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The Mystery of Capital
Hernado de Soto addresses the latter questions while making the case for his central thesis: that Western property law and administrative infrastructure is the reason for the ascendency of the Western economy.
The book is framed as an investigation of the 'Five Mysteries of Capital' during which the author enthusiastically demonstrates the shortcomings of common knowledge on the subjects of poverty, money, law, and history.
De Soto's mysteries are, in short:
- The Mystery of Missing Information. How much poverty, and conversely, how much property is there in poor countries, and how do we measure it? Huge numbers of people live and work off the books: they have no clear title to their land and possessions, they pay no taxes, they have no credit. We're not talking about subsistence farming here, but about buses and taxis, repair shops, and light industry. This 'Shadow Economy' is explored, and the 'Dark Capital' bound to undocumented resources is examined.
- The Mystery of Capital. What is Capital, where does it come from? De Soto views capital as not just a proxy for physical assets, but as a side effect of of property laws and infrastructure. His explanation of capital amplification derived from the standardization, globality, and liquidity that is given to property by standard protocols and infrastructure echoes common reflections on the internet phenomenon.
- The Mystery of Political Awareness. Why have so many governments failed so badly at economic reform? Simply because they do
not realize they are in the midst of their own Industrial Revolution, 200 years late. De Soto argues that the true extent of
the shadow economy was unknown until recently, and methods of dealing with it are in process. It is refreshing to read something
on this subject that acknowledges the hard work and sincerity of many of these governments, rather than rehashing accusations of
incompetence and corruption.
4. The Missing Lessons of U.S. History. How did the U.S develop an infrastructure that nurtures successful Capitalism? This section is an entertaining overview of the evolution of U.S. property law (believe it or not). What I found interesting was the way that 'law' would spontaneously arise in circumstances where the existing system was inadequate or non-existent. Also of interest were the examples of legislation chasing and converging (roughly) with reality over a century long period.
5. The Mystery of Legal Failure. What legislation is required to = enfranchise the people of the Third World? Again, the author makes an argument for law tracking reality. In the Roman legal tradition, laws are not created, they are 'discovered'; the best laws are those that fit existing practice. Well intentioned land reform measures fail because they do not reflect the actual situation. People do not want to be uprooted, they want title to what they believe is theirs.
De Soto tells a story about walking through rice paddies in Indonesia - = there were no survey markers or fences, but he knew whenever he crossed a property line - a different dog barked at him. He tells a group of ministers working on land reform to start at the bottom; listen to the dogs. and work up from there. His message is simple -- discover the law, then write it.
In each of these sections the author firms up his arguments with a = unique perspective based on solid research as much as theory. The final section of the book gives sober and well thought out step-by-step directions to lift people out of poverty and invisibility, again based on experience in field programs, rather than ideology.
This book is infused with a sort of passion that gives the arguments and figures an unexpected fascination. It is neither an anti-globaliztion rail nor a 'greed is good' apologia, but a well thought out investigation into a subject the author cares deeply about. For myself, I care little for economics, but I am familiar with engineering. De Soto approaches his topic like an engineer; he is interested not in promoting a theory, but in solving a problem.
I would recommend this book to two audiences: anyone interested in world poverty or economics, or those interested in the interaction and evolution of laws (ill-informed or not) and the Web. I would also recommend that we start barking.
You may find out more about the author at www.ild.org.pe.
You can purchase The Mystery of Capitalism from bn.com. Slashdot welcomes readers' book reviews. To see your own review here, carefully read the book review guidelines, then visit the submission page.
You need a free market, but free doesn't just mean free from governmental control. You need enforceable contracts, tolerably low levels of official corruption, and the right set of (usually unspoken) assumptions about how things work. The West has that; most other areas don't. Unfortunately, cultural changes take a long time.
InstaPundit! Ahead of the Curve Since 30 Minutes Ago
The link leads to "http://slashdot.org/relevantlink.com".
Uh...?
Hernando de Soto, for those unfamiliar, is an interesting character in his own right
and, aparently, with that link you gave us there, we're going to stay unfamiliar.
FluX
After 16 years, MTV has finally completed its deevolution into the shiny things network
"It is seldom that liberty of any kind is lost all at once." -David Hume
Capitalism doesn't prosper because is it is the nicest
or most logical system, but the most successfully
expansive. It grows beyond everyhting else.
Try THIS link.
That capitalism only works in the West is clearly wrong. It works in East Asia, where often democracy is lacking but capitalism succeeds. For example, Japan has been capitalistic since the last 19th century. Big business combines still control much of the power in Japan and South Korea. Taiwan, Republic of China's founding ideology is the Three People's Principle, which is very socialistic, but Taiwan was rated one of the most capitalistic region in the world. Not to mention the mainland region of China, under the rule of the Chinese Communist Party, where the so-called "Socialist Market Economy" is advancing rapidly to turn Chinese mainland into one capitalistic economic powerhouse, after the "Capitalistic Roader" Deng Xio-Ping's reform. ("Capitalistic Roader" was the term used by Deng's left wing opponents during power struggle in the 1970s before Deng's victory to power)
Free Software: the software by the people, of the people and for the people. Develop! Share! Enhance! Enjoy!
Once upon a time, money was based on physical assets. Now capital has become fiduciary - meaning it is not based on any physical assets at all. To explain, in the UK one Pound Sterling used to be one pound of gold by weight. Now it is just valued for its intrinsic value to people. If noone exchanges money fro gold, the intrinsic value of money is irrelevant. Everyone wants money, therefore money is valuable, QED.
Let us examine what the effect of this will be in the new economy of the internet. Money is an imaginary and intellectual concept, and the internet is an imaginary real. We can then see that money is incompatible, to a certain extent, with the interent, or at least redundant. We are moving into a post-capital society, where the only thing of worth is the posession of knowledge and the spread of ideas.
According to Francis Fukuyama, the respected Japanese economist, the End of History is upon us, as all nations across the globe sink into the western capitalist ideal, and the divisions of old melt away into history.
In susch an environment money is irrelevant.
I predict, with reasonable certainty, that money will not exist in 25 years, and capital will be pure ideas.
--
Clarity does not require the absence of impurities,
/* And you'll never guess what the dog had */
/* in its mouth... */
--Larry Wall in stab.c from perl
The main reason why capitalism works infinitely better than socialism is that capitalism exploits the greed inherent in human beings whereas socialism forces people at penalty of hard labor, inprisonment, execution or all of the above to work for the "greater good" of society. Offering the chance of a life of luxury is a much better way to get something done than sticking an AK-47 to someone's head and telling them to build a car or house.
Lets examine some facts.
1) America has the largest tax receipts of any country in the world. Hardly a Capitalist utopia.
2) America spends more on its miltary than any other country in the world. What exactly does this contribute to free trade ?
3) American corporations are amongst some of the most monopalistic in the world. Is this the free market ?
4) When forced to compete on a level playing field, US corporations fail dismally. E.g. the auto industry. You will not see ANYONE driving an Amercian car in Europe. Like most Amreicans, we would prefer a quality vehicle from BMW, Mercedez-Benz, Volkswagen, Seat, Skoda, Porshe, or even a Japanese made vehichle rather than the American low quality product.
5) Exploitation of resources and inefficiency. America leads the world in the destruction of the natural environment. Like the farme who eats his seed corn, they will surely reap their rewards.
Anyway In conclusion. There is little that the rest of the world can learn from America. Europe rejected Fascism in the 40's, America seems hell-bent on re-learning the same lesson Europe learned so long ago. It pains me to see it as I feel a moral reponsibility (since around 70% of Amercians come from my homeland).
Perhaps Americans who reject the direction their society has taken should return to the Motherland England, to like a more socially acceptable lifestyle.
We will put the kettle on for you and make a nice cup of tea :-)
It's just that everywhere else, people aren't giving it enough time. Capitalism didn't just start one day. It was a gradual process that evolved over hundreds of years in Europe and America. We had time to adapt.
Many people in third world countries want capitalism to bring immediate benefits to their standards of living. You can't go from agricultural to post-industrial society in ten years, folks. People need to give this process time.
--
The World is Yours.
Hernando de Soto was a 16th century explorer. As noted already, the link in the article gives no clue who Hernado is.
Why not read the reviews at amazon, for a more coherent description of what the book is about.
In A.D. 2101
....
War was beginning.
CmdrTaco: What happen ?
CowboyNeal: Somebody set up us the Troll
CowboyNeal: We get signal
Captain: What !
CowboyNeal: Main screen turn on
Captain: It's You !!
Katz: How are you gentlemen !!
Katz: All your Hemo are belong to us
Katz: You are on the way to destruction
CmdrTaco: What you say !!
Katz: You have no chance to survive make your time
Katz: HA HA HA HA
CmdrTaco: -1 every 'troll'
CmdrTaco: You know what you doing
CmdrTaco: -1 'TROLL'
CmdrTaco: For great justice
Capitalism is unsustainable, and the incredible growth of homo sapiens have enjoyed over the last 200 years (From 1 billion world population in 1800 to 6 billion today) is due to "spending" a bank account that was accumulated over billions of years: fossil fuels (source Thom Hartmann: The Last Hours of Ancient Sunlight). We have reached the maximum rate of extraction, and this rate will begin to decline, while demand and human population continues to grow *expontentially* (source: Jay Hanson)
If by "capital" you mean money, then follow some of these links to The Creature From Jekyll Island By G. Edward Griffin: Money is not wealth, it is debt, perpetual debt, which can never be repaid (because the interest/usary is not created whithin the system), and thus always leads to bankruptcy, forclosure, "reposessions", sherrif's sale, and military actions, which the author calls modern Alchemy, since this is how the lead bullets of war are converted into gold.
Capitalism supports slavery. Capitalism encourages unsustainable population growth, depletion of natural resources, and the creation of waste products. "Property Rights" are paradoxical, since the enjoyment of this right must deny this very same "right" to another.
Isn't it time we figure out a different economic system that is sustainable, and less violent?
Ob Bill Hicks Quote on Economy:
To explain, in the UK one Pound Sterling used to be one pound of gold by weight.
pound sterling on brittanica.com
sterling on dictionary.com
Actually, a Pound Sterling was more typically a pound of silver, not gold, in value. Hence the term 'sterling silver.' The term 'sterling' refers to purity of gold or silver, but the Pound was of silver specifically.
[
Actually, it was one pound of silver. There is no such thing as "sterling gold." :-)
Brackets contain world's first nanosig, highly magnified:[.]
The final section = of the book gives sober and well thought out step-by-step directions to lift = people out of poverty and invisibility, again based on experience in field = programs, rather than ideology.
There are two main theories on how the developing world should move into the developed world. Currently, only 30 countries are considered "devloped," while the rest are divided among groups such as "developing," "not developing," and "less-developed."
MT prescribed that economic development requires the rejection of traditional behavior and orginizations, and acceptances of new behavior and orginizations that futher economic growth. The culture of a nation must change to the accepted western ideas of devlopment. A partial list of the requirements that Modernization theorists agree on include:
In a nutshell, a acceptance of western culture and western sytle economic and policital thought lays the foundation of economic development.
DT is a ideology that critisizes the MT approach. Two main tennents of Dependency theory: The development of third-world nations did not resemble the development of the west. The west's development for instance did not have external influences. The second tennent is that developed countries exploited the third-world in their own economic rise. Therefore any economic structure that may exist in a developing country is set up to enrich the industialized nations, not develop the third-world nation.
Dependency theorists see the western exploitation of third-world nations as the primary roadblock to economic sucess. By removing the foundations rooted in imperialism, third-world nations and develop the economic structure that moves them forward.
I have not placed any value judgements on these two theories. All I can say is that I agree with the statement that there are no easy answers to how to develop the third-world.
But lenders will only loan against property when they can be assured of being able to legally sieze the property if the borrower reneges on payment. This is why legal property rights are so crucial: to allow development of mortgages.
There has been a lot of uninformed anti-globalisation hype on Slashdot. I'm really glad too see good stuff like this.
If this weren't true in the States as well, we'd just laugh when a Jim Allchin calls open-source^W^WGPL'd software "un-American."
--
Ooh, moderator points! Five more idjits go to Minus One Hell!
Delenda est Windoze
Ooh, moderator points! Five more idjits go to Minus One Hell!
Delendae sunt RIAA, MPAA et Windoze
This shows up in many controversial areas.
For example, take the immigration from poor areas of the world to the richer areas of the world. The question here is how the culture of these immigrants is different from the country they are going to, and how important is this differance.
For example, if you have a town or village where the immigrants predominate, and have become a political force, what does the community look like? Does it look like and reflect the country that they are in, or where they came from? Typically, it looks like where they came from.
The problem is when this results in the same conditions that they left in the first place. Actually, it never gets that far, because of local ordinances, etc. but it does produce dramatic culture clashes. Southern California is an example of this. Xenophobia and prejudice are easy to develop under these conditions because in a democratic society, those moving in want things their way, similiar to what they are comfortable with, the way they knew it in their former homelands.
A less touchy example is when rich successful people buy a house in the country, after having lived in the cities all their lives. They get all freaked out by things like the smells of the local farms, and complain to the local town council, or whatever.
This becomes important when you are talking about things like how people deal with the basics of their lives, the economics, and how they create their own community.
Part of the problem is that many lack the lifetime of education in the culture of the country the aspire to, thinking that they must hold on to what they know already out of pride. They think in terms of either/or, or at least some political leaders do. The better would be knowing both.
This gets flipped on its head when we take this into another context completely. For example, the arena of the software market, open source vs proprietary software, etc.
As some may say, this is another can of worms entirely.
"It is a greater offense to steal men's labor, than their clothes"
So why is capitalism not ascendant everywhere? Your theory doesn't explain all the facts.
-russ
Don't piss off The Angry Economist
"Money" is just something that people generally will trade anything for, and will accept in trade for anything else. Money, being a thing, has its own intrinsic value which, like anything else, goes up and down in price. Money will always exist, because it is needed to keep the cost of trading things low.
Read Von Mises' _Human Action_
-russ
Don't piss off The Angry Economist
The guy has been buying "soles" (a word in which peasants were counted) of dead peasants in Russia, thus becoming very "rich" and admired. It all blew up, when people discovered that the "soles" were of dead people. Ditto happens today with some Tech shares. Capitalism at its glory...
If you follow the Austrian School of Economics (yes, there are competing schools of thought e.g. Chicago School of Rational Economists, etc), then you realise that capital is a heterogeneous structure of productive elements. People tend to confuse the accounting unit (monetary value) with the tangible/untangible asset (essentially a service generating a revenue stream). Why has the West succeeded as compared with the East? There are a lot of competing claims but I will offer a few generic observations:
... just becaus you are successful now doesn't mean you will always be right. Deeming couldn't convince the American manufacturing industry to take his ideas seriously and as a result the Japanese have now supassed the US in that sector. Given the huge population mass and desire of normal people to improve their lot, there's no reason why India couldn't overtake the US in software services or the Chinese in Engineering Knowledge. In short, the future is unpredictable but a rising tide raises all boats.
- alienation - or the separation (and resulting specialisation) of powers. The modern corporation essentially has 3 functional components - owners (shareholders), governance (directors) and operators (managers). Through legal mechanisms, the transfer of powers and associated trust allows more complex structures to be established. Due to historical baggage of feudal governance structures and patron-style relationships, the East has yet to develop a culture which separates the State from the individual biases. Even if you look at places like Singapore, it is essentially a city state driven by a family core (think Italty) and as a result some financiers are rather disparanging of the capital utilisation rate (compare growth in TFP against other states after discounting human and capital mobility). The alienation eliminates (at at least checks to a large extent) influences such as religion, tribalism, etc from economic factors. The downside is that the government is less powerful than many people think.
- agency costs - consequent to this is how do you ensure that the remote agents (managers/financial brokers) work for your aims (wealth creation) rather than pissing off to South America with your loaned capital. Again the rise of a professional management class as distrinct from a family owned firm with a tendency to treat OPM (other people's money) as personal disposable income allows larger scaling of enterprises. This has been aided by the significant reduction in the cost of internal communications due to technology and now you have firms which number employees in the hundreds of htousands (as compared with 100-1000's early last century). Scale matters and family firms don't have guarentee of talent.
- universal education and democratisation of capital - one of the biggest hinderances towards an efficient market is information asymmetry. What you don't know *WILL* hurt you when it comes to insider information, scams, and other forms of white collar crime. By giving the middle class the chance to pool funds into mutual investments, and the transparency to assess companies in their own right, a more accurate picture of the economy can be reflected in the prices that people are willing to lend at. If you take a look at the share-market in say China/HK, if you are not a professional market specialist, you might as well be gambling at your local casino as minority shareholders get screwed big-time.
- credit creation - the unbundling of the currency from any tangible asset such as the gold standard. This is a rather contentious fiscal "innovation" as it creates inflation (e.g. 70's) but the upside is that greater individual risks can be undertaken (with resulting higher returns). There are some serious side effects (financial crisis/flutuating financial securities) but the industry has developed more advanced liquidation techniques to reallocate capital as a result. As a result, the US financial markets have been more efficient at directing capital to product uses (c.f Japan industry boondoggles) despite its current lower (negative?) savings rate.
I'm sure any professional accountants and economists will harp on about a number of other factors such as anti-trust law (one advantage over Europe), intangible property rights (branding, etc) or derivatives to transfer/concentrate risks but IMHO the above are the main structural elements. This is not to say that all is milk and honey, governments, corporations and individuals have been known to screw up but at least the system has a chance to self-correct. However, it should be noted that people in other countries are not stupid and they can read the books on financial as well as any other capitalist. It also discounts certain elements such as social capital whcih is prized much more highly in the East due to higher population concentrations. The other potential problem I see is institutional arrogance
LL
Money is not debt, money is a medium of exchange.
Debt is an obligation on the part of one person to pay something (usually money, but it can also be labor or some commodity) to some other person.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
The book being reviewed is about capital. Your comment is about money. Capital is productive property, and as such can consist of ideas, land, machinery and even personal skills in some views.
Money is a reliable store of value that is accepted in exchange for other good.
Both capital and money are social realities: there's nothing "imaginery" about it. If I try to pay for dinner using a turnip, patent water or enclose the center of London to graze my cows I'll soon discover that imagination is not enough.
...would have been a better title for at least the alliteration, besides being appropriately descriptive.
satire, n: 1) witty language used to convey insults or scorn; 2) a form of humor lost on most slashdot moderators.
Land is considered as being owned, as soon as a man is able to own a woman, who can cultivate a piece of land and provide food for survival for the man and her children.
The man, being asked if he owns land, would say yes, as long as he owns the labor provided by the woman.
The woman would say she doesn't own land, but she is paid for her labor in being allowed to eat and survive on the fruits of her labor. If she is able to produce more food than the family can eat and is able to sell or trade food for other goods then the struggle who owns the traded goods (or the money she got from the sale) starts.
It seems mostly dependent on how much labor the man has put in to cultivate the land himself. If he did, he will claim ownership of the profit made by the woman's labor, if he didn't and the woman was able to make a profit out of her labor, she considers the profit hers, but not the land itself.
If the woman doesn't work the land anymore, the land isn't considered worth anything and no ownership of the land itself is claimed by the man, but certainly the worth of the potential labor inherent in the woman, is still being claimed to be owned by the man.
In this context it makes sense that the capital of the man is measured in how many women he owns.
The moment an international company comes to the village and discovers something precious to the industrial world in the soil (gas, oil, uranium) and wants to exploit the land, the land will be claimed by the native population as being owned by them. The native population will request recording of the land's ownership, without any consideration of the ownership of women's labor. Because it immediately becomes clear that the profit out of the company's labor is higher than anything the women's labor could generate.
The ownership of the land therefore seems to be defined by who owns the labor put into the land to generate a profit out of it. As soon as the profit is more than just the food to sustain survival of the native population recording ownership takes place.
When Lincoln requested in the Homestead Act that anyone who claimed ownership of the granted acres of land must prove within five years that he "worked" the land and generates value to that land, this seems to reflect that the real capital is reflected in the labor you put in to the land to generate something of value which can be traded and not in the land per se. The native Indians never claimed to own land ( I think), but they fought wars for their tribes territories. In the terms of de Soto, they barked quite a bit.
This would basically mean you always claim ownership to what you produce with your labor. And any person will always claim that much land as his own land, as he needs to grow food to survive. We always start barking if someone tries to take that away from us and we should.
Wuff, wuff, I am off to the bookstore. Thanks for pointing this book out to us.
I'm afraid that its impact will be negligible until and unless a national government somewhere issues a gold-backed currency.
Imagine for a moment, that South Africa issued a digital Krugerrand.
The DKR would be a nice, long number, and if you present it at any branch of any South African bank worldwide, and you're the first person to present that number, they hand you the coin. Various cryptographic protocols can ensure that you're very unlikely to simply guess a valid number.
South Africa would make a fortune on the seniorage, and all of their gold buyers then have a currency available which is not inflatable. Once people get used to the digital gold coin, then we can start seeing digital currencies backed by any other kind of commodity or service (say, Kilowatt hours, or BTU's of home-heating from somebody's natural gas pipeline.)
Ultimately, it will benefit the whole world to have currencies that simply aren't subject to manipulation for political ends, that rise and fall against each other in response to actual market conditions.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Now this isn't to say that race X is superior to race Y (as many drones are quick to play the race card). But a society that has perfectionist attitudes doubled with a "keeping up with the Jones'" outlook have and do progress faster.
Adaptation is necessary for progress. The Europeans took a lot of the practices from the Muslim world under Sulliman(sp?). And before that, the Muslims copied the Indians who were benefitting from the Oriental societies who were the mightiest of the time. Think where we would be if Pope Sylvester the II hadn't been educated by the Muslims; he's the one who introduced arabic numerals to the west. The western world has only been dominant now for at most 500 years (and some would say for less).
Another instance is with the US and Japan. Japan was still a feudal society until the end of the 19th century. The Americans came into the Japanese harbor and let off some cannons. The Japanese were impressed. They realised their ways were inferior to the industrialized western ways. They sent their scholars to the US and Europe to learn all that was possible. And after 40 years they were as advanced as any western society.
it took me all of 10 seconds to find this page from the link given:
http://www.rcp.net.pe/ild/hernandodesoto.htm
Briefly, the author explains the evolution of different forms of Capital: merchant, industrial and, finally, speculative. It is the "Speculative Capital" which scouts the planet for instanteneous profits and has the potential to destroy the whole system as it puts on larger and larger bets.
Ever increasing volatility of Nasdaq, well-publicized devaluation of British pound commonly attributed to George Soros, meltdown in Southeast Asia, and, most recently, Turkish devaluation are the symptoms of Speculative Capital.
Check out Saber's website for better explanation of the subject.
Bernard Lietaer at transaction.net has plenty of interesting ideas about money, drawn from his involvment in the global monetary system five ways: from a multinational corporation to a developing country viewpoint, from an academic to a hands-on central banking and currency speculation viewpoint.. He concludes that greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using, and that we can use the 'net to create abundant, sustainable alternatives.
The trick seems to be to limit "money"'s capacity as a *store of value* and so expand it's use as a *medium of exchange.*
Silvio Gissel's "demurrage currency" model does this. Demurrage charged currency restricts a user's freedom to hoard short-term gains, and coerces users to invest in more *sustainable* productive actions in the long run. (Demurrage currency devalues with time, so it spreads around faster, increasing in velocity, and hence, ironically, value.
barataria.org used to have good info on the famous Worgl experiment, whose success caused the Austrian Central Bank to stomp it out. "The traders took no risk in accepting Wörgl scrip as it was completely backed by the national currency loan which the mayor had obtained from the savings bank and left on deposit there. This enabled anyone holding scrip to swap it at any time for 98% of its face value in national currency. Very few people appear to have made the exchange because at 2% it cost more to do so than to pay the 1% monthly re-validation fee, but any local money which was returned to the bank or paid to the council in taxation was immediately re-launched into circulation in the town."
IHMO, "money" is an elemental "code" that instructs most of our trades.. I look forward to new definitions and arrangements of it.. Redefined, it can promote cooperation over competition, and suit non-zero-sum increasing returns in network effects (ie free ideas grow more valuable as more people use them)
"Imagine how creative, how productive, how ecologically benign our businesses could be if we ran them according to the design principles of the rainforest. With thin soil, few nutrients, and almost no resources, rainforests could never qualify for a loan. Yet rainforests are more productive than any business in the world, home to millions of species of plants and animals, so perfectly mixed that they sustain one another and evolve into ever more complex forms." - Taichi Kiuchi
pound sterling, the basic monetary unit of Great Britain, is divided (since 1971) decimally into 100 new pence. In a monetary sense, the term sterling was formerly used to describe the standard weight or quality of English coinage. The basic monetary unit of the United Kingdom is still called the pound sterling. The term is derived from the fact that, about 775, silver coins known as "sterlings" were issued in the Saxon kingdoms. A pound weight of silver was coined into 240 pennies,the weight of which was probably about equal to the later troy pound. Hence large payments came to be reckoned in "pounds of sterlings," a phrase later shortened to "pounds sterling." After the Norman Conquest the pound was divided for accounting purposes into 20 shillings and into 240 pennies, or pence. These pennies were made from an alloy that was 925 parts silver and 75 parts copper. This proportion remained the standard in English coinage until 1920, when the proportion of silver in the coinage was reduced to 500 parts per 1,000. Britain stopped using any silver in its coins in 1946, replacing it entirely with copper and nickel. By this time the value of silver had long ceased to have any direct link to the British currency, Britain having adopted the gold standard in 1821. In medieval Latin documents the words libra, solidus, and denarius were used to denote the pound, shilling, and penny, which gave rise to the use of the symbols £, s., and d. On Feb. 15, 1971, the pound sterling was officially decimalized into 100 new pence. The symbol £ was retained for the pound sterling; the letter p. was chosen for the new penny. Never was the pound sterling based upon the value of a pound weight of gold. It was based upon a gold standard, yes. I predict, with reasonable certainty, that Heidi Wall will not exist in 25 years, and unbridled capitalism will destroy the world as we know it.
Money will always exist as an intermediatory for direct barter. The internet may add new forms of money such as Mojo Nation's "mojo" or PayPal's trust based $ equivalents (it's not a bank, so the system is based on trust in PayPal), but it will never do away with the fact that I may want bread today and not have the MP3 files that the bread-owner would like in exchange... so I give him the exchange medium money, which he can trade for MP3s tomorrow with someone else.
Scandinavian nations are socialist, Canada is socialist... socialism is a necessary part of any viable capitalist democracy... socialism is likely as old as humanity, tribalism has strong aspects of socialism.
Britain adopted the gold standard then... on May 5th, 1821
I can't tell if the references in this article are intentionally wrong so as to mock the ideas, or accidentally wrong. Either way, it's hilarious!
Francis Fukuyama is a historian, not an economist. His book, The End of History, sees "History" as the struggle between competing systems of economic organization. History is at an end (according to him) because after the fall of the Soviet Union, the alternate ideology of economic organization essentially debased itself.
Money was never based on physical assets, it was a proxy for stores of value that were difficult to carry around.
"Now it is just valued for its intrinsic value to people." This make no sense, nor does the argument in the paragraph. Wow!
Fiduciary doesn't mean what it's used as in the reply. Fiduciary: A person holding a position of confidence, such as a trustee, guardian or executor. Capital has become a person!
new economy: what new economy?
This reminded me of the old living color skit, where the guy would be spouting words that he didn't understand. All in all, a great post! The poster is a genius, subtly mocking not only the lack of understanding and reasoning ability of slashdot readers, but mocking in a way that appears to understand the underlying arguments of economic theory. Bravo!
--- only for the squeamish
Furthermore you are going on to draw conclusions from your lack of understanding about what/why money is what it is. I think that is why you say capital is not based on any physical assets - which is a total non sequitor, anyway. "Capital" is a short word for "the means of production." Capital goods are different from consumer goods - you don't get capital goods to consume them, you get them to make you more productive at making other goods. Anything that helps you to produce things can be a capital good. So factory equipment are factory goods. To the extent that you use them to make things, your household tools can also possibly be considered capital. A farm tractor is also capital. You can begin to see how the lack of capital is something that separates the poor countries from the rich ones. A farmer who has to plow with a mule may work harder than his (say) american counterparts, but since american farmers have more capital (tractors as opposed to mules), they are able to produce more.
It is nonsense for you to say that "capital will be pure ideas" in 25 years. Many physical, real-world tasks - like producing food - will still need to be done, and capital equipment will be used to do them. I think you've just been confused by the abstract, intangible nature of financial tools - money, bonds, stocks - which are used to allocate and transfer capital.
The only truth to your comments - a truth I think you stumbled on accidentally - is that knowledge is a type of capital. There are plenty of abstract types of capital like this - for instance, reputational capital. These types of capital are intangible but they are incredibly important - knowledge is necessary to make other types of physical capital, for instance.
History isn't over (let's not abuse the meaning of Fukuyama's words-that annoys him). Money will continue to exist. Physical forms of capital will continue to be important.
For great justice, before writing a couple of paragraphs about these topics you could at least take the time to learn the vocabulary first. I think you could benefit from reading some of DeSoto's books and articles.
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Ikaruga scoreboard (supports netranking)
Thomas Malthus made the exponential-population argument more than two centuries ago. Paul Ehrlich did it again in 1969, claiming in his best-seller The Population Bomb that "We have already lost the battle. No matter what crash programs are instigated at this time, they will not be enough to prevent a worldwide famine of catastrophic proportions in the next ten years. Billions of people will die." Whoops. (Here is some information on the late Julian Simon, who repeatedly and famously debunked such bogosity.)
Capitalism encourages unsustainable population growth, depletion of natural resources, and the creation of waste products.
Aside from the fact that it's not clear that human population growth is indeed "unsustainable", you could replace "capitalism" with many words, including "life" itself, that would result in equally true statements. Rabbits, rats, and cockroaches, for example, do not practice capitalism (that I know of :-), yet they practice unsustainable population growth (to the extent permitted by the lack of predators), depletion of natural resources (food, oxygen, etc.), and the creation of waste products (turds, CO2, etc.). The same is true even of lowly bacteria, except that their "natural resources" and "waste products" are rather different than ours -- which merely serves demonstrates that one lifeform's "waste products" are another's "natural resources".
Incidentally, I could easily argue that lack of capitalism promotes slavery. The absence of property rights essentially means that others can usurp the fruits of your labors whether you like it or not. It's less direct than literally buying and selling human beings, of course, but it's not at all dissimilar in principle.
"Biped! Good cranial development. Evidently considerable human ancestry."
Cause their own are emptying...
Is that a succeed benchmark ?
The democraty is falling.
USSR was a one-party dictature, USA is a two-party dictature. Democraty is just a comestic !
Do you really think the last us election wasn't a putsch of Big Business ?
I place the blame for xenophobia and prejudice squarely on the ones exhibiting it, not on people who want to immigrate and retain portions of their original culture. (Incidentally, I lived sourthern California for 17 years, so I'm not at all unfamiliar with this. I knew lots of people who believed there should be English-only laws, but I figure that if people want to conduct their business in Spanish or Vietnamese or Chinese, what moral authority do I have to disallow that?) Now, if people want to maintain their individual culture to such an exclusive extent that they are unwilling to interact with the people who lived there before, they're guilty of the same intolerance, but I tend to believe that's the exception rather than the rule.
I once read an interesting piece once about the origin of the so-called Chinatown districts in many U.S. cities. Turns out that one of the favorite entrepreneurial activities of early Chinese immigrants to the U.S. was laundries, so city councils passed ordinances limiting where laundries were permitted, thus effectively segregating the immigrants without doing anything overtly prejudicial. In other words, the xenophobia was imposed from the outside, not the other way around. I find this particularly ironic given that the U.S. is a country of immigrants in the first place -- it's not as if we have thousands of years of history and a political system built to defend that historical culture.
"Biped! Good cranial development. Evidently considerable human ancestry."
All economies have capital. Capital is what we eat, is where we sleep, is what we wear. Even communist societies have capital. They merely assign ownership of that capital to the State. Even socialist societies have capital. They merely use the government to reassign ownership of some of that capital based upon various principles of fairness or equity.
"Capitalism", as you use the term, is a misleading abbreviation of the term "free-market capitalism", which is where ownership of capital is vested in individuals and these individuals vie to increase the amount of capital that each of them owns. This has proven to be very effective at increasing the amount of capital in a society. There are costs to "pure" free market capitalism, though. In the short term, "pure" free market capitalism would have business owners creating unsafe workplaces and polluting the environment, because in the short term those result in more profit, for example. And there are always winners and losers in free market capitalism, and the question of what to do with the losers (those whose skills and abilities do not have value enough to provide them with food and shelter) remains. Thus Carl Marx's criticism of the free market capitalism of his day was quite on target. Thankfully, we do not live in a "pure" free market economy today, but, rather, one which is moderated by government. The extent to which a government should intervene in a free market economy is always an issue, but even the most die-hard free market capitalists admit that the economy would collapse if not for government interventions such as, e.g., chartered limited-liability corporations (a government-enforced invention, otherwise shareholders would be liable for the misdeeds of corporations and would not invest money in corporations), court systems (which allow settling business disputes without guns, well, usually, anyhow), and guarantees of the safety of the money supply.
-E
Send mail here if you want to reach me.
There are countries where free market capitalism is not very efficient because either they have no effective government (Russia, Somalia), or because their government is corrupt (Kenya) or because their government is incompetent (Peru). Still, the majority of wealth in those countries is created by entrepeneurs practicing free market capitalism -- creating goods and/or services and selling them on a free market. This is difficult in countries that lack a stable money supply (Russia) or government support for private property (China), but it's interesting to note that China has no food shortages because private farmers produce more food than all collectives combined, despite controlling a quite small percentage of the land.
Remember, "capitalism" is not stock markets and such. It is the trading of goods and services in a free market, rather than the forced redistribution of goods and services by a government entity. Wherever there is a village market, there is capitalism.
-E
Send mail here if you want to reach me.
The United States has considerably lower tax rates than most European countries. As to how this creates larger tax revenues, investigate the Laffer Curve.
2) America spends more on its miltary than any other country in the world. What exactly does this contribute to free trade ?
What do military expenditures have to do with free trade??
3) American corporations are amongst some of the most monopalistic in the world. Is this the free market ?
Yes, it is. It is not illegal to hold persuasive market power in any industrialized nation, as long as legal means were used to obtain market power. At least the government doesn't force citizens to prop up big industry, like in Europe.
4) When forced to compete on a level playing field, US corporations fail dismally. E.g. the auto industry. You will not see ANYONE driving an Amercian car in Europe. Like most Amreicans, we would prefer a quality vehicle from BMW, Mercedez-Benz, Volkswagen, Seat, Skoda, Porshe, or even a Japanese made vehichle rather than the American low quality product.
Ha! You moron! Volvo and Saab and Jaguar are owned by American companies. Do some research! How many English automakers are still owned by the English?
5) Exploitation of resources and inefficiency. America leads the world in the destruction of the natural environment.
Wrong. China and even Canada are, on a per capita basis, more wasteful of resources.
This is a ridiculous generalization. How about nations that still use leaded fuel, like China? Leaded fuel is far more polluting that unleaded fuels used in industrialized nations.
As it stands, every environmental account will display quite clearly how air quality in the US has risen dramatically in the last twenty years with the advent of cleaner fuels - even cities like Los Angeles are dramatically less smoggy.
I'd say europe in general is 50-100 years ahead of the US in the ethical evolution of mankind.
Ha! What a crock of shit! Lets recount the burning of immigrant homes in Germany, or how about the inability of the major European powers to do a damn thing about the Balkan conflict? Time and time again Europeans have looked to the US to handle major humanitarian efforts. Europeans are inward looking protectionists who are more regularly xenophobic than any culture perhaps save the Japanese.
His book The protestant ethic and the spirit of capitalism traces the historical antecedents very clearly. Check out Chapter 2 (54k) in particular for an exposition of how maximising business profit became a devout obligation.
Ironically, now we anticipate the Flood (global warming) that is the direct consequence of this sequence of thoughts and behaviours.
You can never eat too much, only cycle too little.
The fact of the matter is that what most Americans want is "good enough" junk -- something of low quality, with known flaws, that is inexpensive and "good enough" to get the job done. This is one reason why American industry advances so much faster than, say, German industry. Whereas a German designer will sit there and fiddle and fiddle until the product is "perfect", the American will whip out something servicable, say "Next!", and move on to creating something else using the lessons learned from creating the first. The result is product which is clunky, kludgy, and is "good enough", but which is definitely not going to be held up as anything exempliary. See, e.g., the Intel x86 architecture, which shouts "Kludge!" from every trace on its silicon die.
-E
Send mail here if you want to reach me.
The American Historian Paul Kennedy estimates in one of his books that at some point , not too long after Colonialism began taking roots, China's share of the world trade was around 25% and India's 19%. British Colonialism disrupted the native Agrarian economies and turned what were once formerly prosperous societies into poverty-ridden countries. Comparing ancient civilisations with with 300-400 year old countries is absurd. The British created a class of people in whatever countries they colonised - be it India, Kenya, Sri Lanka , who were educated in English and more importantly anti-local and western in their attitudes. This was an evil stroke of genius on the British and continues bear fruit even today. But there is a slow realisation in some sections of even these westernised intelligentsia that any system that does not take into account local temperaments, history and culture will ultimately not work. The next stroke of evil genius was making Democracy, Human Rights by the post ww2 Anglo-American neo-colonial powers , as some kind of standard. You can always impose moral standards after you'are done with the colonial looting and systematic eradication of local populations and cultures. That little island in Western Europe has produced more criminals and committed more atrocities than any Nazi regime that ever existed. Because of the triumph of the anglo-american alliance in ww2 , their crimes have gone unpunished . But let it not be forgotten that no one will forget the evil deeds of those bastards and wheel of history will turn a full circle ...
The governmental system of taxing the creation of capital so that the possessors of capital may have less competition for their lofty positions in society and more money for their puppet politicians to spend as they are told.
"Marxism" on the other hand would have run something like:
Capitalism in which the puppet politicians, on behalf of the creators of capital, kill their owners, take their capital and try to occupy their lofty positions in society, only then to find it necessary to kill the creators of capital in order to conceal the fact that the politicans needed someone to pull their strings all along.
There is no real mystery to "capital" -- being simply accumulation of the fruits of labor and enterprise. The only mystery is why warriors, the protectors of such accumumulations, have never realized that they are actually in the insurance business, ignore the politicians, find the best police, soldiers and actuaries and go into business for themselves with something like Warriors Insurance where the wealthy pay insurance premiums for the protection their property rights enjoy from the military and police -- and are indemnified when the military and police fail in their protective duties.
Seastead this.
What do Do Soto's '5 mysteries' say about intellectual property and ecommerce?
1. The Mystery of Missing Information. Huge numbers of people live and work off the books: they have no clear title to their land and possessions, they pay no taxes, they have no credit. The unbridled sharing of the creative works of artists might fit here...
5. The Mystery of Legal Failure. In the Roman legal tradition, laws are not created, they are 'discovered'; the best laws are those that fit existing practice. It should surprise no one that RIAA is trying to kill the notion of unpaid music before it gains the patina of respectability.
You can look at it on a national or global scale, and I realize this is a bit of a new perspective of an ancient concept. It is hard to see without a second point of reference for comparison. To try to grok the concept of taking your mind out of it's secure mold, think of how the culture of what we call "Western Civilization" views other cultures who practice things like clitorectomies of young girls as absolutely barbaric and disgusting. However, after thinking about that concept, then reverse your viewpoint back on our culture and our extremely popular practice of circumcision of young boys. Illogical genital mutilation. And the funny thing is that we who have been circumcised had it done so early in life that we find our mutilated penises normal, and tend to view an uncircumcised penis as abnormal and somewhat disgusting.
Now that I have tried to set the stage for this, consider the following:
It is exactly slavery, maybe even worse, as you aren't even officially Sold, you are never even told you are a slave, most never even begin to realize a hint of it their entire life - it is what you have accepted as secure and 'normal'. You a born into a situation that is very hard to realize due to the lack of perspective of being able to take a look at the monstrous trap 99% of the people are caught in.
I was not meaning to purely prove a point of wage iniquity, but instead to show how the 1% are the slave drivers. Sure, a lot of us in the computer profession are freer and have more liberties than the the average joe trapped in a factory all his life. But that simply makes us nerds favored slaves, nothing more. My point was not about wages, but instead to point out the obviousness of something so hard to realize due to never seeing our global culturism from outside our culture. If you were born with only one eye, you would never be able to fully grasp the concept of depth perception. In fact you would never even think about it unless a two-eye told you about it. And then you might not believe the amount of extra information to be gleaned from two nearly identical images taken merely 2.5 inches apart. If everyone had slugs for hair, nobody would think it was weird.
I do not think this cheapens the word "slavery", instead it deepens and clarifies the meaning. Please don't tell me the only way you can be a slave is by being bought and sold on the public auction block.
Just wonder what it is that you cannot fully see or even notice. I'm sure I only have the slightest inkling of what I am attempting to describe (Maybe why this is coming out a bit vague)
I will end with this statement, and have faith that you can interpolate how it applies to what I have been trying to descibe: Does a fish complain about humidity?
You hit the nail on the head. Capitalism is a joke of a system. It's a joke because it uses money/currency. Why's that? When you use a currency you are forced to set prices on goods and services and that means success is measured by profit only. In reality capitalism is zero-sum, a pyramid scheme (albeit huge and global), no matter what "they" say about "expanding markets". Hey, why can't we do suppy-and-demand better? We've got massive computer networks already. Let's just figure out how an electronic barter system would work, ferchrissake! You don't believe me? Here's an example: If a crucial base resource dwindles over time in supply, the "free market" would demand that its price rise, right? All right then, what about crude oil? If you adjust for inflation, crude oil has FALLEN in price over the last century. (If we really measured supply and not just availability, oil would cost $1000's per barrel.) This is the prime reason capitalism is a lie: it cannot survive without seriously (perpetually) undervalued base resources, both material and human. Without an ultra-cheap base, there can be no value-added stack, no "Economy" built, no pyramid of profits, since any increases in base resource prices would be passed up the value-adding chain, thus setting off shockwaves of destructive inflation. At some point the value-adders can't make their price points and the system collapses. Hence, we're forced to pull every trick in the book to keep base resources cheap and plentiful--at any cost!! Hello! Anybody home?!! That kind of bs can't go on forever! Sorry Friedman, Simon, there is no comeback to my argument. (BTW, how come I'm the only one who's figured this out?)
--- WWSD? What Would Strider Do?
My theory is that it is ethics that makes a difference. I am talking about the kind of ethics where is you see someone drop his or her wallet, you chase after that person to return it.
Certainly during its founding, and indeed for quite large parts of its history, the USA enjoyed a comparitively high degree of ethical standards from its population.
Ethics in the general population is important. It is what stops new businesses going under because the Mafia steps in. It is what creates the kinds of laws that this chap is talking about. It is what causes the degree of trust that is required to conduct business transactions in an easy manner.
It seems to me that if one looks at the various nations, that there is a high degree of correlation between the economic strength, and the general level of ethics.
"- credit creation - the unbundling of the currency from any tangible asset such as the gold standard".
I agree with the rest but this doesn't make sense.
The first problem with credit creation is that here is a constant risk that governments will print money and use inflation to pay off their debts or to finance unsustainable expenditures.
We saw this in the 1970s and in the 1920s. The cost of the uncertainty this creates is enormous - see how even the slightest sign of inflation 'spooks' financial markets.
The second problem is incompetent management of the money supply. This was the actual cause of the great depression. They went off the gold standard and congratulated themselves how clever they were creating the unsustainable 1920s boom by printing money. Eventually the party ended and the stock market crashed. During the next year or so, the money supply fell by 60%. If you do that, you will cause a depression. This is all documented at length in Milton Friedman's book on the monetary history of the US.
Governments have mostly learned how to manage money supply so this problem rarely occurs these days.
People often assume that the 1930s depresssion was a product of free markets, when in reality it was due to incompetent management of regulated money supplies by newbies who didn't know what they were doing.
While the gold standard was in place there were booms and busts, but the busts were usually short lived and the rate of economic growth was far higher than it is now. When you graph the stock market before and after going off the gold standard, there is a knee in the curve - growth is much slower afterwards.
One comment on the book - it makes the very good point that secure title to property is key to economic growth. Having visited a number of third world countries I can confirm this is a huge issue. But it is just a part of the wider problem of the rule of law. When every government decision is dictated by 'connections' or bribes, and when it is impossible to compete with those who have the right connections due to government harrassment, you end up with inefficient entrenched monopolies.
Ghandi saw this problem; in fact his first big protest in India was against a government-mandated monopoly in the production of salt.
The USA is not immune from these problems. Look at the actions of the recording industry to extend their control over consumers and to extent the reach and duration of copyright. The fact that you need tens of millions of dollars to get into congress delivers a system that gives those who are already wealthy and organised what they want.
The USA was very slow to crack down on tobacco companies for this reason. Other countries took effective action a long time ago.
I often wonder whether those in authority really want to stop the illegal drug trade. The economist had a graph recently that showed that heroin prices have been in almost constant decline for 15 years. "The way on drugs is going well and we will succeed". Right, like you won the war in Vietnam.
Your looking at it as a zero-sum-gain situation. If that was the case, then there would be no advantage to have seperate wheat farmers and bakers since none of them add an real value. Since we learned to have seperate farmers and bakers, we have produce more since the farmer can optimize farming without also spending time to feed him self and the baker can produce food for many other people letting them work on other things. Maybe you should go read the first chapter on an economics book some time.
The explotation you describe just makes some level of the exchange look better for some people but is not required.
But, a large majority of the 1% are born into huge inheritances, never having to work to have what they have, any more than the other 99% have had to work to become poor.
Actually, I don't believe that 1% is the right number - the real super rich are a much smaller percentage. But that is not the point.
The only way it is acceptable to have a 1% of a society live by simply milking the efforts of the rest of the 99% is in a slavery model.
There are many socio-economic models that give rise to this sort of wealth distribution. Just because you don't like the distribution we have (and I think it is a problem too) doesn't mean that it is slavery. Slavery carries many other attributes besides economic disparity.
MOVE 'ZIG'.
I never plan on reading any "economics" textbook, because then I'd start believing that the naked emperor was indeed clothed in the "finest silks". Like you, I'd begin confusing supply and demand with this or that supply and demand accounting methodologies (so far we've only seen bullshit communism and full-of-shit capitalism). Nobody seems to be able to separate supply and demand from capitalism. Capitalism uses money to proxy value, to "account", whereas a pure supply and demand system would not. Capitalism is a crock of shit because it believes the convenience of a currency outweighs all the bad side effects. Like I said, when supply and demand is measured by profit only, a whole raft of bad things comes along like vibration in a poorly designed machine. Because we use money, we assign prices. Because everything has a price, you are forced to use profit as your only measurement of commercial success. Again, look at oil: we cannot function without cheap oil. If the price began to rise (reflecting its dwindling supply), inflation would travel up the value-adding stack and eventually destroy it, since no one could make their profits! This means without eternally cheap oil (and other base resources), the capitalist system collapses! This is not rocket science. And if you think about it, you can see that it's only because we use money that this happens. Economics textbooks don't talk reality like this, that's why I don't read them! Why not use networks to measure the success of supply and demand directly? Profit is a very stupid way to measure success. Sure it works a little bit, enough to beat communism. But who ever said communism wasn't also a crock? Capitalism is better than communism like an old man with lung cancer is better than an old woman with breast cancer. Try to imagine fabulous supply and demand--better than even "free market" supply and demand--BUT WITHOUT USING STUPID MONEY!!! Pull your heads out of the "economics" textbooks, and just start thinking about how things are, and how absurd inflation, debt, and profit really are. They only exist because we use currencies. They have nothing to do with economic health or diversity.
--- WWSD? What Would Strider Do?
SubtleNuance is a troll; his handle itself is an ironic statement on his posting style.
He isn't trying to be part of a rational discussion. He's a troll. Don not feed the trolls.
and this is obviously a problem that isn't going away. i predict all americans are going to start driving around 40 year old vans.
jesus christ man, it's pretty fucking clear to me that new cars will gradually replace old cars. it's not a super-complex concept, and you can see it happening throughout the history on cars, and just about everything else for that matter.
De Soto's book is the kind of hack work developed when an author begins learning a subject with preconceived notions that will not be disturbed by facts; the very idea that capitalism has failed in the "non-West" is, to all current historical accounts, unreconstructed Westerncentrism. If one is going to read a history of the development of capitalism at a global level, read something that hasn't been completely discredited academically. Try, for starters, Andre Gunder-Frank's Re-Orient, which is a sort of synthesis of recent revisions of world-systems analysis..
De Soto's book reeks of modernization/neoliberal theory, which provides a program of development for countries along lines often articulated and enforced by the IMF and World Trade Organization. Liberalize your economies (sacrifice national properties to the free market), reduce public expenditures (end welfare programs for the poor, reduce or eliminate low-cost educational access, don't have any redistributive tax economies), and welcome foreign direct investment even at the expense of people's welfare (sweatshops) or environmental restrictions. Many corporations, for example, are able to meet US environmental standards by paying poor nations to take their waste.
Modernization theory and neoliberalism has been criticized for ignoring some fundamental facts, one of them being that the "ideal" of capitalist development, the West, was realized through colonialism and neocolonialism. Until the sizties, most of the nations considered ideal capitalist nations profited while colonies paid the costs, through slavery and low-wage labor. That's why De Soto's argument sounds like crap to me without even reading the book. Discussing the success of Western capitalism in some sort of historical vacuum, without considering histories of colonialism and neocolonialism (the prevalent model the WTO endorses), is racist, factually undermined, and extremely myopic.
It's inexcusable, then, to discuss the failure of capitalism in the non-West as if it's a matter of national or cultural values. Additionally, it is wrong because there IS successful capitalism in the east. Capitalism relies upon massive inequalities to work: there can not be wealth without poverty. Someone has to pay a disproportionate share of the costs if others have a disproportionate share of the wealth, of capital.
I have a few suggestions of more accurate story-telling of capitalism for anyone who cares. First of all, read Marx's Capital. You don't have to be a Marxist to appreciate its insights. Weber is interesting, although he falls into the trap of believing that some sort of unique cultural value led to capitalism, an extremely Eurocentric and historically inaccurate perspective. Wallerstein's book Historical Capitalism is an interesting (although flawed) analysis. Ernest Mandel's Late Capitalism explains the concept of "late capitalism", something supposedly different from the first species. But I do suggest Frank's Re-Orient as a starter, because it lays down strong empirical evidence that European hegemony on the capitalist world is a short period in the history of world markets, and that Asian nations are emerging as central to global capitalism again.
It really helps when you have millions of poor mexicans crossing the border willing to clean for $5/hr.
Drag n' Drop DVD Recommendations
OK, your observations are spot on and the Austrian economists are quite vociferous in blaming the government for mismanaging the money supply (probably a good example of bad agency with near-zero feedback). The point is somewhat subtle and highly political but the essense is that ultimately a currency has to be tied to some benchmark so that people can have a consistent framework for evaluating prices and making economic decisions. The gold standard worked IMHO because it was a proxy for the cost of energy which tracked technological productivity through the ages as it shifted through human muscle, domestication of animals, steam engine mining, petrochemical extraction (TNT blasting -> modern extractive techniques). Productivity (leisure theory of money, etc) is what drives the creation of wealth. Societies like Columbian Spain and Dynastic China got royally screwed when they imported monetary assets (Inca gold, Opium Silver) without any real intrinsic increase in productivity (and you could probably add the current IT overhang to the list after future historicans study this decade). However, for political reasons gold was not a good political choice as the ultimate national backing as the major sources of gold production is South Africa and Russia. So whether you were left-wing or right wing, half of your currency was "unreliable" as those governments could influence production.
...
Shifting to a fiat form of currency has caused incredible disruptions, there's no doubt that the abandonment of the bond between industrial productivity and social cohesion has caused incredible stress (witness the failure of the lower class unskilled manual labor esp blacks to gain social mobility). As the result the "market" or collective desire for society to have social stability is currently seeking another anchor. In effect, this has implicity recognised (or encouraged the shift to) recognising that information is the key economic driver rather than energy. When we apply our mental talents to unlocking energy sources in nuclear rather than chemical levels, manipulating light rather than electronics, or the quantum world of micro/nanostructures, the the use of a gold standard becomes a hinderance. The failure of the accounting system is that it cannot measure human capital, the intellectual and innovative drive of individuals to create a better life. In fact, if you look closely, you'd probably find that the very measures that governments suggest (e.g. recent Australia attempt to fund "Innovation" is just as likely to succed as Singapore's 5-year plan to establish "creative arts") are counterproductive as the taxes (or forced savings) crowd out private investments or creative activities. With the (admittedly somewhat haphazardous) deregulation of the financial markets, individuals can create their own securities (witness the spontaneous formation of the RueoDollar market despite the best wishes of the NY/Wash financial-politcal complex). As a result, the private venture capital industry, from sheer defensive need to protect their capital formation from tax erosion and reserve bank inflation have evolved techniques and mechanisms to survive in a highly variable and changing environment. As more groups enter the Internet, these third parties will slowly be recognised in their own right as an independent fiscal authority (which is indirectly threatening to certain national sovereignty). If you like I can email you some links on this.
Again as the above this is just my own imperfect understanding as to some of the structural elements of the world economic systems. As a layperson and not a trained economists, I cannot back up my observations with equations or mathematical formulations but if my observations of behaviour and fitting in of reported "facts" fit my mental model of the world, then it is all I can go on. The gold standard has its use and is still a useful proxy for energy, especially in highly developed courtries like Australia/Canada where it is a reflection of the current tech in energy extraction (uses many of the same extractive processes) but IMHO, the case can be made thatthe source of economic power has shifted decisively towards information (+ higher derivations) and is reflected in new instruments such as social policy bonds, environmental indicators (emerging markets for fresh water), etc
It will be an interesting century.
LL
Maybe they're trying to revive SDI simply to try and defend the US against nuclear missle attack?
If you look at the approaches advocated for computer security by people like Bruce Schneier, they seem to advocate that you have to look not just at the potential flaws in the software, but at a myriad potential weaknesses such as social attacks on the administrative structures supporting the system. I think you have to take a similar approach when you are looking at military defense.
In the 80's, SDI addressed a real intercontinental ballistic missile threat from the Soviet Union and forced that state to bankrupt itself in trying to match the US' SDI effort. It broke the Soviet Union when the CIA, NATO military power, and Afghanistan had failed because it forced them to play the game that capitalist democracies are best at.
Which states currently have inter-continental ballistic missile capability? Which are likely to develop it in the next few years? Which is the higher risk to US cities and the civilian population, one of those states deciding to take on the US, or some terrorist organization stealing (buying) a nuke from Russia or the Ukraine and smuggling it into a major US city? Right now, and for the near future, the latter is the case.
Look at how little money has been spent helping the former Soviet states develop the institutions necessary for a stable capitalist democracy. Which is the smarter way to keep the US safe, help Russia clean up its act and become a major trading partner who sees more advantages in trading than warfare, or spending billions on a missile defense system which may not be addressing the real weaknesses in the US' defenses? The former approach does potentially build your future economic competition, as the Marshall plan did with Japan and Germany; but the peace that resulted is a lot more stable than the results of WWI, where reparation payments set the stage for the rise of fascism and where the Maginot line didn't do much to stop the Germans who blitzkrieg'ed through Belgium. Is SDI the US' version of the Maginot line? Does it really best address the most likely future threats to US security, or is it a make work project for defense contractors with little chance of civilian economic benefits?
China is probably one of the biggest threats to North American security these days. Although Western governments continue trade with China in spite of their poor (though improving) human rights record mainly because they see a huge potential market, it also has the beneficial side effect of making the Chinese leadership understand that they have more to gain from continued trade than from potential gains through warfare. It's why Western democracies have mostly abstained fighting with eachother since WWII; the inter-dependent economies have much more to lose from reduced trade than any potential gain from military conquest.
I believe that you need a reasonably sized and well funded military to protect yourself from aggression. However it is far from clear to me that SDI offers a judicious use of funds for that military.
Laissez lire, et laissez danser; ces deux amusements ne feront jamais de mal au monde. - Voltaire
Japan (& Sth Korea) have a command economy that pretends to be capitalist. Even the big business cartels (7 control 95% of Japan's private economy) don't compete with each other. For example both NEC & Nissan belong to the same cartel (I think they are called Kuyetzu or something like that), consequently Nissan only use NEC computers & NEC only use Nissan cars. Really the whole economy is controlled by the bureaucrats of the industry ministry. For example they were the ones who literally ordered Japan's corporate would to get into electronics 40 years ago. & the systems works too. Just compare how Japan has developed from being a bombed out wreck 50 years ago to the economic powerhouse today (compared with how much the US has improved over the last 50 years). Sure there's been a bit of a recession in Japan in the 90's but that's relatively just a blip compared with how they were at the end of the war.
I got really excited when I read that book. I gave my copy to Mark S. Miller, hoping it would excite him in the same way.
The author is thinking about changing the world through public policy initiatives, education of officials, and so forth. I'm thinking of changing the world by giving disenfranchised entrepeneurs powerful tools to link them together and to turn their resources into capital
Regards,
Zooko
Communism confiscates all property and enslaves everybody. Capitalism gives property to a few and enslaves the rest. It's sad.
The former failed because there is no incentive for the slaves and they become lazy and uncreative. The latter seems to work because the slaves are motivated but it will only last so long because it too, is a slave system.
Intellectual property laws exist only because capitalism is a slavery system. Our livelihood depends on working for others so we can pay our taxes. The reason that we have to work for others is that 99% of people have been deprived of an inheritance in the land. Income property is owned by a few and the government. The others are slaves. Artists and inventors depend on their work to make a living. Can we blame them? With the exception of a few, we all do because we are all slaves and we are all disenfranchised. So now we are swimming in an ocean of laws and rules that take away our remaining liberties, one by one.
The internet and other communication technologies are the first major kinks in the armor of a sick system. As technology progresses, it will eventually die a horrible death. What will happen to a slave-based economy when robots replace everybody, i. e., when human labor, knowledge and expertise become worthless?
We should all demand a truly free system where everybody is guaranteed income property, a piece of the pie. This way we can all compete and cooperate on an equal footing. No welfare, no exploitation, no herding of billions of people into big cities that pollute and destroy the earth. Just freedom.
There is plenty for everybody. This is not a handout from the government because the land has existed for billions of years before any human government appear on earth. Their job is to make sure that everybody gets a fair piece. What we do with our inheritance after that is up to us and our descendants.
The land should not be divided for a price. It should be an inheritance for us and our children and their children.
Demand liberty! Nothing less.
The one thing I notice in the US, and in silicon valley in particular, is that swarms of mexicans are employed to do menial tasks, many of which could be done mechanically, or would be deemed easily not worth the cost if it was any higher. I don't think the situation is created by the mexicans - it's not like they're dying to work for $5/hr, but by a minimum wage which makes it cheap enough to have 5 people attend to me at my hotel check in.
Drag n' Drop DVD Recommendations
Maybe you should go read one of those books.
Most transactions are not 1 to 1. Money fixes that problem. If you grow grain and you want bred, you can trade with a baker for bread. Fair and cash free transaction where you both gain. Now extend that a bit more. How about a new plow? You have grain but the plow maker has no use for grain, he wants bread so will he take your grain in trade for the plow and then trade the grain for bread? now he has to be able to haul around grain. This is why money was invented.
Debt is something that lets people maintain their trading balance through hard times. If you farm you would know this but I expect you've never even seen a farm. Some years the crops just don't happen. Go back 50 or 100 to 300 years and things were much worse than the risks today of bad crops. Debt allows people to continue to obtain the things they need when their source of income dries up.
Debt is something that has allowed the industrial revolution to happen. Up until the late 1800's, Christians in most of Europe were not allowed to go into debt and the only bankers were Jewish. This resulted in the Jewish community ending up with a much more stable economic situation as europe destoryed its self through war and was one of the leading causes of the bad will towards Jews that was widespread in before WW2.
1 Pound Sterling use to be the same as one pound of sterling silver, hence its name.
Actually once hours worked per year are factored in (GDP per person, per hour worked) the US has lower figures that Western Europe, Australia & New Zealand.
Remember in Europe & Oz etc most people have a 35 or 38 hour week. Plus they get at least one or 2 flex days off a month, & more than double the public holidays & sick days too. Plus for example here in Oz we all get 4 weeks paid annual leave (with leave loading of 17.5% which means one can add a week of sickies to our annual leave with any financial penalty, plus shift workers get an extra week plus every day worked on a public holiday one gets triple time & another day tacked onto the paid anual leave) & every 5 years with the same employer one gets either 2 months or 3 months paid long service leave (it depends whether one is on a state or federal 'award'). & in most of Western Europe people get 6 weeks paid anual leave.
The simple fact is that Americans have the worse working conditions in the western world
Also all us Europeans & Aussies also get virtually free cradle to grave healthcare & education.
FYI, in Chinese politics, the "Leftists" are referred to as "conservative" while "Rightists" (like Deng Xiaoping in the 70s) are considered "liberal". The "conservatism" refers to preserving the Maoist status-quo against the ravages of reform-minded Capitalist-Roaders like Deng...
--jrd
XML is like violence. If it doesn't solve your problem, you're not using enough of it. --AC
But, a large majority of the 1% are born into huge inheritances, never having to work to have what they have, any more than the other 99% have had to work to become poor. ... 99% of the 1% contribute NOTHING to society, just take from the others like overgrown playground bullies.
By investing, rich people can actually create wealth. Now some of that wealth goes back to them (NASDAQ goes up), some of it goes back to workers (jobs and better paying jobs), and some of it goes to consumers (faster computers, cheap televisions, microwave ovens, etc.)
It isn't fair that some people can choose to never have to work. But the truth is that human greed, inflation, and taxes tend to make even the richest do some "work" (careful investment) to create wealth for all kinds of people besides themselves.
You seem to be mixing up socialism & stalinism.
All the nations of western Europe are socialist democracies, yet by many factors are actually free-er than the US.
You have to remember the US has:-
- the highest incarceration rates in the world
- the highest policing rates in the world
- the highest rate of police shootings in the world.
- the most extreme forfeiture & conspiracy laws in the world (where all that is needed is the uncorrobarated testimony of a paid snitch, bit like stalinist Russia in that regard)
- the highest military expenditure rates in the world (spending at least 10 times more than the country that comes next in that regard)
- & as a percentage of GNP, spends at least 3 times more on military expenditure than any other OECD nation 7 miltary spending per capita is at about the same rate.
Actually the fastest growing industry in the US is the building of jails - did you know that if imprisonment rates keep increasing in the US as they have over the last 10 years then by the year 2030 every single American will either be incarcerated or empoloyed in a jail.
I never said that fractional reserve banking doesn't require the use of debt. What I said was that money is not debt. -jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
The always reliable Arts and Letters Daily links to an interview with de Soto, a review and extract in the NYT and reviews here and here.
There are also downsides to having the state supply food and housing, which vary depending on how you administer such a scheme, and generally reflect the fact that it would have to be funded from tax receipts.
If the state owns and administers housing stock on behalf of those who would otherwise be homeless, there would be a lack of ownership and care over the houses. The government would not want to pay for nice houses or maintanenace, and the tenants, not owning the capital, would not want to either. This is, in fact, what happens in Britain. Similarly for food. If people go and collect their rations every day with no control over the contents, you are not going to get haute cuisine.
On the other hand, if the state merely agrees to fund individual choices as to where they want to live or what they want to eat, a price limit would have to be agreed. This is essentially like the voucher system used in some places for paying for education. It would work OK, except that the "best" providers of food and housing would price themselves out of the scheme, by refusing to accept voucers at all (stores in Britain do this to assylum seekers who are given tokens in place of cash, and do stores in the US with food stamps), or by raising their prices above what can be payed for with them. The value in many goods comes only from their exclusiveness, and anyway in many cases supply is limited and prices must be raises if demand rises.
So, do away with vouchers and just give people the cash. This is actually pretty close to being a basic income gaurantee - something I think is quite a good idea. The issues then are twofold. Firstly the redistributive nature of the scheme is now clear. Food and housing don't appear from nowhere after all - you're taking resources from one person and giving them to another. Secondly, do you mind that people may not spend their money on what you wanted to give them ? are you going to stop them from investing it in the stock market, losing it, and then having to beg ?
It pointed nowhere, so I posted a corrected version. It got changed, later, after enough people pointed this out.
Property laws are nice, but assuming all your success comes from internal causes is essentialist and circular and pretty short-sighted. The West's ability to leverage its temporarily superior armaments and logistics technology to pillage Africa and Asia for human capital and raw materials undoubtedly enriched one side while weakening the other. The imposition today of a structured system of foreign intervention, subsidies, and sanctions that many interpret as a "free" market perpetuates the West's advantage. People used to make no apologies about this sort of thing and call it "mercantilism" but now we get these complicated books trying to pretend it all happened through good old-fashioned Protestant work ethic and responsibility? The success of capital-based systems in some of the richer Asian countries shows that you don't necessarily require Protestants, property rights and democratically ansewrrable organizations... sometimes a big army will do just as well (PRC).
Da Blog
- World pop in 1500 =
.5 B
- 1800 = 1 B (doubling took 300 years)
- 1940 = 2 B (doubling took 140 years)
- 1960 = 3 B
- 2000 = 6 B (doubling took 40 years
Rate is exponential, and increasing, over a large enough interval. Even the graph you refer to expects the world pop to reach 11 B by 2200.The only problem is, whether the rate is increasing or not, it is undeniable that world population is increasing. Our nasty Western habits of meat eating increases our ecological footprint significantly, as it takes about 20 pounds of corn to produce 1 pound of beef. IF the world switches to a vegitarian diet soon (yeah, right), then it might be possible to support that many people. Otherwise, it's gonna get real ugly.
Also, if the estimates at Jay Hanson's site are correct, guess what happens when you combine a rising pop, and a rising demand for energy, with decreasing rates of returns on fossil fuels? Sure, there will be wars and suffering in the Mid East fighting over oil, but in the long run, it will be for naught. When the oil, gas, and coal run out, suddenly, people will resort to cutting trees for fuel at rates that will make the present destruction of the rain forests look miniscule. When the trees are gone, so will follow the climate.