Don't Feed the Beast

Of course we're going to watch the drama, we're human. Greece is/was (take your pick) about to pop, is a tragedy in full swing, full of suffering and misery, and the mainstream will be full of it.

I haven't paid much attention to the mainstream for years now, and yet the dribs and drabs which do filter through on blogs catch my attention. I get excited, worried, frightened, the whole shebang. There's been some well-sourced rumours flying around for a couple of days now, that Greece will be forced/allowed (take your pick) to default in the second half of March (23rd). As part of this the major banks have been given advance warning, to give them a chance to protect their assets. The little guys will take the hit. Too Big To Fail means far more than rescuing 'systemically relevant' banks. It is about protecting the exploitation system, the state itself, the Hobbesian, inflexible hierarchy of rulers and ruled only a tiny minority truly benefit from.

This morning, Zero Hedge posted an article on the ECB's latest move, shocked that the 'Rule of Law' is arbitrary, can be amended retroactively, is not sacrosanct. But this has been so since forever. Cheap oil and the profits therefrom have merely masked it. Now that easy growth is impossible, the system is doing whatever it has to, to keep itself functional, and its core functioning is extraction of the ruled by the rulers. It's that simple. Here's a quote from Zero Hedge:

The ECB, on its own and without judicial or parliamentary review, has swapped their Greek debt for new Greek debt that is not subject to any “collective action clause.” They did this unilaterally and without the consent of any other sovereign debt bond owners of Greek debt. They did this without objection of any nation in Europe. They have retroactively changed the indenture, the contract made by Greece with all of the buyers of their bonds, when the debt was issued. There is no speculation involved in these statements, there is no longer any guesswork on what might be; the ECB swapped their bonds for new Greek bonds with the assent of the Greek government and it is now a done deal.

What else were they going to do? The system is in an advanced stage of collapse. Whatever it takes, whatever must be sacrificed to survive, will be done. And this is a fight for survival. But this system cannot survive, too much has changed. We cannot grow economically as it needs us to, we are increasingly disenchanted with Consumerism, there is the Internet spreading information faster than the control structures can control, technology is rendering the work-for-wage model obsolete (if it isn't already), and easy oil is not sufficiently plentiful.

Our focus should be on what world we want to build in the new circumstances, not on the quickly-changing details of the economic and political day-to-day, as 'exciting' and horrible as they can be. This requires of us that we don't feed the beast. Don't vote. Consume less. Study alternative currencies. Support endeavours you resonate with which offer elements of the new, such as gift economies and renewable energies, organic farming or permactulture, etc. Don't send any money, or send as little as possible, to the mainstream media. And make your voice heard, maturely, patiently, humbly, in independent outlets, among friends and neighbours. In such little steps we can contribute to a more gentle collapse of the old, a more vigorous emergence of the new. It is not that we rush childishly into the sparkly future, rather, we act in accordance with reality, foster our and others' common humanity and civility, and be as constructive as possible.

It is not going to be easy, and I strongly suspect terrible tragedies lie between us and whatever new stability results from all this upheaval, but this is how history unfolds. Change is difficult, profound change profoundly so.

What Is Capitalism, Exactly?

Russia Today seems to be a news organization growing in presence and penetration. It is, of course, not without an agenda, but for now at least it covers stories of interest to the 99%—to use the modern vernacular—far better than the mainstream. I drop by from time to time and watch any articles that catch my eye. Last weekend a debate on #ows did just that. An early theme that emerged in the opening minutes was that America had yet to experience true capitalism, that Wall Street was not a capitalist phenomenon, that until we got true capitalism we’d just be digging a deeper debt-hole for ourselves, and the socialist rich would continue to fleece the 99% and charge them for the pleasure. Oh yeah, and growth would not return. It’s an argument I’m sure you’ve all heard before. And it begs one blindingly obvious question: What the hell is capitalism?

At risk of annoying those who want to know, I suspect there are as many answers as people chancing an answer. Which is I suppose good in some ways, but bad in others. However, if capitalism can be any number of things depending on whom you ask, the assertion that some pure or true capitalism would put America or Europe or the world Back in Business is vague and unprovable. Furthermore, if the world has never experienced True Capitalism, how can we know it would work? And, is it even tenable to assert that something as vague as capitalism has a ‘true’ form, and what does it mean for such to work? These are not easy questions to answer. In fact, there are no answers.

My position is vague too, I admit it, but—I dare to suggest—less vague. Whatever we call The New Way (I’m with those who refer to it as resource-based economics, but that’s totally cosmetic, little more than a temporary holder), we cannot know from this distance the details of its operating, which would be emergent and changing anyway. But a New Way it will most definitely be. What I do not seek is a ‘return’ to, or arrival at, some pure, ‘free’ market oiled by an optimally minimal amount of ‘government interference’, because such a wish makes absolutely no sense to me. Not only is there no separation between the fictions of Market and State, there is no such thing as freedom. Acceptance of this will set us ‘free’ (ha!) to build The New Way from the ground up. And so, from a fresher perspective, a free market is exactly what I wish for.

Deep in the Myth of the Market I spy the seed of something radical, and that is direct democracy and its potential flourishing via the Internet (or similar infrastructure and software). The very idea that everyone’s dollar is equivalent, has purchasing power and therefore ‘political’ power too; that none can steer the market to their own egomaniacal ends, is a healthy one. The problem with it, is that money is necessarily powerful, operates as a commodity with value even as it is a mere measure, and that being rich is ‘better’ than being poor.

Because outcomes cannot be equal, because people are not uniformly ‘rational,’ motivated and well informed, the messy and unpredictable competition of markets can only lead, in this system, to grossly unequal accumulations and distribution of money and property. Under the current rules of the market game ‘success’ is about victory over, or at the expense of, other market participants. Competition is nothing unless it produces winners and losers.

In this system, healthy unequal distribution (uniformity of outcome is flat out impossible) generates unhealthy and stubborn rich and poor divides. When, by definition, rich is Good, and poor is Bad, why should we expect a different result? There is a constant incentive to game this system for ego-based ends; the rich seek to maintain the current distribution or tilt it even more in their favour, the poor to Get Rich by any means possible. The power lies with the rich, however, since they can afford lawyers, lobbyists, the best education, etc., to help them and their kin stay ‘on top.’ And none of this has anything to do with blame, except at the systemic level. As humans with empathy and imagination, we can imagine what it’s like to be rich or poor, so seek the former and avoid the latter (as a rule) and set up systems that survive across generations. Hence stubborn rich-poor divides, class divisions, and so on.

So the ‘free’ market dynamic so many yearn for can only generate the very monopoly problem it is thought to avoid, while our foundational assumptions about reality include scarcity, Separation (as Charles Eisenstein means it), greed and competition, and denigrate, or think illusory, abundance, cooperation and trust.

"What," as Mr. Fussy was wont to say, "to do?"

Well, to be vague, in conjunction with a change of consciousness, we change the rules and goals of the game, by changing the money system to fit what the new consciousness desires, perceives, understands. Until we address the stickiness of money, its ability to glue divisions in place and keep them there at all costs, the Market-State hierarchical extraction dynamic will operate as we have seen historically thus far, turning ‘idle’ resources into goods and services for sale at an ever accelerating pace, to the enrichment of the 1% (10% really), recently as aided and abetted by fossil fuels and our burgeoning technological prowess. Furthermore, exacerbating the problem of what I’m calling money’s stickiness is the usury attached to its creation per fractional reserve banking, such that the money system must constantly increase the money supply if it is to pay off the interest owed, which requires a forever growing economy. Consequently, growth is what ‘backs’ money in this system, hence our blind allegiance to the god Perpetual Growth, and our systemic subservience to it. We are witnessing today the system’s breakdown, for the simple reason that growth cannot be reignited as the system demands.

The money system is a problem generated by a consciousness (or paradigm) of scarcity, fear and greed. They reenforce one another, co-create each other in a positive feedback loop, and we are still in their (its) grip. But we are breaking out of it at last. There are multiple suggestions ‘out there’ to help us grow a new system from the soil of the new, emerging consciousness.

The Venus Project and The Zeitgeist Movement call for a new socioeconomics which would render redundant the need for any medium of exchange, but are sketchy to silent on how to transition to such a different system. Their idea to give away goods and services at a price of zero, to all people, by producing more than enough across the planet, is beautiful, but too outlandish and far-off to find sufficiently deep purchase in the current culture’s soil, as evidenced by The Venus Project’s relative obscurity after decades of dedicated promotion and campaigning. The Zeitgeist Movement is concerned primarily (and rightly so in my opinion) with dissemination of information and analyses which help others more critically appraise the status quo so as to be readier for change when it comes, and more able to introduce it wisely.

Charles Eisenstein calls for the buying of existing debt with a fiat, negative interest currency, not debt-based; the end of income taxes, and the introduction of biting taxes on environmentally damaging mining, manufacture etc.; a social dividend ‘funded’ by that money drained from the economy via the demurrage rate and environmental taxes; for minimal (or no) private property, maximum commons, revolution in the education system; and multiple money types to meet flexibly various economic needs. It’s all laid out in his book, “Sacred Economics”.

Franz Hoermann and his ‘team’ call for a minimum of two “billing circuits”, such that matter (as mined, farmed, grown, etc.) is to be ‘tracked’ by one type of money, and human creativity (labour and other societal contributions) by another. ‘Money’ is to be totally electronic and transparent, created (as in Ithaca Hours) at the point of the transaction, which means locally at the level of the individual, managed by an Internet-like infrastructure, and to be seen as a means of keeping tabs rather than as wealth. In this ‘plan’ (better; set of ideas and suggestions) there is to be a social dividend in the form of an ‘overdraft facility’ at the level of the personal ‘bank account,’ which incurs no interest. There is no interest anywhere in the money system. Bankers become advisers to people seeking help on the best way to contribute to society. Private property would likewise (as in Eisenstein’s model) be phased out. Education would be a far more open affair. (Further details on this are available on YouTube in German, or at this blog as translated by me.)

There are many other ‘plans’ out there, from Freegold, to 100% reserve banking, to MMT. My ‘money’ is on some mix of the above.

But change is underway now, globally, in the form of Occupy Everywhere, which is the early beginnings of the creation of a new decision-making sociopolitical apparatus, which will mature and develop as it does, beyond the control of any individual or monopoly. As such it is a genuinely ‘free’ market (to the extent such a thing is at all possible) because it is motivated by transparency and cooperation, which has The New Way both as its goal and means (means are ends). The establishment of these means is to include the contribution of anyone who wishes to be involved. In this ‘market,’ this bazaar, the ideas and suggestions humanity has to offer can be discussed and critiqued, including how to get direct democracy up and running, scaling that up beyond the local, and slowly building the mechanisms which will transcend the current status quo, and render it redundant. If some people want to call this process True Capitalism, they can. Who am I to say no to that. My contribution (or desire) is adherence to a transparent and cooperative process which allows the stronger ideas to rise to the surface of human consciousness, globally. Science, feedback from nature, open-mindedness and concern for the environment will take care of the rest.

The earth belongs to no one. No one. Life (or Universe) is a web of ever-changing interrelationships which cannot be frozen into some ‘preferred’ arrangement, and includes humanity as deeply as it includes asteroids and weather. Humans are not separate from Universe. Existing ‘rulers’ only rule over others for as long as those others agree to that rule. Law, convention, tradition; all are negotiable, and being human inventions steeped in inescapable ignorance, need to be treated with a wise but cool attitude which allows us creative flexibility going forward. I agree with those who see an enormous sea change sweeping across the human sphere, that our consciousness is reaching out to a deepening appreciation of cooperation, interdependence, emergence, embeddedness and community. These ‘new’ desires can find no fruitful voice in this system of Perpetual Growth, consumerism, cynicism, propaganda and hierarchical ‘control.’ In the manner of autopoiesis (self-creating) we, the 100%, are giving birth to the soil that will nourish their flourishing, regardless of the label we choose to attach to what one day emerges as Our New System. What it will not be is the flowering of the neoliberal dream of homo economicus, locked into guarded competition with the rest of Universe in a battle over scarce goods and services, whose cost is the endless rape of nature in pursuit of the barren dream of Shiny Cars, Huge McMansions and other Bling Mirages.

So, my answer to the question I set myself in the title: I don’t care. It’s not history or some pragmatic, academic purity which should be guiding us, but our humanity and its embeddedness in the rest of nature. Chris Hedges:

Macdonald argued that those who wanted change had to base all actions on the nonhistorical and more esoteric values of truth, justice and love. They had to retain Danton’s call for audacity. Once any class bows to the practical dictates required by effective statecraft and legislation, as well as the call to protect the nation, it loses its moral authority and its voice. The naive belief in human progress through science, technology and mass production, which this movement understands is a lie, erodes these nonhistorical values by placing faith in state power and fantasy. The choice is between serving human beings or serving history, between thinking ethically or thinking strategically. Macdonald excoriated Marxists for the same reason he excoriated the liberal class: They subordinated ethics to another goal. They believed the ends justified the means. The liberal class, like the Marxists, by serving history and power capitulated to the state in the end. This capitulation by the liberal class, as Irving Howe noted, “bleached out all political tendencies.” Liberalism, he wrote, “becomes a loose shelter, a poncho rather than a program; to call oneself a liberal one doesn’t really have to believe in anything.”

Believe in us, and call yourself a human.

Alessio Rastani: Our Saviour

So it turns out Alessio Rastani is not an expert in the way an organization of the high reputation of the British Broadcasting Corporation would ordinarily appoint to pontificate on a matter of such import. Isn’t that the sweetest thing!

The Beeb have embarrassed themselves by hiring some failed trader to voice his (expert!) opinion on the global financial crisis, is shocked when same then speaks what millions believe, meaning that millions hear this information for the first time on a mainstream outlet, and the expert doesn’t even own his own house! Sublime. Talk about a poster child for The New Way.

I am not an expert. And thank goodness. Our stock of experts from all corners of the globe seem incapable of arguing their ways out of wet paper bags, or at least of calling a spade a spade. That a so-called non-expert, a failed trader according to the balance sheet quoted by the Telegraph, should squeeze onto the prime time and go viral with “Goldman Sachs rules the world!” is about as tautly ironic a moment as we could possibly deserve to enjoy.

When the first rumours started circulating that this was a hoax, I have to confess I thought it would be better that way. It really doesn’t matter how expert or otherwise Alessio Rastani is, what matters is what he said, the BBC’s reaction to him, and how his interview went viral. His message is what I suspect even governments believe, and, deep down, even the mainstream media. We are fooling ourselves still that the façade is real, that Mummy and Daddy are in nicely charge, that the wheels are not off, and that ‘normal’ is coming back. Who then but a fool to point out the bleeding obvious, that the emperor has no clothes?

Sublime. Cosmic. Fated. Mythic. Wonderful.

Are Market Traders Psychopathic?

Hamburg – Why do traders like the exposed London UBS dealer Kweku Adoboli blow away billions? What’s going wrong at the banks, or with our young professionals? One thing’s for sure; they behave more recklessly and manipulatively than psychopaths – which is the conclusion a recent study conducted by the University of St. Gallen comes to, as SPIEGEL found out.

The cooperativeness and egoism of 28 professional traders were studied. The subjects had to play computer simulations and undergo intelligence tests. The results exceeded the expectations of the Team of Pascal Scherrer and Thomas Noll, forensics experts [“Forensiker und Vollzugsleiter”?] from the Swiss Prison of Pöschwies, north of Zurich.

“Of course we can’t call the traders mentally disturbed”, says Noll, “but the traders did behave, for example, in a more egoistical and reckless manner than a group of psychopaths who took the same test.”

Especially surprising for Noll: In total the bankers didn’t win any more money than the control group. Instead of competently and soberly pursuing maximum profit, “the traders sought only to get more than their competitors. And they put a lot of energy into harming them.”

Noll compared the situation to a neighbour having the same car, “and you go at it with a baseball bat, just so that yours looks better”. The scientists cannot explain this drive to destroy. The UBS dealer Adoboli, who blew two billion dollars, will remain in custody until further notice.
Der Spiegel (My translation.)

“Of course we can’t call the traders mentally disturbed”. Of course not. They’re professionals. They work in respected institutions and were once known as Masters of the Universe. The very last thing such people are is mentally disturbed. They know what they’re doing.

And don’t forget the Invisible Hand. Forget neither that economics is and should remain amoral. We are all, individually and collectively, far better off if we behave more recklessly than psychopaths. This is what the free market promises to deliver. The last thing we want is any of our precious freedom to accumulate wealth in a ‘Devil take the hindmost’ fashion be taken from us. As long as I could not give a fuck how well you’re doing, everything will be just fine, if you’re like that too.

On the BBC yesterday trader Alessio Rastani told his interviewer his version of the truth: “This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!” He goes on to point out that national governments are powerless, and that Goldman Sachs rules the world. Alessio wants to help people though. He advises us protect our assets, have good hedge strategies, take advantage of the coming collapse. It doesn’t appear to occur to him that his advocacy is for us to be more like him. His message is that traders do not care. Or rather, the only thing they care about is making more money than their ‘competitors.’ The consequences of this are collapse. His cure is to take advantage of collapse just like traders do.

“Insanity is doing the same thing, over and over again, but expecting different results.” Albert Einstein.

“Of course we can’t call the traders mentally disturbed.” Thomas Noll.

I think Thomas Noll is doing good work, but I side with Einstein here. And I think it really is past high time we recognize that we are slaves to an insane system of perpetual pillage that cannot stop until it devours itself, and most of us with it.

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.

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.

The Market, The State and Money Flow

This is a direct continuation of my previous entry, and precedes subsequent, directly related ponderings, now in the mental pipeline.

Money circulation is what keeps an economy functioning. That money tends to collect at certain nodes, and once it has collected there is unlikely to leave, is a block in the smooth flow of economic activity. The problem is nicely characterised as hoarding, which occurs simply because being rich is better than being poor. (That there will always be ‘rich’ and ‘poor’ is accepted, the only question, as we take this forward, is: rich and poor in what?) So the challenge is to keep the flow going, despite the pressure scarce money systemically creates to be richer than the next guy, and keep it that way.

In our current dominant myth The Market circulates money well, whereas The State does not. This is, if one peers under the bonnet, something of a circular (no pun intended) argument, in which: “black = bad (because it does)”, “white = good (because is does)” where “Market is white” and “State is black.” “Good” is the flow of money from place to place, from person to person. Trade is good. Strangely, as a ‘happy’ – though unintended – spin-off of this, some succeed to riches, while others fail to poverty, where many will be poor and few will be rich. I say this is strange, because these quite fixed and stubborn outcomes are logically contrary to The Market's primary function of promoting smooth money-flow. Poor people neither have nor can circulate money, rich people have but don’t want to circulate all their money. They want to possess more money. This is a systemic issue with money, though not the only one.

Again, smooth money flow is necessary to keep an economy functioning well. And yet as money flows around it ends up unevenly distributed. This uneven distribution inhibits maximum money flow, which means it inhibits maximum economic activity. What to do?

To answer this, I believe an analysis of The Market and The State is vital. An impartial, unbiased analysis. My efforts are those of an amateur of course, and yet I see very little work being done out there to look at this issue dispassionately. Ideology rules almost every roost.

The myth we all know so well relates that markets are efficient distributors of goods and services, and thereby serve society well. Economists call this myth the Efficient Markets Hypothesis (EMH). Markets are blind mechanisms powered by self-interest yet guided by an Invisible Hand, which, over time, ensures maximum possible societal good. Leave them be, let them alone to work their strange magic, and all will be well. Interfere, tinker, regulate, and The Market doesn’t work as it should. It is a force of nature, and best respected as such. Hence the correlation of ‘free’ markets with ‘freedom’. ‘Freedom’ is a social good ensured by ‘free’ markets. Also, selfishness is the inbuilt and unshakable human trait which, counter-intuitively, ensures maximum societal freedom and health.

To find out how we have come to ‘know’ that ‘free’ markets work this way, we must look to economics, and in particular the long journey economic thought took from Adam Smith, through Keynes, and into the neoclassical school. Economics is a strange discipline shot through with bizarre and impossible assumptions, and is seemingly incapable of making accurate or reliable predictions. It has been torn to shreds repeatedly by mighty thinkers, and yet soldiers resolutely on, convinced the nirvana of perfectly free markets it seeks is out there somewhere. Amazingly, despite its perpetual swagger (and I urge the reader to buy and read “Debunking Economics” and “Econned” for further information) orthodox economics has not proved anything, and most of all, has not proved there ever was, nor that there ever can be, a perfect (or ‘free’) market. They have likewise failed to prove that as-close-as-possible-to-free delivers social good.

To refresh, the conditions for a perfectly free market are:

1. forever rational market participants
2. perfectly informed market participants (knowledge of all prices of all goods and services for all time)
3. ease of entry and exit
4. total transparency

These conditions are of course impossible to meet. And yet only these conditions can prevent cartels/monopolies from forming. Cartels and monopolies do not serve the public good, distorting the market’s functioning. Some even become Too Big To Fail. Because the market cannot be perfectly free, it cannot, with or without the Invisible Hand, prevent these distortions from arising. Indeed, its necessary imperfection guarantees that settled imbalances occur.

Enter The State. How we hate The State. It is corrupt, nannying, bullying, dissembling, greedy, and to cap it all off, takes our money and wastes it on useless projects that no one wants. And yet, how could there be a market without a state? Can the infrastructure that enables markets to exist, such as roads and other transportation components, trade laws, criminal laws, courts, police, education etc., be established and maintained without The State? Can even one of these necessary components be run well by market processes? I believe not. If it were possible it would already be so.

The problem with maintaining societal infrastructure is money flow, how to effect it without ruffling too many feathers. We do not charge for education, and yet schools must be built and run, teachers and other staff paid. Money goes into the process, but does not generate money-profit. This is true of establishing laws; running courts; paying the police, armies, navies; road building and maintenance, and so on. Money flows out from The State into the state sector, but not arrive back as private spending from the private sector. In terms of The State making a profit, it has but one revenue stream; taxes. Or, in fantasy land, it plays the markets and charges citizens for all its services at point of use, thereby becoming a business. This cannot be. So, because The State relies on taxes to draw existing money to it, making a 'profit' would mean taxing back more than it spent. Is such a thing possible? Can such a business demand on The State make sense in any circumstances? (Absolutely, it's called interest and paying off the bill, should you choose to create government money that way.)

Remember, we are talking about money as a created tool. Isn’t it unrealistic to expect the same monetary performance/behaviour of an entity whose function is to spend money, as that of another entity whose function is to circulate money (while profiting from that circulation where possible)? As discussed in my previous post, for some to save or make profits, others have to spend or make losses. For this to be otherwise, there would have to be an abundance of money, and everyone would have to be rich. This is of course logically impossible. Money works as an incentive precisely because it is scarce. Money exists to deal with scarcity, and has to stay scarce in order to ensure competition and productivity.

In my view we have, therefore, a false dichotomy. Comparing The Market with The State is worse than comparing apples and oranges. It is in fact like comparing the right hand with the left. You may be right handed, but that doesn’t mean you’d be more efficient, or benefit, if you chopped your left arm off! The entire debate around this false dichotomy is a manifestation of a power struggle to control money, because money is the best tool humans have for controlling and shaping society. People in positions of power are there because they like it. Control is what they enjoy. The Market/State battle is in some ways a smokescreen, a pantomime in which the actors and actresses are sincerely convinced the right wing/left wing battle lines are helpful and genuine. Ideology rules the roost.

But there are systemic reasons why it must stay this way (for a while yet). Experimenting with entire societies is not easy, so what is done, what is determined to be the ‘best’ way, is the result of battle, propaganda, consensus, and contrived argumentation, not by scientific methods. This means that arguments such as those laid out here are almost bread and circuses for the masses. I can make any claim I want, show any assumption I find to be false, show the entire socioeconomic apparatus to be flawed and doomed, and it makes no difference whatsoever. The show must go on.

Except, except, except... I am part of the process of understanding ‘Life, the Universe and everything’, just as everyone else is. As our understanding changes, so, in time, will our societies also change. Change is the only constant. Sadly, Great Big Global Change is likely to be very bumpy indeed.

More on this in due course.

'Free' Markets = Corrupt Markets?

An economy — whether local, national or global — is just a system, as are all other multi-component, cohesive processes we know of. As such economies are subject to internal and external forces acting upon them, affecting their behaviours, shaping the manner of their operations. The discipline of economics studies economic systems, but, sadly, comes to the task with a raft of core assumptions about the ground rules governing economic operations — such as rational buyers and sellers, unlimited wants and scarce resources (though, strangely, energy is assumed to be infinite in some regards!) — all of which are, at least in the mainstream, out of bounds when it comes to what may be discussed. These assumptions shape socioeconomic policy generally, which shapes our lives. I refer the reader to Steve Keen’s “Debunking Economics” for a forensic analysis of the internal inconsistencies and logical contradictions of the dismal science (it really is not a science), my focus here is on the discipline’s blinkered attitude to corruption, an observation I first heard made by William K Black. Generally speaking, according to the professor, economics fails to consider corruption at all.

For me the best sentence I have read so far highlighting the systemic pressure to corruption inherent in economic systems was written by Jacque Fresco (from “The Best That Money Can’t Buy”):

“In a monetary system there is an inherent reason for corruption and that is to gain a competitive advantage over someone else.”

A core assumption that arises from the perception of unlimited desires having to deal with limited resources is eternal competition. In economic theory rational market participants are also “law-abiding” market participants (though laws are not really considered), so this endless competition should produce efficiency everywhere it is allowed full scope. The real world, that messy, recalcitrant thing, makes this assumption laughable. Here some quotes from a recent discussion at Financial Armageddon:

“Don’t forget the Dow is fake also. They took out GM and Citibank from the Dow. Those are two zeros and they put in Travelers and Cisco…that’s 640 Dow points that were added because they swapped GM and Citi for Travelers and Cisco.”

and

“Those trades [in Citi, Bank of America, AIG and Wells Fargo] are 80% of all trades in the market and the total market volume is less than half of what it was back then [2007]. In other words, you’ve got half the market participation of what it was and of that half, 80% of it is concentrated in less than half a dozen financial firms.”

Some observers are resolutely opposed to the idea that the markets are manipulated by powerful market players, but we need only recall that economic systems have built in to them a constant and unending pressure to corruption, for the idea of corruption to become more than predictable. We then see corruption as inevitable. There is crime (of which some 90% is economic), humans are capable of a great variety of behaviours — that is, they are not the robotic, homogenous, mechanical components of economic engines economics theory needs them to be — consequently it is silly to assume all who are motivated to become ever richer are nice human beings. If they were we would need no laws in this scarcity-based system. That we have laws, and that laws cannot be perfect, says enough.

And of course the world is vastly more complex than a ragtag of markets efficiently distributing scarce goods and services via the price mechanism. We poor saps watch the voodoo of stock markets in hushed awe, feeling good when it rises, and concerned when it drops. In Ellen Brown’s “The Web of Debt” I came across a wonderful analogy for the importance of stock market performance; the Dow is a dead military dictator propped up in the castle window, his arm moved reassuringly up and down by some mechanical device to pacify the troubled crowds outside. So not only do we have internal, get-rich-quick motivations to corruption, we have external, socioeconomic and political pressures to corruption. Economic systems experience constant internal and external pressure towards corruption, and yet in the mainstream the idea that markets are even manipulatable is a virtual heresy. ‘Free’ markets are the panacea for all ills. Just leave markets alone to work their magic and all will be fine.

But at last there are the beginnings of a serious attempt to address this woeful shortcoming of economic theory, and the fallout of this on socioeconomic practices. From the abstract of a recent paper at www.voxeu.org (hat tip nakedcapitalism):

“How does economic theory need to adjust in light of the global financial crisis? This column presents a new insight on how innovation leads to rent capture, which in turn is a sign of a potential crisis. This stems from asymmetric information in the financial sector. To avoid a repeat of the crisis, policymakers need to increase transparency.”

Asymmetric information is anathema to perfect (and free) markets, in which all participants need to be perfectly informed about what’s going on, for price to be fair and distribution to be efficient. Of course, to the untrained eye, such a market is impossible right from the get-go, but here, in the rarefied air of economics academia, we must look at particular instances of a particular sector of the economy (finance), rather than at the very foundations. Such is change of established institutions; a painfully slow nibbling at the edges.

The article looks at the arcane complexities of CDSs, asserting the sellers are privy to more information than the buyers, and as such possess too much power in the transaction, favouring them greatly over the buyer. The authors extrapolate from CDSs to the financial market as a whole, arguing that the entire sector benefits the sellers with asymmetric information advantages that destabilise the entire economy over time.

What is important about this is that the holders of the keys of current orthodoxy, that elite shouting loudest about the beauties of ‘free’ markets, are suddenly under the microscope being exposed as the least ‘free’ sector. A small beginning it may be, but it has the potential to weaken considerably the paradigm-controlling power of financial institutions. Hopefully the debate about the ongoing crisis will widen as a consequence of this, and other, research.

Meanwhile, it must still be only at the extreme fringes that scarcity itself is viewed as an outdated assumption. Once momentum builds around open and unbiased discussions of scarcity and its fallout, then the idea of a resource-based economy might take hold in the public’s imagination. So much of what we ‘know’ about life on Earth arises from this key assumption. Tackling it will prove, I feel, to be humanity's greatest challenge to date.

Free market, perfect market

“So contrast that to the crash of ’29, when, suddenly, the US got involved in a lot of programs, like Barrack Obama’s getting involved in a lot of programs now ... and so ... the recession/depression we can look forward to lasting a lot longer in America, than if Obama just sat back and let the market, you know, be a market.” Max Keiser

Max Keiser, that very entertaining online econo-show host and ex trader, is advocating here the kind of laissez faire, non-interventionist economics that quickly turned the 1920-21 stock market crash into the roaring twenties. I enjoy much of what Max Keiser says and support his efforts to bring important information to the attention of as many people as possible, but this is an argument I do not agree with. However, because it is a good example of the circular “freedom = free markets = democracy” meme so virally ensconced in the public’s imagination, and spreading worldwide since the collapse of “communism,” it presents me with an opportunity too nice to ignore.

The roaring twenties was a speculation-led bubble that directly created the 1929 crash, which itself gave us the Great Depression, so to see that period as somehow economically healthy is somewhat specious. Furthermore, there is a lot of debate about whether intervention or non-intervention turned what might otherwise have been merely a mini-recession into a multi-year depression, but neither of these objections is what I want to tackle here. What troubles me is this idea of the free market. What does that actually mean, in detail?

To my mind it would mean, in pure form at least, no rules whatsoever, which would mean all synthetic derivatives and any trading of anything — including kiddy-porn, snuff movies, cocaine, heroin — would be okay, as would Wild West style gangsterism and true, hard-man, survival of the fittest punch-ups by any means imaginable. If only the fittest survive, in terms of ruthlessness, brawn, intelligence, cunning etc., that can only be good, right? Children working in factories, slavery, genocide of unneeded human excess, the whole nine yards. Those who survive that kind of a market place really would be deserving of their precious existence. But no one in their right mind advocates such a world. So what are free markets?

A free market is one in which the settled rule of law operates in the interest of effective and honest trading. So free markets need laws, which are tricky, complex things full of devilish details and convenient loopholes at the best of times, and subject to revision and interpretation — change is the only constant. The Market therefore needs the help of a legislature and executive that properly understand it (very problematic because politicians don’t work in the markets), the legislature and executive themselves needing money to operate at all. This money must of course come from the business activity of the market via taxation and donation.

So we necessarily have a State-Market partnership which exists in a system whose principal quality is the pursual of success as denoted by material acquisition and wealth. Ever-present in this system as an ongoing pressure towards corruption is money, and, by definition, that being rich is better than being poor. Out of this bizarrely supposed separation of Market and State there is, to my mind, simply no way a free market can exist. There has never been one, and will never be one; intervention is essential, corruption inevitable.

As I have argued before, markets are monopoly/oligopoly/cartel creating processes. They are predicated on competition, which means winners and losers, and the winners slowly gain sufficient power to control the market to their advantage. Nice guys finish last. Greed is good. Greed cuts through. Being rich is better than being poor. The system is stimulated by its very nature to render perfect competition impossible, regardless of its intrinsic theoretical failings. Only perfect competition could produce a free market. A perfectly competitive market is composed of perfectly informed and rational market actors, both as buyers and sellers. This is not possible. If it were, markets probably wouldn’t need any laws.

Perfect competition and free markets are economics’ Utopia condition that can never be reached. Until they occur (and they never do), distribution of goods and services will not be efficient (i.e. built-in obsolescence), will be unfair, and we will get poverty, war, and the many other unsavoury aspects of all monetary socioeconomic models. Even Adam Smith, a passionate advocate of free markets, recognised this:

“To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but, what is much more unconquerable, the private interests of many individuals, irresistibly oppose it.”

And:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

There is no way to prevent conspiracy, fraud, or any other type of corruption that the human imagination can conceive of, except through intervention by the State in the Market, such intervention always being, of course, very imperfect. And because the State must intervene, there is necessarily a close relationship between it and the Market (to my mind they are two sides of the same coin and share many characteristics). It is in the Market’s interest — because the name of the game is to acquire wealth — to pressure government to enact law in its favour. This dynamic is inescapable.

Unless we pursue true abundance globally and establish an economics without price. In the same way that Open Source Software and Wikipedia are self-organising and non-monetary in their internal operations, so resource distribution can be too. Now that we can technically produce abundance, the only way to distribute goods and services fairly is by transcending the price system. We just have to learn how to want this, culturally, voluntarily, and then go for it.

Of shorting, naked and otherwise

“You mean just like those wonderful "CDOs" that Goldman (and others) created that were in fact fully synthetic instruments and which came into being ONLY because someone wanted to SHORT your house?” Karl Denninger

Shorting (from Wikipedia):

“In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as he will pay less to buy the assets than he received on selling them”

Ellen Brown discusses naked short selling – short selling's ugly sister – in her very informative and eye-opening book “Web of Debt”, relating the following story, which she trawled from the SEC's online archives. In 2005 a gentlemen by the name of Robert Simpson purchased all remaining 1,000,000 shares of a small company and put them in the proverbial sock drawer at home. He watched in astonishment as the self-same shares traded 60 times each over the next 2 days. 60,000,000 transactions of those shares he had about his person, so to speak. To quote Brown:

“The incident substantiated allegations that a staggering number of “phantom” shares are being traded around by brokers in naked short sales.”

While in shorting there is at least the sense of borrowing in the transaction, there is something distastefully opportunistic about it, and done in great mass can shift the market down. Naked short selling is still more nefarious, with trades of shares the broker neither owns nor has use of taking place. But the legality, criminality, immorality or otherwise of such actions is, to me, of secondary importance to the obvious weighty blow such trades and market activities deal to the cherished idea of the perfect market, and to the idea that unregulated and unrestricted buying and selling, via the mythical “invisible hand,” ends up benefiting everyone, young and old, rich and poor, black and white. That tired old argument of market efficiency, trotted out by free marketeers of every stripe in a bewildering variety of forms, is not only fallacious on the face of it, it is also destroyed by the very greed which is supposed to lead to such benign efficiency.

The perfect market, only possible when every participant is perfectly rational and informed, cannot exist. The speed, complexity and enormity of market activity today makes perfectly informed market participants even more of a laughable idea than it was in days of yore. Add to that the skill and power of advertising, the increasing division of labour and automation that makes it almost impossible to judge knowledgeably the actual value (all definitions of value aside for the moment) of things like iPods and laptops, and you have an even greater gap between theoretical and actual. Consumers and buyers are adrift on a sea of shimmering manipulations while, in the background, price, value, wealth, and ultimately social integrity are the play things of the sociopathically greedy in pursuit of ever more power.

Ideally the perfect market prevents the formation of monopolistic power, which distorts the proper (or wished for) functioning of that market. Since there can be no such thing as a perfect market, we have monopolies. We always have, and always will. Unless, that is, we transcend money and its now overwhelmingly negative effects, by rendering it an unnecessary tool via abundance.

Even Adam Smith, father of The Invisible Hand, though he had no idea of the state we would be in today, nor of alternatives such as a resource-based economy, knew well the importance of human wisdom over 200 years ago:

“The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy: but the mean rapacity, the monopolizing spirit, of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot, perhaps, be corrected, may very easily be prevented from disturbing the tranquility of anybody but themselves.”

Smith's warm views on intervention aside, to my mind the regulation/deregulation debate is a distraction, as are others of its ilk (such as fiat or gold backed currency). We live in a mesh of assumptions and myths about money, value, labour, efficiency, scarcity and our very natures which is strangling us to death. Applying the study and research required to break out of this mesh, and then begin the hard work of forging a new paradigm, is an obligation we all share, if the better future we are technically so capable of is to be realized. That, or more of the same tending to worse, and very possibly to collapse. It's up to us.