I never had chance to follow this up before Covid hit.
What I was alluding to is that, in the modern world, money is largely an illusion - it pops into existence when banks lend money, disappears again when the debit is paid and governments can also just conjure it up out of thin air - something which as @Geof_Cox points out frequently means that money for public services can easily be found, there is no need for “austerity” and tax does not do what you think it does. National economies did not need to be run like household budgets even in Thatchers day and do so even less today.
I thought I’d have to spend quite some time explaining this - difficult as I’m not an economist and, besides, Geof does it better but I have discovered I don’t have to.
Geof is probably familiar with this work, I’ve just started and it is clear it is going to boost my understanding of (what I think to be) Geof’s position. So far I would 100% recommend it, even though it is 10 chapters Richard Murphy has a relatively easy going style.
You might need this primer on Modern Monetary Theory
The only question left, of course is - if money is so fluid and easy to create, why can’t I dream up a better bank balance?
What are currencies secured against these days? It hasn’t been gold for decades.
Could it be a load of theoretical numbers in a spreadsheet somewhere and if so, how does that make the £/€/$ any different from the various cryptocurrencies?
The crypto industry would have you believe that there wasn’t any difference , the crypto was just as secure and resiliant as a money in a national bank.
It’s bollocks, in some shape or form national governments in the UK, US and other nations with their own currency will not just disappear, nor will their central banks.
Cryptocurrencies are (this is an oversimplification) overcomplex Ponzi schemes - the value in the currency being only from the traditional currencies used to by the crypto. Except that even in a Ponzi scheme there is a half chance of getting some of your money out - in a crypto crash the “haircut” is normally 100%
Thanks for the link, but I noticed the absence of one cri/tical word in the author’s list of government shortcomings and essentials - ‘empathy’. I’m sure it was implied, or even implicit, but it was never formally .stated.
As a follow-up to empathy, I’m inclined to point to a potential tension between no longer earning retirées who are living on index-linked (TF that’s me) or fixed pensions and/or savings, and working people whose salaries are not keeping up with the cost of living (terrible term - must one pay to live!).
If one’s a childless baby boomer (much vilified these days) one may only learn about Generation X/Y/Zs’ difficulties through liberal news media and of course it’s harder to deeply empathise than if one has offspring.
I have always thought money was a credit voucher that could be exchanged for what you had earnt for carrying out some effort (work ) i.e. force x distance. Every purchase I have made was considered on how much work credits I have, Keeping it simple how long did I work or have to work to buy that
If indeed the illusory aspect can be proven, then surely that very illusion becomes shattered when along comes another person who happens to want some of the monetary units that exist in the particular illusory circle in which I happen to circulate. I might for example have a huge pile of Roubles, but if nobody wants them then they are worth nothing. On the other hand I may have a fistful of $ that a lot of other people want, and therefore I can drive a hard bargain as to what I might obtain in exchange for them, and that particular barter is in fact very real and thus not illusory at all.
So we have a situation where something tangible can be obtained in exchange for something alleged to be illusory, so surely one has to come to the conclusion based upon the old adage that you can’t get something for nothing, that the illusory concept has therefore been shattered.
I don’t know either of these texts Billy, but I have been a regular reader of Richard Murphy’s blogs so probably have read some of the content there. In the Foreword I was struck by this:
What I do is applied political economy, and not economic theory. In applied political economy, unlike economics, there is no assumption that there is an ideal form of economy. Market fundamentalists and hardcore socialists will, in that case, be disappointed by my approach. I believe in the private sector, whilst recognising that it is riddled with faults. I also think government is a fantastic tool for delivering many of the things that we need.
This is very close to my own views:
The idea that economics can be a ‘hard’ science like physics is misconceived - the mathematical modellers that dominate US economics.in particular. are all wrong - indeed as the great Cambridge economist Ha Joon Chang has argued, their ‘economics’ is not even an academic discipline, because it’s fundamental assumptions are indefensible.
Instead, economics is really a branch of history, using mainly the research and analysis methodologies of that discipline to reach the truth of what actually happens in real, past or existing economies. This is what both Murphy and Chang call ‘political economy’, and it is what Adam Smith and Karl Marx wrote.
I also look at economic and social organisation dispassionately - whether a public service or market solution is best is not a matter of any a priori assumptions. but analysis of which works best in practice. Different activities need different approaches - I don’t think a community centre is necessarily best run by the local council, but I think building control certainly is.
Having said that, I have gradually moved towards favouring much more state intervention - simply because there is no market mechanism that will curtail disaster that is years, decades or centuries in the making. I have been challenging apologists for capitalism on this for years, and never received an answer. I still believe in the creativity and dynamism of small businesses embedded in their local communities - but that the whole overblown edifice of huge multinational corporations needs fundamental change
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Although it is true that Engles supported him for at least part of his lifgetime it is emphatically not true that Marx “[never did] a day’s work in his entire life”.
And what of it if he didn’t? The same is true of many academics, must a man’s value to society be measured solely in how many literal spadefuls of shit he can move at the behest of his employer?
That’s us to a tee. We also have a large extended family with many close relations of all ‘Generations’, including two new born within the last 3 months. That gives you a real perspective on how hard it can be for people of all ages. My immediate family ranges in age from 2 months to 95 years. And the 95 year old still works two mornings per week in a local shop.
Anybody that has actually read Marx will laugh at the idea that he ‘didn’t do a day’s work in his entire life’. He was, in fact, one of the hardest workers I’ve ever come across - synthesising vast tracts of historical economic data into easily the most comprehensive understanding of economic history anybody has achieved.
There’s an old ‘joke’ among people that have actually read Marx that goes something like:
What ignorant people think Marx’s writing is like: ‘Down with capitalism! What about the workers?’
What Marx is really like: ‘For the next 250 pages I’m going to analyse the movement of world cotton prices over the last 35 years.’
Exaggerated - but in essence accurate.
Nor is it true, incidentally, that he didn’t support his family through his journalism - for much of his life he did. Thankfully, Engels (and a few others) recognised the importance of the research and writing Marx was doing later in his life - which required many years of unpaid work - and supported him - as, indeed, many great writers, artists, scientists, etc, throughout history have been financially supported by others that have recognised genius.
Whilst I realise money is an essential part of today’s world I hate it with a passion so if the perception of it’s importance could be altered I’d be very happy.
Several members of my close family are absolutely obsessed with the accumulation of money and the loss of a couple of pounds for whatever reason often results in a sense of despair or anguish.
I think if he’d shovelled cow dung his entire life rather than postulating an ideology that’s been responsible for the deaths of tens of millions, he might have been of more benefit to mankind.
This discussion is way above my head but still interesting to read however your comment did make me think, was the 20th century a success or failure in leading us to where we are today and is it all due to Mr Marx?
I see the world very much through my children’s eyes - especially now that my eldest daughter is buying a home in the UK, while the younger 3 are here in France. It’s a much tougher world for all of them than it was for me growing up in the 60s and 70s - even though my childhood was materially ‘disadvantaged’ - but it’s even tougher in the UK than in France, given the madness of the property market, civil service breakdown - health service breakdown - etc, etc…
