[GJM] your reply to the unraveling

[W. Curtiss Priest]

Dear Norman,

Your reply was quite thoughtful and we certainly agree
about the merits of Binary Economics to counter the
debt cycles that we are subject to.

Your appeal to Say I find unnecessary for your argument.

If we look directly at what Say wrote:

	It is worthwhile to remark that a product is no sooner
	created than it, from that instant, affords a market for
	other products to the full extent of its own value. When the
	producer has put the finishing hand to his product, he is
	most anxious to sell it immediately, lest its value should
	diminish in his hands. Nor is he less anxious to dispose of
	the money he may get for it; for the value of money is also
	perishable. But the only way of getting rid of money is in
	the purchase of some product or other. Thus the mere
	circumstance of creation of one product immediately opens a
	vent for other products. (J.B. Say, 1803: p.138-9) [1]

I have great difficulty with the assertion that, in typical
economies, that the "value of money is perishable."  And only
if you believe that will the demand for goods push into
the demand for other goods.

However, in an economy that has knowable inflation and which,
at the least, pays the holder of money the rate of inflation
plus, typically, 1%, "risk free," the holder of money has
the choice to either spend or save.

Now, for some folk, having money "burns a hole in their pocket"
and they don't seem able to hold onto it.

So, rather than perishability, but simply "easy come, easy go,"
will somewhat complete the "effect."

Whichever, the key, as you say, is to achieve a balance
between the income to buyers, even if not employed.  I.e.,
they should have some capital ownership, or the equivalent, and
there would then be no need to borrow money to buy all goods and
services in the economy.

As I phrase it, and it is also phrased differently by Douglas
in Social Credit, only if the returns to productivity gains
are universally shared, will the system be in balance.

This would, of course, be a very different economy.  It would
mean that those "with money" would not be permitted to
receive a disproportionate share of productivity gains as
they now do by holding stock in companies.  I.e., monied
people beget more money, and cut out the balanced distribution.

The only adjustment I would further make is in accord with
Rawls.  In elegant simplicity, Rawls considers "fair" when
everyone benefits if one person, either a CEO or an investor,
makes everyone else better off.

What is dangerous in that simplicity is those in the "primal
position" must be also very aware of the difference between
a static economy and a dynamic one.  I.e., it may appear
that this "trade off" is wise, but, when one considers the
result:  greatly raising the propensity to incur, as you
call it, non-",procreative, forms of credit," this causes
continual boom and crash cycles.

So the cost of such cycles, their misery, should be considered
(i.e. "internalized") when everyone sits in the "primal
position" (picture "cavemen" around a campfire) and elects
the "rules of the game."

As I see it, the capitalist sees booms and crashes as
externalities, that, some such as Joe Kennedy, can wisely
avoid (as Kennedy did prior to the Great Depression).

So, it is that externality that should be internalized, or
else the cycle is born to continue.

Sincerely,

Curtiss

P.S.  you surely have some list bounces from your reply.  I
am pleased to forward your reply to any lists you tell me
you couldn't post to  :)

-- 


	   W. Curtiss Priest, Director, CITS
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB at MIT.EDU http://Cybertrails.org