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How destructive is the middle class?
How destructive is the middle class?
Firstly, I’ve no wish to define people by accidents of birth and then condemn them for the effects of those accidents – by accent, dress, or other filial habits. Whichever class we’ve been born into remains as our original soil. Parenthood, love, loyalty and some behavioural codes, grow from that sacred ground. There’s nothing we can do about our entry into the world, or our remaining gratitude for it. However, as adults (if we accept that rite of passage) we must look about at the wider world – our connections to and our effects within it.
I’d like you to consider that the current middle class is a defended enclosure by those whose income is largely composed of rent. Perhaps as powerful as land enclosure, I ask you to contemplate a modern enclosure – status property. I leave aside the historical middle class – the yeoman, guildsman, bourgeoisie… I think they may have passed away.
The negative effects of land enclosure are copiously documented by well-known economic philosophers, dating back at least as far as the Reformation (Thomas More). The negative effects of what I’ve chosen to call status enclosure, as far as I can tell, are not documented at all. I speculate that status enclosure may be an even greater drain on a community than land enclosure. At any rate they’ve a similar weight in the scales (and scales of injustice).
I propose that the gathering of rent for status is the central process by which we become middle class.
Status enclosure is the means to a monopoly of services. Lawyer, dentist, GP, architect and so on have gained right of enclosure to impose a large rent for their very existence – not for what their labour may provide.
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Limits to Economic Growth?
Limits to Economic Growth?
These are notes from a short lecture given at Nottingham University on 28th November 2017. Click on the images to enlarge them.
1 Production Increase
During the 17th and 18th centuries the rise of mercantile power, colonialism and a slave economy was associated with the development of the idea that “improvement” meant production growth and was an indicator of a new idea of progress. This was a core idea in Adam Smith’s book The Wealth of Nations. In it Smith described the production increase at the early stages of the industrial revolution as being the result of an increasing division of labour and specialisation – his famous example being the pin factory.
However what really enabled the industrial revolution to take off was not just that production was being broken down into simplified specialised processes in factories but that this specialisation enabled mechanisation. Machines were being applied to production on a greater scale and these machines were powered. Their energy source was fossil fuels – coal fired steam engines began to overtake wind and water mills, sails, wood and the muscles of humans and work animals as the main energy and power sources.
2 Applications of fossil fuels to machinery and technical infrastructures
Later in the next century coal power was supplemented oil as a fuel source refined into petroleum and diesel. Later still natural gas became a fuel. The technologies of energy delivery evolved too. Gas was created from coal and piped across towns and cities. The fossil fuels, and later uranium 235, were used to generate electricity which could be distributed by power grids. It could be generated too by hydro power dams as well as by wind and solar.
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The future of renewable energy
The future of renewable energy
I’ve been reflecting on the idea that the current energy system is starting to be swept along by a technological revolution somewhat akin to the “revolution” over the last 30 years in computers and telecommunications that has brought personal computers, mobile phones and the internet. Read some of the literature of techno-optimists and it is very common to suggest that Moore’s Law – the doubling of processing power on computers every year – provides an analogue for the sort of change that will apply in renewable energy systems – if only the politicians and carbon vested interest do not get in the way. In support of this idea people commonly point to the rapidity with which renewable systems like solar and wind have developed so far. The main thing is that the political support should be there…
I 60% agree but have severe reservations with carrying the analogy too far. There are some real differences that make the two “revolutions” largely non-comparable:
(1) The digital revolution has brought us many new products that do things we couldn’t do before – computers, mobile phones, the internet. That makes it attractive to people and companies and has sped adoption. The energy revolution does not bring new final end products – the end products are electricity (and heat and motion) which we already had. What it brings are many new ways of generating electricity (and heating and moving things).
(2) To pay for the energy revolution people must pay once for the new technology that generates the energy source (mostly as electricity) and once for products that are adapted to this new energy source (eg a petrol or diesel car to an electric car) – and perhaps a third time for the back up or storage to cope with intermittency in the renewable power source.
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The Strange Idea of Negative Interest
The Strange Idea of Negative Interest
This article addresses the role of demurrage (negative interest) in the design of new currencies. But it takes a roundabout route with diversions around the zero and negative interest rates being currently applied to fiat money; and a detour via positive interest which is itself a stranger idea than we have been led to believe. It suggests that demurrage is worth a place in the designer’s kitbag, but not for the reason normally postulated.
The basic idea of interest is simple. It’s a special type of rent. If we loan out something we have no immediate need for ourselves, it seems reasonable that the borrower should pay us rent for its use. So interest is a rent on money.
A fundamental problem with the rent rationale in general occurs when the ‘property’ concerned is a public good – a commons which has been enclosed – or where it has been secured by violence or some other unfair means. In that case we might feel a little aggrieved at having property we feel we should have a degree of proprietorship over sold or rented back to us. This is the way many people feel about water for example.
Another issue arises when the property owner has (and will have) no need for the property themselves and have acquired it only for its rental value. Seeking a store of value via investment is understandable but when the asset class created is a ‘stuff of life’ good, tensions are sure to arise because investors are affecting the price of essentials. The more they can corner the market the more they can increase the cost of basic living. This seems to be increasingly the case with housing.
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New currencies and their relationship with fiat currency
New currencies and their relationship with fiat currency
Complementary Currencies aim to work alongside the pound or the dollar. Classically they seek to broker exchanges of underused resources with unfulfilled need, and facilitate activity in niches neglected by the mainstream economy. They do much good work and are worthy of support.
Intentional Currency designs on the other hand will generally be grounded in a critical assessment of the way fiat currencies operate, and recognise and seek to remedy or mitigate their dysfunction. In this way they are competitive with fiat. Consequently if fiat currency plays a role in the start-up or continued operation of a new currency, it is appropriate to manage these interactions carefully and to understand the impact that fiat-dependence can have on the currency’s development.
This article outlines management issues associated with some of the potential interactions with fiat. It has been produced as a Working Paper as part of the Feasta Currency Group’s development of a Charter for Intentional Currencies.
Creating and maintaining a currency without any interaction with fiat is clearly a challenge. It’s like asking fish to reinvent water while they are swimming around in it. But if we consider the main forms of interaction with fiat, some clues as to the management of the difficulties may emerge.
Three important fiat-interactions are:
i) access to fiat capital for a start-up phase or for a step-change in the development of the currency
ii) the issuance of currency units in exchange for fiat (fiat-backing)
iii) general exchangeability with fiat
Capital Investment
Most projects need start-up capital, but fiat-friendly projects have the option of repaying investors or contributors in fiat once they are successful. A fiat-cautious project might think twice about this. To some extent this challenge has been successfully navigated by a number of ‘Open’ projects, at least to the extent that contributors defer any claim on project success until revenue streams flow or until ‘satellite’ fiat-earning activities are identified.
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The Greece and Eurozone Crisis Made Simple
The Greece and Eurozone Crisis Made Simple
One can go into long convoluted explanations but, as I see it, there are two basic problems, one leading into the other. The more superficial problem is that in a single currency zone without the option of devaluation purchasing power will drain to the more competitive countries. To continue buying in the common currency people, companies and governments in less competitive (and poorer) countries have to borrow but this is a temporary solution for the obvious reason that they must pay back with interest so pretty soon borrowing makes this problem worse.
At that point the rationale of the common currency zone is stuck in an unresolvable dilemma. All the twists and turns have merely been “kicking the can down the road” – and each time the problem re-surfaces it is bigger and more threatening. What does “kicking the can down the road” mean? It means borrowing more in order to pay back the last lot of loans.
What makes it a little bit confusing is the way that the debt gets transferred from agency to agency at each can kicking stage. What has basically happened is that the other European states have wanted the Greek state to be turned into a debt collecting agency on behalf of the Eurozone governments and for the IMF. A key problem here is that the Greek elite does not actually pay taxes – they have taken their money and everything moveable to Switzerland or places like the London property market. Like the rest of the global elite they too believe that “only the little people pay taxes” and by now the little people have been ruined. The other option is to sell off the public sector to the creditors. However the Greek people have now elected a government that says that they can’t pay – a government that does not do what it is told by the creditors and whose finance minister did not wear a suit and a tie.
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