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I guess this comes under the heading of preparing theory for the day it is required. Compared to human life spans, history can move slowly. It’s like the old joke though. How did you go broke? At first slowly, then quickly. How did capitalism collapse? At first slowly, then quickly.
I will reveal my Anglocentrism here. “Capital and Its Crisis” IMHO needs an English translation, quite a task of course. Can a good, inexpensive or free, open automated translator do a first pass which can then be edited? I feel certain you have considered this but have other priorities.
Such a pass example edited by me (though the automated translator is probably not free for commercial use):
“Capitalism rules the world. Heated discussions continue between establishment scholars and those critical of the nature of global capitalism. The problem is that the nature of the institution, the central quantity in capitalism – capital – is unknown. After more than two hundred years of vigorous Capitalist development, there is still no logical theory of capital – not in science, economics or Marxist political economy and not in the social sciences in general, whether they are positivist or critical, modern or postist. This is evident during capital crises. At such times, the helplessness of the trusted experts and managers is revealed. Questioned on the thinness of their capital theory and sometimes, in their moments of anxiety and panic, they even confess that they do not understand the nature of capital nor its crises. And when the protest flags are raised and the demonstrators leave their homes and workplaces in anger and take to the streets, it turns out that the masters of capital don’t have an alternative plan. They do not understand the essence of Capital, nor its results.”
No doubt, my edited translation is poor but I could laboriously read your book in this way. I am not planning to do so at this stage. I’ll wait to see if a translation is coming. After all (and please forgive the chauvinism and obviousness in pointing it out):
“English is the universal form of communication in science. Although many countries still publish journals in their native tongue, English is currently the best way to share one’s research findings with scientists in other parts of the world.” – languageconnections
Thank you for your reply. All your points are theoretically valid. However, the issue is time. The delay of political praxis indefinitely for the relative or stage completion of the science aspect becomes ever more problematic. In turn, you could validly ask, “What do you expect the CasP Core (for want of a better term) to do?” Realistically, there is nothing more to do than what you are doing already. Citizens and intellectuals are faced, somewhat equally I think, with their powerlessness to effect change in this system; at least so long there is no broad-based solidarity of the major classes and no broad understanding of what is actually happening, environmentally and in the political economy of power.
I referred to money, finance and capital as fictions, as social fictions. I ought to be more careful about terminology, definitions and expositions. The power of capital in this system is no fiction. It is very real as CasP uncovers and elucidates. The social fictions exist, at the publicly conscious and debated levels, as the tales which hold that money and capital are measures and stores of value. This is the “theology” and “catechism” of capitalism to use the very useful Fixian (Blair Fix) analogy. CasP uncovers that money and capital are measures and stores of (social) power which translatable into physical power.
To speak pedantically, social power is all physical too, in the monist view of the cosmos as a complex relational physical system. The theology and catechism of capitalism, preached and propagandised to the populace incessantly by politicians, business leaders (so-called), media talking heads, the advertising industry and all the bought and suborned managers, advisers, bureaucrats and apparatchiks of neoliberal capital, are dinned into the brains of all those indoctrinated under this system. The ideas in their minds are entirely what they have been trained to think. There is no element that they have critically deduced for themselves. In the literal physicalist sense, the firing pathways and circuits in their brains, in their synapses, have been trained and to a significant degree sense formed, laid down, wetware-wired – as per plastic brain theory – to accept the rubrics and platitudes of capitalist dogma as self-evident truths. This is the physical sub-stratum and indeed the basis of the human network of false consciousness under capitalism.
It is this level of mind programming and indeed of firmware or wetware installation in the brains of the populace from birth to maturity which produces what we may call the hive mind of capitalism. However, we would be selling humans short if we didn’t consider that they still have autonomy and the ability to detect and process the gap between their real physical and emotional or conscious qualia state (under increasing impoverishment, exclusion and privation) and the claims that under capitalism they are and always will be living in the “city of light” . A further phrase I find useful in this context is “the day prophecy fails”. The day is fast approaching when the prophecy of capitalism fails. We will find we are not living in the eternal cornucopian embrace of endless production and blissful consumption but rather in a dystopian hellscape of runaway climate change and ecological disruption. No recitation of catechisms will fill empty bellies or placate existentially terrified minds at that point.
As I have said before, (scientific) theory of this general type (like CasP) must be prepared for the day that people are ready to hear it. So I guess this is part of the role of Capital as Power: to produce theoretical models more homomorphically congruent (my terminology) with aspects of reality and to deploy them to replace the mythic constructs of capitalism with more realistic models ready for use when people lose faith in capitalism. Eventually the idea that billionaires should have, almost in their hands alone, such huge wealth and indeed a majority of the world’s wealth and the attendant power to creorder the world to their wishes and against the majority will begin to seem obviously wrong and insane to the majority. Work and cling to the tiniest hope. That’s about it.
Footnote 1: “The City of Light” is featured in the dystopian series “The 100”. The series is full of grinding, grisly violence and plot holes often associated with improbable recoveries from gut holes but it has some interesting symbolism and an extensively imagined continuous collision between technology and barbarism. “Perverse Instantiation” Parts I and II explore AI and AI brain implant issues, imaginatively and sensationally.
As I see it, capital is best understood as a social fiction: a socially constructed fictive reality. Capital consists of denominate numbers (whose units are the numeraire) which we cooperatively, or under duress, pretend or accept can refer validly to real quantities and which we use to manipulate real quantities. By “real” I mean real stuff. To shorthand that, if it has measurable mass, energy or momentum it is real stuff.
I argue that we need to understand the crucial difference between the real (in the above definition) and a human or social fiction. I will keep things aphoristic for brevity. Everything is real. Not everything is true. Even a fiction is real. A fiction or a false statement is constructed as patterns in media just as a true statement is constructed as patterns in media. To shorthand the difference between “real” and “true” in these senses, a crooked stud in framing is real but it is not true: using “true” in the sense that a carpenter uses the term “true”. I often have recourse to this brilliant definition by Peirce.
“That truth is the correspondence of a representation to its object is, as Kant says, merely the nominal definition of it. Truth belongs exclusively to propositions. A proposition has a subject (or set of subjects) and a predicate. The subject is a sign; the predicate is a sign; and the proposition is a sign that the predicate is a sign of that which the subject is a sign. If it be so, it is true. But what does this correspondence or reference of the sign, to its object, consist in?” – Charles Sanders Peirce.
If we consider representations or models which attempt to be accurate in at least one particular, it is clear that we can have true models (true in at least that one aspect) and false models (false in at least that one aspect). What do we mean by “true” here? Technically, we mean a homomorphic correspondence between the model and modelled object or process. Homomorphism is the best way to conceive the “true” relation. A homomorphism is a structure-preserving relation between statement or model and the object (the predicate in Peirce’s statement). The “true” consists in the structure-preserving relation.
With respect, I feel CasP is failing of its own radical promise and insights if it does not arrive at the full conclusion that the untrue “representations” – they are actually prescriptions not representations – of money, finance, capital with respect to reality and as calculations for the manipulation of reality ought to be wholly and radically abolished. Naturally, this would need to be a stepped process not an instant, wholesale abolition which would immediately collapse into total destructive anarchy. But if we cannot envisage and then action, stepwise, the abolition of capital what are we doing? I argue we are doing nothing but pursuing a hobby in the interstices of capitalism to distract ourselves from our existential plight.
The complete abolition of capital and capitalism is an existential necessity. It has become empirically clear that the existential crises of climate change, the sixth mass extinction and the clearly imminent pandemicene (to name three) are not in any way solvable by capitalism. These crises are created and exacerbated by capitalism and its wholly prescriptive approach which recognises no natural limits and uses its fictive denominate numbers to manipulate real stuff in a manner which is clearly destructive of life on earth.
January 3, 2023 at 5:00 pm in reply to: Is power a thing in itself or the space between things? #248809
- This reply was modified 2 months, 3 weeks ago by Rowan Pryor.
I think Pieter de Beer has made a key statement as follows:
“I would argue that in the articulation of power as a clearly defined scientific concept, with quantitative and qualitative units of measure, we generate a fresh viewpoint, and enable the creation of a new linguistic milieu from which can be derived newer and more relevant rhetoric than the tired old language we have been using to largely no effect for the last 200 years.”
We are all referring to social or sociopolitical power in this debate. Ulf Martin’s definition – “the ability of persons to create particular formations against resistance” – gives us the clear analogue, or more precisely the clear homomorph, with physical power. “In algebra, a homomorphism is a structure-preserving map between two algebraic structures of the same type (such as two groups, two rings, or two vector spaces). ”  We are seeking a structure preserving map or concept which preserves essential similarities and relates our understanding of physical power upwards and into our understanding of social power. Only in this way, I would argue (as a monist materialist), can we create “a new linguistic milieu” to use Pieter’s words, to address reality consistently across the range of the physical to the social to the ideational.
I argue that all human descriptive ideas and concepts are models, as indeed I argue that all human perceptions (qualia in modern terminology or impressions in Bishop Berkeley’s terminology) are models. Even normative ideas are intended, in the teleological sense, to be models: they model an “ought” that should turn into an “is” via the claimed future effects of the modelled behaviour as cause. You ought do x so y (or not y) will arise in the future. Capitalism is very much like that. You ought to contain wages so that inflation will not arise in the future. However, as the recent example shows, wages were contained but inflation re-emerged anyway. The system’s outcomes are multi-causational but many causes must be denied as causes (monopoly power, administered prices, profiteering and money creation gifting money or interest-free money to rich corporations “too big to fail”). They must be denied to give deliberate selective sabotage (in the CasP sense) its plausible deniability cover.
To return to models, there are in relation to the objectively real – as objective or critical realism would understand that concept – accurate models and inaccurate models or true models (or more nearly true models) and false models. The accuracy or inaccuracy of a model inheres in the degree of homomorphism or structure-preserving character it displays in relation to the real system. A model is always and unavoidably a simplification. It perforce models key elements essential to a given investigation or enterprise at a given time. A model can never model everything due ideational and computational limits. Sometimes the simplification inherent in a model is a feature. Sometimes, the over-simplifications which are unavoidable in modelling become a bug, a whole bunch of bugs, a bugbear.
Pieter’s statement relates, at least in part, to something I call the “categorial imperative”. I do mean a “categorial imperative” and not the categorical imperative of Kant. The “categorial imperative”, as I define it, refers to our need, indeed our imperative requirement, to categorise things correctly. Without ordered and valid categorisation there can be no ordered reasoning. We then commit category mistakes at every stage of our reasoning. There is still the further requirement, of course, for testing the results of ordered reasoning against reality and doing so in a methodical, empirical fashion. We are quite capable of raising internally category-consistent or selectively category-myopic pure reasoning systems with little relation to reality but great relation to our own wishes and desires: vast structures of motivated reasoning supporting self-interest, careerism, credentialism, class and so on . Bourgeois or conventional economic theory (of the “money measures value”, market fundamentalist, endless-growthist type) is a case in point. Our current capitalist system with its conventional economic theory underpinnings – including the real-ideal or real-formal bifurcation, which Bichler and Nitzan have so accurately identified and critiqued – is very clearly on a trajectory of comprehensive collapse (involving many species extinctions already and possibly including humans quite soon) as it continues in ideological fashions to ignore fundamental physical and biological laws and the asymptote limits they impose on certain activities.
We properly develop ontologically real categorial taxonomies as we empirically investigate the world. The SI itself is a result of this process and it itself is not necessarily complete yet. Further discoveries necessitating the amendment or even expansion of the SI are possible. The categorial imperative boils down to developing and using the correct operators on the correct operands. I mean this mathematically and linguistically. Math is a specialised language and modelling system, nothing more.
In relation to the real-ideal or real-formal bifurcation it can only be solved (avoided as a modelling pitfall) by a strictly monistic conception of all existence. This equates to a “one substance” thesis in philosophical terms. If one declares oneself against “bifurcation” in any of the senses explored above, one ipso facto declares oneself a monist. This may sound doctrinaire or dogmatic. I would suggest it is simply the parsimonious (Occam’s razor) explanation which solves the entire issue of the real-ideal split (in methodological theory without in the least solving our multitudinous real, practical problems). It solves the “transmission problem” and the “unification problem”.
The “transmission problem” essentially relates to the question of how can we conceive that ideas arise from “stuff” and that ideas (including via so-called free will or volition) can affect stuff. Short answer? Ideas are stuff too. Ideas are information instantiated as patterns in media (in brains, books, hard-drives etc.) and more particularly as patterns which can affect the generation of other patterns. The “unification problem” I refer to here is how to unify physical science and social science. That has already been begun in practice. Capital as Power is in that tradition (of social science, not social ideology) as I see it. Conventional economics is in a different tradition, one of social ideology, where it mixes the descriptive and prescriptive, mixes a coagulating conglomerate into a “degenerating research program” (Lakatos) and attempts to make a social science of it. Self-interest, careerism, credentialism… there is nothing else there. The proof is in the pudding. Conventional economics succeeds only in prescribing a biosphere-destroying ideology. The physical signs are now clear on this point when investigated by objective science.
To sum up, the ideological myths and lies of classical, neoclassical and conventional economics all need to be dispelled. An attempt at a wholly new and more scientific approach needs to be attempted and indeed is in train, at least with CasP theory and perhaps in other arenas.
Note 1. Wikipedia (which I think is good enough for blog and informal forum references).January 2, 2023 at 4:33 pm in reply to: Is power a thing in itself or the space between things? #248802
I am no ontologist either, except of the most amateur kind. I attempt to be an “empirical ontologist”, not a dogmatic or speculative ontologist. You wrote that you wondered “if my question was actually more linguistic/semantic.” The way I see it, a question or a proposition is always unavoidably linguistic/semantic. That is how we communicably couch them. This does not preclude a question or proposition from having a real referent. If we are comparing/testing our propositions to/against real referents then that is the sine qua non of the empirical approach, in theory at least. In practice, it’s a difficult enterprise. I will post in the main thread here about “power” as per the various references in this thread. I can only give my opinions of course.January 1, 2023 at 4:46 pm in reply to: Is power a thing in itself or the space between things? #248794
Those are some very interesting thoughts which raise basic questions of ontology. What is a thing in isolation? What is a thing in relation to other things? To state my position clearly, I posit that a thing does not and cannot exist in isolation. It exists only in relation. As a basic definition, a “thing” is an object, process, force, field or system, as we standardly define them. (If I continued with an explicit categorial taxonomy of definitions, this post would get far too long.)
I think Ulf Martin gives the best definition of power in the CasP context:
“In the following, we try to develop a concept of power as the ability of persons to create particular formations against resistance.” – “The Autocatalytic Sprawl of Pseudorational Mastery” , Ulf Martin.
This is an excellent definition in my opinion because it relates social power back to physical power in an understandable and indeed linked way. Power is the ability to create formations against resistance. We can see this in operation when a bulldozer pushes up a great pile of dirt. The main resistance is perhaps the force of gravity. There are other resistances like inertia, resistance to shearing and the resistance of friction. We can see the issues of power and resistance in Elon Musk’s takeover of Twitter. Musk’s takeover is a wonderful (meaning an appalling) example of the use of capital as power. The people thought they had or possessed an agora, in this case a virtual one, as a gathering space or assembly where they could share ideas, both progressive and reactionary. The more destructive of the most reactionary expressions were controlled by the previous owners. Via the use of capital as power, Musk came along, took over and inverted that so far as he could and can. Various forms of resistance have arisen, but again to go into that makes the post too long.
The operations around Musk’s implementations of capital power are real, physically real. His power is effectively wielded physically. He takes over the infrastructure (logical and physical control just as the terms logical and physical are used in computer systems control). There are logical and physical lock-outs. Real people are thrown out of access to Twitter (logical) and real people, workers, are thrown out of the Twitter building (physical). Locks are changed, doors are shut. The operation of capital as power always has the physical back-up as last recourse. Indeed, not as last recourse but as only real recourse. Only the physical is real in the final analysis. These are some early thoughts on your post, from my perspective. But then I am a materialist or physicalist ontological fundamentalist. Everything is everywhere and always physical. There is only that. Information is simply patterns encoded and instantiated in matter (in various media) which has then the ability to influence the formation of other patterns (via decoding and instruction execution operations by instruction execution “agents” with servos, meaning humans or artificial agents like computers, robots, drones, automated machinery etc.
- This reply was modified 11 months ago by Rowan Pryor.
Capital and its Crisis.
“Don’t worry. Everything is out of control.” – The Tao.
The same crisis over and over?
As Thomas Piketty discovered from his research: “If r>g then inequality increases.” If rate of return on capital exceeds the economic growth rate then inequality increases. Theoretically, we can increase growth rate and/or decrease return on capital to change the equation. As the article notes; wars, plagues, famines and revolutions have been the main ways throughout history that r and g have been changed in the equalizing directions. One thought this suggests is that capitalism is not as sui generis as its theorists claim.
Both Pro-capitalist and Marxist theorists implicitly claim that capitalism is special: that it alone releases the revolutionary productive forces which have transformed the world. The capitalist sees this as an endless progress to private wealth utopia. The Marxist sees it as sweeping away all old systems and then unleashing the next stage of history where socialism will inevitably (somehow) triumph. Models of more persistent, more fundamental forces in human societies (per Walter Scheidel and thinkers like Peter Turchin) show a different picture. What are these more persistent, more fundamental forces in human societies or rather forming human societies and driving them? They have to be the “nature of nature” and the nature of man. The first sounds tautological, the second sounds essentialist.
The “nature of nature” is simply the natural forces we confront, which are fundamental and unchangeable by humans. The nature of man also consists of material and corporeal fundamentals which we cannot change by will or choice. It seems, if history shows these long patterns, under discussion in the linked essay, then these fundamental forces are more determinative than we would wish: as we do wish in all our fond humanist teleological theories where the progress or direction of history occurs according to our goal choices (this according to us of course).
More random thoughts.
It’s interesting, and perhaps diagnostic, that conventional economics talks about hedonics but not about eudaimonics. It talks about utility and disutility but not about purpose, fulfillment or meaning. Inflation theory is attempted with hedonic adjustments but not with eudaimonic adjustments. Wages, goods and services are all utility (supposedly) and work is all disutility (supposedly).
Conventional economics talks about efficiency, efficient use of resources, and trashes the biosphere and humans unsustainably. That is hardly efficient.
Thanks for reply. This little issue threw up another interesting paper which has real system implications and finance system implications. I admit I didn’t find the paper. Somebody else linked to it. I think you might find it very interesting unless you are already aware of all the concepts involved.
Pieter and John,
Thanks for the replies. Food for thought definitely.
There I was joke-complaining about “esoteric theory”, on Twitter to B&N, and now here I am wanting to make it even more esoteric, theoretic and idiosyncratic. I am not unaware of the irony. Political economy frustrates me enormously just as religion does. In both disciplines, there are claimed entities and processes, essentially claimed as fundamental “ontological objects”, which are objectively unobservable. These claimed fundamental “ontological objects” vary from school to school, in theology and in political economy. Like B&N, I am completely against the “great bifurcation” if I can term it that, not just in political economy but in metaphysics itself. (I will come back to that.) I refer to the real-nominal bifurcation or what I might also call “the real system – formal system” split seemingly ineluctably underpinning all theoretical and model systems and their application to, and more importantly their feed-back and reflexive interaction with, real systems. One of the key problems of course is prescriptive theorising presenting itself as descriptive of something real after it has surreptitiously set it up by prescription or by plain propagada and dogma. B&N’s resolution of the “value controversy” along with, essentially, the resolution of the capital controversy is a resolution I applaud. I’ve said so for quite a while now. It’s a brilliant, cutting-the-Gordian-knot style of pragmatic and scientific resolution with a seeming (to me) implicit view of empirical ontology with which I can agree.
It is this implicit view of ontology which I want to see formally elucidated… by someone. Jonathan has occasionally engaged on this level with me but using a terminology, lexicon and model-set different from my non-academic ones. He understandably, I think, with his own research program does not want to go too far down the rabbit hole of my reinvention of this wheel (to mix metaphors). I’m trapped somewhere else, in a tunnel of my own making, in that arena which Albert Hofstadter termed “empirical metaphysics”. I would prefer to call it “empirical ontology”. Hofstadter wrote in the essay “A Conception of Empirical Metaphysics” that “The problem is to state a provisional conception of reality which is as far as possible continuous with the goal of traditional metaphysics and which nevertheless is of empirical import.”
The reason I prefer “Empirical Ontology” as a term is to expressly delineate it from the far end of the metaphysics spectrum, the speculative and religious end, which to me is anathema to discuss formally, simply because anything can be speculated. In contrast, empirical ontology would concern itself first with real ontologies (obviously) and how we arrive at them. By real ontologies I mean categorial taxonomies of real non-fundamental objects, such as a cat for example (as Felis catus in the developed and received biological taxonomy with its categorial-ised or categorised distinguishing characteristics) and more importantly categorial taxonomies of real fundamental objects (fundamental to the discipline in question) such as the elements of the periodic table, charges, polarities and valences, which are fundamental to chemistry. It’s important to note that “fundamental object” is a relative or relational term: the object (thing, system, field or process) is fundamental relative to discipline it refers to. This is very important. The fundamental object also has to be objectively observable (also very important) even if only by instruments (as systems) extending human perceptions (as systems) or at least by derivation (mathematically usually) from established dependable scientific laws and known, defined fundamental objects of the discipline in question. (This latter assertion itself would need a truth warrant justification in empirical ontology terms). A “fundamental object” in any real systems theory is surely only something which we do not need to decompose further for the discipline in question or else it is something which we cannot decompose further (yet, perhaps) into parts and see (model successfully) as a system of parts and probably as a system with its own emergent characteristics. Whether a “very” fundamental object is ineluctably fundamental at a given place-time in cosmological evolution or is “eternally” fundamental in some sense is not something we can ever know.
As well as real ontologies as categorial taxonomies of real objects, we need formal ontologies as categorial taxonomies of formal objects. This is not least because formal objects are after all real in a sense. They and/or their performative results are made real by the actions of humans and even by their thoughts – which is not to say thoughts create real stuff but rather that thoughts too are made of real stuff and act or are marshalled to manipulate real stuff, including our bodies as “biological robots” with frames (skeletons) and actuators (muscles) creating servos (limbs and digits) etc. Getting back to formal objects, they vary immensely and are themselves ordered into formal systems and sub-systems. Any language is a formal system. Mathematics (a specialised language) is a formal system. A rule book is / sets up a formal system. Computer system analysts and programmers of data bases and rule based systems are deeply concerned with getting their formal ontological objects, their “categorical ontology”, correct or they end up with logical errors peppered through their design, code and operations. So much so, that if one searches “ontology” on the internet in most search engines, computer systems ontology entries come up first and one has to go well down the results lists, ususally to find “old-fashioned” metaphysics ontology. There is a deep lesson in there, in the whole topic, in my opinion, but I haven’t properly explored this hunch.
The reason I harp on about the need to resolve and indeed unify (sic!) real system / formal system ontology, if possible, is related to the need, in my opinion, to set up a formal method via empirical ontology and categorial taxonomies as a comprehensive method-check that we do not at any point reflexively re-introduce formal objects as real objects objects back into our real system science. This might sound paradoxical on the surface after claiming the need for a unification of real system / formal system ontology. But as with all constructive efforts there are right ways and wrong ways to put objects together in assemblages. The problems associated with putting real objects and formal objects together in assemblages require a care which is particularly onerous. We can see this in the putting together, in praxis and emergence, of the real (physical and objective) economy with the various formal object concepts and models (prescriptive for the great part) of classical and neoclassical economics, including Marxist economics. To put it colloquially what a stuff-up, a real SNAFU! If the sixth mass extinction, climate change, the pandemicine and imminent possible human extinction are not a stuff up then I really don’t know what is. We don’t have much time. That fuels my frustration.
Of course the notion that abstruse or esoteric theory could affect all this seems like the most absurd long-shot of all. At least until one considers a basic principle of chaotic deterministic systems as a paradigm example. Tiny changes in initial conditions, at any time “t”, can make huge differences in system gyrations from that point on as time advances. I am certain Jonathan has made this kind of point, maybe even this precise point. On the other hand, family, colleagues and acquaintances of mine, all of more intelligent, more practical and more professionally successful than me would probably counsel me, again colloquially, against these kind of analyses by saying “People make up crap all the time. Other people believe crap all the time. It’s never going to change. It’s the nature of humans,”… and go back to making or appropriating “wealth” at their differential rates in their differing ways as the castrophically-destined system (to a high probability now) indeed forces most of us to do. Few are willing to become revolutionaries, in theory or in praxis, or else sustainably self-sufficient. It’s hard, risky work in both cases and the pay is really bad.
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor. Reason: Added mention of CasP essay competition
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor.
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor.
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor.
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor.
- This reply was modified 11 months, 3 weeks ago by Rowan Pryor. Reason: Deleted note
Come on mate, give me a break. When someone says “it doesn’t add up” that is a colloquial expression. When dealing with arithmetic or math, the potential for any and all operators to be involved is not literally excluded. 😉 But I guess you were just joking.
I’m not sure why my point on ““capricious money creation and capricious money destruction” has not been picked up on. Is it “too MMT” or “too Chartalist”? The point is money is fictitious, nominal, formal (choose your preferred term). Obviously, money can be created ex nihilo and destroyed ab nihilo. One thing we need to do (IMHO) is look at the capitalist capture of money creation and money destruction. I don’t think this detracts from CasP but necessarily adds to it. Of course it’s a corporate cartel of powerful capitalists who have captured the formerly state apparatus of money creation and money destruction, not any individual capitalist. When a system runs on chits, it helps to be part of the cartel which prints and shreds the chits, selectively. Or am I wrong? Tell me where I am wrong.
I’ve already asked Jonathan (and/or Shimshon) some very silly questions on their Twitter. After I got a good, succinct answer, I posted this Twitter reply.
“Yes, my questions were mostly wrong-headed. I still don’t get CasP properly even though I have read the (original “Capital as Power”) book and key papers. It’s like I am “firm-wared” to think of everything as related to prices and not related to other things. And I never even studied economics formally.
This “firm-wareing” of thought patterns is really, really difficult to overcome. I strongly take the point that prices do not reflect value but rather instantiate power relations. And yet I (still) expect the capitalist book-keeping to add up. So I keep advancing questions that assume that (price) values in the different categories and “departments” (in the Marxian sense) will add up and make arithmetic accounting sense through the economy. Yet there is no reason why they should (add up) under conditions of capricious money creation and money destruction.”
I like to hope that occasionally in questioning others and myself I come up with potentially valid ideas. At the moment I am clinging to this idea of “capricious money creation and capricious money destruction” in contemporary capitalism as accounting for the bifurcation of stock prices and goods & services prices. If money can be capriciously created and destroyed (and it can be and is) then while the arbitrary national accounting identities can be maintained as mathematical identity equations, the bifurcation of stock prices and goods and services can proceed apace and untethered each to each by prices or “value prices”. There would seem to be no necessary relation of prices in that sphere: at least not one governed by national accounts or economic category and department accounts.
Again, I could be off-track here. There is one little bit of CasP I get (understand) because it relates to my ontological investigations of real systems and formal systems/notional systems. The rest of CasP I clearly still don’t get because of my enculterated firm-ware biases. One has to unlearn conventional economics even when has not learnt it formally. Its paradigm is so insidious.
I really don’t think any complex analysis is needed. MMT and CasP have demystified the operations for us.
1. Loans and deposits move in tandem because an accounting identity is in operation under double-entry bookkeeping and national accounting. (MMT)
2. Rich people and corporations get loans at cheaper rates than poor people and small businesses. Money creation in this form must result in redistribution from poor and middle to rich (on a sliding differential scale). (MMT and CasP)
3. Money creation is a power operation in the sense CasP uses the term “power”. (CasP)
4. Money creation is rigged and gamed by the people with power in the system. (CasP)
5. The previous deflation and the zero interest rates were rigged and administered. The current inflation is rigged and administered. (Follows from CasP IMHO.)
6. Why does the rigging of the system change? When the power players determine they have “mined out” a process for all it’s worth (low or zero interest rates) then they will switch the system to the opposite regime (inflation) for further differential gains. Zero percent interest rates permitted big players, those who play in billions, to borrow billions at zero percent interest. That is free money, provided bonds (government bonds perhaps?) can be obtained somewhere with risk-free positive interest rates. However, this process, which delivers differential profits, will sooner or later drive inflation. First it drives asset inflation. Later is may well drive consumer goods and services inflation if and when any of the sloshing money gets to workers at any level, including skilled workers and professionals.
Then, a relatively rapid switch to inflation becomes the new way that big players can reap the differential profits. The asset inflation was useful early as it busted small players (relatively) as they could not purchase assets much at all and their relative wealth declined as those who acquired assets got further large gains. Once the assets are “all acquired” by the big players (e.g. landlords now own most of the housing stock) then the asset inflation game is played out. It is now time for the consumer goods and services inflation game to take all the money workers are now not putting into assets beyond their reach. Interest rates are jacked up and inflationary price rises are administered by monopolies and oligopolies.
Note that central banks are run by boards of appointed business people. Central banks are not run by governments (as they once were in some cases). Equally, central banks are not run by workers. To reiterate, they are run by business stooges. The idea that they would run interest rate policy to do anything for workers or the poor is preposterous. Governments are run by big business too. Donations capture regulation and policy so government fiscal policy also has the fingerprints of big business all over it.
The whole system is rigged by and for the rich. QED. It’s an open and shut case. As I say, there is no mystery now MMT (revived Chartalism) and more importantly CasP have demystified things.
Forgive me if I make a point that someone has already made above. I feel the answer is obvious. Loans and deposits move in tandem because an accounting identity is in operation under double-entry bookkeeping and national accounting. Every loan creates a deposit. Assume a bank loans entity A $100,000 for a renovation. This creates a negative entry on the bank’s balance sheet, it’s loan sheet. It also creates a positive entry, a balance, of $100,000 in entity A’s account. As the renovation proceeds, A makes progress payments to B, the contractor. Now, the balance moves to B’s account. The bank still holds the loan as a negative entry (until A pays it off).
If the bank holds too many negative entries, according to banking rules, it can borrow from other banks or from the government. In this case positive and negative entries swap between these entities. Loans and deposits continue to move in tandem. There’s nothing profound or mysterious in these numéraire operations simpliciter (as mere formal quantities, not real quantities) but they have profound effects as rituals of capital creordering the socioeconomy (as per CasP theory). What might be interesting, in the accounting sense, are the “frictional” or “lag” effects shown by the discrepancies. Even this is a weak “might”, IMHO. But please, shoot me down with facts and logic if I am wrong.
Of course, this is not the main original question (money creation as redistribution) which was and is a good question. Again, I think the answer is simple. If rich people and corporations can get get loans at cheaper rates than poor people and small businesses (and they can) then money creation in that milieu or regime does result in redistribution from poor to rich. It looks patently obvious to me, as a crusty old curmudgeon getting more and more exasperated with the idiocies and childish mystifications of planet-destroying capitalism. But again, shoot me down with facts and logic if I am wrong.
An initial thought on this debate. Bichler and Nitzan are characterised by Nicolas D Villarreal as:
“Declaring that both neoclassical and Marxian political economy have been done in by their subscription to the idea that there is a real economy which regulates the nominal/financial economy, and that this real economy can be quantified, with utils and demand curves in the case of neoclassical econ, and socially necessary labor time in the case of Marxian econ. The CasP theorists suggest that these measures of the real economy are in fact unquantifiable, and that, in fact, there is no underlying real economy, that it is finance and finance alone which structures our social reality.” – Villarreal.
This is a misunderstanding and mischaracterisation by Villarreal of what B&N are saying. They are NOT saying there is no underlying real economy. They are NOT saying that the real physical processes and results of the real physical economy do not occur. They are saying the financial economy is not an accurate reflection or mirror of the real economy. They are saying that the real economy cannot be quantified and accurately reflected, in finance capital operations, by utils or SNALTs or their proxy measure, the numeraire, as money capital.
B&N are not saying it is finance and finance alone which structure our social reality. They refer to the real human acts of cooperation and production in industrious work. This is plain. What they do say is that finance (finance capital) is not a measuring set but an instruction set. More precisely it does not measure value, it deems value and issues instructions (capital investment) on that basis. It does not measure or reflect what is really happening. It takes a false aggregated measure in a fictitious unit, deems it to be a real measure and issues instructions for production or no production on that basis alone and does so (under capitalism) to maximize profit. It attempts this by keeping strategic sabotage of production in the “Goldilocks Zone” (for profits on capital, not for the good of the majority of the people).