This article is adapted from a Dewey Lecture by Noam Chomsky at Columbia University in New York on Dec. 6, 2013Truthout
Noam Chomsky | What Is the Common Good?
Noam Chomsky | Dewey Lecture, Columbia University, 2013
This article is adapted from a Dewey Lecture by Noam Chomsky at Columbia University in New York on Dec. 6, 2013Truthout
11 comments:
Why is using common stock as money more ethical that using any other sort of things as money?
F. Beard,
Can you write a paper on this? Or can you recommend sources for better understanding common stock as money?
Seems you've made the same comment hundreds of times and even the most frequent commenters here don't really understand what you're talking about.
1) Requires no government deposit insurance.
Whatever type of instrument we use as money - whether equity shares, commodity backed certificates, or government fiat money - if people deposit that money in depository institutions, and those depository institutions are permitted to make loans against those deposits by issuing IOUs, and if those bank IOU's are become widely accepted in the society as a medium of exchange, then there is going to be some public utility in governmental insurance of the deposits.
Now there are many people who have argued against fractional reserve lending per se, for one reason or another, but the issue of fractional reserve lending and the related issue of government guarantees of deposits in depository institutions conducting fractional reserve lending are logically independent of the nature of the monetary base. You can have both fractional reserve lending and government guarantees with an equity share money base, or with some other form of money base. Or you can eschew both fractional reserve lending and government guarantees with an equity share money base, or with some other form of money base. They are entirely different questions.
2) Requires no fractional reserves.
See above. Whether or not a society chooses to permit fractional reserve lending is a question that is independent of the nature of the money base - and even independent of the question of whether it has a monetary base.
3) Requires no fiat lender of last resort.
If the society refrains from using a fiat monetary base or a supplemental fiat medium of exchange, then it cannot have a fiat lender of last resort. Of course, then the society also deprives itself of the utility of a well-regulated fiat medium and of the financial dynamism made possible by lender-of-last-resort central banking. Also, it seems likely that in a system based on equity share money, private depository institutions would eventually organize themselves into hierarchical systems, with private mega-banks serving as lenders of last resort.
4) Requires no usury.
Usurious lending at interest is a phenomenon that can be present in any type of credit market, even in a credit market facilitating the bartering of commodities. It has nothing to do with the nature of the monetary medium. It would be entirely possible for a society that used equity shares as the dominant medium of exchange to have widespread usurious lending. Nor is usurious lending "required" in order to operate a system with a fiat monetary base. The rules governing credit and interest, and the determination of what levels of interest are to be regarded as fair, are a separate matter from the nature of the monetary base.
5) Does not have deflation built-in since common stock is normally spent, not lent, into existence.
I have no idea what you mean by "deflation" in this context, or why you think it is "built-in" with the present system, since in our system we have almost permanent inflation with rare deflationary episodes. But whether a given society experiences price inflation or deflation is a complex monetary phenomenon that is independent of the precise form of money used, and will always be a risk in any financially sophisticated, developed modern economy.
6) Only the owners of the issuing company are affected adversely by under or over-issue since every recipient of common stock as money becomes a part-owner of the issuing company.
That's might be true, but seems quite irrelevant and is of little comfort, since in a society using only equity share money we all become very temporary owners of just about everything. Equity share money would be subject to every kind of monetary pathology that affects other forms of money; and a society that uses it would be just as subject to financial bubbles, boondoggles and crises as a society using other forms of money.
Man, I wish I had me a big old stack of Enron-common-stock-money!
JK: Seems you've made the same comment hundreds of times and even the most frequent commenters here don't really understand what you're talking about.
Philippe, commenting at NEP, Yves Smith, Six in this thread and last and least myself have tried to point out some of the issues. Pretty much per Six: the commonstockier something is, the less moneyish it is. (6) is small consolation to somebody who foolishly accepted (near) worthless stock. So as a proposal it is a lead balloon, but as a point of view it may have some value.
Seems you've made the same comment hundreds of times
That made me curious so I did a couple of searches and... wow. 101 hits on MNE and 488 at naked capitalism.
Apparently it's literally the answer to everything.
Hey F,
"government backed credit cartel"
Maybe what you REALLY have the problem with is NOT the 'credit cartel' part of this statement of yours, but rather the 'government backed' part of it...
This 'libertarian disease' that is despoiling humanity is manifest (to me anyway) in this 'government backed' part of these words of yours here...
This could be your basic problem with the current system.
rsp,
I may refute your refutation later but frankly I'm tired of the lot of you and your lack of understanding especially when you guys supposedly value "sharing", "equity", "democracy" and "common good" YET reject a money form based on ALL of them.
Brave words, Beard. But frankly I think this shows that when somebody calls you on your brain-dead parrot fanaticism and mechanically regurgitated slogans, you have no idea what to say. And yet I doubt that will prevent you from your obsessive temper tantrum.
In your reply to Matt, you contrast your view with the idea that money must be a liability. But the point I made is that whether the money a society uses is a liability of its issuer or an equity share in some enterprise run by the issuer doesn't have anything to do with all of the other things you are worried about: financial instability, usury, exploitation, credit denial, purchasing power erosion - all of those things can exist in any financial system based on money and credit.
"You've got lending and usury on the brain, Kervick. Try to get this through your debt-indoctrinated brain: Common stock is SPENT!!!, NOT LENT into existence so there is no necessary debt, nor usury."
There is nothing preventing stock from being loaned into circulation or loaned after it has been issued in some other way. And if common stock is the primary monetary instrument in a society, people are going to need to borrow lots of it.
Suppose you want to buy a house and, as is likely, cannot pay for it with stock-money you have already saved up. You are going to go somewhere and borrow some. Some rich financial intermediary who has accumulated a lot of stock-money will lend it to you. And unless it's your brother-in-law, they will probably charge interest - just like banks do now! And they might even charge you very high, usurious rates of interest - just like some banks and financial institutions do now! And if they think you are a bad risk and unlikely to repay, they will judge you not credit-worthy and won't lend it to you - just like banks do now!
Maybe you are dazzled and confused by the world "equity", which has connotations of sharing and equitableness. Or maybe you think that because common stock units are called "shares", that has something to do with sharing. Well don't think these silly things, because in your alternative world nobody is just going to share common stock shares with you. You will get you hands on it the same way you get on money now: you will either sell something for it (primarily your labor), or you will borrow it at interest.
You might get some of it for free: your granny might give you some in a birthday card; your dad might leave you some in his will - the same way you get free money now! Or maybe the government will send some of it to you for free - just like they sometimes do now!
At the bottom of your multiple levels of jumble and confusion, I think you are having trouble keeping track of the difference between the kind of instrument bank deposit balances are and the way that instrument gets into circulation or into someone's hands after it is already in circulation. Bank money is a liability of a bank that is, a debt of the bank. If you have a bank deposit balance, you can demand that they redeem the debt and give you government-issued cash. But one way people get their hands on these bank liabilities is by borrowing them from the bank. And if a borrower does that, then the borrower has a debt. And that latter kind of transaction will occur with whatever kind of monetary instrument a society uses, so long as that society permits borrowing and lending.
"So once stolen equity is restored they'll be little need for borrowing."
Why in the world would you believe that? The need for borrowing comes about from the fact that people desire to make large purchases that exceed the limits of their current disposable wealth. It has nothing to do with the nature of the monetary medium we use for exchanging and storing wealth. If you want to start a business, or expand a business, or buy a home, and you don't already possess the things you wish to acquire for that purpose, you will need to acquire them. If you already possess something you can part with whose market value is sufficient to get those things in exchange, great. But if not, you are going to have to ask somebody to give those things to you in exchange for a promise to pay them back out of your future income. That's what credit is all about. It has nothing to do with the precise form in which you usually receive income: whether in government fiat tax credits, or common stock shares, or pork rinds, or restaurant gift certificates, or bank IOUs, or collectible vinyl records.
Think of the value represented by a single house: the value of all of that wood, the furniture, the land it sits on, the metals and special materials used to make the appliances, the shingles, the carpets, the pipes - and the hours and hours and hours of skilled human labor that went into manufacturing all of those component parts of the house, and then putting them together into a house; and the hours and hours of work that went into imparting and acquiring those skills that enabled those workers to perform that manufacturing. All of that value is embodied in the worth of a house.
Now reflect on the fact that most young people have not accumulated an amount of wealth that is equal to that value, and that they can also afford to part with. To get a house they are going to have to pay something up front, and then promise to pay a lot more over may years. That's going to be true whether they pay with bank IOUs or pork rinds.
Now here's an issue: that young person probably has a job, which is an arrangement in which they exchange work for something else of value. That's how they have been accumulating wealth. The owners and top managers of the enterprise at which they work have probably been taking much larger shares of the enterprise's income for themselves than they have been giving to that worker. If you really care about more "sharing" that's the place to look. Get out of your crank money illusions, and focus on the system of real wealth, and on how it is produced, controlled and exchanged.
There is no reason to think that equity is more honest than liabilities. If I give you an IOU in exchange for something I want, I now have a new liability, and you have a new asset and some new legal claims on me. If I instead give you an ownership share in my business in exchange for something I want, you have different kinds of assets and claims on me. Neither transaction is inherently more honest than the other. Either transaction can be honestly made; and either transaction can be dishonestly made.
Accumulating equity is one way to accumulate capital. Over time, it is possible for imbalances in capital accumulation to arise naturally through any kind of market exchange, since some people are smarter, more ruthless, more aggressive, more calculating and more greedy than others. And once inequality exists, inequalities in bargaining power also exist, which lead to the possibility of deep exploitation and economic domination, and even more pronounced inequality. When their is great inequality, the rich will naturally become the creditors of the needy others, which leads to an institutionalization and solidification of their dominant power relationship. You don't need any theories about banking cartels or the super-special nature of bank liabilities to explain these power relationships, which are inherent potentialities in any system of private property, private exchange, credit and debt. The struggle between the capital-rich and the capital poor, between owners and laborers is an outgrowth of any such system.
Post a Comment