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.


Anonymous said...

Your blog seems a bit schizophrenic to me. On one hand you claim to be interested in a resource-based economy as proposed by the Venus Project, and on the other you want only to 'demote' money. The elimination of money is central to the Venus Project. If that's what you want to explore then you need to examine the ways in which people act without money. No examination of alternate currency schemes will ever build you a bridge to a moneyless society.

There is no need for the obsessive focus on fairness in individual exchanges of the market system. Free-market logic says that if all individual transactions are accepted as fair, then the system must be fair. This leads to problems because the transactions are in fact never fair, as price does not (and cannot) reflect wholistic value. Let the current monetary system handle the current expectations of people. Work instead on developing the commons and promoting the logic of the commons, which measures fairness in outcomes, not the minutia of transient exchanges.

The scientific method does not work on trust, it works on data. Everyone must have access to the data. You must demand it. A democratic society cannot be built around an economy of proprietary production.

Beat the drum. Walk the path. Step by step we will move forward.

Anonymous said...

Oh, and thanks for the translations and have a great holiday!

Toby said...

Of course it's schizophrenic, we have to work out how to walk our way down a path never trodden. There's uncertainty, flirting with this idea, mere seconds later with its opposite. I'm not the kind of person to just accept something without questioning the hell out of it. And, like I said, this blog is a crude and messy smithy for my book, which will be far more cohesive, sing one melody, or perhaps harmonize and interweave different melodies with one theme in mind.

That said, your comment is spookily timed. On my way home last night it struck me how money is always and only debt. Soddy's definition of money begins: "The nothing you get...". Money is nothing, but, it is nothing with purchasing power. If a piece of nothing with a number on it has purchasing power, it is debt, regardless of the interest attached. Money is a claim on society, a pressure on it to work, to produce. Money is an act of bondage, no matter how it's created. We either accept debt, or we don't. Ergo, we either have money, or we don't. I don't think there's a middle way. Hoermann might be barking up the wrong tree.

Schizoid enough for you?

Ah yes, and I started yesterday to take another look at the commons. Weird man.

You seem a bit schizo too. Aren't you against The Venus Project?

Anonymous said...

I understand that the Venus Project has no chance of success because Jacque is a stubborn old coot. As is the case with many bright individuals, he is his own worst enemy. In any great endeavor one must hold true to the vision while being flexible in the methods used to achieve it.

We are all schizo and hypocrites to some degree. What is important is for people to continue to engage in the presence of friction so that the common understanding can be refined.

Your comment about money and bondage gets us close to the heart of the matter. Slavery is a stark example of a stupid behavior which was accepted for millennia. Finally, after much dithering, humanity stood up and said: "No more!". As you say, we either accept such institutions or we don't. Society can run without money just as well as it can without slavery.

The P2P Foundation is a good place to learn about many commons projects.

Debra said...

One of the great limitations on your analyses, guys, is forgetting the historical context in which our ideas bathe.
No idea ever emerges from a void.
It emerges in OPPOSITION to another idea, and as such, exists in continuity AND rupture to what preceded it.
Schiz is what our society is.
As individuals we reflect the increasingly polarized dualism that is splitting us more and more, divorcing... MIND FROM BODY, for example.
Behind the money problem, there is THE NUMBERS PROBLEM, as we are bowing down before them.
The money problem is really obscuring the numbers problem at this time.
While money is a colossal abstraction, the numbers are even BIGGER ABSTRACTIONS.

Toby said...

Great to see you back, Debbie (and thanks for your generous reaction to my poem), but, being on holiday and yanked this way and that, often willingly, by family plans and trips and swimming pool dips, I have no time to respond fully, here or elsewhere. A full response will have to wait until the second week of August.