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Jack inspects some magic beans he is trading for his cow
“Once upon a time there was a poor mother who lived alone with her son, Jack. All they had in the world was an old cow to give them milk. One day the cow stopped giving milk so the woman had to sell her. She told Jack to take the cow to market and to get as much money as he could for her.
On his way to market Jack met a man who wanted to buy the cow. He offered Jack five beans for the cow. Jack knew that his mother would be very angry if he sold the cow for beans. "They are very special beans" said the man. "They are MAGIC ! - they will bring you good luck!" Jack thought that he and his mother needed some good luck, so he gave the cow to the man in return for the magic beans.”

     Jack’s tale begins with some economic truths: trade is grounded in the perceived fair value of an exchange of goods and services and, in times of hardship, people will accept forms of trade that they might not consider otherwise. Fortunately, the old man did not take advantage of Jack’s naive ideas of fair value, as the beans were indeed magic. (Why the man was willing to trade them for a spent cow remains open to question.)
     Most of us make less fanciful decisions, and consider carefully whether an item we are purchasing is a good value, but until recently, most of us have not questioned the inherent worth of cash in pocket, the piece of plastic that represents funds in our account, the place where this money is kept, or the balance between trust and government regulation that keeps the entire system running. Since the financial crash things have begun to change. Kos diarists have examined the role the banks play on a personal level: skimming a little off every transaction, and assessing excessive fees. Others, particularly bobswern and gjohnsit, have assessed the banks' culpability in crippling the system itself.
This trend has accelerated to the point that trust in banks is becoming increasingly difficult. Rolling Stone’s Matt Taibbi has shown the breadth and depth of manipulations meant to keep tight control of money in a few centers. He also shows exactly how national governments, their courts and regulatory authorities, have become helpless or even complicit in this process.

It's now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive," he said. "And that's not just surmising. This is just based upon what they've been caught at.
    The foundation of the Capitalist system itself has been called into question, at least in its present incarnation. If governments can’t regulate their own money supply for the benefit of the majority of their own citizens, and banks abuse their position shamelessly on account of that, people will eventually turn elsewhere. I believe that the rise of virtual currencies, such as the Bitcoin, and alternative trading schemes, such as local scrip and barter exchanges, are symptoms of an economic system that is bent to the breaking point.

    Part of the problem with how money works under Capitalism-as-practiced, is that it functions two ways: on one level as a medium of exchange and on another as the object of capital. Unfortunately these roles are diametrically opposed. Money is passed from one hand to another frequently as goods and services are bought and sold, but as an object, its role is to stay put, and hopefully attract other money to it through interest or speculation. Unfortunately, its latter job has become more important to the people who control most of it: the infamous 1%. Capital is currently sitting in a black hole sucking more money beyond the reach of individuals, and even businesses. Gjohnsit, in the diary “No, you aren't crazy. The economy is busted” states, “Money velocity is one of the most basic measuring sticks for economic activity. The fewer monetary transactions, the less economic activity”.  I am republishing his FED graph, which shows exactly how much velocity has slowed in the recent past.

    Because money is not functioning properly on a small to medium scale, other forms of exchange are becoming more popular. If individuals and businesses are turning to these alternatives, it signifies the failure of Capitalism-as-practiced even more than street protests such as UK Uncut and the Occupy movement. The marketplace itself is beginning to judge the current system as not fit for purpose. Despite the fact that alternatives can be unstable, dependent on perceived value, and can also be subject to legal restraint should they become too successful, their use is increasing. From simple barter to internet currency, people are looking for workarounds.

Barter on smaller and larger scales:

     Several friends of mine have recently joined a barter club. To join, you must be vouched for by at least two club members, at which point you get a password and can post items for trade on the club’s Facebook page. The rules are complex, extensive, and moderated heavily to ensure that spammers and businesses don’t post under the guise of individuals. Cash purchases are strictly forbidden. However, sometimes a poster will list “specific consumables” in their list of acceptable trades. The most popular consumable is toilet paper. Everyone uses it and everyone knows its value. Reportedly however, most people can work out trades of some sort without resorting to using currency in any form, even toilet paper. Time bartering schemes work in a similar manner with services rather than goods the medium of exchange. Both they and local barter clubs are as much about community building with like-minded people as they are about avoiding corporate consumerism. They could be thought of as tribal in nature, requiring a level of trust that extends only to a small circle of people. However, their small scale means that they also don’t challenge current financial hegemony.
     Surprisingly, a much more extensive and organised form of barter exists: business-to-business barter exchanges. According to some sources, 1/3 of NYSE businesses use at least some forms of barter. The International

Reciprocal Trade Association, one of the certifying bodies, “made it possible for over 400,000 companies World Wide to utilize their Excess Business Capacities and underperforming assets, to earn an estimated $12 Billion dollars in previously lost and wasted revenues.” This is done through trade credits, a form of virtual currency, and is particularly useful for small businesses like printers, where labour costs make up a great deal of their budget, and businesses whose overhead is fixed, like hotels. Membership in the IRTA cover the costs of investigating the businesses involved, and keeping track of these trades for tax purposes. Trust is therefore delegated to the certifying authority, so its reputation is important, as is its stability. Interestingly enough, after supplies of the the metal-based Liberty Dollar were confiscated in 2009, and its promoter prosecuted, the IRTA felt the need to distance itself, insisting their “trade dollars” were “a legal and robust form of commerce in America”, sanctioned by President Reagan himself. Governmental authority is supported as taxes are paid. Even so, $12 billion does not pass through the hands of banks, so some challenge to the status quo is involved.

Local Currencies

    Scrips that work within a limited area often arise in reaction to economic trends that hurt a population cohesive enough to try to mitigate them. One recent example is the push against globalization, monopoly of big box stores, and other ways that big Capital tries to extract maximum profit while contributing minimally to the community. They are like local bartering and time-sharing schemes in that they are meant to reinforce local ties more than a substitute for national currency. In the past, local scrips arose during the Depression in both America and Europe, and some worked effectively to benefit the communities that used them. But they were mainly implemented because, then as now, the velocity of national currencies had slowed to a crawl. Unfortunately, the latter, when successful did challenge central banks authority, and became victims of their own success.

    Many current UK initiatives, such as the Totnes, and Bristol Pounds have come from the Transition Town movement, which seeks to build robust local economies in a post peak-oil world. They are instituted to rebuild interpersonal relationships and ecological resilience. Totnes’ effort has been particularly successful, partly because Totnes is a fairly remote market town in Devon. The area has also been a magnet for Progressives since 1925, when Leonard and Dorothy Elmhirst set up an experimental school at nearby Dartington Hall. Because of its local success, the Totnes Pound has become an example to larger cities like Bristol. In Totnes, places where their scrip can be used are limited to local businesses and restaurants. However the Bristol Pound is morphing into a virtual currency, is banked by their local credit union, can be applied to energy bills, and is becoming more flexible. In this way, it is becoming more like earlier incarnations of local currency such as the Wara, which was used in Bavaria and Austria during the early 1930s.

   The Wara was a form of Stamp Scrip, invented by Silvio Gesell, a German businessman, specifically meant to increase the velocity of money. Once a month, stamps worth a percentage of the value are affixed to the back of a note to keep it current. This makes it a form of monetary hot potato and discourages hoarding. The most famous examples of how this could restart moribund economies are those that took place between World Wars I and II, in Wörgl, Austria and Schwanenkirchen, Germany.  In Wörgl, the mayor instituted it by depositing 40,000 Austrian schillings in a savings bank and issuing notes worth 98% of a schilling. They could theoretically be redeemed, but thrifty townspeople were inclined to keep the extra 2%. Initially it was put into place to finance local works projects, and stamp sales financed a soup kitchen.
Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cash flow they would receive from the trees.
    In Schwanenkirchen, a coal mine owner in the village of began to pay his workers in a form of Gesell’s scrip called the Wara. After the miners discovered that local merchants would accept it, they raised no objections.
When, after two years of complete stagnation, the workers for the first time brought home their pay envelopes, no one was interested in hoarding a cent of it; all the money went to the stores to pay off debts or for the purchase of necessities. The shopkeepers, too, were happy. Although at first they had felt a little hesitant about Wara, they had no choice, as no one had any other kind of money. The shopkeepers then forced it on the wholesalers, the wholesalers forced it on the manufacturers, who in turn tried to pass it on to those who carried their notes, or they exchanged it at Herr Hebecker's mine for coal…So Wara kept circulating, a large part of it returning to the coal mine, where it provided work, profits and better conditions for the entire community.  Indeed, one could not have recognized Schwanenkirchen a few months after work had resumed at the mine. The village was on a prosperity basis, workers and merchants were free from debts and a new spirit of freedom and life pervaded the town.
    Unfortunately the mayor of Wörgl and the coal miner in Schwanenkirchen were a little too successful. Surrounding villages were jumping on board, and visitors from abroad were studying how to apply similar approaches.  This was too much of a threat for the German and Austrian Central banks. In 1931, the German government ended use of the Wara by emergency decree, and in 1933, the Austrian government did likewise, first claiming that the idea was crazy, then Communist, and then Fascist. Ironically, their insistence on central control led to a lot of unfortunate “craziness” later on when high unemployment and desperation led the people of these countries to adopt those very philosophies, to no good end.
     Obviously, the more the line between magic beans and genuine currency becomes blurred, the more likely the irate Giant of Central Authority is to come swarming down howling for blood, which brings us to the cautionary tale of the Liberty Dollar, and the recently fashionable Bitcoin, neither of which are based on a trusting community, both of which appeal to libertarians and individualists, and only one of which is (or was) backed by anything of intrinsic value.

Sound Currency versus Magic Beans

     The Liberty Dollar was the brainchild of Bernard von NotHaus (seriously), more of a countercultural DFH than a libertarian. However, like a lot of very reactionary people, he believed that money should always represent something of genuine value such as precious metals. From 1998 through 2007, silver, gold, and copper coins were issued and notes printed, backed by metals housed in a secure warehouse in Coeur d’Alene, Idaho. Memberships in the scheme could be purchased allowing a discount. Merchant who would accept them were also offered a discount. Regional offices were set up, $60 million dollars worth of Liberty dollars went into circulation, and the FBI began to take notice. Von NotHause defended himself, saying the coins and notes did not have the words “legal tender” anywhere on them and were therefore a form of voluntary barter currency. Since the scrip looked like money, and could be used as money, the DOJ begged to disagree, and was quoted as saying "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country". Von NotHaus was convicted in 2011 and could face 15 to 20 years in prison, a $250,000 fine and confiscation of £7 million in precious metals. He is still awaiting sentencing in a borrowed mansion in Malibu, and is quoted in the NYT as saying:

The thing that fires me up the most, is this is what happens: When money goes bad, people go crazy. Do you know why? Because they can’t exist without value. Value is intrinsic in man.
    So if stable valuation based on physical reality is important, why has the Bitcoin been in the news lately, and why have investors such as the Winklevoss twins gone to the trouble to buy up $11 million worth of them? Bitcoins were launched in 2009 by someone under the nom de guerre of Satoshi Nakamoto, who may or may not actually be a consortium of programmers. Their value not insured by a central bank, based on the value of precious metals, or on the value of labour. Bitcoins are backed up by, well, nothing. They are manufactured out of thin air by a process known as “mining”, which consists of allowing your computer to be used as part of a system to record and document Bitcoin transactions. The mining process becomes more time consuming and less remunerative as time goes on, so early adopters, and those with proportionately larger computing power have had a definite advantage. The only thing that makes them at all attractive as a medium of exchange is that, like gold and limited edition Beanie Babies, only a certain amount will ever exist.   In its early history, the Bitcoin carried a whiff of scandal, as the preferred and untraceable medium of exchange on the notorious drug website Silk Road, and as a way for the Iranians to get around the trade embargo leveled against them. Recently, their price spiked, reportedly because panicked Cypriots were trying to exchange them for Euros, but possibly because they had been widely covered in the media. Then they abruptly tanked when their security protocols came into question. Nonetheless, they have drawn attention in a way that more stable B-to-B barter exchanges and local currencies have not.

     The US Government considers them a possible threat, purportedly because they could be used to fund drug dealers and terrorists or support unpopular regimes such as Iran and North Korea. Most economists think their volatility limits their usefulness, though Stanford’s Caroline Hoxby wrote: “First part is right: value derives from belief others want to use it for trade. Second part is not obvious: beliefs could stabilize or not.”

     While their anonymous nature may have made Bitcoins initially attractive to people who did not want to run money through banks, they have come to appeal to the same contrarian demographic as the Liberty Dollar, simply because they are not a national currency reliant on the integrity of whatever central bank is responsible for them. Unlike barter schemes and community currency, they represent a complete lack of trust. If they have a community of adherents, it consists of fellow skeptics. At this point, people are willing to consider trading for beans in the hope that they will prove to be magic. All of these alternative forms of exchange are Anti-Capitalist in nature because Capitalism is simply not working for ordinary people and businesses dealing in goods and services. If a significant proportion of the population, across the political spectrum, is coming to this conclusion, governments should pay attention. The marketplace is talking.

 

     

Originally posted to Anti-Capitalist Meetup on Sun May 19, 2013 at 03:00 PM PDT.

Also republished by Political Economy Group DK PEG and Community Spotlight.

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Comment Preferences

  •  Tip Jar (26+ / 0-)

    You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

    by northsylvania on Sun May 19, 2013 at 03:00:18 PM PDT

  •  I'll be up for about an hour (7+ / 0-)

    to answer questions and duck flying tomatoes.

    You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

    by northsylvania on Sun May 19, 2013 at 03:07:18 PM PDT

  •  ACM has been reposted on (8+ / 0-)

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun May 19, 2013 at 03:09:57 PM PDT

  •  excellent diary! (9+ / 0-)
    I believe that the rise of virtual currencies, such as the Bitcoin, and alternative trading schemes, such as local scrip and barter exchanges, are symptoms of an economic system that is bent to the breaking point.
    this is where my research is focussed and if positioned properly, rather than gold farming, counter-currency can serve as a platform for socialist counter-insurgency. Imagine a scrip for universal /global medical care...

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "I’m not the strapping young Muslim socialist that I used to be" - Barack Obama 04/27/2013

    by annieli on Sun May 19, 2013 at 03:26:41 PM PDT

  •  ACM Schedule (7+ / 0-)

    May

    26th: Le Gauchiste

    June

    2nd:
    9th:
    16th: Justina
    23rd: Geminijen
    30th: Annieli

    July

    7th: NY brit expat
    14th:
    21st: Geminijen
    28th:

    We urgently need writers for the 2nd and 9th of June and for the 14th and 28th of July. The series only works because people volunteer to write, are comment and are willing to share their ideas, actions and perspectives. In the absence of that contribution from everyone, there is no series. Can you volunteer to write? If so, please reply to this message OR send a message to the anti-capitalist meetup on dkos OR send a private message to NY Brit Expat OR send a message to our group email: dkanticapitalistgroup@gmail.com

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun May 19, 2013 at 03:30:48 PM PDT

    •  expat, (4+ / 0-)

      didn't I already agree to take June 2?

      There's some new organizing going on with those of us supporting OUR Walmart.

      Would love to write about it!

      WE NEVER FORGET Aminul Islam, Bangladeshi Labor Martyr

      by JayRaye on Sun May 19, 2013 at 03:35:27 PM PDT

      [ Parent ]

      •  that is what I was missing!! (3+ / 0-)
        Recommended by:
        JayRaye, northsylvania, Justina

        I was looking at the notes of the meeting and I could not find the date that you had said you would post. I looked and I figured that if I put it up, you would tell me!! It worked!!! Let me update the schedule! :)

        "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

        by NY brit expat on Sun May 19, 2013 at 03:43:09 PM PDT

        [ Parent ]

    •  Thank you so much (5+ / 0-)

      for reposting, running the schedule, and keeping us organised so far, though hopefully the new calendar will take some of the load off.
      If someone is interested in posting a diary on a subject of interest, please drop us a kosmail at ACM.
      In the meantime, I'll do one on July 14. Thanks again NY brit.

      You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

      by northsylvania on Sun May 19, 2013 at 03:37:30 PM PDT

      [ Parent ]

    •  Wonderful!! We only need (3+ / 0-)
      Recommended by:
      JayRaye, Justina, northsylvania

      people for the 9th of June and the 28th of July!!! Can anyone volunteer to post?! Unfortunately, I am unable to do the 9th or I would as I am at a conference in NY. Just two more volunteers needed!!! :)

      "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

      by NY brit expat on Sun May 19, 2013 at 03:46:05 PM PDT

      [ Parent ]

  •  This is very interesting ... (9+ / 0-)

    I also think you are making an excellent point on the fact that money as a medium of exchange is coming into contradiction with money in its role as capital (which is only important in its role of making more money). I also appreciate the clear exposition; when I went to look this up when you had mentioned what you wanted to write on, I honestly could not understand anything of what was there.

    This IS clear and I really appreciate your explaining it to me as if there is one thing I am not really clear on in economics, it is money. I understand the functions, I understand the idea of a universal equivalent; what I have trouble understanding is how these things interact and how a scrip which is not linked to any form of value can function. This is what you have explained to me and I am grateful!! Thanks, well done!

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun May 19, 2013 at 03:41:13 PM PDT

  •  Great diary, northsylvania. (8+ / 0-)

    I'm for every kind of organizing: union, protest, political, and alternative living and economies also.

    I don't think there needs to be a one-size-fits all when it comes to fighting back against Capitalism.

    I was raised in the back woods of northern Minnesota where barter was a big part of our economy.

    It does make life easier to not be so dependent on "cash money" or "store bought" commodities.

    Funny how my parents generation wanted nothing more than to get out of the backwoods. They wanted flush toilets and hot and cold running water inside the house.

    That's understandable, I suppose. But now all they talk about when they get together is the "good old days!"

    WE NEVER FORGET Aminul Islam, Bangladeshi Labor Martyr

    by JayRaye on Sun May 19, 2013 at 03:44:42 PM PDT

    •  Thank you JayRae. (5+ / 0-)

      Barter does indeed work very well for individuals on a local scale. I really like the idea of local scrip, especially when it can be used for things like paying energy bills and taxes. If people can work for a city or county and make enough to keep them warm and in their homes, they will be that much ahead and the city gets real work done.
      I'm still cautious about the Bitcoin. However, if people want to purchase things out of the community, and unfortunately this is sometimes necessary, something like that will have to be invented, though hopefully based on something a little more substantial than keeping the system running (though heaven knows, the Central bankers are paid enough).

      You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

      by northsylvania on Sun May 19, 2013 at 03:58:43 PM PDT

      [ Parent ]

  •  Very interesting and well written diary, (7+ / 0-)

    thank you very much.

    "Too often we enjoy the comfort of opinion without the discomfort of thought." - John F. Kennedy -7.8., -6.6

    by helpImdrowning on Sun May 19, 2013 at 03:58:45 PM PDT

  •  there was an interesting thing (4+ / 0-)
    Recommended by:
    JayRaye, Justina, northsylvania, Odysseus

    that I had read about greece about the development of the use of an alternative local currency due to shortage of euros:

    http://www.guardian.co.uk/...

    and

    http://www.theworld.org/...

    The other use of scrip was in the old cooperative market where labour could be bartered for something representing milk, flour, etc. Here is a discussion of it:

    http://www.uk.coop/...

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Sun May 19, 2013 at 04:27:10 PM PDT

    •  I wish I had caught (1+ / 0-)
      Recommended by:
      JayRaye

      that Guardian article when it came out. This is exactly what I'm talking about! Informal bartering networks like my friends belong to, end up becoming more formalised and larger.

      "It's all about exchange and solidarity, helping one another out in these very hard times," enthused Ioanitou, her hair tucked under a floppy felt cap. "You could say a lot of us have dreams of a utopia without the euro."
      The rapacious people who control the currency don't have to control our lives. Let them keep their ones and zeros if they need them for game markers that badly.

      You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

      by northsylvania on Mon May 20, 2013 at 12:03:24 AM PDT

      [ Parent ]

  •  Currencies are very interesting (10+ / 0-)

    Like language, they emerge early and often in the evolution of the species.

    I'd like to introduce an overlay to this discussion of "national" and virtual currencies. It is the idea of a global currency.

    From the very beginnings of commercial trade between nations, we have had one. They have always been sponsored by a particular nation. Inevitably, that currency becomes corrupted or debased by the controlling nation through over-reach, hegemony, loss of confidence, and greed -- and the nation's power recedes.

    Here's what it looks like:

    The world is detaching from the US dollar for all the reasons above -- and the super power status of the US is in a precipitous fall.

    The terms of the Bretton Woods agreement were broken in the early 70s, when Nixon detached the currency from gold. (The sins of Vietnam war costs.) But the world continued to use the Dollar.

    I'll skip the piling on of corruption along the say, such as banking monopolies and the forced growth of consumer class debt via inflation, which caused a loss of confidences globally.

    The final straw has been the total paralysis of Federal Government, the sinking of the US into third world demographics, and above all -- massive QE from the Fed that exports inflation, and the constant threats that the US was prepared to default via debt ceiling terrorism.

    I'm a currency trader. Yes, the exchange rate business casino is still the largest market on earth. But in the real world, nations are letting their Dollar reserves drop and they trade with direct currency swaps instead, avoiding the dollar at all costs. Trillions upon trillions of US dollars are heading back to the US from a once dollarized world.

    Sounds like a good thing, huh? All that money.

    It's an economic tsunami.



    Denial is a drug.

    by Pluto on Sun May 19, 2013 at 04:30:53 PM PDT

    •  Oh, and fascinating Diary. Thanks, northsylvania. (6+ / 0-)



      Denial is a drug.

      by Pluto on Sun May 19, 2013 at 04:31:55 PM PDT

      [ Parent ]

      •  Thank you for commenting. (5+ / 0-)
        Recommended by:
        JayRaye, Pluto, Odysseus, AoT, BlueDragon

        I had hoped at least a few of the people who had experience with currencies and currency trading would weigh in.
        The Euro has obvious problems, the Pound is in process of devaluation (if you live in an island economy with no manufacturing and failing agriculture, you notice things like that). The Japanese are doing the same. If cracks are appearing in the facade of the almighty Dollar, it is time to begin some process of alternative exchange into use, until the central banks come to the realisation that playing beggar your neighbour will also beggar your own citizens.

        You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

        by northsylvania on Mon May 20, 2013 at 12:19:47 AM PDT

        [ Parent ]

  •  Beautifully Written and Illustrated Diary! (7+ / 0-)

    Thanks so much, northsylvania.  When the capitalist money system collapses, we will all need to be on the barter system.  (And they can't put us all in jail!)

    At base, the essential value is the value of the labor time and skill that goes into making useful objects or providing needed services.  Gold and silver is only valuable because it embodies the labor time and skill that goes into mining it, even if the process is highly mechanized.  Labor is the universal value, and it is stolen labor time which the super-rich have stolen and are hoarding.  Time to take it back!

    Convict Bush, Cheney and their torture cabal. Support universal health care,unions, WikiLeaks and Occupy Wall Street! Time for a totally new, democratic economic system. Turn the corporations into worker cooperatives!

    by Justina on Sun May 19, 2013 at 04:56:32 PM PDT

    •  Non-labor resources are real. (3+ / 0-)
      Recommended by:
      northsylvania, JayRaye, Odysseus

      Yes, oil isn't much use until it's pumped and refined, but all the pumps and refineries in the world won't do you any good without the raw material.  Marx's analysis worked in a world where human labor was still the most-limited-resource for extraction of most value.  But today the most-limited-resource is energy, and in fifty years it may be food.  At which point, expect a sudden "bust" in human population.

      •  Oil is concentrated (3+ / 0-)
        Recommended by:
        JayRaye, Odysseus, AoT

        mechanical labour, which is why people have made fortunes from it. I have planted gardens to feed two people for a year and know that if it is done by hand, it is close to a full time job for one of those two people. Nonetheless, if you have two very hungry people, it can seem like a good bargain.
        I am not against global trading per se. Crop failures in different parts of the world make it very helpful indeed. Nonetheless, if the system of global trade exploits the people involved in growing the food to the extent that they are using their land and resources while starving, as is the case in Kenya occasionally, it would also be helpful for people to understand exactly how much time, energy and labour is required to grow that £1 packet of beans, and respect it accordingly.

        You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

        by northsylvania on Mon May 20, 2013 at 01:12:41 AM PDT

        [ Parent ]

      •  The real is an assigned value (1+ / 0-)
        Recommended by:
        northsylvania

        Oil is an assigned value for a work done. In other words, we're back to a real object assigned a value (capital) by its ability to do work ("energy" = "the capacity to do work," doesn't it?). Thus, it's still a labor-based analysis, with the oil standing in for an impossible number of laborers.

        One barrel of oil represents the human labor of 140 men for a year. That's a fantastic concentration. Thus, we are bargaining, again, for labor.

        However, when people bargain for oil futures, and then there is a shortage of oil based on the promise of delivery to too many customers and the prices go up -- all without a single drop of oil actually moving from the ground to a tank -- and then the futures are sold at a vast profit, we're no longer dealing with value based economics.

        "...ere God made us He loved us; which love was never slacked, nor ever shall be." - Juliana of Norwich

        by The Geogre on Tue May 21, 2013 at 07:50:58 AM PDT

        [ Parent ]

  •  Thanks for this, tipped and recc'd. (5+ / 0-)

    Off Topic, but not out of place here, there's an interesting bit of intellectual history in this week's Nation magazine. It's about the Austrian School. I thought it might interest ACM readers. ☛ Nietzche's Marginal Children

    The free market is not the solution, the free market is the problem.

    by Azazello on Sun May 19, 2013 at 05:06:56 PM PDT

    •  Also, too ... (3+ / 0-)
      Recommended by:
      JayRaye, tardis10, northsylvania

      The Feds have begun their crackdown on Bitcoin ☛ Reuters

      The free market is not the solution, the free market is the problem.

      by Azazello on Sun May 19, 2013 at 05:12:07 PM PDT

      [ Parent ]

      •  Good catch. (3+ / 0-)
        Recommended by:
        JayRaye, The Geogre, AoT
        A spokeswoman for Homeland Security declined to comment on whether the agency, or any foreign law enforcement agency with which it may be cooperating, plan to seize any other accounts linked to Karpeles, Mt. Gox, or other Bitcoin exchanges.
        Most U.S. transactions go through MtGox and, since almost everything that happens in the US currently falls under Homeland Security, it might be wise to pay attention.

        You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

        by northsylvania on Mon May 20, 2013 at 02:45:47 AM PDT

        [ Parent ]

  •  What, I wonder, is the velocity of Yap stones (5+ / 0-)

    "Value" and "Price" are significant ideas in how our species distributes power. Money and power are negotiations that reside deep within our psyches.

    muddy water can best be cleared by leaving it alone

    by veritas curat on Sun May 19, 2013 at 05:14:34 PM PDT

    •  Relatively low (2+ / 0-)
      Recommended by:
      JayRaye, The Geogre

      and parallel to the number of people who get married or die, as those are the main time when the stones are "exchanged". I recently read "Debt: The First 5000 Years" and it has a very good explanation of these sorts of currencies. What it calls "Human currencies." They aren't used for everyday things like we use our money, they are use mainly to order social relationships between people. So, no matter how many bananas you had you could never exchange them for a Yap stone. You could also never exchange those bananas for a wife, or as restitution if you were responsible for the death of someone. But you can use the Yap stones for those things. They represent a very different thing than what we think of as money.

      If debt were a moral issue then, lacking morals, corporations could never be in debt.

      by AoT on Mon May 20, 2013 at 10:36:02 AM PDT

      [ Parent ]

  •  Coming back later, but kudos (7+ / 0-)

    The question that puzzles me, from a capital point of view, is whether or not capital is anymore related to money even. "Globalism" has gone through more costume changes than Cher doing a birthday party for Elton John, but as it is practiced it has meant that the purely symbolic money written on accounts is treated as real and speculated with, and thus we have "creating wealth" without creating goods or demand.

    Without this world of "finance" (rather than financing), it would not be possible to have had Sept. 18, 2008 and the "lost" trillion dollars without an actual loss of goods, and, without "finance" becoming capital, banks would need to lend and stimulate business. Now, without any connection to business or productivity, they are making/creating money by simply agreeing that they owe one another 70 x 7 quatloos.

    "...ere God made us He loved us; which love was never slacked, nor ever shall be." - Juliana of Norwich

    by The Geogre on Sun May 19, 2013 at 05:49:53 PM PDT

  •  go local (1+ / 0-)
    Recommended by:
    northsylvania

    grow local
    build local
    buy local

    "a lie that can no longer be challenged becomes a form of madness" -Debord

    by grollen on Sun May 19, 2013 at 06:33:03 PM PDT

  •  Wonderful diary & incredibly appropriate (6+ / 0-)

    today with the news of Yahoo buying Tumblr ($13 million of revenue last year) for $1.1B. Pretend $$$ for the highly marketable pretense of sexay relevance (& a chance to monetize). That's how the game is played. Enjoy the casino, listen to the music,pay no attention to the man behind the curtain. Who will be left with no chair when the music stops? Typically,as we see every day,the weakest among us.
    I vaguely recall that when politics loses control,rogue economies rise. Somewhere along the way,I further came to understand that this doesn't have to be all bad ;) This diary is another reminder of that fact.

    (& speaking of rogue economies,hat tip to Ithaca Hours http://www.ithacahours.org/)

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Sun May 19, 2013 at 07:00:17 PM PDT

    •  Thank you very much for contributing (3+ / 0-)
      Recommended by:
      JayRaye, tardis10, Odysseus

      and mentioning Ithaca Hours. They have been around for a long time, and obviously inspired Totnes and other Transition Towns. It says they are accepted by tradesmen and businesses, which would be expected, but also the Cayuga Medical Center. For an alternative currency to truly work, it has to be exchangeable for a major family expense like energy bills, property taxes, and medical care. If those larger sums are immediately put back into circulation, they really give a shot in the arm to big projects within the community. I notice that Ithaca will make loans to small businesses and non profits as well.

      You..ought to be out raising hell. This is the fighting age. Put on your fighting clothes. -Mother Jones

      by northsylvania on Mon May 20, 2013 at 12:57:43 AM PDT

      [ Parent ]

      •  Unfortunately,IthacaHours has never (3+ / 0-)
        Recommended by:
        northsylvania, Odysseus, JayRaye

        reached the critical mass needed to be much more than symbolic. (irony noted) Still,in these transition times,as we grapple with how to promote wealth and demote money on this finite planet, every wedge is useful.

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Mon May 20, 2013 at 06:05:16 AM PDT

        [ Parent ]

        •  Could you write more on that? (3+ / 0-)
          Recommended by:
          tardis10, northsylvania, JayRaye

          Not being a local, I know nothing of how the program works on the ground or is perceived.

          -7.75 -4.67

          "Freedom's just another word for nothing left to lose."

          There are no Christians in foxholes.

          by Odysseus on Mon May 20, 2013 at 07:47:06 AM PDT

          [ Parent ]

          •  My take is that the perception (3+ / 0-)
            Recommended by:
            northsylvania, JayRaye, Odysseus

            is that Ithaca Hours are too old-school hippie,too earnest,too much 'eating your peas' hassle & that is more than just a marketing problem.(A close read of the page of businesses accepting tells the tale.http://ithacahours.info/...)  The over-arching difficulty is that without being more widely accepted,still only about 100K in circulation,Ithaca Hours have limited utility. Combined with the above perceived lack of cool doesn't make for a dynamic alternative. But that can change.

            Here's hoping that new tech (app driven) meets the structure Ithaca Hours has in place and gives the whole idea a shot in the arm ;)

            "George RR Martin is not your bitch" ~~ Neil Gaiman

            by tardis10 on Mon May 20, 2013 at 09:16:26 AM PDT

            [ Parent ]

  •  Well done, northsylvania! n/t (3+ / 0-)
    Recommended by:
    northsylvania, JayRaye, BlueDragon

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Sun May 19, 2013 at 10:20:29 PM PDT

  •  A damning case, well argued (5+ / 0-)

    Your thesis is strong, and your evidence is good, and, more to the point, your writing keeps us from wandering. This makes your indictment a sterling case against current capitalism as inoperative because of . . . you don't quite say, as it would require speculation, and it doesn't really matter, because the reactions ought to be sounding alarms.

    I'm freer to speculate, although I would never argue for consciousness. I see that the capital sector has begun to act in self-interest, with banks becoming agents of their own interests. As far back as John Law's Mississippi scheme, the banks were instrumentalities of capital interests, but they are now an actor in capital. If we believe that our world has solved the capitalist-industrialist-worker-market crisis [it hasn't], it surely hasn't solved the capitalist-capital-industrialist-worker-market play.

    I know that it seems like today is a replay of the 1920's, but I don't think so. At that point, financiers became capitalists and then owned companies that generated their real stock (Morgan, e.g.). Today, the goal is to be, in terms of your analogy, wizards.

    Regardless, your analysis is precise, your conclusions compelling, and your presentation wonderful.

    "...ere God made us He loved us; which love was never slacked, nor ever shall be." - Juliana of Norwich

    by The Geogre on Mon May 20, 2013 at 04:52:19 AM PDT

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