Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Homo Oeconomicus, modern Neanderthal?

by melo Thu Mar 20th, 2008 at 08:55:35 AM EST

This diary is a response to Frank's diary that grew much too long for a comment, so here it in diary form, where folks won't have to scroll through it to read the other comments.

Great diary, great questions.
  Methinks it's a combination of two principal reasons, creating this black hole in the dialogue in the election runup.
  First is the flagrant fetishisation of money as sheer end in itself, with the concomitant reverence for an aura of wealth, extending to a microscopic attention to the tiniest details of celebrities' lives, just because they're rich (Paris Hilton syndrome). The very richest of all aren't celebrities in the media, but they too are surrounded by people who serve the power they ascribe to money, in the person of their boss. This 'glamour' functions as a spell that deprives people of the bigger picture of consequences, as the lust for money blinds them to anything but the possibilities that money promises, (but seems to rarely deliver).

more below...


 Yet money can save lives, raise peoples' lives from misery, yet only if motivated by kindness, the biggest self-interest of all. Doing a fine job of delivery there! What little there is, compared to the bail-out of the super-rich, or the CEO bonuses waved in our faces like red rags!
  Second is the relative invisibility of the longsuffering underclass, who don't make headlines unless they flip out and do something media-worthy, or some tragedy rips off the cellophane covering the uncomfortable truth, as did Katrina.
  It's difficult to overestimate the importance of Katrina on the world psyche, it was the clearest picture ever of the dark underbelly of the 'american dream', and the cruel injustice of the system that touted itself as so exceptional with that myth. Stripped of said myth, it was revealed as no more than the old I've got mine, so fuck off, devil take the hindmost we've seen down through the ages in almost all cultures in recorded history. The whole game would be over but for the glamour element. Yet we are all so damn prone to its magnetism, conditioned as we are, it's near-sexual in its strength, impossible to ignore. What is it we really need, after the basics are met, does it have to be this way?
  Like those of the fall of the Twin Towers, the images of Katrina will continue to reverberate for many years, doing their subconscious work of helping people evolve to aspiring to something new and better to ascribe value to, than the tired, crumbling old gods.
  While money always had huge power since its invention, the poor had so little of it as to be irrelevant. Methinks the present widespread fetishisation of money springs from the industrial revolution, and the breaking up of centralised monarchies. All of a sudden money flowed outside the centennially, centrally proscribed channels in a more democratic and meritocratic way than before.
  If you invented something, anything, that could be mass-produced, and patented, then you became a kind of royalty in your access to all the toys and trappings (excellent word!), but without the boring protocols and public accountability that stultify the lives of the real royals. They don't call them 'royalties' for nothing...
  How was it possible to make serious money if you were poor before the industrial revolution?
  What ladders permitted one social ascent, other than artisanry, the military or the clergy? Art worked for a tiny amount of people, certainly more exception than rule though.
 If someone invented a better wagon axle any time between 5000BC and around 1750 AD, would his idea have catapulted him to the life of a pasha, like the invention of the bic lighter, or tupperware?
  So the nouveau-riche stepped up to their place in the sun, and soon there were so many of them, and economies grew, more children grew to maturity, the phenomenon of the middle class emerged, with the 'service industry' growing proportionally. Education became more widespread, increasing possibilities for 'class migration' and here we are, in a world where if you asked the average 10-year-old in England if he'd rather grow up to have the life of Richard Branson or that of Prince Charles, it would be 99-1 for the Virgin CEO, who doesn't have to show up at one yawn-inducing, constipated, stodgily symbolic ritual after another, to keep his perks. Bin there, done that, out the other side!
  Money as passe-partout, the greasy pole available to anyone with enough wits and willpower to climb to the top of the social pile, get the RESPECT that previously was accorded only to those blessed with noble birth!
  Inherited, dynastical money creates another form of aristocracy, another story...
  So this idiot fantasy cloud we see surrounding money had its roots in, is a vestige of the awe at the freedom it brought for Joe Sixpence to leapfrog the rules that had kept his caste 'in place' for centuries, barring exceptional luck, beauty or talent.
  The mavericks, the whizz kids... they were the bad boys, sexy, vital John Galts bringing civilisation to the miserable, mobility, electricity, street lights, hospitals SCIENCE!!!
  Money as revolutionary tool...  
  This perception about whom we now call 'yuppies'is changing to one we proles used to have about the monarchy, one part woo-woo, the other that they are a scurrilous bunch of rascals that need taking down off their arrogant pedestals (that we built).  
  I remember LIFE magazine covers from the 50's with pix of balding, plump cigar-in-hand tycoons (like typhoons, awesome forces of nature) with names like Lucius Vanderbilt IV, and by then the tide was turning, they weren't really sexy anymore, unless the spell was working, Kool-Aide-drunk, in which case you had  evil old toads like Kissinger talking about how power was the greatest aphrodisiac ever...
  That power was money, hanging with the 'big boys', the allure of magical class-smashing transformation, without the rules normal rubes had to live by, the mojo that made even the encrusted old-paradigm powerbrokers bend their knees.
  We still haven't invented any symbol as powerful as money has been, to upend established hierarchies. (Perhaps information is taking its place, and we're at the stage of nibbling on it in blogs like this one to see if it's fake or real, as of old with gold). Will the internet be more than the sum of its parts, a force and vehicle for ideas that can upend status quo's in an as-yet novel way?
  Money's the most fungible 'thing' we've invented, as symbol it has come to have more valence than the old ideas of conscience, morality or virtue we used for centuries to 'rise above the beasts', or even the hard commodities it was printed to stand for.
  It has become a virtue in and of and for itself, the medium has become the message.
  That is becoming more obviously unsustainable, as we crave more than life built on simple expediency, and the mythic(al?) power of money will be replaced by something else, homo oeconomicus in its purer forms (sophisticated Ponzi scheme/casino 'financial service providers') is on its way to extinction. I affirm that, lol!
  What that something else is, will be up to us to create, or is it emerging from the cracks while we bend our minds to it?
  Money will always be around, but maybe its power to corrupt will lessen, as more people change their values towards a more human way of life, or philosophy, if you prefer.
  For that to happen, it will take a hell of a lot of demystification, which is what's a-starting, the falling of the tallest virtual tower man ever created.
  Proving that trust is what people need, (as we finally get to understand, writ large, what happens when it's overextended then abused), and when we can't trust leaders not to abet stealing from us while they sleep, then maybe we need to start trusting in each other more...
  In somma, there is as yet no 'one idea' that has come close to substituting the sticky practicality of the idea of money, and we have yet fully to come to terms with the dangers of fetishising it, and the poor have no place at the table, they are ignored, no levers of power for them, discouraged as they are to vote. Maybe Obama can change that, but how, if, as Frank points out here, he continues to ignore it, unlike Edwards, who emphasised it clearly, and was outvoted for his pains? Denial still outweighing reality...
  Excuse the length, brevity took a hike.'Come back!'
  It's snowing outside here, good blogging weather, thanks for listening...
                       

Display:
You certainly have a mellifluous way with words, Melo.  Very, very impressive if English is not your first language.  But if we fetishise money, and idolise the rich which have it, why the political aversion to using the state as a mechanism for re-distribution, or even allowing the taxpayer a fair return on the risks the state takes with his money - as in bailing out the bankers. Why the myth that all profits are private, when enterprise is only possible within the security and legal space provided by the state at taxpayers expense?

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Mar 20th, 2008 at 09:50:57 AM EST
yup, i love words, and english is my first language. thanks for the compliment, frank, i appreciate it from such a fine writer as yourself, as i read here and elsewhere, i aspire to add more substance to my screeds, as i come very late in life to the political table, till then... i practice...and read some more.

Frank Schnittger:

But if we fetishise money, and idolise the rich which have it, why the political aversion to using the state as a mechanism for re-distribution, or even allowing the taxpayer a fair return on the risks the state takes with his money - as in bailing out the bankers. Why the myth that all profits are private, when enterprise is only possible within the security and legal space provided by the state at taxpayers expense?

why indeed? it's a rigged game, just on a larger scale than we have ever known.

many have felt this for years on a gut level, perhaps these recent events will lead to a definitive  restructuring, one can hope...

take the drug of conspicuous consumption away, and what's left?

we're about to find out, i'm hoping it will lead to greater political consciousness, demanding leaders pointing the way to a different way of life, with much more than just rhetoric for buttress.

till then, i read and rant along with the rest, trying to analyse from the dregs of an emptying teacup what kind of future we can encourage, that will be both fairer and more sustainable for the planet.

the best ideas have always bubbled up from the bottom, i take some faith from that, maybe one day...  

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Mar 20th, 2008 at 10:07:57 AM EST
[ Parent ]
Melofluous ;-)

You can't be me, I'm taken
by Sven Triloqvist on Thu Mar 20th, 2008 at 10:09:44 AM EST
[ Parent ]
melo:
take the drug of conspicuous consumption away, and what's left?

One of my saddest experiences was driving through Mozambique and seeing real poverty - young kids with bellies swollen from kwashiorkor and then going to a bar where only the most expensive Scotch whiskys were on display.

I asked the proprietor how this could be.  He said he had a store room full of cheaper brands which he couldn't sell.  One drink might cost the equivalent of an average month's salary, but only the top brand name was acceptable, so much were they in thrall to western style media and advertising...


"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Mar 20th, 2008 at 10:51:03 AM EST
[ Parent ]
man, i got a cold sweat reading that.

that's one of the most extreme cases i've ever heard of,  it reminds me of nestle and their scams to get third world mothers' milk to dry up, so the latter became completely dependent on the corporation, and many, many children went without and starved.

advertising is the most diabolic force on the planet.

pr, spin, propaganda, all the same mindbending shit.

corporatism, an idea whose time is over, gotta try harder to understand chris cook...

corporation bad if not LLP, corpration good if LLP, is about as far as i've got, lol!

thank the fsm he's a very patient man.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Mar 20th, 2008 at 02:33:36 PM EST
[ Parent ]
Frank Schnittger:
Why the myth that all profits are private, when enterprise is only possible within the security and legal space provided by the state at taxpayers expense

You put your finger on the problem, Frank.

The mythos comes before the logos. We have been imprisoned by language: by definitions.

We are bound by Economic Newspeak.

All Profits are by definition "Private", where "Private" = "in private ownership", and more usually "in the ownership of a Joint Stock Limited Liabilty Company" or "Corporation" the purpose of which is Profit.

In just the same way the "Private" sector means "in corporate ownership".

So the outcome is that by definition the "Public" sector can only raise money:

(a) in taxes - from the long-suffering taxpayer, or
(b) by borrowing.

There is no such thing as Public "Equity" because Equity is defined as shares in a "Private" Corporation.

It's all bollocks of course.

The solution is to expand the Corporation and in doing so expand the definition of "Private".

There is no reason at all why assets should not remain in "Public" ownership with finance raised by unitising some of the use value/ production/ revenues within legal frameworks/protocols  other than the Corporation.

eg trust law based units as in Canada, or units in partnership-based entities of one type or another.

What we should be aiming for is an inclusive economy operating on a "Not for Loss" or "Profit for Purpose" basis as opposed to "Profit is the Purpose" as now.

We should "Equitise" the economy by introducing on a widespread basis:

(a)"Public Equity" financing of public assets using  trust or partnership vehicles, with tradable units offering a reasonable index-linked (say 1 to 2%)return on Capital but no return of Capital,;

(b)creation of Treasury credits which would be used to invest in land and property (repaying existing secured debt once and for all) at minimal - index-linked - rates of return ie to all intents and purposes a land tax.

We may thereby create a "National Equity" to complement a shrunken National Debt which would now comprise only the (unsecured) credit/money actually in circulation.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Mar 20th, 2008 at 11:11:41 AM EST
[ Parent ]
ChrisCook:

The mythos comes before the logos. We have been imprisoned by language: by definitions.

We are bound by Economic Newspeak.

All Profits are by definition "Private", where "Private" = "in private ownership", and more usually "in the ownership of a Joint Stock Limited Liabilty Company" or "Corporation" the purpose of which is Profit.

In just the same way the "Private" sector means "in corporate ownership".

way to say it all, chris.

thankyou for banging on about this, your bees are definitely climbing into my bonnet.

ChrisCook:

(b)creation of Treasury credits which would be used to invest in land and property (repaying existing secured debt once and for all) at minimal - index-linked - rates of return ie to all intents and purposes a land tax.

put for a bear of littler brain, does this mean the state would gradually buy out private property and substitute private ownership with managed leases, reflecting real value, avoiding bubbles?

just supposing...i have 5 acres, and if this first solar installation happening now of 2.3 kw works as promised, i am thinking about going for a 20kw installation, which is the maximum allowed for the incentives offered, which basically consists of paying 3  times the current rate, linked to increases, and not charging any taxes on the income. (supposedly €2-3,000 per month).

the company i'm working with has some much bigger installations under its belt, and i know we can check their income/outlay before committing to anything.

could i make an LLP out of this possible business, selling shares in the installation, instead of incurring all the capital outlay myself? how would it differ from a 'normal business'?

i think i get that the motivation would be different than maximum profit-uber-alles, and that appeals, but there is risk in all business, and while this project seems solid (as anything here in il bel paese), does the fact that it's an LLP somehow protect the shareholders(?) better than a 'normal' partnership?

i should know by mid summer how close the reality is, compared to the sales pitch, from seeing how the roof installation works, and extrapolating for a hilltop location with more sun exposure and rotation motors to capture more sun-hours.

i am embarassed how little i've understood this LLP lark, notwithstanding your patient attempts, however i do feel the penny slowly dropping, and with a concrete example i could relate to better, i have a hunch there's going to be an 'aha' monent, and i'm going to laugh at how simple it was to grok, once i re-arranged the mental furniture enough, clunk, thud!

thanks for sharing.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Mar 20th, 2008 at 04:17:08 PM EST
[ Parent ]
European Tribune - Homo Oeconomicus, modern Neanderthal?
Money's the most fungible 'thing' we've invented, as symbol it has come to have more valence than the old ideas of conscience, morality or virtue we used for centuries to 'rise above the beasts', or even the hard commodities it was printed to stand for.

But that's the problem, melo, we are accustomed to think of "Money" as a "thing" or an "Object" because the Bank created IOU's we use as Money are Objects.

In fact, Money is a relationship. To achieve Money, you simply need:

(a) a barter network or "clearing union" as Keynes had it;

(b) an abstract "Value Unit" or Unit of Measure;

(c) Credit - or "time to pay".

What happens is that "Money's Worth" (eg Kilowatt Hours; Square Metre Days; Hours of Individuals' Labour) changes hands by reference to the Value Unit.  Any credit extended will generally require a Guarantee.

It is the provision of a Guarantee of the credit, backed by a proprietary default fund, that is the principal "value" Banks actually provide in exchange for charging "Interest".

But I digress. Let's have a look at your proposal.

melo:

Just supposing...i have 5 acres, and if this first solar installation happening now of 2.3 kw works as promised, i am thinking about going for a 20kw installation, which is the maximum allowed for the incentives offered, which basically consists of paying 3  times the current rate, linked to increases, and not charging any taxes on the income. (supposedly €2-3,000 per month).

the company i'm working with has some much bigger installations under its belt, and i know we can check their income/outlay before committing to anything.

could i make an LLP out of this possible business, selling shares in the installation, instead of incurring all the capital outlay myself? how would it differ from a 'normal business'?

There are two types of Capital in use here.

Firstly, there is the use of the land, as a location for the project. But as that's yours, we'll park that subject.

Secondly there is the use of the capital invested in the solar installation on the land.

The output is in energy.

You are essentially creating a "pool" of future energy production of x  MegaWatt Hours per year.

There are a couple of ways you can raise finance within a partnership entity.

Firstly "Energy Equity": ie you can sell part of the "ownership" in Non - Redeemable "n'ths" or %ages in the revenues you get from the sale of energy production (you don't say who to, presumably the Grid at a decent price?).

That way, if you have a good year, your "Capital Partner" investors do too.

You could buy them back, but proportional shares - unlike shares with a "Par" Value of say €1.00, $1.00 or £1.00 - can never be redeemed, because although ownership may change hands, and the value will vary, there must always be 100%.

Secondly: "Energy Debt" ie you sell Redeemable Units (of say 10 Kilowatt Hours apiece) to investors at whatever price seems reasonable. So if the market price is 10€ per unit now, then you might sell 100 units at 8€ each.

You then arrange with the Utility to whom you sell your energy that they accept these units instead of cash in return for electricity supplied, and the utility redeems the units with you, instead of paying you cash.

What you are doing by raising capital in this way is creating fungible units of energy-based currency (or "Money's Worth"), and of course there's no reason why the investors couldn't use them in the local pub or anywhere else which accepts them in exchange.

The admin infrastructure for this is pretty simple.

Something like.....

Kilowatt Cards

would work just fine.

The beauty of it is that you would undoubtedly find that most of the Redeemable Energy Units actually circulate as currency and don't get cashed in.

That, of course, is exactly what the goldsmiths found when they placed bullion in safe keeping on their shelves ("bancs") and found that they were able to issue more receipts than they had gold...

...thereby inventing modern "deficit-based" banking....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Mar 20th, 2008 at 05:49:02 PM EST
[ Parent ]
thanks chris, i will mull on that a while...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Fri Mar 21st, 2008 at 01:13:34 AM EST
[ Parent ]
Money is the universal token of power in the modern world. People with money must have worked hard to achieve that.

Dynamics of power always causes some despair. I just put up a diary.

by das monde on Fri Mar 21st, 2008 at 01:59:56 AM EST
Brilliant, nourishing thinking, melo. Reading it felt like having an exceptionllay satisfying meal and wanting to try out the recipe.

You've identified so many disparate issues and brought them together so clearly and simply, truly a tour de force.

A standing ovation for your analysis is all I can contribute to this topic for the moment. The world of finance and its language is one that is an almost impenetrable mystery to me. I suppose I could, given an incentive, make an effort to learn it. Your take on the subject of money is precisely the kind of thing I need to shed some light on the subject.

Blaugustine

by Augustinatalie (endapressNOTblueyonderNOTcoNOTuk) on Thu Apr 17th, 2008 at 01:01:16 PM EST


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]