[GJM] #9 John Gelles And Edmund Phelps On The Inner Structure Of TOP

[wesburt at juno.com]

Dear John Gelles,

Please accept my heart felt thanks for 
posting Edmund Phelps' essay, "Economic 
Justice", published in the WS Journal, to 
your blog and for bringing the topic to my 
attention on James Cumes' list "Victory 
Over Want" <VOW at topica.com>.  I cannot 
afford the WS Journal and would have 
missed Dr. Phelps' essay on my favorite topic.

My innocent readers should be forgiven if 
they conclude that I have been working in 
cahoots with Gelles and Phelps since I got 
a modem (and Internet access) as my 1994 
Christmas present.  That conclusion would 
be mistaken, of course, but the conceptual 
framework illustrated in attached Figure 
17f.gif and 2-3e.gif nicely identifies and joins 
together in one whole system (also known 
as a holon) the two disparate opinions of 
Gelles and Phelps on the exceptional 
US economy.  

Each of these two disparate opinions are 
perfectly in accord with the known data 
published on the US economy.  The 
connecting link is the inner structure of 
the "real Economy" which produces, and 
measures by the flow of M1c-total (about 
56% of M1), the flow of wealth we consume, 
accumulate, and waste year by year, century 
after century.

The commonality of the private sector of 
an economy as extolled by Phelps, and, 
the public sector as deplored by Gelles; 
was adumbrated by Adam Smith in his 
"First Maxim Of Taxation," by Thomas 
Paine in his Agrarian Justice, by Frederic 
Bastiat in his "The Law," by Henry Carter 
Adams in his "Relation Of The State To 
Industrial Action," by Pope Leo XIII in his 
"Rerum Novarum," by Bertrand Russell in 
his "Principles of Social Reconstruction," 
and by Wassily Leontief in his "Input-Output 
Economics."  Each of these authors was 
disparaged for discussing a politically 
incorrect topic.

After all concerned have had time to decide 
whether, or not, there has been any collusion 
among the three parties, perhaps it will be 
possible to bring the "The Inner Structure" of 
a Local, State, National, or World Economy 
into open public discussion.  We know that 
this topic was proscribed for Benedict De 
Spinoza in 1670 by the Church Of Rome 
and the Jewish establishment of his time.  
Who will step up to the podium today and 
tell the American taxpayers and voters that 
the topic continues proscribed today, 
because Church and State are still joined 
together in common cause?

Thanks again, John.  You may have cut the 
Guardian Knot of economics.  Time will tell.
And thanks also to Martin Hattersley, Q.C. 
for reminding us, not too long ago, that M1c 
acts in an economy much like the charge 
of fluid acts in the automatic transmission 
of an automobile, even though they still use 
manual transmissions in Australia.

Kind regards,

Wes Burt

--------- Forwarded message ----------
From: John Gelles <indexed-savings at sbcglobal.net>
To: VOW at topica.com
Date: Wed, 11 Oct 2006 11:56:49 +0000
Subject: Economic Justice and Necessary 
Demand 

Yesterday I wrote (under 'no subject') a 
comment on Edmund Phelps' essay, 
"Economic Justice", published in 
the WS Journal and copied to my blog 
http://www.ustaxreform.us/10106.htm  

In my comment I said, "I seek, instead 
of failed capitalism [Phelps' 'dynamic 
capitalism'], a purposeful, cost-price 
based, debt-free Keynesian monetary 
system of entrepreneurial production -- 
with environmental, social and moral 
objectives developed by deliberative 
people -- separate from and in addition 
to their private shopping habits. 

A question is, "Why debt-free Keynesian 
money?"  Since such money may depend 
on savings to keep average price stable, 
why not associate newly created money 
with an interest rate that can be raised 
to encourage saving?

The reason is that the object of debt-free 
money is to ensure both production of 
necessities (by government allocation 
of some capital) and consumption of 
necessities by deliberate additions to 
monetized demand.

'Dynamic capitalism', as defined by 
Phelps, would allow for government 
intervention for these purposes -- but 
does NOT insist on them. 

It accepts unemployment in spite of 
its social, moral and material costs. 

Who will invest in necessary change 
(in energy, housing, education, etc.,) 
if there is too little monetized demand 
for it? 

The answer is only government. And if 
government must go into debt to do 
this, to whom is the interest on that 
debt to go? 

Certainly not to lenders who did not 
have the "gold" to lend: what lenders 
lend to government is the debt-free 
money government creates by fiat for 
use in both the public and private 
sectors. Interest in the public sector 
is not necessary and will tend to raise 
taxes and reduce output.

'Dynamic' capitalism is not dynamic 
enough. When an entrepreneur raises 
production, customers do not necessarily 
have the money to buy it -- especially if it 
is something like food for the poor.

'Moral' capitalism will begin with full 
employment (because there is an infinite 
amount work to be done, and work is like 
the air we breathe -- we cannot live 
without work and the necessities of life 
it provides. 

Once the system discovers money, it will 
manage it to do the most good.  Phelps' 
dynamic capitalism fails to manage 
money -- it allows money to be turned 
into unnecessary debt in amounts large 
enough to slow down production and 
make people behave badly in business.

J.G.
http://moneypedia.wikispaces.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

               TOP and TWP are cognoscible on
                Dr. W. Curtiss Priest's web site at:
                    <http://www.epie.org/cyber-
                             soc/default.htm>
                 TOP is GOOD --- TWP is EVIL
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