I see, so the old “either you are with capitalism or you think people are evil and doomed” binary. How convenient. What if there is a third way, option C, where capitalism was a useful stepping stone but not the end game? As books like Survival of the Friendliest show, capitalism has little to do with human nature. Those arguments have been ended by others, and we need not rehash them here.
"The Ministry for the Future" is an important book, anyone up for a discussion on it in a few weeks?
I am sorry you are being so dismissive of me and my opinions. People are inclined to say that “the books that confirm my opinions confirm the truth”. That is not necessarily the case.
Capitalism as a system is of course recent. The point is that private property is built into humans. The things that one uses are “mine”, not “yours” – every child fiercely defends this distinction. In hunter-gatherer societies private property was at a minimum, but land was never owned because it was always temporary. When agricultural societies came along, 10-12,000 years ago, land was “in common”; in practice it was at the direction of community leader(s). As cities developed, the need for finance increased. First, merchants provided finance to leaders for wars and other projects, then financiers. Financiers were hated for various reasons, in part because they showed that leaders were incapable of financing their own wars, in part because they had the temerity to want their money back with interest, in part because, in medieval Europe at least, they were often Jews, because Christians were forbidden to lend money at interest, and of course no one would lend money for mothing.
That said, we still need capital for projects (and wars). This is what capitalism does. We don’t like capitalists for some of the reasons enumerated above, but they are the ones who allocate capital. To design a society or an economy without capitalists, we would have to replace those people.
It is of course possible to set up a bank to fund projects instead of capitalists. But this would have to be done very very carefully. Any political influence, for example – put aside the moral question, because this is not about corruption or lack of it – would mean that the allocation of capital would be inefficient – it means that what would be funded would be projects that friends of the bank administrators, or maybe they would be people who were initiating projects that were in accordance with goals that the administrators liked. This is a recipe for how to lose the capital of the bank. To return to corruption, the biggest problem with corruption is NOT moral – it is that it distorts capital flows so much that the bank loses money and eventually goes bankrupt.
China is a great example. The allocation of capital in that country has been to preferred recipients and to preferred projects. This has led to a disastrous situation for finance in China. Xi Jinping has noticed and is trying to correct it, but it may be too late. Yes, it has created fortunes, but the problem is NOT too much capitalism – it is too LITTLE.
Market economics is about ensuring an efficient flow of money to profitable projects. It is always flawed, because all markets partake of market failures such as pollution and other harms to people – we call these “externalities” and agree that the external cost of such harms needs to be factored into the price of the product. That said, the base insight of Adam Smith is still valid: people buy (or rent – “acquire access to”) products because they think doing so will make them happier. Each person determines their own needs, and we only mess with those choices if the negative effects of supplying those needs outweighs the value of indulging in them. Illegal drugs and child pornography and such are banned because they violate that rule.
This very literally means that, IF you observe rules around protecting people from negative effects by charging for them, and also IF you prevent or regulate monopolies (big "if"s) then any company that is more profitable must by definition be helping more people find happiness.
So then your capitalists, or your allocators of capital, should be people who are NOT thinking up what THEY BELIEVE will be good for the population; they should be people who fund the most profitable companies within these constraints, and they should let the police deal with folks whose desires fall outside of what is socially useful. Because this is the BEST way we know of to ensure that people’s OWN definition of what is good is what they are allowed to follow, instead of someone ELSE’s determination of what their well-being SHOULD be (mostly).
Now in modern times we have rising inequality, and this is not good. It means that a large and increasing part of the population does not have access to capital, so they cannot go to college, cannot start a business – they don’t go to decent schools, they don’t have decent health care.
Now schools and health care exhibit what economists call “positive” externalities – they more or less pay for themselves by the well-being they create. So the idea that these should be private goods does not make sense. Even in the US, that seeming bastion of laissez faire capitalism, we have government-financed K-12 education, and substantially subsidized higher ed, and (shshsh – this is a secret) the MAJORITY of health care in this country is paid for by the government. Probably it would make sense, from the point of view of purely technical measures of well-being and the financial benefits thereof, to increase these.
The fact that Jeff Bezos has wealth of over $200 billion is not a function of greed. He started a company which is very beneficial to the population, and its profit level shows this. That said, this figure has been hugely inflated by the Federal Reserve’s stimulus to the US economy – that stimulus has created a ton of money, which instead of inflating the value of goods and services has inflated the value of assets – stocks & bonds, real estate, etc. Not good. The stimulus checks that put money into every taxpayer’s hands were more beneficial. Unfortunately this was paid for with government debt. The Fed’s stimulus was created from nothing. I’m beginning to think the Modern Monetary Theory people have somewhat of a point: that if the economy is doing poorly, stimulus for the citizenry should be created from nothing, and then mopped up later if inflation gets too high by the Fed. They tend to get expansive about what they want to fund with this money, not all of which I agree with. But some of those projects have such strong positive externalities that sure, they do make sense – universal child care/early education, for instance.
Allocating capital needs to be done in such a way as to follow the profits (within the constraints as described). If capitalists do it or banks run by bureaucrats is not what matters – what matters is the principle of using profit (properly constrained) as your measure of well-being.
This should work for me too.
Ok, so [drum roll] the book discussion on Kim Stanley Robinson’s The Ministry for the Future is formally convened for Thursday, October 28th at 18.00 Brussels time.
I imagine we will spend most of the time discussing economics (or rather, political economy), using the book as a springboard and a thinking tool. So, you do not actually need to have read the book to enjoy the conversation. But of course it helps, so do it if you can. The following three sources will give you an idea of Ministry’s intellectual scope:
- its Wikipedia page.
- the Crooked Timber seminar on Ministry, started by a long reflection by the author.
- (just added) my own cheatsheet of possible discussion points.
If you are in Brussels and prefer a conversation in person, you are welcome to come to the office with me and @ivan. In that case, drop me a message.
The Zoom link below works now as registration, and on the day will work as the connection link. You do not have to register, but if you do we will get a better feel for who is coming and what people want to talk about, so we might do a better job of hosting.
https://us02web.zoom.us/meeting/register/tZclf-CuqzkvGNEjzoCoEIGyt889a7dq-rCB
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The history books that I encountered didn’t naturalize property as something innate to being human. And it is certainly not something most indigenous people relate to. That some languages includes a possessive doesn’t mean all languages do, and so basing the need for property on a sense of connection or belonging feels to me like a profoundly colonialist claim. And once that misguided assumption is removed, the argument for capitalism based on property as a natural unavoidable state collapses.
Here are some books to consider, by PhDs except the first one:
But here, let me have an economist speak to the flaw of naturalization and philosophical issues:
“It’s become evident that common property regimes often fail because of the flawed assumptions about human nature that are implicit in the superstructure of modern society (mind dominates body, people are greedy and dangerous, self-interest is a natural right). We understand now, at least, that property is not a material projection of an individual’s body, but a set of variable, inclusive rights embedded in our interrelationships. Since liberalism’s argument for exclusive ownership cannot be validated metaphysically, as this article maintains, many of the assumptions behind the property law of private ownership are also invalid. Based on a mistaken metaphysical premise, our forbearers created government to protect private property; and now the private sector has virtually taken over government through the Market State, creating an untenable and dangerous situation.” ~ James B Quilligan writes in The Failed Metaphysics Behind Private Property: Sharing our Commonhood published in Kosmos Journal Spring Summer 2011 page 59
This is a perspective. A modest search did not bring up Quilligan’s academic background — he has acted as an advisor to a number of governments on development. There is no doubt that you cite him because his outlook chimes with yours, which is fine, of course, but constitutes no sort of proof.
I do disagree, and find the idea that people have no inclination toward ownership to be dangerous — it led to the horrors of Stalinism, Maoism and the Killing Fields of Cambodia. Stating that it does not exist on the basis of one person’s opinion does not convince me
That said, introductory Econ textbooks are almost all much too one-sided in the other direction, of being too atomistic and utilitarian. My perspective is that “self-interest” includes all the things that would make one happy, which for most people revolve around having a modicum of security and stability, an interesting job, and a mutually supportive family, with good friends and a pub to relax in. Some people’s interests are highly inclusive, which is often beneficial to all those around them — this should be encouraged. Others are ambitious and seek power — this impulse can be great as well — these are social organizers, but their tendencies need to be channeled so as to benefit society, not harm it. Yet others mostly want to be left alone. If they aren’t hurting anyone, why not? There is a variety of people and personalities — the objective is not to create a society in which everyone tills the fields together while singing songs, as with the old Communist ideal, but to have many roles which can be filled by the varied humans, with the overall effect of encouraging cooperation along with personal fulfillment. One does not, need not exclude the other. Personal property and financial incentives are excellent motivators — use them to encourage the entrepreneurial and creative. Others feel compelled to work in cooperative groups — sounds great! Why be exclusive?
@petussing, you are of course right about confirmation bias! Everybody (including economists) should pay close attention to it. That said, there are two structural potential sources of mistakes that affect neoclassical economics. They are structural, because, if you take them away, the discipline is left with nothing to stand on.
The first one is sweeping assumptions about human nature. Like:
This may be true, I am not qualified for making the call. But other economic behaviors attributed to human nature have been since proven false. Smith’s account of the rise of money from barter, itself attributed to the human tendency to “truck and barter”, is a fantasy. So, better pay attention to conclusions about human nature that, conveniently, underpin our favorite theories.
The second one is norms and institution blindness:
Granted. And so are, say, military glory and the possibility of dominion over other humans. In The passions and the interest, Hirschman gives an interesting account of how, in the Renaissance, encouraging people to make money came to be seen as a sort of lesser evil, to keep frustrated scions of the nobility to look for their place in the sun by the means of war. But even financial interest motivates, sometimes, to highly destructive behavior. In Graeber’s account, Cortéz was a kind of entrepreneur, and his motivations were mainly financial (he was in debt, and chased by creditors). The point is, these motivators motivate people to very bad actions, unless they are kept in check by large systems of norms, checks, balances, enforcing institutions etc. And notice how these systems are not “naturally” financed by capitalism. One concludes that capitalism is not a stable system, perhaps? Anyway, saying “greed is good, it motivates the creative” in 2021 seems to me to miss crucial pieces of the picture. We do not want to motivate the creative, or anyone else, unless the actions we motivate them to do benefit somebody and, crucially, do not harm others.
Plus, neoclassical econ as the theoretical edifice of capitalism is very well developed, and needs no further help from then likes of us. In the Sci-Fi Economics Lab, my interest is to take the roads less traveled.
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Alberto-
As ever, fine points.
I was hoping that I hedged the private property impulse around with enough limitations to prevent excessive dependence on it. If not, my bad. Yes – private property in the modern world is a bundle of legal rights – it should never be elevated (as Locke did) into something “God”-given or absolute. But instead of trying to beat it out of people, use it – it’s tremendously useful as a motivating factor to improve and transform society, so long as it doesn’t get out of hand.
The description of barter in the economics literature, as a predecessor of money, is, yes, fantasy. But humans barter all the time. The basic instance is in relationships, such as : “OK, I’ll wash, and you wipe”, or “I’ll make the money and you raise the children”, or “I’ll hunt and you gather”. It’s an innate sense of the fairness of things, that has been shown, for example, by the anthropologist Frans deWaal in his work with monkeys.
Heaven forfend we should be promoting greed. I find that the word “greed” is over-used, to describe the ability of some entrepreneurs to earn very large incomes, largely as a result of the structure of patents, tax systems and other social and legal reasons. I have no objection to modifying those systems to make them more egalitarian – I do have a problem with the apparent need to demonize the people who have been successful for coming up with business models that improve our lives so much we all want to use them. They are not just adding value – they are NOT extracting money from anyone involuntarily – they are MAKING OUR LIVES BETTER. Some reward is warranted – just not the world.
My main concern is that we not try to write entrepreneurs out of the plan. Utopian socialist fantasies have often been dull, because they end up being some narrator describing heaven on earth. There is a reason why Dante’s Inferno is his most popular work – it turns out that people are thrilled by the sight of the baddies getting what they deserve, and the image of Satan at the bottom of the pit is as close to epic tragedy as any figure in literature.
I agree that swashbuckling merchant princes have already been done, and for social as well as literary reasons we ought to move on.
After having read through tons of proposed systems and such, I find myself significantly attracted to Proudhon, of all people. I personally think that the old Marxian ideal of state takeover has also played itself out – the incentives of a huge bureaucracy are all wrong. It may be that a paradise of employee-owned businesses funded by a bank lending out part of the profits of those businesses, offering a team-based approach to creating successful models, could succeed. After all, The Avengers seems to be doing well at the box office.
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I am curious if we might consider the new posthumous Graeber book as the next in the book series? I was reading this article about it today (having already ordered it) and sense it too can open up ideas for ways forward. Graebers Final Challenge article in the Tribune Reviewing it may also be inspiring for Witness districts.
The leitmotif running through the chapters is that if we want to make sense of all these phenomena, we are obliged to put human collective intentionality back into the picture of human history, as a genuine explanatory variable—to assume, that is, that our ancestors were imaginative beings who were eminently capable of self-consciously creating their social arrangements.
The authors by no means discount the importance of ecological determinants. Rather, they see their effort as moving the dial to a more sensible position within the agency–determinism continuum, which usually only takes one extreme. The key upshot is that this newfound view of our past equips us with an expanded sense of possibilities as to what we might do with ourselves in the future. Fatalistic sentiments about human nature melt away upon turning the pages.
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Why not. It is not strictly in-format (not a work of sci-fi), but in the end it’s our book club, and we do what we want. I will be reading that one in any case.
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With the book discussion coming up, I decided to re-read Ministry, and am now almost done. Here are a few items for discussion. For each one I try to provide one or more quotes from the book: click on the black arrows to reveal the quotes.
I am limiting myself to the economics ones, though I imagine people will want to discuss some of the non-economic points. There are, in fact, some who claim that the main point of Ministry is that you cannot achieve the green transition without substantial violence, and that is not a strictly economic point!
Anyway, here we go. Please feel free to bring to the discussion your own point, of course, this is just an icebreaker! Practical info here.
First discussion point: economics gets a mauling. All along the book, economic orthodoxy is presented as a substantial obstacle to understanding what is really going on with the environmental crisis. Even I am not that negative! The interesting point for debate is whether the dismal science is losing touch with reality, and is in danger that people will simply dismiss it as irrelevant, and what would take its place as a system-level map.
quotes
The whole field and discipline of economics, by which we plan and justify what we do as a society, is simply riddled with absences, contradictions, logical flaws, and most important of all, false axioms and false goals. (p. 166)
Extinctions and ocean warming can’t be fixed no matter how much money future people have, so economics as practiced misses a fundamental aspect of reality. (p. 173)
This is due to the discipline’s complacency in cloaking its practitioners’ ideological biases in the mantle of pretend objectivity:
macroeconomics was no longer so very clear on the ultimate effects of quantitative easing, given that the evidence from the past half century could be interpreted either way. That this debate was a clear sign that macroeconomics as a field was ideological to the point of astrology was often asserted by people in all the other social sciences, but economists were still very skilled at ignoring outside criticisms of their field, and now they forged on contradicting themselves as confidently as ever. (p. 343)
What a science! They worked all over the world (including in the Ministry for the Future’s offices) trying to calculate the gains and losses of this event in some way that could be entered into a single balance sheet and defended. But it couldn’t be done, except in ways so filled with assumptions that each estimate was revealed to be an ideological statement of the viewer’s priorities and values. A speculative fiction. (p. 344)
Second discussion point: the macro policies of the transition. In Ministry, India is the state that leads humanity towards the green transition. The Indian people are traumatized into action by a heat wave that kills 20 million people in Uttar Pradesh, and they sack their whole political class and get to work. The rest of the world will then follow, with more or less foot-dragging depending on specifics. Some of these Indian policies are not economic policies, of course – for example there is an effort directed towards regenerative agriculture – but some are. The ones I could identify:
- Nationalization of the whole energy infrastructure.
quote
India’s electrical power companies were nationalized where they weren’t already, and a vast force was put to work shutting down coal-fired power plants and building wind and solar plants, and free-river hydro, and non-battery electrical storage systems to supplement the growing power of battery storage. (p. 25)
- AOC’s Civil Climate Corps, or something similar. The quote above seems to allude to that. And that, in turn, is an idea very close to MMT’s flagship policy, the federal job guarantee.
- Factor substitution, replacing capital- and natural resources-intensive production techniques with labor intensive ones.
quote
The new agriculture is also labor intensive, as to a certain extent people must replace the power of fossil fuels and pay close attention to small biomes, and of course we have that labor power and that close attention. […] Completing the clean electrification of the country is being accomplished by construction of massive solar power arrays, and then electricity-storing facilities, and a refurbished national grid. This again has been labor intensive, but India has lots of people. And lots of sunlight. And lots of land. (p.126)
Third discussion point: Monetary policy. It occupies a central role in Ministry. The big central banks rule the world of the book, as arguably our own. The monetary policies I could spot:
* Modern Monetary Theory, explicitly endorsed. It becomes mainstream in the 2030s.
quote
Enough governments were convinced by MMT to try it. That it influenced so much policy through the late thirties was regarded as a sign either of progress or of desperate fantasy solutions. Similarly split responses had of course greeted Keynesian policies exactly a century before, so for some observers the interesting thing became to watch the next steps, and see whether this time around, having reiterated in this realm the twentieth century’s thirties, they would manage to avoid reiterating its forties. (p. 366)
- Carbon quantitative easing. The Ministry for the Future persuades the central banks of China, the USA, and the EU to lead a coalition of central banks. This coalition issues a new currency, the carboni, that is backed by carbon sequestration (or foregone emission). These are “backed by hundred-year bonds with guaranteed rates of return, underwritten by all the central banks working together” (p. 173).
quotes
So really this is just a form of quantitative easing. Yes. But directed, targeted. Meaning the creation, the first spending of the new money, would have been specifically aimed at carbon reduction. That reduction is what makes the new money in the first place. The Chen papers sometimes call it CQE, carbon quantitative easing. (p. 174)
Normal currencies float against each other in the exchange markets, but if one currency is guaranteed to rise in value over time no matter what, then it becomes more valuable to investors. It will always stay strong in the currency market because it’s got a time stamp guarantee of a rise in value. The carbon coin designed in that way would eventually probably replace the US dollar as the world’s benchmark currency, which would strengthen it even more. (p. 176)
The upshot of these policy implementation decisions was that the oil companies and petro-states were being paid in proportion to their stranded assets, but over time, and only for doing carbon-negative work, as defined and measured by the Paris Agreement standards and certification teams. The young staffs of the central banks were all quite proud of this arrangement, which they had concocted over the years in an effort save the carbon coin, and then watched as their bosses approved and implemented it. Those staff reunion parties were raucous to the point of almost scandalizing staid old Zurich. (p. 480).
- Traceable money. The carboni and the main fiat currencies are all blockchained and made fully traceable, and absolutely not anonymous. Tax havens are wiped out: when a transaction is deemed illegal, the currency units transacted are erased from existence.
quote
If all fiat money everywhere went digital and got recorded in block-chains, so that its location and transaction history could be traced and seen by all, then illegal tax dodges could be driven into non-existence by sanction, embargo, seizure, and erasure. (p. 334)
Fourth discussion point: other policies.
- Carbon tax. The world of Ministry has a carbon tax to reinforce the carbon quantitative easing, but I could not find a lot of specifics.
- Water as a commons. The State of California implements legislation to manage water. As part of it, it is subtracted to the realm of market exchange.
quote
To help accomplish all this they had passed a law, the Sustainable Groundwater Management Act, which they called “Sigma.” In effect it had created a new commons, which was water itself, owned by all and managed together. Records were kept, prices were set, allotments were dispensed; parts of the state had been taken out of agricultural production. In drought years they pumped up groundwater, keeping close track, conserving all they could; in flood years they caught water in the valley and helped it to sink into the basin. (p. 185)
- Necessities as public goods. KSR makes a case that any reasonable attempt at solving the environmental crisis needs an outright ban to sell, or profit from, providing people with necessities.
quote
The necessities are food, water, shelter, clothing, electricity, health care, and education. All these are human rights, all are public goods, all are never to be subjected to appropriation, exploitation, and profit. It’s as simple as that. (p. 409).
I’ll stop here, but there are many, many more ideas in the book… looking forward to the discussion.
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A friend was using a phrase from Values by Mark Carney… “Tragedy of the Horizon” which means the future gets discounted beyond the visible horizon… which seems relevant to establishing a ministry for the future that can step in as representatives of the future to move that visible horizon as a mitigating effort. Or something like that…
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Thanks! That was fun.
There’s a whole chapter of Ministry dedicated to that, and it uses the same phrase. 
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Oh! I forgot that. But it totally makes sense.
Hello @alberto & folks!
After discussing 'Ministry for the Future’ I turned to ‘New York 2140’ (by K.S. Robinson) to take a different view on ‘SciFi Economics’. When coarse-graning the view, both books are about the same subject: the conscious ‘moderate misfits’ beat the powerful with clever, sometimes ‘black’, application of the ‘tools of the powerful’. The scenario is different - a partly submerged NY after massive sea level rise. What may be interesting - this ‘intertidal NY’ could be used (with KSB’ coonsent) to build a district of Witness to play its dynamics. Might be even the author would like to offer this re-build? - best regards, Martin
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KSR is a bit elusive – for example, he is not on Twitter. But sure, good idea! Witness is, after all, a floating city.
@martin and all, I finally got around to reading New York 2140. Again, lots of interest in economics. I highlighted a passage that might be the blurb for the Sci-Fi Economics Lab. It describes intertidal New York, a place where rising sea levels have driven real estate prices to near-zero, and is therefore left (temporarily) alone by the Powers That Be to fend for itself. To a certain degree, though, the quote describes our own world: all these experiments are right here, right now (except the skyvillages – damn, they would be cool!).
And a lot of them were interested in trying something different, including which authorities they gave their consent to be governed by. Hegemony had drowned, so in the years after the flooding there was a proliferation of cooperatives, neighborhood associations, communes, squats, barter, alternative currencies, gift economies, solar usufruct, fishing village cultures, mondragons, unions, Davy’s locker freemasonries, anarchist blather, and submarine technoculture, including aeration and aquafarming. Also sky living in skyvillages that used the drowned cities as mooring towers and festival exchange points; containerclippers and townships as floating islands; art-not-work, the city regarded as a giant collaborative artwork; blue greens, amphibiguity, heterogeneticity, horizontalization, deoligarchification; also free open universities, free trade schools, and free art schools.
The book’s take on sci-fi economics is a real eye-opener. I love the vision of intertidal New York and the experiments in alternative governance and economies. It’s incredible how these concepts mirror real-world innovations and challenges.And yes, those skyvillages sound mind-blowing! The variety of approaches and the shift away from traditional hegemony are thought-provoking. It’s a testament to K.S. Robinson’s imagination.By the way, if you’re interested in exploring more books and their order, you should check out this site https://bookwormera.com/colleen-hoover-books-in-order/. It’s a great resource for book enthusiasts.