On Sat, 5 Jul 1997, Bill Bartlett wrote:
> I disagree with the argument that new money creation is a remedy, but I
> believe Harry is saying much more than that.
My remedy is a new *way* of creating and distributing money. It is really
about bringing democratic participation to bear on the regulations
governing the banking system as a means to achieve economic justice.
The basic political premise is that anyone who must
participate in a particular money-system has the right to shape the rules of
the money-system. In fact this should be true of ANY system in which we are
participants. This does not mean that an egalitarian
system is necessarily one which provides all participating individuals with
precisely all the same things. Preferably, it *does* mean that a prior
consensus should be established as to what each individual shall expect in
*common* from the system AND provide in *common* to the system. Of
course, consensus is always difficult to achieve in practice and the values
of individuals change over time, which means the system (any system) must be
open to reform. This is all consistent with Liberal Democratic philosophy.
Of course, the "markets" already have input into the operations of the
banking system, but as with other areas of economic policy in a democracy,
they should not be immune from accepting input and guidance from the
legislative and judicial systems.
> He is arguing that a minimum
> income, enough to cover all the necessities of life, should be a universal
> right and that to earn more than that and to satisfy the human need to
> contribute to society we would then have the choice of what work if any we
> undertake.
Yes. In an economy which uses the exchange of money to distribute essential
goods and services I see this as a basic right. The only reason to deny
an individual a secure income is if he/she has a reasonable
opportunity to live outside of the money system. This is frankly an unfair
and unrealistic expectation to place on anyone in today's economy.
>
> So his proposal to create the necessary money is, I gather, simply the
> means to pay for his proposals, rather than being fundamental.
What is fundamental is *how* the money is created.
> The problem
> I have with this is that creating money which does not represent actual
> wealth simply devalues all money. You cannot create money on the basis of
> need, but on the basis of value available.
>
The most important "value" money has is as legal tender. The
"Wealth" that is generated in conjunction with the creation of money is a
social construct and may not even count as wealth by other individuals.
For money to qualify as legal tender, its method of creation and its
physical medium must be officially sanctioned. In other words, it
technically does not matter that ALL money is created in conjunction with
wealth. What is more important is that it be accepted ( ie. recognized as
legal tender) for certain purchases in the economic system.
But I could even argue that this new money IS mostly being created in
conjunction with wealth creation since it is going to pay for wealth
created by businesses.
also seems to me that Harry proposes this solution in an effort to avoid
> the issue of redistribution which should be central to the guaranteed
> income project. In other words he is trying to give to one class without
> taking away from another class, a loaves and fishes act. Of course in
> practice his proposal would take away from someone - those who possess
> money - because inflation would substantially devalue their funds. Other
> capitalists, whose wealth was in the form of real assets would escape.
>
I don't believe it would cause much inflation. But even if it
did, this would only be a temporary problem since the markets and
banks would learn to accomodate the new financial realities of a guaranteed
income system. If anything, the banking system has become very adept at
fighting inflation, so I think the concerns about inflation are really
unwarranted. (The example of post WWI Germany is often cited as an
example of what might happen...but the comparison is invalid since in
that case money was being printed to pay off the nation's FINANCIAL DEBT.)
> The obvious truth is that you cannot redistribute income TO one class
> without taking AWAY from someone else.
>
Well I'm not talking about *redistributing* income, but of creating a
*new* income. This will certainly upset the existing the
power relations among different economic segements of society.
> But I am not so sure that the cost of a guaranteed income is all that high.
> It would probably result in substantially lower net wage costs to
> employers, which would substantially offset the increased taxation costs
> involved. Of course SOME employers - those offering jobs with little
> inherent job satisfaction would suffer. Labour would be much more free and
> would require substantial compensation for jobs that are unpleasant or
> socially obnoxious.
>
> This is the REAL problem. The capitalist class are clearly opposed to any
> proposals which reduce their power to discipline their workers. The power
> of the capitalist class comes not from the barrel of a gun, but in the main
> from their economic power over the majority of people. They decide who
> eats, how much and under what conditions. Harry's proposal for a guaranteed
> minimum income eliminates much of that power and is essentially therefor a
> revolutionary demand (in that it is a demand the capitalist class can not
> and will not agree to). If the sack holds no fears for their workers
> employers would have no power over them, and hence no power at all, they
> would be on borrowed time before the working class abolished capitalism
> entirely.
>
> As a socialist I therefor support the demand, and I see no point in
> discussing how the capitalist class pay for it. That's their problem.
>
> I don't kid myself that they will agree to the proposal simply on its
> merits though. It is necessary to organise to force them to agree.
>
I don't think it will require force if you take the approach I'm
advocating, although it may require some good legal arguments!
Harry Veeder
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