have to want to do so, and understand fully why we want it. No pulling the wool over anyone's eyes. Intelligent consensus always, no 51% telling 49% what to do. That this is hard, untried, seems impossible, should deter us, not because the task is not enormously daunting, but because any other way will not work. At least, that's my reading of our predicament. Only if we grow up culturally and take charge of our communities via direct democracy, which must include a democratic money as well as other social infrastructure (such as Lego cars!) can encourage cooperation and the maturity of all citizens. Growing up out of the dumbed-down emotional immaturity we are now bogged down in is the task before us. Hoermann's ideas, and not all of them are here, seem very well tuned to the demands of that task.

One last thing, Hoermann & Co will be releasing a 30 page booklet at the end of the summer which will list practical advice for how to survive currency collapse. I'll get it, and translate as much of it as I can. (And I haven't had a chance to do any quality control, nor for last week's post. Sorry. Must do better!)

Monday, June 13, 2011

Hoermann's Ideas for a Possible Way Forward

On to solutions then. Today I'm drawing from an interview Prof. Hoermann gave for WienTV late April this year, rather than pulling together the best parts of multiple sources. My domestic schedule has been absurdly hectic this past week or so, so anything more ambitious than a direct translation has to fall by the wayside. I don't think that's such a big deal, since the material in the almost 50 minute long interview is strong.

As background I'll just cover quickly the interview's opening 5 mins or so. Hoermann and other academics started in 2004-5 to attack the question of how to transition from the current, broken system to a very different one. Their first idea was to found a private university in which the students (the children of former east block oligarchs who had experienced systemic collapse) would have co-built and set it up. They would have been trained to become ambassadors and technicians of those ideas they themselves had co-developed. Their application was turned down twice. After much soul searching they decided to found an institute, for which the rules are not as stringent, but as they began the financial crisis began unraveling (it was summer 2007), and the rest, as they say, is history. Hoermann and his fellows are now following the tack of books, interviews and Internet presence generally in a spirit of 'We're all in this together.” He is at pains to point out, and does so again and again, even in his book, that what is put forward are suggestions to be experimented with in a spirit of open learning and not fixed instructions to be followed to the letter. And such has informed my translation. ;-)

WienTV: How will the information flow from the system to the citizens and back? How will the system be able to detect and react to dissatisfaction and unhappiness?

Franz Hoermann: The system must function on at least two levels. The first is a formal level which is already integrated. Because we're setting up at least two accounting circuits, we'll be able to react to both individuals and groups who have, e.g., too little purchasing power, too little purchasing power in one or more of these circuits. Then, to put it prosaically, a red light would go on, whereupon one would first look into which need is not adequately being met, then consider which measures might be most appropriate in response, initially temporary solutions like changes in elements of the design, or find new roles for people, or look at rewards for work done, or whether special bonuses are due, or we rearrange or reconstruct, or we hide something for a period … you know? We'd simply improvise for a while, until we hit the solid solution from which generally appropriate responses can be established. And, besides the formal feedback for which the red lights have been built into the system, there'll also be real communications platforms where people can communicate informally, say things like, “Yeah, I'm coping with my job, no problem there, and I'm happy with my standard of living, but I'm bored!” or, “I don't have enough social contacts in my life.” Whatever bothers people, they can report in these forums, and then we'll try improve things accordingly. In the final analysis though, we have to get to a situation in which the people themselves can co-create and co-design the system.

But, we must of course point out that today such is highly unusual, since we're not really accustomed to, probably most can't even imagine a situation in which we shape our own money or economic system. Today we still believe that to do so requires a special education or qualification, or the experience of a successful businessman, or perhaps as banker or politician. But it won't be that way in our new concept. Creative people—and the best outcome would be if all could fully develop their own creativity—[must be drawn more deeply into designing social and economic processes.]

WTV: How will education work, be financed? Is education free?

FH: Of course. This is one of the key themes. We suggest, and these really are suggestions, that people have a [“Lebensbegleiter” is a new word so has no translation] 'coach for life,' a 'guide for life,' and it would be nice if this person were a member of the family, with experience. For this role there would be a host of courses and skills to be learned; psychology, coaching, mediation, all the things we have to day, and each can choose from this broad palette whatever first appeals. Lebensbegleiter would have to accompany 10 to 20 people or so, their whole lives, but of course only when their 'chemistry' works—you can choose you Begleiter, there are no fixed rules here, no centralization. 'Guides for life' would have the challenge of helping their charges fully develop their potential, exclusively via positive motivation, by trying to find out what sort of a person their charge is. This is the exact opposite of today's education system! Today's education system attempts to pull students through a set of supposedly objective standards—which is actually impossible for human potential, so these standards are in fact synthetic, synthesized—which, it is hoped, guarantee some minimum level of education. In our design it's completely different. We always develop individual paths, tailored to each individual, for which there is no 'correct' and 'incorrect,' and are primarily concerned with those things which make the individual happy, which, additionally perhaps, also achieve some positive social utility ... that would be the path he or she [follows]. At some point perhaps a person comes to a juncture where he or she decides to change direction, and they will be given every chance to do so, since it's best when people are multi-talented. […snip…]

Today's school system isn't there to ensure that all children develop optimally, rather, primarily, to ensure that teachers earn an income, in this crazy money system. The emphasis in teacher training is on expertise or technical knowledge, not on psychology, and not at all on the psychology of each individual student. One tries to instill in teachers how, roughly, to guess at their students' abilities, via scales and quantitative grading, which is absolutely impossible. [For example,] hundreds of experiments have shown, that the same lesson, taught by the same teacher, early in the morning or later in the afternoon, results in a difference of up to two grades. […snip…] [And rote learning really isn't learning at all.]

In our system, people are responsible for their life's development, and are accompanied throughout their journey by their 'life guide.' They can change direction at any time, for example take a year out to further develop body and mind, [financed by the guaranteed income].

WTV: How will your system cope with the problems thrown up by pleasant and unpleasant jobs, such as people not wanting to do the unpleasant work?

FH: We assume that, during the transition, there will be unpleasant jobs to be done. That's the way it is.

WTV: For example?

FH: For example physically strenuous work; working on a building site, or rubbish collection … although, there are people, or a certain percentage of people, who have no problem with such work. And if such work makes them happy, then of course they should do it. But, perhaps it would be best if we could arrange things such that they don't only do physically strenuous work. Perhaps they would only do such work two days of the week, then on other days occupy themselves with other things, things that could develop their mind, build social contacts with people who don't work the same type of job. Today we live our lives in boxes. We talk to people mostly from our area of expertise, and hardly ever with those from different careers. An academic and a builder rarely meet, say to play cards, or go to a restaurant or concert. That just doesn't happen today, and in my opinion that is a very damaging situation. Because, people who, let's say come from what we today call a 'higher' level, simply don't understand the lives of those with 'simpler' work. And, because they cannot understand their fellow humans, have prejudices which they then, for example, blindly bring into the political sphere. This is exacerbated by the fact that we today clearly overvalue academic, theoretical and political work. Extremely overvalued. I mean, when you consider how an academic degree—and I'm not talking about plagiarized or ghost-written degrees, although they of course exist, and perhaps very often—degrees don't really tell us much about the abilities of people who hold them, and certainly say nothing about their social abilities, their willingness to communicate and engage with other social groups, to learn of their successes and wishes. And that is a serious problem today which is exacerbated by a materialistic money system, a zero-sum game in which I have to take from people if I have to win something for myself.

WTV: How should one understand what happens when suddenly everyone wants to do the nice jobs, or even the horrible ones? Is there going to be some kind of capping?

FH: No. There are as few regulations as possible. This is something that people often misunderstand, especially if they've only heard a little of what we're proposing, or have a shallow understanding of it, and believe we putting forwarding some centralized, inflexibly model. No, we're proposing the exact opposite. The exact opposite. We would, should a majority of the people—otherwise this all just remains an idea—should a majority want to set this thing in motion, we would start with one particular variant, we're going to have to start somewhere, and then the process would develop in the community as wished and shaped by that community. And then we would withdraw to function increasingly as mere advisors. The idea is that people will have, right from the beginning of their social lives, a very different education, they begin from the earliest age with active roles in the community, in particular cooperative ventures which they experience as fulfilling and joyous, because these activities allow them to use their best abilities and talents, cooperatively, working with others. Then we'll have people who learn that pulling the wool over others' eyes, exploiting others, fooling them, which all happens at school today in the competition for good grades … And we even have the situation in some schools that there should be such a thing as a normal grade distribution. That is totally insane! Then there's no development, you see. To work to a predetermined normal grade distribution means that we negate positive development, that we don't admit or allow it. That is the most stupid thing we can do! For this reason, then, no more numerical [grade] assessments, we will deal with each child individually, encourage and nurture their unique abilities in a happy environment focused on joint endeavours aimed at generating the most creative ideas and solutions for society. And this [learning/work] will be rewarded with our 'thin-air' money, or 'performance-points' [generated directly by] social contribution, from which they then have real purchasing power.

In this way children will learn very early on that they themselves contribute to the society they live in, that their actions shape the world they live in. Then, when they're engaged with a difficult manual job or unpleasant task, perhaps because they want the reward it brings, it won't be the work itself that is the focus of their attention, but rather finding the most creative way of accomplishing it, to automate themselves out of a job, so to speak. This is of course in high contrast to today's job world. Today a bricklayer can only lay bricks. He can't build a robot that lays bricks, even if somehow he knew how to, because then all other bricklayers would be after him for making them redundant.

WTV: How do you respond to the criticism that your plans require centralized planning, that there would be a small group of people in complete control?

FH: Well, yes, at the beginning there would indeed be a small group of people developing the software, perhaps another administering the server room, and so on. But really, when you think about it, we trust today small groups of people, like the fire brigade, or groups like the Red Cross, emergency doctors etc., and exactly in these areas we see people more concerned with the social consequences of their work than with personal gain. These are the types of people best qualified for such work. And of course the whole thing is democratically organized, no question about it. There won't be some small party or private business exerting control, extorting society with their advanced specialized knowledge. That would be totally counterproductive, it simply can't be set up that way. And then, when the system has developed a certain rhythm, has found its stride, maybe after a few years, then the community would decide who does what when. This requires us to develop collective intelligence, with which people can fulfill and assign these key tasks responsibly and purposefully, and not selfishly.


WTV: What will people who have a lot, i.e. the very wealthy, do with their wealth? You said in your last interview they would be invited to give away their riches. What do you mean?

FH: Not that they should give away all their belongings, that's not what I meant. What I meant was when a person no longer has faith in today's currencies, that is money, not property as such, that he or she should try to spend that money into the real economy, and that which can't be spent, that should be given away somehow, at least while we have the time-buffer between now and total collapse of world currencies. But, this change [to the new] will create, for the very rich, considerable psychological stress. And here we have to point out that everything they bring into the new system, say money, will be credited, at some exchange rate, as 'points' to their accounts. Nothing disappears, but the 'money' will not earn interest. If they leave it alone, it would just sit there and not grow. Probably the 'value' of these 'points' will stay more constant than today's money, which suffers from inflation, since the new system would operate along very different lines than today's [market driven] supply and demand; namely, as steered by the intelligence of the network's participants. For example, those who manufacture some product, and those who represent demand for it, its consumers, would cooperate in the network, and out of this general cooperation a price would arise, with which this product would … today one says “brought to market” --- reach the end user. For each product then a unique delivery solution. For example, for some mass-produced item that everyone needs, there might be some fixed delivery process, with a new product we have no experience of, we'd begin with a distribution mechanism designed to allow a consensus to develop, and then alter the distribution accordingly.

This is really critical point. Today's economists apply [market-based] supply and demand 'laws' universally, regardless of whether we're distributing necessities like rice, or some luxury good like a gentleman's wrist watch. And just on this one point alone we can see how economists have no clue about reality. There must be different distribution procedures for necessities and luxuries.

WTV: Yeah, I guess so!

FH: Exactly. Logically speaking, and looking at it humanely, we would have it that way already. But, sadly, this humane perspective is not deeply embedded in our system.”

The rest is a discussion of the coming currency collapse, which Hoermann is predicting, according to his latest interview, beginning July-August of this year.

I will continue with more on the solution side of things next week, time permitting! I'll close though with a passage in which Hoermann details the alternative to 'money as wealth':

“And this is why the notion that money has value is so dangerous and counterproductive. If it is a measure, then it can only be the abstraction of the value of some economic process, that is, the creation of a good or a service. But then it can't be a thing that we pass around, that has some changing value we fight over because it can be kept scarce. And this is the absolute, central core of our non-materialistic money system, in which money only appears then, when some social contribution has been realized. Ours is a performance-backed money, one which would have enormous advantages, since it would only be about documenting genuine social contribution in the real economy. For such “bonus points” with purchasing power will be given.”

(I've been at this for over 5 hours now, and have much else to do here at home, so I'm posting it without editing. I'll do that tomorrow. Apologies for any mistakes that have crept through!)

Saturday, June 4, 2011

The Money Myth II (with Franz Hoermann)

The (almost) global revolution is now in what I optimistically think of as its advanced early stages. What is happening on the streets across the planet is only the visible surface of a deep and mighty desire for something honest and authentic. We are starving for a system that serves the people transparently, justly, and sustainably. We know the current sham cannot deliver what we want.

The revolution is no longer merely imminent, it is visibly underway. But, in conversation with fellow writer Frank Powers yesterday over a few beers in a semi-pretty part of Berlin, we agreed that the various groups neither know what to do with power should they get their hands on it, nor do they appear to be making sufficiently informed demands of the money system. As you know, I believe money as we have it must be destroyed, before any hope of progress to a different socioeconomics can follow. Before I came across Franz Hoermann I felt The Venus Project, for all its flaws and despite the paucity of details on transition, were the organization with the best chances of establishing a truly new system. I now believe Franz Hoermann has the best analysis of today's system, as well as sound ideas for monetary alternatives. There can be no quantum leap from debt-money to post-scarcity. That is not going to happen. Indeed, even embracing Franz Hoermann's suggestions will take a miracle, but, because they are strong, they should be heard. And from here on in only miracle's can save us, so, reach for the moon I say.

I am a nobody. If any one is reading this and my previous translations of Hoermann's work, and is impressed, please, join me in spreading his ideas. A new civilizational phase can only be reached with all of us doing what we can to further democracy and justice. No one is the leader. The ideas lead us as we alter them. We can no longer live for the machine, we must make the machine live for us.

What follows today is the last I will translate from “Das Ende des Geldes”, (some of which has appeared in these blog pages before). Next week I will begin presenting Franz Hoermann's proposals. They are 'out there' on YouTube in various, disconnected interviews, so I will have to 'staple' them together in some presentable form. Don't expect a polished product. In fact, never expect a polished product from any one, ever. It's up to us after all.

Now over to the Professor:

“In shallow political discussion, as also, sadly, in academic economics departments, the answer given when one asks after the function of money is most often threefold: Money is: (1.) a measure of value, (2.) a universal medium of exchange and (3.) a store of value.

It only takes a grade school education to demonstrate that money cannot fulfill even one of these functions. People who believe in the above definitions of money are continually led by this nonsensical belief to confused and confusing positions. First we'll refute the assertion that money is a measure of value. A measure is, at least in the natural sciences—which have always been the great role model for economics—a smallest unit, initially defined arbitrarily, but which thereafter may not be changed. Furthermore, assigned to each measure is a fixed method of measurement. Measuring length requires a different methodology than measuring weight or speed.

Today's money-values arise in the Market according to, allegedly, the Law of Supply and Demand. Even money itself is traded, allegedly, in a market. But trading money means the measure of value itself possesses a variable eigenvalue [“a value of a variable in an equation” according to the English dictionary, though the text's “Eigenwert” might also translate to “intrinsic value” in this context – Toby]. A meter, on the other hand, is the length itself, so possesses no length. Were the meter as measure of length to behave exactly as the Dollar and Euro as measures of value, then, when it came to measuring longer planks of wood, the meter itself would lengthen—because of the higher demand—whereas with short planks it would shrink, due to the lower demand.

Thus it must be clear even to schoolchildren, that is, to people without an economics qualification, that using such a yardstick you could not even construct a humble garden shed. A measure (of value) is an arbitrarily set, though thereafter unchangeable base size for comparison and measurement to be performed in a standardized manner. Commodity money with an eigenvalue does not meet this requirement and is therefore, provably, not a valid measure of value. So how then are financial values measured in today's society? There are three core methods: (1.) deriving the value from an actual purchase price, (2.) generation of an accountancy opinion and (3.) a subjective guess, as, for example, from a collector.

A purchase price represents an agreement to hand over an object for a particular amount of money. This price is therefore always subjective and never generally applicable for other similar items. Obviously a jeweler will hand over a wedding ring to his son at a lower price than to just any old customer. The illusion of similar prices for similar goods arises, e.g. in shops, mainly for reasons of expedience: Instead of bargaining with each and every customer over the price of each and every shirt or pair of trousers, prices are simply, that is for reasons of simplicity, assigned – of, course, in certain circumstances a customer can still bargain. Price is therefore always the result of a personal relationship, or the salesmanship of the seller, or the actual power balance at play, and can therefore never be derived from primitive calculations, as claimed by generations of clueless economists, forced by their training to parrot such nonsense. And here we confront the astounding fact that nothing is so easily manipulated as the market price in the everyday economy, for example with given, excuse me, I mean of course loaned money.

If you give your neighbour an amount of 'money' with which he is then to buy your house from you, no doubt he will find no reason not to take you up on your offer. Should you then amend your accounts to show a profit, because of which the bank then credits your account with real money you can use anywhere, then there can be no reason your neighbour should not return the favour. Why not just reuse that original 'money' you gave, excuse me, I mean of course loaned him, this time to buy your house from you? Then he can demonstrate a profit to his bank, which then immediately gives, apologies, likewise credits his account. Only much later will it emerge that the exchanged monies were worthless, but by then they will have been transferred to some other bank.

Should comparable prices not be available, accountancy opinions as assessments of value by specially qualified people will be produced. The exact methods these “Wise Ones” deploy are rarely made public, but when this does occur, the reaction is always astonishment and loud criticism. The wishes of their clients are invariably concealed behind arbitrary pseudo-mathematics. These “Wise Ones” try to secure their lifestyles with airy formulas and weak explanations, a.k.a. financial alchemy, designed to lend their endeavours an aura of higher knowledge. But when no genuine prices are available, what use can some value, arbitrarily derived by an accountant, actually have? None whatsoever, obviously, since the assessor tries to arrive at a definite price in the best interests of his client, e.g. for some negotiated sale, before a judge, etc. For the members of this profession [Hoermann is one, I believe] any analysis of their strange practices is of course taboo – their financial existence depends on this incomprehensible theology of formulas. Because their calculations are never testable and therefore not falsifiable, these professions should be disqualified from the scientific community. No assessor, claiming to be able to determine approximate values for prices on the basis of guessed mathematical formulas, ought to be taken seriously by a buyer, a seller, or a judge. These methods are exclusively about the misuse of mathematics, and never about their serious usage. Proofs for the claims made here have been published in scientific journals for years.

[ … snip … ]

The fairy tale of supply and demand is supposed to inform our politicians about how it is that scarce goods and services are the most valuable. And yet there is deliberate silence on the fact that the supposedly scarce products are, typically, very much there in plentiful quantities. It's just that they belong to other people, people who spread purposeful rumours, for example with the help of media outlets they also own, that these things are scarce at the moment. They need only lock up some store room, or pump less oil, or sell less on the stock exchange – presto, the market reacts, and the price rises.

Free market economics is optimally suited to such market manipulation, assuming one possesses sufficient power or information. In truth the so-called Law of Supply and Demand is nothing more than a systematic and comprehensive method of extortion. By means of the elegant and multi-generational repetition of “The Law of Supply and Demand” – as an allusion to universal natural laws – the public has become used to this robber-Barron method, and no longer sees this form of extortion as a crime. We've come to see it as a law of nature. For rearing the public in this way many economists have been awarded, deservedly, the [so-called] Nobel Prize.

But scarcity can never serve as a basis for scientific theory, since it lies, just like beauty, in the eye of the beholder. If which a person allergic to bee stings urgently needs, e.g. a life saving medicine, be scarce, such can have terrible consequences. For this reason he will be prepared to pay enormous amounts of money for this medicine, should someone seek thus to extort him.

For the authors of this book on the other hand, who are luckily not allergic to bee stings, a scarcity of such a medicine is unimaginable; one single ampule would be an over supply. Scarcity as a basis of a science is therefore exactly as effective as beauty. Purely subjective perspectives, which can be shaped and tuned by the richest and most powerful as they so desire, have been transformed to objective units of measure. Every owner of some product can raise its price at any time just by making it scarce. Pseudo-sciences, the so-called economic sciences, were established to deceive and manipulate the public. The scarcity of some good or raw material is in and of itself an absurd concept. Should, for example, too little crude oil exist, then we can build cars to run on electricity or hydrogen. The solution to problems of scarcity is not therefore the extortion of raising prices or even resource wars, it is innovation and substitution, that is, replacing scarce with other more abundant substances. And yet precisely to prevent this from happening the multi-branched practice of patents and copyright law was developed over recent decades. The great monopolies of humanity's product streams seek to prevent, for as long as possible, that their freedom to extort via cyclical consumption be taken from them. The fairy tale that scarce things are worth more has led the public to accept this type of extortion.

[ … snip … ]

Even here the standard definition of money fails: money is not in any way a universal exchange medium. What could such a thing be, anyway? When an exchange is executed, one swaps one piece of good A with one piece of good B. However, should we exchange two pieces of B with one A, it's not a swap (exchange) any more, since we now have a price in the sense of a value-relationship: one A costs two Bs.

For centuries the public has been told that a sale takes place only when money is used [my emphasis]. But this is not true, since prices are nothing more than a value-relationships. In the above case, one piece of A has the price of 2 pieces of B. Here we're using B as a currency to buy A. If one A cost 4 C, then in the C currency the price of A would be 4 C. Thus money can never be used for an exchange, but only for a sale. Because with money it is only prices that are being paid, the deployment of money as an exchange medium is impossible for reasons of simple logic. Through this semantic trick the public has been distracted from the ubiquitousness of price, which is always used exclusively in conjunction with money, since every sale requires a price and money can only buy, it can't do exchange [$5 for $5 would be an exchange!]. The price can always be manipulated on the free market by the more powerful party to the sale – free mostly in the sense of punishment free for the extorter. On the other hand the fact that any 'exchange' of unequal quantities is always a sale has been ingeniously concealed. When such happens it is always an instance of value-relationship, therefore a price of some kind is in action. And the fact that any good can at any time take on the function of money, by which means the money-monopoly of the banks would be threatened, has been successfully hidden from the public. This they accomplish in schools by rote teaching expressions into the unconscious, anchoring them there with magical formulas of money as a universal medium of exchange.

[ … snip … ]

Finally we come to the beloved function of money as store of value. How do you personally store the things you value? Do you sell them, then squirrel the money away in a safe somewhere? If you answered in the negative, perhaps you will also have recognized that even this famous function of money doesn't have a good leg to stand on. Mere repetition of nonsense does not make it true. Money is not value and cannot therefore function as a store of value. Money hasn't even got it in itself to store its own purchasing power, otherwise the institutes charged by government (and dependent on government largess) with tracking prices, would not have to manipulate, constantly, the basket of commodities used to assess the retail price index, in the hope of reporting – actually, producing – as low an inflation figure, as politically desired a figure, as possible.”

And there you have it purples, the last from Das Ende des Geldes. Next week, should I have the time (very busy week coming up) I'll post something on solutions. We need to be armed not only with the most accurate and incisive critiques of the status quo, but, more importantly, the most cogent and pragmatic suggestions for alternatives we can muster. That's where the real work is, and we all have to put our shoulders to the grind stone. Time is of the essence!