I have been catching up with the TV series 'Home of the Future' on 4OD (Channel 4). It is extremely interesting and informative, but I wanted to blog about a couple of ideas that stuck out for those sensitive to the RBE concept.
The family featured in the futurized home run a garage and one project was to upgrade it to deal with electric cars, but this was presented as a way of keeping the garage in business. This was just one way in which the programme series has shown up its preconception that there will be / ought to be paid work in the future (it's a given), even though it shows ways of saving work in the home. One family member who works at the garage opined that their future will involved repairing electric cars. Repairing things is good, but to create work and keep comsumption going, products are currently made so that they need repairing or replacing. In an RBE, transport hardware will be designed and built to optimally provide the service of transport as a way of helping human needs to be met. It will not be designed to keep people in work, or to consume resources unecessarily.
The second idea was a smartphone app that helps you find out where the cheapest supermarket prices are. Setting aside the absence of the need for money in an RBE, we can still see the absurdity of using the processing power of a smartphone to mine for price data that is essentially already available, but kept separate for the purposes of competition. The bewildering price structures in supermarkets make it necessary either to have this secondary tech to help you, to use considerable brain power to achieve the same end, or simply to ignore the "shopping around" element altogether.
A supermarket has to create enough of an impression that is the 'cheapest' to get you to choose it over the others, but also to get you to spend more money there once you have chosen it. One of the tenets of the free market is supposed to be clear price information with no subsidies or lags and no externalities. The supermarket price wars give a complete lie to this.
Showing posts with label free market. Show all posts
Showing posts with label free market. Show all posts
Saturday, 17 March 2012
Sunday, 30 October 2011
Making markets work
This is the heading of chapter 13 of "Natural Capitalism" (Lovins, Lovins and Hawker) that influenced me years ago. One of my favourite bits is where the authors directly expose tthe assumptions of the free market as, if not being invalid, having obvious exceptions. The authors say that "it's only because markets are so imperfect that there are exceptional business opportunities left."
I'm blogging this material here as to get to an RBE we need some transitional steps - and making the free market do what it theoretically should, or showing that it can't, may be one such step.
It's a US focussed book, published in 1999, but the ideas hold up pretty well. Anyway, here are the 18 assumptions (in italics), interspersed with the "hang on though" exceptions (in the book you turn the page). All credit is due to the authors of the book.
1. All participants have perfect information about the future. If anyone had it, he or she’d be barred from elections and stock markets — and probably not given any credence by the rest of us.
2. There is perfect competition. Competition is so imperfect that exceptional profits are commonly earned by exploiting either one’s own oligopolistic power or others’ oversights, omissions, and mistakes.
3. Prices are absolutely accurate and up-to-date. Markets know everything about prices and nothing about costs.
4. Price signals completely reflect every cost to society: There are no externalities. Most harm to natural capital isn’t priced, and the best things in life are priceless.
5. There is no monopoly (sole seller). Microsoft, airlines’ fortress hubs, and your managed health-care provider come close.
6. There is no monopsony (sole buyer). Consider your utility, the Peanut Marketing Board, and the Federal Aviation Administration.
7. No individual transaction can move the market, affecting wider price patterns. What about Warren Buffet and the Hunt Brothers?
8. No resource is unemployed or underemployed. Thirty percent of the world’s people have no work or too little work. (Economists justify this by calling them “unemployable” — at least at the wages they seek.)
9. There’s absolutely nothing that can’t be readily bought and sold (no unmarketed assets) — not even, as science-fiction author Robert Heinlein put it, “a Senator’s robes with the Senator inside.” Most of the natural capital on which all life depends can be destroyed but neither bought nor sold; many drugs are bought and sold in a pretty effective free market, but doing either can jail you for life.
10. Any deal can be done without “friction” (no transaction costs). The hassle factor is the main reason that many things worth doing don’t happen.
11. All deals are instantaneous (no transaction lags). Does your insurance company always reimburse your medical bills promptly? Does your credit-card company credit your payments immediately?
12. No subsidies or other distortions exist. Worldwide subsidies exceed $1.5 trillion annually — for example, America’s 1872 Mining Act sells mineral-bearing public land for as little as $2.50 an acre and charges no royalties.
13. No barriers to market entry or exit exist. It’s hard to start up the next Microsoft, Boeing, or GM — or to get out of the tobacco business
14. There is no regulation. The world’s regulations, put on a bookshelf, would extend for miles.
15. There is no taxation (or if there is, it does not distort resource allocations in any way). The Internal Revenue Code exists.
16. All investments are completely divisible and fungible — they can be traded and exchanged in sufficiently uniform and standardized chunks. You can’t buy a single grape at the supermarket, nor an old-fashioned front porch in most housing developments.
17. At the appropriate risk-adjusted interest rate, unlimited capital is available to everyone. Many people are redlined, must resort to loan sharks, or have no access to capital at any price.
18. Everyone is motivated solely by maximizing personal “utility,” often measured by wealth or income. So why does anyone fall in love, do good, or have kids, and why do three-fifths of Americans attend weekly worship services?
I'm blogging this material here as to get to an RBE we need some transitional steps - and making the free market do what it theoretically should, or showing that it can't, may be one such step.
It's a US focussed book, published in 1999, but the ideas hold up pretty well. Anyway, here are the 18 assumptions (in italics), interspersed with the "hang on though" exceptions (in the book you turn the page). All credit is due to the authors of the book.
1. All participants have perfect information about the future. If anyone had it, he or she’d be barred from elections and stock markets — and probably not given any credence by the rest of us.
2. There is perfect competition. Competition is so imperfect that exceptional profits are commonly earned by exploiting either one’s own oligopolistic power or others’ oversights, omissions, and mistakes.
3. Prices are absolutely accurate and up-to-date. Markets know everything about prices and nothing about costs.
4. Price signals completely reflect every cost to society: There are no externalities. Most harm to natural capital isn’t priced, and the best things in life are priceless.
5. There is no monopoly (sole seller). Microsoft, airlines’ fortress hubs, and your managed health-care provider come close.
6. There is no monopsony (sole buyer). Consider your utility, the Peanut Marketing Board, and the Federal Aviation Administration.
7. No individual transaction can move the market, affecting wider price patterns. What about Warren Buffet and the Hunt Brothers?
8. No resource is unemployed or underemployed. Thirty percent of the world’s people have no work or too little work. (Economists justify this by calling them “unemployable” — at least at the wages they seek.)
9. There’s absolutely nothing that can’t be readily bought and sold (no unmarketed assets) — not even, as science-fiction author Robert Heinlein put it, “a Senator’s robes with the Senator inside.” Most of the natural capital on which all life depends can be destroyed but neither bought nor sold; many drugs are bought and sold in a pretty effective free market, but doing either can jail you for life.
10. Any deal can be done without “friction” (no transaction costs). The hassle factor is the main reason that many things worth doing don’t happen.
11. All deals are instantaneous (no transaction lags). Does your insurance company always reimburse your medical bills promptly? Does your credit-card company credit your payments immediately?
12. No subsidies or other distortions exist. Worldwide subsidies exceed $1.5 trillion annually — for example, America’s 1872 Mining Act sells mineral-bearing public land for as little as $2.50 an acre and charges no royalties.
13. No barriers to market entry or exit exist. It’s hard to start up the next Microsoft, Boeing, or GM — or to get out of the tobacco business
14. There is no regulation. The world’s regulations, put on a bookshelf, would extend for miles.
15. There is no taxation (or if there is, it does not distort resource allocations in any way). The Internal Revenue Code exists.
16. All investments are completely divisible and fungible — they can be traded and exchanged in sufficiently uniform and standardized chunks. You can’t buy a single grape at the supermarket, nor an old-fashioned front porch in most housing developments.
17. At the appropriate risk-adjusted interest rate, unlimited capital is available to everyone. Many people are redlined, must resort to loan sharks, or have no access to capital at any price.
18. Everyone is motivated solely by maximizing personal “utility,” often measured by wealth or income. So why does anyone fall in love, do good, or have kids, and why do three-fifths of Americans attend weekly worship services?
Sunday, 9 October 2011
Corruption
It is a weak but unfortunately common argument technique to play down or ignore the advantages of something you are against, play up the disdadvantges of it, and do the opposite of the thing you are in favour of.
This is seen a lot by critics of TZM/TVP especially when they light on money, because of course in an RBE there would be no need for money, and some proponents see actively getting rid of money as a transitional step in bringing in an RBE.
Undeniably money was introduced for practical reasons - a means of exchange, a store of value, a unit of accounting - the classical purposes of money - and it is counter intuitive to claim to be able to do without these functions. [In an RBE we would account for every resource. Difficult, maybe, but look at all the intellect and technology that goes into finance and weaponry. Imagine if that was diverted towards fulfilling human need and measuring sustainability].
To balance the claim of the usefulness and inevitability of momey we can look at corruption as one example of something an RBE would eradicate. I saw a TV programme about black South Africans in shanty towns. Some of them were bribing officials to get what we would call a coucikl house. One family fetaured had applied for and been allocated a council house, only to find that the house was already occupied bu someone (equally desperate) who had 'bought' the house - ie bribed an official.
In an RBE there would be no money to bribe people with, and with resources shared fairly no desire to be bribed. With human needs put first there would be no-one living in a slum. Opponents of an RBE need to put their cards on the table. Do they actually want a world where human needs are met and corruption is designed out? If so, they need to fit it into the monetary system, where scarcity (in this example of decent homes) brings an opportunity to make money.
Free market capitalists often argue that their favoured system will eventually benefit all, but this promise of jam tomorrow doesn't seem likely to be fulfilled based on experience so far. And given that human need is not being well enough fulfilled the while the limited resources of the planet are being squandered as if they were limitless, I say we try something else. Maybe no system has so far been beter than capitalism, bt this doesn't mean no better system is possible.
This is seen a lot by critics of TZM/TVP especially when they light on money, because of course in an RBE there would be no need for money, and some proponents see actively getting rid of money as a transitional step in bringing in an RBE.
Undeniably money was introduced for practical reasons - a means of exchange, a store of value, a unit of accounting - the classical purposes of money - and it is counter intuitive to claim to be able to do without these functions. [In an RBE we would account for every resource. Difficult, maybe, but look at all the intellect and technology that goes into finance and weaponry. Imagine if that was diverted towards fulfilling human need and measuring sustainability].
To balance the claim of the usefulness and inevitability of momey we can look at corruption as one example of something an RBE would eradicate. I saw a TV programme about black South Africans in shanty towns. Some of them were bribing officials to get what we would call a coucikl house. One family fetaured had applied for and been allocated a council house, only to find that the house was already occupied bu someone (equally desperate) who had 'bought' the house - ie bribed an official.
In an RBE there would be no money to bribe people with, and with resources shared fairly no desire to be bribed. With human needs put first there would be no-one living in a slum. Opponents of an RBE need to put their cards on the table. Do they actually want a world where human needs are met and corruption is designed out? If so, they need to fit it into the monetary system, where scarcity (in this example of decent homes) brings an opportunity to make money.
Free market capitalists often argue that their favoured system will eventually benefit all, but this promise of jam tomorrow doesn't seem likely to be fulfilled based on experience so far. And given that human need is not being well enough fulfilled the while the limited resources of the planet are being squandered as if they were limitless, I say we try something else. Maybe no system has so far been beter than capitalism, bt this doesn't mean no better system is possible.
Saturday, 12 June 2010
Money
I've watched a series of you tube videos that show how money evolved from a convenient way of dealing with gold to a system of accounting which relies on faith in the US government. (The videos are from a US perspective, but it's not too different elsewhere). The US government is "reliable" in this sense becuse it represents the land, labour, food, mineral resources, etc, of the USA itself.
It's odd, because one of the key Venus Project ideas is the big database showing what tangible resources we actually have. The money that exists ultimately is supposed to represent these things, but apart from the fact that we can't measure the true worth (utility) of (say) a tree, compared to (say) a bus we don't actually know in total in one place what we have. If we did know this we would have better information on how much money there should be to represent it, instead of letting it grow arbitrarily.
The idea of coupling money to gold is unhelpful as the price of gold does not relate to the utility value of the actual resources we have and neither does the amount of gold that exists.
If we did know in total in one place what useful things we actually have, we could perhaps try to denominate it all in one unit, but would there be any point? If we direct ourselves to producing sustainable abundance, rather than getting money, we reduce and/or eliminate the vary scarcity that the free market is supposed to allocate out to everyone.
It's odd, because one of the key Venus Project ideas is the big database showing what tangible resources we actually have. The money that exists ultimately is supposed to represent these things, but apart from the fact that we can't measure the true worth (utility) of (say) a tree, compared to (say) a bus we don't actually know in total in one place what we have. If we did know this we would have better information on how much money there should be to represent it, instead of letting it grow arbitrarily.
The idea of coupling money to gold is unhelpful as the price of gold does not relate to the utility value of the actual resources we have and neither does the amount of gold that exists.
If we did know in total in one place what useful things we actually have, we could perhaps try to denominate it all in one unit, but would there be any point? If we direct ourselves to producing sustainable abundance, rather than getting money, we reduce and/or eliminate the vary scarcity that the free market is supposed to allocate out to everyone.
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