I really like the idea of abundant non-fiat money explained by Douglas Rushkoff:
Our economy is suffering from scarce money because money is not “worked into existence”. But we can also use technology with powerful information processors. So people are connected using a “peer-to-peer” exchange technology.
I really envision currency competition allowing people to choose the monetary system of their choice. And the system I would choose would allow each person to develop a digital account with credentials. People could also voice their demands on their digital account.
This information about the supply and demand within the economy will be much more “aware” than any supply and demand calculation available today.
Free market barriers exist today. Scarce money is a barrier. And awareness of supply and demand is also a barrier. And through empirical observation - we can begin to notice other barriers… which I have many theories about as well.
We “work our currency into existence”. Labor is the currency. And the value of that currency is related to supply and demand information. People will naturally attempt to provide labor that is scarce because it is more valuable.
I am suggesting a change in the money creation mechanism.
A gold backed currency is a barrier to trade. A disabled person has property that can be worked. And another person can work that property to grow crops. They don’t need gold. Gold is better than a fiat currency. But we should really work toward a non-fiat currency that is worked into existence.
We should not ignore the capabilities of our powerful information processers in doing calculations.
These monetary schemes - no matter how clever - will never work. The fact is that if you own no property the only thing you have left to sell is your labor. Capital theory shows how the accumulation of property (particularly what Austrians call “higher-order goods”) leads to increased human productivity and, hence, greater prosperity. Creating a paper money backed by “hours” or some such nonsense will not lift those who own no property out of poverty and empower them to become capitalists. The ultimate appeal of any such system is its potential to redistribute wealth from the rich (capitalists) to the middle class and poor (those who have only their labor to sell). But history shows how all these misguided attempts to “correct” the “imbalances” of society always backfire and make things worse than they ever were. You don’t think the Elites have infiltrated every populist redistributionary movement in the last 200 years? You don’t think the power-elite can say one thing (“Redistribute wealth to the poor!”) while doing another (redistributing even what little wealth the poor might have to the rich)?
No more games. No more clever money games. Get the government out of money production, end the State monetary monopolies and permit people to freely choose what they will use as money.
Clayton - you are discussing what you think we should be doing right now. I am only discussing what I see as the better monetary system. You are talking about a completely relevant - but different topic.
The middle man is the market. Labor is invested into the market and digital compensation is created. A construction worker builds a house. A farmer works the greenhouses. The compensation is dependent upon supply and demand calculations. And that compensation is dynamic. The compensation is self aware. The compensation knows how it was created and its value upon creation. The compensation knows its last use in trade, and it knows its value at that time. Over time – the compensation changes value based upon current supply and demand information as it relates to its previous usage.
The value of dc should reflect supply and demand.
Value is determined by supply and demand information. As the information processors become more aware of supply and demand: credit creation is done in recognition of effective value calculations. This is not central planning because the calculation uses variables associated with real supply and demand. If there is no demand for a form of labor – then there is no compensation for that labor. The labor can be recorded. And if that labor becomes valuable in the future, then the digital compensation gains value. The laborers digital account increases in value. Likewise, a digital account can decrease in value over time. And the value of dc is always dependent upon current supply and demand.
There can be trade of dc in existence.
The fluctuating value of a digital compensation is dependent upon its previous exchange. An individual can maintain an account of dc as an investment – but there is risk. It is less risky to continue moving dc because changes in value can be more drastic as more time passes. A construction worker does labor building a house. And the worker is compensated as credits are created. Estimations are used to evaluate the day to day labor of the worker. And because the dc is self-aware: future work by the laborer influences the real-time value of previously acquired dc. This encourages workers to maintain credibility by developing and maintaining a sound reputation.
Property damage can be calculated as a way of reducing the dc within the perpetrator’s account. The account can even go negative. Dc can be gifted and it maintains its exchange value based upon its last labor value.
Ideally there is no debt creation.
Debts are risky. Debts can be acquired through a judicial system. And debts can be created between individuals. A farmer can give food to a person without dc. And the dc accounts can go negative. Because the dc is partly or entirely a debt-based creation: it has intrinsic risks. The holder of the negative account may die, become sick, or simply choose to maintain an irresponsible life. The individual who accepts the debt-based dc can not trade that dc until the debts have been accounted for. An individual with a negative account may die, and their organs may be used as assets for compensation.
There can be property damage due to the wilderness. And there are various forms of insurance. We can protect ourselves against floods by using floating houses. This is insurance by design. Individuals may also organize with others who agree to insurance programs. These programs might collect and manage dc in a way that allows people to obtain help from the community if there is a need. Organizations can have negative accounts as well. But entities that accept the debt-based compensation can not use that dc in trades until the debts have been accounted for.
Gavin: If you wanted to prove that all modern physics is wrong, you would be well-advised to begin with the language of modern physics. Your manifesto is filled with statements like “The middle man is the market” that are unintelligible.
I am reading Chapter 2. I really want to figure out how to do value calculations in a way that gives each individual equal influence - to some degree… so that the demands of poor people can equal the demands of rich people. The difference between the poor and rich should be the amount of labor contributed and the quality of that labor. Value calculations should not be dependent upon wealth… and that is the problem I would like to solve.
I don’t like fiat. I don’t like the inability to work money into existence. And I think we can figure out a way to do value calculations in a more just manner… using networking information technologies.
I feel that Chapter 5 totally disregards “money as information”. When you begin to recognize money as information: many of the claims reveal erroneous analysis.
The gain and loss of information most assuredly influences the end product. And as information increases - welfare most certaintly has more potential to increase. Information is capital. Information is valuable.
I guess I need to read “Money and Credit” - by Karl Knies… seems he was on a better course of thought than Mises… considering that Mises did not understand money to be a medium of exchanging information.
Money does convey information through prices. Read the whole book and then refute mises. You cannot cherry pick one thing that you may not be comprehending and reach the conclusion that mises was wrong. That little book you started reading is the definititive source on what money is and how it ties into the rest of economics.
Money is information. And when you lose information - you lose potential. When you gain information - you gain potential. The value of a computer is influenced by the software within it. The software is information.
I am not saying Mises is wrong in his entirety. But I am saying that he can be very wrong in some of his conclusions because of an erroneous maxim. A maxim that ignores money as information - will produce erroneous conclusions. One of which - I illustrate previously.
Money conveys information through prices. And prices indicate supply and demand information. A person can acquire money through labor, and the money in possession is an informational representation of the person’s labor. If the person loses the money - then that information is lost. If the person has money stolen - then the information is misrepresented by attributing the value of one person’s labor with the theif.
When we begin to see money as information - we can begin to investigate alternative money that possesses more information, and that information can be machine readable. The value of money might even be calculated based upon awareness of every person’s demand prioritiy lists in combination with lists of their capabilities and contributions.
When individuals own the means of production - the demands of those wealthy individuals weigh more than the demands of those who own no means of production: and valuation is less than satisfactory for the society. People accomodate those who have commodities, and the demands of poor able laborers are often ignored.
Shared ownership of resources allows for the laborer to be accomodated for the DIRECT quantity, quality, and “fair market value” of that labor because commodities are not owned. Imagine a form of socialism with stratfication and money: if you can. Imagine a socialism without central planning where individuals engage in contracts as a means of accessing products and services.
