Socialists and neoliberals can and must be friends

A leaflet explaining the Citizens’ Basic income at the Green Party conference next weekend will not state that the CBI ‘Makes work pay’. This is the whole point of it. Well, as I keep saying, the wider purpose is to allow everyone, everywhere to think sustainable thoughts instead of here and now necessities. But a prime selling point will be omitted because Anne Gray thinks that aspect favours employers as against vulnerable workers.

I would normally have highlighted ‘Anne Gray’ with a hyperlink, but I cannot remember how to do this with text on my own laptop, so I have copied Anne’s paper as an Appendix.

Anne and I make opposite assumptions, which neither of us can prove in advance. Anne assumes that without controls employers will continue to exploit workers as they always have done. I assume that the CBI will give workers equal bargaining power with employers.

In the short term Anne may appear to be right. If the average entrepreneur is more quick witted than the average benefit claimant, the former will mostly get away with behaving as though nothing had changed. But blogs such as Johnny Void and Boycott Workfare will spread the word to everyone who is computer literate that they don’t have to do anything they don’t want to do. The message will quickly reach everybody it needs to.

For years  7 million – the number Iain Duncan Smith said would be receiving Universal credit by 2014 – have been used to living off benefits, supplemented by occasional undeclared work, or perhaps a little something that Tesco wouldn’t miss. The only difference for them is that one of those activities will be encouraged instead of prosecuted. Or to put it another way, a Basic Income will make work pay.

So why does Anne think this fact should be suppressed? In the first place it  is a fact. Anne’s accusation is already levelled at Tax Credits, because they already do what a Basic income will do, only a BI will do it more comprehensively (and cost the better off more than £30 billion)..

I must correct one statement in Anne’s paper. She says:

“A BI shares an important feature with the notorious Speenhamland system of poor relief of the early 19th century – that is, the claimant gets the money however little s/he earns. “

I have taken the following from the Wikipedia link she gives

“The authorities at Speenhamland approved a means-tested [my emphasis] sliding-scale of wage supplements in order to mitigate the worst effects of rural poverty”

Do I have to spell it out? It is means testing which prevents work from paying. The Universal Credit was Iain Duncan Smith’s way of making work pay. Well, it wouldn’t actually, it would just remove means testing enough to make former claimants no worse off once they had been compelled to take a job – any job. But the UC remains a myth for 90% of its intended beneficiaries.

Milton Friedman was in favour of a Negative Income Tax. At first this looks like a Basic income. The effect would indeed be identical, except that the Basic Income gives money up front, and only takes more from you than it is worth if it turns out that you didn’t need it. A NIT on the other hand takes money from you, and may give it back later. Bad psychology. We are programmed to avoid loss.

I welcome the fact that wage rates can become flexible. Osborne’s low-grade version of the Living Wage is already running into threats of redundancies. A ‘proper’ Living Wage would be worse. Market forces can be used by the formerly weak, whereas now they are still a means of oppression by the strong. Mention of Friedman – a neoliberal – leads us where Anne fears to tread. But she is far from alone. I have a simple litmus test.:

“What is your attitude to Zero hours contracts? Think now, and then once we have a Basic income.” Anne fails this test, but so does Caroline Lucas, Natalie Bennett, and, as I discovered at the leadership count last Friday, so does Amelia Womack. The only explanation I can think of for none of them recognising means testing as the root problem is they are not yet able to think outside the socialist ‘workers v bosses’ box.

For me, the new’ persuasion is better than force’ rule means that the line given by the government  (“Zero hours contracts suit some people, especially students, down to the ground”)  changes from utter clap trap whilst such contracts are backed by benefit sanctions, into a simple statement of fact. A Basic Income will facilitate entrepreneurial start ups – no big deal if it doesn’t work out. But above all, the extra tax which the Basic Income will take from the better off can be presented as a compromise: for your money you (rich people) get a planet fit for your grandchildren.

Milton Friedman’s idea of a Basic income (or Negative Tax) would be around £15 per week, to ensure that everyone was still forced to accept slave labour. Many ‘left wing’ proposals really would be ‘unaffordable’. But neither side thinks in terms of sustainability – how to live without over-exploiting the ecosphere  – the thin shell round a little ball which is the only known home of all life.

The two sides can be brought together in the Green context. The Basic income must be enough to cover basic needs, so that no one need do anything, or be in favour of the government allowing or doing anything which might damage the ecosphere. Although I myself was born into the socialist tribe, I am against the Citizens’ Basic income being any more than adequate coverage of basic needs. If we are to have a Cat in Hell’s chance of saving the ecosphere for future generations, we need all the neoliberals (and those who think neoliberalism is working for them) and socialists we can recruit.




Anne Gray for PWG 15.8.16 [PWG – Citizens’ Income Policy Working Group]

In this text I first address what I think is a major gap in the arguments amongst the group so far – the probable effects of a BI on employers’ behaviour. There are two parts to this – firstly how a BI would affect offered pay rates, which leads to the question of whether abolishing job centre rules would be an effective and immediately available support to resisting low pay independently of a BI. Secondly, if BI is seen as a way of making precarity acceptable, what would be employers’ response in terms of the balance between precarious jobs and full-time permanent jobs?

I go on to consider another question which is coming up in the PWG – would a BI help to make ‘de-growth’ acceptable to the population and if so how?

How would a basic income affect the pay rates employers offer?

It is frequently argued that BI would release some people from the ‘poverty trap’ – that is, the feeling that it’s not worth working if you gain a wage only to lose JSA and/or other out-of-work benefits, representing a massive tax rate on the earnings of those exiting unemployment into work. If it’s true that BI, by ending this ‘poverty trap’, would persuade some unemployed people to take jobs they previously wouldn’t have accepted because of low pay or short hours, employers will find it easier to recruit their required numbers than before. Then the employers may find they can get enough recruits at a lower wage – unless a minimum wage law stops them offering less pay in their next job advertisements.

A BI shares an important feature with the notorious Speenhamland system of poor relief of the early 19th century – that is, the claimant gets the money however little s/he earns. Critics of the Speenhamland system argued that employers took advantage of that by paying less – see the summary of Karl Polanyi’s 1957 critique, if you don’t know it, on Any benefit system with that same feature risks having the same effect – unless prevented by a minimum wage law. (With Speenhamland, eventually the authorities realised this and introduced workhouses instead!).

Fran Bennett (then of the Child Poverty Action Group) made this same argument in relation to tax credits when they were first introduced, in papers published by the Joseph Rowntree Foundation. Several academics have made it in relation to Universal Credit (references on request). These critiques emerge even though the guilty feature is modified in the case of TC and UC by high withdrawal rates as earnings rise.

Most importantly, right wing writers (e.g. Milton Friedman, Hermione Parker) have argued for BI precisely because it helps and encourages people to take low paid jobs. And if pay falls, it falls not just for those who may be desperate for any job, but for all those changing jobs that already had one – and possibly even for those IN jobs and staying in the same workplace; many recent press reports show how easy it is for employers to issue new, worse contracts in the current under-regulated, under-unionised environment. Pay will fall not just for small businesses (amongst which Greens might want to encourage small shops but hardly the junk mail distributors or battery chicken farms), but for JD Sports, the supermarkets, and all the other corporate giants. Surely we don’t want taxpayers’ money to go indirectly to these companies to help them reduce their wage bill and/or casualise their workforce even further?

Why abolish the minimum wage law if it doesn’t do any harm ?

We have it, trade unions struggled for it and want it – and if we are being opportunistic though I think Greens should not be, there are more potential votes from them than from people who might be tempted away from the Tories.

Does leaving a minimum wage in place actually do any harm?

Where is the evidence that small shops, etc. are unable to survive because of it, or would be unable if it rose further? Premises costs, rates, and aggressive competition from big business like supermarket chains and coffee shop chains are surely more important factors. If we want to subsidise small businesses, let’s give them a subsidy or tax concession designed to encourage them to employ extra people and/or have lower premises costs – don’t remove the minimum wage law, which would hand higher profits to big companies that make too much already. The sector that really is shedding jobs and services because of the Tories’ ‘living wage’ – namely social care homes and agencies – desperately needs more public funding but that is a whole separate policy issue.

The whole drift of Green policy at conferences and in manifestos over the last 5 years has been that the minimum wage needs raising not abolishing. Abolishing references to it in the MfSS would sit very oddly with previous conference motions and with other parts of the MfSS. We are committed to controlling the spread between minimum and maximum pay in a given company, as well as to equal pay for women and a European living wage. Abolishing the MW/LW would be like losing an important spanner from the toolbox.

GP policy is that we want to scrap zero hours contracts except in very limited circumstances (WR 354). This is an example of how we need MORE regulation of work contracts not less – and extending to other features as well as pay, to make sure employers don’t make conditions worse in other respects in order to comply with any increase in minimum pay.

If we want to reduce the supply of recruits to bad employers how can we do that ? Is BI the best or the only way ?

Let’s go back to the idea that BI lifts people out of the poverty trap and encourages unwaged people to work. These people fall into two groups; those on JSA and those who can’t claim it. The second group are mainly people with a working partner whose 6 months’ entitlement to insurance-based JSA has expired, or people under 18. The argument that people are deterred from working by the financial factor that when you get a job you lose benefits applies mainly to the second group.

Those who ARE on JSA are currently under such strict rules about what you can refuse that they would often be obliged to apply for rock bottom pay and conditions anyway, and to take any job offered for fear of sanctions (benefit being stopped). The financial incentive effect of a BI would make little difference to them. What would make a big difference is that BI is unconditional – all the job centre rules about applying for so many jobs each week, sanctions if you turn down a ‘suitable’ offer, etc. would go.

But we don’t have to have a BI to change the job centre rules and reduce the use of sanctions. We need to reduce the conditionality of existing benefits and of UC. We make far too little of this in the GPEW. We can demand this happens NOW, without concerns about how much exactly a BI would cost or how we would fund it. It is the idea of scrapping conditionality that has ‘sold’ BI to the PCS and UNITE and led them to link a demand for BI to their campaign against benefit sanctions.

Current JSA rules have been getting gradually tighter, with sanctions and the imposition of compulsory work-for-benefit placements becoming more common, even since 1996. This job centre bullying system was designed to chase people into bad jobs. If we want to resist bad jobs, relaxing the benefit rules is an effective and very cheap first step. It’s a serious omission that we have no stated policy that I can find on this – just a brief criticism, in the ROPS on welfare reform, of the emphasis on conditionality in the early UC proposals, which does not go near far enough and is only visible to members.

How would a BI affect the security of jobs and the extent of unwanted part-time work?

Another potential effect of BI is that it could make ‘precarious’ jobs acceptable – the temporary, the zero hours contract, the very part-time. Some economists like Guy Standing argue that precarity is here to stay and that BI is the best way to deal with it. But here there are dangers too.

In the 1990s and earlier, France, Belgium and Germany all had very high ‘disregards’ – amounts of money that unemployed people can earn without deduction from their benefits. This was in contrast to the UK where the JSA disregard has stuck at £5 at least since before the millennium and as Clive Martin points out, will be zero for childless people under UC. Trade unions, NGOs working with unemployed people and many academics all criticised the high continental disregards for encouraging employers to create casual jobs that fitted into the benefit rules whilst reducing the pool of secure full-time work which the same jobseekers really wanted. A poverty trap – not the same kind as the British one where you lose your benefits if you work a single hour, but a poverty trap none the less.

What is important here is the similarity between the high disregards in these French, Belgian and German benefit schemes and a BI itself. They were like a partial BI for the unemployed. To combat these effects of encouraging more precarity, alongside a BI we need regulation of zero hours and limitation of temporary work. Perhaps we need to work with GPTU and other policy working groups to check whether the WR section of MfSS is adequate for this purpose in the light of recent developments in the labour market. Just as BI world still needs a minimum wage, it still needs several forms of labour regulation if the BI is not to end up subsidising employers who show no long-term responsibility for training and supporting their workforce and want to turn labour supply on and off like a tap. Just like the demand to end conditionality of benefits, reversing the march of casualization under Blair’s government is something we can work for straight away without waiting for a BI.

A BI does NOT solve all the problems of precarity. In particular, try telling your prospective landlord or mortgage company that you don’t know whether next week’s income will be your wage for 40 hours (say £400) plus your £80 BI, or just your £80 BI. It is creditworthiness and a secure long-term income that gets you a home.

Would a BI assist the process of ‘de-growth’ ?

Let’s return to the effects of BI on overall amount of work done. Giving people a way to refuse low pay or very insecure work would probably reduce the total of hours worked and jobs offered slightly. More people would stay unemployed longer. Some of the worst jobs would not be offered. So this would reduce total resources used. However, many of the worst jobs are in services rather than in making ‘things’ – agriculture and food processing being a notable exception. And we don’t actually want LESS work done in social care, hospital cleaning or paid childminding. We want these things properly, publicly, funded. Neither a BI nor softening of benefit conditions is going to make the overall economy better in terms of happiness or sustainability – for that we need different policy instruments.

At the same time clearly a BI would be a welcome support for some kind of work we do need more of – like starting small businesses, organic agriculture or running NGOs. But if we want these things, why not subsidise them directly? This would surely be better than subsidising all the businesses that might take advantage of the fact that workers were getting a CI by paying them less, or by putting more of them on temp contracts.

IF a BI was high enough (how high we don’t know) it would enable more people to work part-time, even those used to quite high hourly rates. Then we would be talking about de-growth. But the taxpayers’ money needed to fund BI does not come from thin air, even if some of the money is raised through non-income-tax sources like land value tax. Shrinking the economy inevitably means shrinking the tax base – whatever that tax base is.

Granted a BI would make greater, less conditional help for the unemployed more acceptable – by changing the work choices for EVERYONE. Granted it would help de-growth for a while by achieving higher incomes at the bottom through re-distribution – though the extent and shape of that depends very much on how it is financed, and if it’s done through higher basic income tax, re-distribution would not be very marked; we need to tax the rich and the big corporates. But ultimately the transition period would be up and there is no way to keep human demands on the planet at a sustainable level except…be content and not ask for more….maybe not more than we had in the 1940s ? who can say?


There is a danger that ‘the days of BI’ become rather like ‘after the revolution’- the illusion that everything will be great if we do this one thing, and no other changes will get what we want. I defending a policy that many regard as very adventurous, we risk using too many poorly defended arguments for too many advantages of BI. Let’s instead separate our various objectives and ask what is the best and the quickest means to achieve them.

In particular; ‘BI helps unwaged people enter work’ seems to contradict ‘BI helps people accept that there will be less work’ (whether because the planet can’t support it, or employers won’t pay for their workforce through slack periods of business, or machines are tending to replace human labour).

And also in particular; let’s attack benefit sanctions and the whole workfare-style job centre setup, along with several of the unions, as an immediate, cheap and feasible change.

And let’s not subsidise giant and bad businesses along with those small ones that we want to encourage.

Further reading

Some of the issues in this paper, and the international evidence, are addressed in my previous writings which give lots of further references to relevant literature for anyone who wants it:-

Is Citizen’s Income the answer to workfare? On Citizen’s Income Trust web site at

‘Unsocial Europe; social protection or flexploitation ?’ Pluto Press, 2004

‘European perspectives on welfare reform – a tale of two vicious circles?’ European Societies, vol. 4/4, 359-380, 2002

Flexicurity: solution or illusion? ‘Labour Regulation, Precarious Work and Income Maintenance in an Expanding Europe’ in ‘Employment Policy in the European Union; Origins, themes and prospects’, edited by Michael Gold, Palgrave 2009



8 responses to “Socialists and neoliberals can and must be friends

  1. Hi Clive,

    Neo Liberalism is a pretty broad political philosophy but starts with the notion Look after the Economy and the large economic Players and the rest will look after itself. It is classical Liberalisms very close First Cousin. Neo Conservatism is also its sibling

    I was reading some of your published work on these questions last week also and wondser how far you have got in your thinking with Money creation and the question of Interest on money. This is for me the nub of the matter something I have in common with Joseph Prouhdon, explained by Peter Kropotkin in the Encyclopedia Britannica thus.
    ”Now Proudhon advocated a society without government, and
    used the word Anarchy to describe it. Proudhon repudiated,
    as is known, all schemes of Communism, according to which
    mankind would be driven into communistic monasteries or
    barracks, as also all the schemes of state or state-aided Socialism
    which were advocated by Louis Blanc and the Collectivists. When
    he proclaimed in his first memoir on property that ” Property
    is theft,” he meant only property in its present, Roman-law,
    sense of ” right of use and abuse ” ; in property-rights, on the other
    hand, understood in the limited sense of possession, he saw the
    best protection against the encroachments of the state. At the
    same time he did not want violently to dispossess the present
    owners of land, dwelling-houses, mines, factories and so on. He
    preferred to attain the same end by rendering capital incapable
    of earning interest; and this he proposed to obtain by means of
    a national bank, based on the mutual confidence of all those who
    are engaged in production, who would agree to exchange among
    themselves their produces at cost-value, by means of labour
    cheques representing the hours of labour required to produce
    every given commodity. Under such a system, which Proudhon
    described as ” Mutuellisme,” all the exchanges of services would be
    strictly equivalent. Besides, such a bank would be enabled to
    lend money without interest, levying only something like 1 %,
    or even less, for covering the cost of administration. Every one
    being thus enabled to borrow the money that would be required
    to buy a house, nobody would agree to pay any more a yearly
    rent for the use of it. A general ” social liquidation ” would
    thus be rendered easy, without violent expropriation. The same
    applied to mines, railways, factories and so on. ”

    We can learn a lot from the Swiss referendum on Citizens Income as discussed here.
    ´However, the nearly universal misunderstanding of money is a major obstacle. For too long we’ve allowed a small coterie of bankers and “court economists” to hold the secrets and “tutor” us. So, it’s time for total openness.
    First, regarding the claim that the Swiss proposal would’ve been too costly, what’s entirely omitted from the discussion is that the proposal (and similar proposals elsewhere) appear to call for re-distribution of existing money—taking money from certain sectors through taxation and re-allocating it to the people at-large.
    The implication is that the money supply is basically static and that re-distributing limited funds would require tough budget decisions—sparking tax hikes and associated spending increases in several areas; hence the claim “costs too much.”
    But a successful basic-income plan can and must be based on the creation of new money, or “distributism,” not on reshuffling existing money, which is “re-distributism.” That’s the “state secret” that no one wants to touch.
    The issuance of new money needs to happen to overcome the huge “gap” between today’s paltry purchasing power and the massive mountain of debt and the towering totality of prices on all available goods and services. We have full stores and empty wallets. (Ideally and importantly, governments should reclaim their interest-free money-creation rights and forbid private central banks from creating money any longer).´´

    Banking reform is a tricky business I think Clive and usury is their business and price discovery in the market is their creed. Those of us that understand the finite planet and exponential growth disjoint will I think find it very hard to make the Bankers our freinds and Neo Liberalism being the Political Wing of the Usury industry will not be won over on this basis I disagree with the direction of the argument in your piece here.

    • My definition of neoliberalism is based on hearing Monbiot – the 0.1%, (not 1%) who are in complete control of everything to all intents and purposes. But you could accuse me of sloppy writing. What I really mean is that a lot people who are generally ‘right of centre’ should be seeing the Greens asaiming for what they want to see.
      I guess you are a’Positive Money’ supporter. I was persuaded otherwise by two formidable brains, Jonathan Dixon who is no longer active in the Green Party, andAlison Marshall, who does blog and correspond.Dixon convinced me that money is neutral. I twill facvour faithfully and well whatever ethos is in control. Ergo, if people generally make growthist assumptions and ant to buy cravans and yachts and things, the banks telling them tey aren’t allwed to lend much will only infuriate people against whover imposed such restrictions. On the other hand, if expectaions are low, I claim I always expected interest rates to approach zero, as they have done. tha tto me supports Dixon’s thesis.
      So we have to achieve th culture shift which regards less stuff as the norm, not just a blip.
      I envisage the Cits BI as normally being balanced by taxation in some shape or for, not necessarily just on personal incomes. Land VAlue Tax seems to me an obvious feature. I would however see money creation along the lines of ‘Helicopter Money’ whenever economic activity fell below what was ecologically sustainable.
      The Swiss result was not widely reported here so far as I am aware, but one comment I did receive from an email group I belong to was that the ‘scare’ of floods of immigrants taking advantage was what made the result so one sided.

      • Hi Clive,

        The standard economics theory and practice is that money is neutral the treasury growth models and the ones of the big city banks and accountants ignore it completely. This notion is similar to the notion of Climate modelling ignoring the sun it is the standard establishment approach and makes the sums easier but lacks a certain Je ne sais quoi.
        on Neo Liberalism , this is a video interview I did with Roy Madron.

        On the monetocracy here is an interview with Roy from the early noughties about his book Gaiain democracies.

        I have been corresponding with Roy and reading drafts of his new book on Super Competent democracies.As Roy says NEo Liberalism is a whole ideology against state provision of anything and inimicable to the interests of society, which it actually claims does not exist. Capitalism Roy says can and does exist and do Fine with high levels of Democracy seeing social provision as a cost of doing business. Neo Liberalism is not pragmatic at all, it is an elitist and fanantical creed, almost cult likein m,any ways.

        My monetary reform activism CLive is not limited to being a Positive MONEY supporter or indeed a supporter of David Malone for GP leader, or any one organisation, institution or individual, I do not do Tribal. I also undertstand Modern Monetary Theory but disagree with their stance on state sanctioned usury (On Usury I am in a very small minority , This is also true of my Anarchist beliefs ). and support thier efforts but also follow the Social Credit movement in Cananda and have studied Islamic finance thoroughly as well. As I said above my position is squarely with Prouhdon. The Usury is the root of the growth requirement which you and I both share grave concerns about. For the Usury full enchelada Creutz is the Babby as they say in Bristol.
        Kreutz has a book now published in English called the money syndrome

        Money is not Neutral for Kreutz and neither is it neutral to Steve Keen and countless and growing numbers of hetrodox economists.It was also seen as anything but neutral going back into the mists of time. Peak Ignorance on Money was probably around 2007 in the run up to the Great Crash happilly that is a peak we can be pleasedto have reached and passed, whilst some still cling to the cosy notion that Money creation and debt do not matter.

        If we had something other than money and something other than the Neo Liberal ( Classical Liberal ) Notion of the free Market perhaps money could be neutral but when one Knows the process of money creation intimately and has been exposed to some Hyman Minsky one wonders how the notion of moneys neutrality could remain in place.
        This is Steve Keens introduction lecture entitled The Alternative to Neo Liberalism

        If we continue to use money based metrics with usury being the price of money clive we will continue to falsely compare economic and socio economic choices against a flase metric. The Price of Natural electrical energies for instance is judged against notions of Internal rate of returns and Net Present Values which use interest rates as the basis of its discounting future monetary streams into present values.The Interest component for Public housing projects is something like 77%

        ”The capital share in garbage collection
        amounts to 12 % because here the share of capital costs
        is relatively low and the share of physical labor is particu-
        larly high. This changes in the provision of drinking water,
        where capital costs amount to 38 %, and even more so in
        social housing, where they add up to 77 %. On an aver-
        age we pay about 50% capital costs in the prices of our
        goods and services.”
        In this Video Margeret Kennedy and others talk about the influence of Helmuth Kreutz on their own work.

        Democracy and devolution of power to communitites, complementary currencies promoting localisation as Shumcker famously said Small is Beautiful. It really is the Interest you know Clive, Compound interest and notions of exponential growth heve decoupled people from the Balance and synergies of our Natural environment.

      • I may have to cut along story short. You say you have read some of my posts. 29th May 2016? The neoliberals may be ruthless bastards, but they are unlikely to be stupid. It is in their own interests to evolve a culture like that of the Siane (See my book resume). I envisage something which will closely resemble Feudalism, but unlike under Feudalsim everybody, whatever their start in life, will have opportunities to rise through the ranks. Also no no ewill ber at risk of starving. I am unlikely to get a publisher to do a re-write of my book, but if I do, there will be a chapter in which I explain my conjecture that Feudalism and the Indian Caste system were responses to the ‘Tragedy of the Commons’ where they had more time for manoeuvre than the Easter Islanders had. You can use theide if you quot eme as your source, and give people my blog address.
        There is much I could say aout money, but I am loth to spend all th etie necessary on your copious links. But you have given me a new insight – he potential conflict of interest between store of cvalue and means of excheange.
        But there are, or were, before we messed them up, ‘primitive’ tribeswhich either had no money, or if the did, could nevertheless use it within a sustainable culture. I stillhve difficulty in thinking of money as other than neutral per se.
        I have never had an answer I could make sense of from monetary reformers to two puzzles 1. Every time bad debt is written off, isn’t that the same as creating ‘debt free money’?
        2 Velocity of circulation Faster, where confidence and expectations are rising, is the same as more money creted isn’t it? similarly whenever expectations etc dip, the mony sully will contract willy nilly, and trying to increase it by Helicoptering or whatever is trying to push apiece of string. It will only work if it, or some other factor raises expectations at the same time. Positivists I have tried talking to just say yes, and go on as though velocity remained constant.

      • Hi CLive,
        This is a long answer because you ask two key questions which deserve a full explaination. I make no apologies for the links and quotes.
        The Beranrd Lietaer video at 1 hr and 9 minutes repays watching.

        1. You say.
        ”Feudalism and the Indian Caste system were responses to the ‘Tragedy of the Commons’ where they had more time for manoeuvre than the Easter Islanders had”.

        There have been tragedies of mismanaged commons’ but The Tragedy of the commons as a category is too wide in my opinion , it is not inevitable.?

        Mono Culture and Diversity Leitear on Matrifocal or Hierarchical Patriarchal structures.
        Stresses efficiency breaks easily and is notrobust , Diversity and symbiosis is less efficient but mor robust we need permeculture and diverse systems and not mono cultures, a very basic ecological tennet which can be applied well to political economy and finance.

        2”.Potential conflict of interest between store of value and means of exchange´´.
        The conflict is not potential it is very real they are mutually exclusive functions.

        3. Every time bad debt is written off, isn’t that the same as creating ‘debt free money’?
        Repaid or written off debt destroys money as The asset is realised or rather liability is extinguished.Its a basic accounting identity explained by Graeber here.

        Money if understood in terms of a flow of credit that is secured by loans thereby creating money gives the best understanding of where money comes from and how it is extinguished. This partly helps with the second question on velocity of money which is a very good measure for cash and gets less clearly defined as one starts looking at asset financing and property financing which is of course a huge component of the money banks create, when one gets into derivatives the wheels really start to come off..

        Quiggley again.

        Money and Goods Are Different

        ”Thus, clearly, money and goods are not the same thing but are, on the contrary,
        exactly opposite things. Most confusion in economic thinking arises from failure to
        recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth;money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion.”

        The Relationship Between Goods and Money Is Clear to Bankers
        In the course of time the central fact of the developing economic system, the
        relationship between goods and money, became clear, at least to bankers. Thisrelationship, the price system, depended upon five things: the supply and the demand for goods, the supply and the demand for money, and the speed of exchange between money and goods. An increase in three of these (demand for goods, supply of money, speed of circulation) would move the prices of goods up and the value of

        money down. This inflation was objectionable to bankers, although desirable to producers and merchants.On the other hand, a decrease in the same three items would be deflationary and would please bankers, worry producers and merchants, and delight consumers (who obtained more goods for less money). The other factors worked in the opposite direction, so that an increase in them (supply of goods, demand for money, and slowness of circulation or exchange) would be deflationary.”

        Relavant parts of Tragedy and hope are all extracted in the notes to my Poem Usury Hells Fuel Mans Oppressor.

        4. Velocity of circulation Faster, where confidence and expectations are rising, is the same as more money created isn’t it? similarly whenever expectations etc dip, the money supply will contract willy nilly, and trying to increase it by Helicoptering or whatever is trying to push apiece of string. It will only work if it, or some other factor raises expectations at the same time. Positivists I have tried talking to just say yes, and go on as though velocity remained constant.

        Velocity of Cash

        yes Credit creation is driven by banking expectations and borrowers appetites .

        Aggregate demand including Socio Economic decisions by community government and national government and then International trade.are key to how much demand can be realised

        ”The value of goods,
        expressed in money, is called “prices,” while the value of money, expressed in goods, is
        called “value.” p.49 (Commercial Capitalism) Quiqqley shows how Bankers make the distinction and real power lays in the Value of money and not the prices of goods.

        on how debt and credit creation effects aggregate demand is summed up in this argument. In my poem this is the not even wrong part.

        ”A counterfeit Nobel laureate, theres an irony.
        Denies that in money there can be a place that gertrude stein called there, home once but no longer there , there in Oakland. A precursor to some sub prime heritage.
        A speaker of truth to power could follow Pauli ´Das ist nicht nur nicht richtig, es is nicht einmal falsh!

        ”Not even wrong, not even there.
        All counterfeit, yet to counterfeit the counterfeit? a crime.
        What of the shepherd of this unruly nothing,
        where will they pen and fence this pack of wolves.
        Will they dress this pack of cards in sheep’s clothing.
        Limit the herd a need for Golden standards.

        Prudence of sound Money and even sounder usury.
        Fix the price and patronise those who will honour the thievery. A mechanism to harmonise silent ballot boxes.
        A gentlemen from belgium would complement his single currency. Unruled and unruly sets a course for austerity on a continent many times at war. A fight of 11 rounds.

        Spread like a cancer through the development of continents, enabling the killing called wars. That increase the debt and centralise the money power.
        Quiggly shewed the tragedy, little hope it seemed,
        blind faith in capitalisms harlot. That babylonian whore.

        At first a mere money trick for ragged trousered philanthropy. With usury, take away whats not even yet been paid. Ruskin would see wealth as that which is valuable in the hands of the valiant. Real goods sustain and wealth succours. Usurious money is but an unmade claim and worse. No banker has earned that newly minted note that hangs discordant in the air, as apt to rob as to pay.

        How obscure this obscurant cult of mammon.
        What smoke screened hall of mirrors.
        How obese and gluttonous the leviathan of usury.
        Austerity for the likes of you and I.
        More banqueting and evacuated vomit spews from the sceptred top table. Corrupt in patronage and jealousy of power. Overstuffed with greed and thirsty for more.”

        ”We argue that Keen’s definition of Aggregate Demand is more appropriate, especially if the role of credit creation by private banksin shaping macroeconomic dynamics is to be understood.
        We show how, in the simplified model we present, no growth can take place without the creation of credit by banks. The net change in the level of debt (what we call ‘Net Credit Creation’ = Credit Creation less Debt Repayment) is the single most important variable affecting the dynamics of the economy.”

        Story of the 11th Round.

        So how does a loan, whose interest is never created, get repaid?    In a static or declining system, it requires someone else’s principal being used. In other words, not creating the money to pay interest is the device used to generate the scarcity necessary for a bank-debt monetary system to function. It forces people to compete with each other for money that was never created, and penalizes them with bankruptcy should they not succeed. When the bank checks creditworthiness, it is really verifying their customers’ ability to compete successfully in the market place– that is to say, to obtain the money that is required to reimburse the principal and interest. Ultimately, someone must always lose.
        In the current national currency paradigm, one reason why so much attention is paid to central bank decisions is that increased interest rates necessitate more bankruptcies in the future. The economic pie must grow that much faster just to break even. The monetary system obliges us to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks or lenders. No wonder “it is a tough world out there,” and that those who live within a competitive monetary system so readily accept Darwin’s supposed “survival of the fittest.” 

        Lietaers work on complementary currencies, WIR Bank in Switzerland and other local currency schemes is essential to providing a monetary measure by7 which externalities can be reflected and priced into investment and spending decisions.

        Margrit Kennedy: Interest and Inflation Free Money
        (Published by Seva International; ISBN 0-9643025-0-0;
        1. Four Basic Misconceptions About Money 15
        …First Misconception: There Is Only One Type of Growth 18
        …Second Misconception: We Pay Interest Only If We Borrow Money 24
        …Third Misconception: In the Present Monetary System
        We Are All Equally Affected by Interest 25
        …Fourth Misconception: Inflation Is an Integral Part of Free Market Economies 29

        Interest on money drives need for expansion.

        Reliance on one currency ( the dollar is a defacto gold standard.with no monetisation of an analogue for silver to provide circulation and a multiplier due to velocity.

        ”Patriarchal Value Coherence
        All patriarchal societies in history have had the tendency to impose
        a monopoly of asingle currency, hierarchically issued, naturally scarce or artificially kept scarce, and with positive interest rates. This was for instance the case in Sumer and Babylon, in Greeceand Rome, and from the Renaissance onwards in Western societies all the way to today.The form of these currencies has varied widely, ranging from standardized commodities, precious metals, paper or electronic bits. But what they all have in
        common is thatgovernments accepted only that specific currency for payment of taxes, that this currencycould be stored and accumulated, and that borrowing such currencies implied payment of interest. They all have in common Yang characteristics as illustrated in Figure 1.”

        Bernard Lietaer – Why money needs to change now!

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