An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Quantifying economic sustainability: Implications for free-enterprise theory, policy and practice
Good find, Roger. Didn't realize that Bernard Lietaer was into ecological eco as well as monetary eco. He is a former central banker. BTW he sees MMT's focus on chartalism as to heavy on the side of efficiency, holding that it sacrifices too much resilience to be safe for liberal democracy.
The limit is not within MMT, the tool of a liberal democracy, but in other tools used by democracies to keep themselves agile and their Adaptive Rate high.Lietaer is a big fan of local currencies, which I see as protecting local resiliency at the expense of aggregate coordination.Reality is that we select our tools AFTER exploring the scale of options we wish to explore. Seems to me that that decision was made long ago. Now we just have to get serious about aligning our choices.ps: Lietaer is just the sponsor for the ecologists. Goerner & Ulanowicz are the ecologists. Ulanowicz used to be here in Maryland before retiring to Florida.
Paper: "The parallel economic event would be a massiveincrease in productivity/efficiency that produces a dramatic leap in GDP."Galbraith from the other day: "Just to take for example, this telephone conversation, which I imagine is taking place over an Internet connection: we have paid our flat rates, and we are conducting it essentially for free. If we were doing this thirty years ago on a long-distance phone connection, it would be metered by the minute, and it would be adding to GDP; but as it is, it’s not. So that’s a difference in the way in which technology interacts with the kinds of accounts that we have, that suggests to me that it’s a factor that’s going to slow down the recorded rates of growth, and the rates at which businesses can enter revenue in their ledgers."Productivity/efficiency gains retard GDP growth (as measured) as the price drops if there is competition...Maybe the Lietaer people would be correct if the unit price for the good/service stayed the same ie the supply of the good would increase but the price would stay the same, then, if demand increased with supply, you could show gdp growth...rsp,
And this here:"an ecosystem's ability to maintain its own vitality over long periods—that is, its “sustainability”...this is textbook free market libertarianism 101 "get the govt out of the way and let 'the invisible hand' do its thing"...so I dont see what "automatic" processes have to do with MMT, MMT advocates for govt intervention and guarantees...Some of the prawn "carbon" may want to go thru the turtles instead of the large fish (REH is BS) ... THEN what do we do? We establish quotas, taxes, etc...Generally there is a conflation here between an 'evolutionary' context and an 'intelligent design' type context... rsp,
Your comments have some validity, Matt.This particular application of autocatalysis modeling is longer on local-autocatalysis than on systemic autocatalysis (i.e., they over-stress local return on local coordination over systemic return on systemic coordination).That application feature aside, their work helps illustrate the potential for enlarging perspectives even further, by crossing disciplinary boundaries.Best way to change a constraining paradigm is to practice stepping outside it.That's what the whole utility of "dialectic" is.Experiencing a novel perspective on a situation is useful for individuals as well as groups - even if not all optional perspectives are useful or "correct." Practice at varying perspective helps all by itself, by increasing both doubt and optimism in parallel.TINA hates options, but her opponents hope for & bank on them.
"This particular application of autocatalysis modeling is longer on local-autocatalysis than on systemic autocatalysis"That shows from their focus on Lietaer's local currencies as opposed to systemic or sovereign currencies.
Matt the quote from Galbraith is interesting really. If you think about it, a lot of the VALUE/WEALTH created in the West (and non-West) over the past two decades cannot be accounted because it hasn't created the equivalent financial wealth.For example, if you go over GIThub, which as a hub to host open source code, you could value all that there is there for BILLIONS worth of software. But for most of these projects there was never monetary exchange. The open source 'everything' movement is huge and is a demonstration that DEMOCRATIC COMMUNISM (oooohhh scary) is possible, and is not only possible: 1) is mor eefficient and, b) is more resilient, than corrupt corporate oligarchies we have now. Not only that but corporate capitalists have been feeding off 'democratic communist' production the last two decades like leeches. The only thing stopping democratic communism are limits to physical replication of goods (which are negligible in the case of software!). The closer we get to post-scarcity society regarding energy and non-renewable resources the closest we will be to.Huge funding should be going towards energy sources and management (efficient electric networks and ways to collect and storage energy) research programs. But that would get us closer to the removal of 'the middle men' which are the wealth extractors (politicians, bankers or big energy companies). I digress... the real problem though is while others are happily using all that 'free' wealth created, it does not generate sufficient monetary incomes. So you and I are using 'blogger' software for free but if this was developed by some poor soul (instead of owned by Google, that can afford those expenses), he wouldn't be able to feed because income would not suffice to buy physical goods (like food). We have to put a lot of effort into solving those disparities and get the economy of "real goods production and consumption" to the "open source non-monetary economy".
Greater freedom for path discovery leads to higher efficiency as a rule and greater control over variable leads to more resilience as a rule. It takes application of intelligence through design science aka engineering to hit the sweet spot between efficiency and resilience.Social systems have to be designed to optimize efficiency and resilience, too. This is done through configuring institutional arrangements.The democratic political process is not necessarily the most intelligent way to go about this but technocracy also has its limitations. So these approaches need to be combined.
In defence of Lietaer I don't think he is against MMT, he says that we should have different currencies for different purposes.In fact the last time I heard a conference from him he was advocating for a dual-system of state currency (managed along MMT lines) and local currencies to add local resilience. This seems to work fine IMO if you take some of the current implementations as an example and people has some defence over MMT abuses (the problem is not MMT, is how MMT is used, plenty of governments have used MMT: to wage war, there is newer a shortage of currency; or to propel asset bubles that help the 1-0.1%).
That's right, Ignacio. Lietaer agrees that MMT has the correct description of the existing monetary system, but he doesn't think that MMT economists go far enough in emphasizing the need for resilience using alternative currencies. It's too simple for the ruling elite to hijack state currency creation and management to provide for democratic control of society. It's a highly efficient system for the ruling class and the rest of society can fend for itself or maybe live on the crumbs that the ruling elite let fall from their tables.
Tom what it looks like you have to do for more local control is have the CB FIX the exchange rate between the different local currencies being used across the local jurisdictions within a greater 'currency zone'...iow Maryland could have its own currency and Iowa could have its own currency (each "dollars") but if I in Maryland sold you in Iowa my Outback with 197,000 miles (I'll give you a good deal Tom! ;) when I took the Iowa$ back to Maryland the Maryland CB would have to change me out $4$ by giving me 1 Maryland $ for 1 Iowa $.... this might work...You can see this in how Plato explains what we were doing 2,500 years ago here, each polis had its own drachma but it was readily changed out by the CBs of the city-states drachma for drachma, so you could have a "greater Greece" currency system while each city-state could manage its own local economic affairs, if a true real surplus developed locally, they perhaps would let a local producer export the surplus, BUT they fixed the exchange rate so when the exporter returned, they would change them out drachma for drachma, no financial imbalances could develop (like currently in the Eurozone...):"If a private person is ever obliged to go abroad, let him have the consent of the magistrates and go; and if when he returns he has any foreign money remaining, let him give the surplus back to the treasury, and receive a corresponding sum in the local currency." Plato c. 350 BCso again all we need is some non-morons in control again who can do rudimentary math and we should be all set....another important thing here is obtaining "the consent of the magistrates" which by definition is a lack of "free trade", trade has to be regulated.. ... which the libertarians have a BIG problem right there at word GO...rsp,
he [Lietaer] doesn't think that MMT economists go far enough in emphasizing the need for resilience using alternative currencies Then he doesn't really understand the problem. I agree with Roger's comments.The idea that "alternative" or "local" currencies (or "heterodox" economics) are the solution is refuted by their very names. The global currency, the national currency, by definition is the commanding height of the economy. If local currencies were so important, they would no longer be local. Saying that MMT ignores their importance is like saying that if you see someone being bludgeoned unconscious, that you ignore the resilience provided by first aid if you don't buy a band-aid before stopping the bludgeoning.
Actually, Scott Fullwiler has studied alternative currencies and holds that they have a positive role to play in many cases. My impression is that Lietaer envisions a much larger role in order to create alternative payment systems independent of state control on the principle that whoever controls the creation and administration of money in a society controls the society and its economy. And he is speaking as a former central banker and technocrat. As I understand him, he doesn't see sole control of the money creation and administration as promoting liberal democracy since it can easily be captured and commandeered.
Not saying they're not a good thing, but by definition they aren't the main thing. The state does not solely control money creation right now, and never did. Banks can and do create money, most money in fact, and so can anyone. Bank money is an "alternative currency", and any such currency is fundamentally the same not-thing as state money - a credit/debt relationship and nothing but an abstract relationship, the sole fundamental difference being who the relationship is with. Saying that alternative currencies can be good amount to repeating centuries- old observations that founding a bank can be a good thing by effectively "doubling the circulation of coin" or some such phrase, or observing the benefit of decentralization of investment decisions by modern banking.Capture and commandeering of the top of the money = credit pyramid by corruption is not an easy thing at all. The current unstable state can only be maintained by a vast edifice of deceit and nonsense, but nearly the only ones who understand that are the malefactors themselves. The biggest obstacle is that people cannot believe that things are as simple as they really are. If enough people understood finance as Mitchell-Innes did, or if there were a JG - two very simple things with great mutual synergy - this corruption would be impracticable.
Well it can be argued that some countries like the US have largely delegated money creation and administration to the banking sector and the banking sector also has strong if not dominant influence over the central bank and Treasury. I think that's what Lietaer is concerned with, especially in the aftermath of the crisis when the financial sector was rescued while the people were hung out to dry.This behavior is affecting Japan, the UK, and the EZ in addition to the US. I would say that digital currencies are a reaction to it.
re: local vs nation currency systems:bitcoin? I agree, totally with both Lietaer & Fullwiler.It's just clear that any attempt to make local currencies very formal - e.g., accept them for local taxes - quickly overlaps with efforts to organize national fiscal/tax policy.It's a simple case of where to invest in resiliency methods. Locally, or nationally? Both obviously, to allow variance in all sub-contexts, such as the 50 states, and ~5000 counties, not to mention cities and towns - and even merchant/consumer groups.
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