Freedom's Bulwark: CAPITALISM! (Republicae)

… control freak, self-righteous conservatives and perhaps an equal number of smug, do-gooders on the left don’t get the core genius of this tenet of libertarian tolerance for free association. Likewise, many of our own who haven’t yet shaken off the lingering vestiges of their former categorizing mindsets: The snarkiness over the Zeitgeist debate is clear indication that many in this movement can’t yet embrace the concept of voluntariness without enforced conformity.

Communitarianism is human and not oppressive if it remains open. We become flexibly accustom to it in the fluctuations of family life. Anthropologically we evolved gathering in clans. When there’s space … there’s harmony or spinoff. When there’s crowding and heavy-handedness … there is conflict or subjugation.

Early, when cooperation is positive, the group grows and thrives. When the group becomes too unwieldy to maintain consensus, it will crumble into pieces of its own weight, as it should. Unless, of course, there is resort to aggression, which either succeeds in oppressing ( at least for a time), or there is escalating retaliations.

Generally, this positive model is how Amish communities function. The school, major medical and catastrophes are group responsibilities, enforced without threat of violence. Barn raisings are social and happily not self-centered. Many of their old fashion methods and lifestyle choices are to keep their communities just the right size by the inevitable attrition of peaceful group dynamics. Someone gets out of step or is a malingerer, shunning, in its less aggressive forms, usually proves sufficient for the voluntary choice to move on ( and there is usually the pull factor of hope for greener pastures where one might expect to fit in better).

Police powers are a corruption of civil society. Central control is an inevitable consequence of government and the politics of ambition. It is not indispensible, but rather, should be regarded as the anathema to a smooth, happy and productively functioning community.

When the real money necessary to the functioning of a genuine capitalist system is restored to better resemble the barter engaged in by Amish libertarian/communitarians, I propose the following slogan be inscribed to capture more of the ethic:

E Unum Pluribus

By all means, read the Fugitive Essays: Selected Writings of Chodorov, I think you will find them very interesting on this and other related subjects.

http://www.1776solution.blogspot.com

"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner

To see the beginning of trade you have to go back into the at least the late Paleolithic Period, but it began to really take off by the middle of the Neolithic Period. There was no government, no structure to speak of during those times, but trade came from necessity, desires, dreams, all the same attributes that govern economies today found a genesis during those periods.

As one would expect, trade increased, trade routes produced trade markets, markets into settlements, settlements into towns and so on. Before written language there were markets, before governments there were markets. Even laws sprang from the markets themselves and did not originate from government structure. I could go into the entire history but I would bore you to death. Needless to say that there was an evolution from primative trade into higher orders of trade and human interactions that provided the impetus for greater organization. Land ownership was a very late occurrence in history, even the idea of "royalty" was a rather late event, but before it all came free, unadulterated trade with markets following the growth of that trade. Usually, even after the rise of government the markets were free of all government interevention.

http://www.1776solution.blogspot.com

"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner

Thank you very much!

http://www.1776solution.blogspot.com

"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner

Actually, monopolies usually occur with a great deal of government intervention into business affairs, providing certain privileges, favors and regulations that favor one politically connected group or corporation over another. Monopolies began as grants from the various royal heads of state, such at the East India Company. In a free market the competition normally prevents artificial monopoly creation.

The great thing about a gold specie is that it acts and reacts to the law of supply and demand, adjusting purchasing power to the various forces of economic exchange. Unlike fiat money which always has to be manipulated either by government or a central bank in order to achieve and maintain economic growth.

As Rothbard put it so succinctly when he hit the nail on the head and quoting that brilliant Scottish Economist David Hume:

“First, the total stock, or supply, of money in society at any one time, is the total weight of the existing money-stuff. Let us assume, for the time being, that only one commodity is established on the free market as money. Let us further assume that gold is that commodity (although we could have taken silver, or even iron; it is up to the market, and not to us, to decide the best commodity to use as money). Since money is gold, the total supply of money is the total weight of gold existing in society. The shape of gold does not matter? Except if the cost of changing shapes in certain ways is greater than in others (e.g., minting coins costing more than melting them). In that case, one of the shapes will be chosen by the market as the money-of-account, and the other shapes will have a premium or discount in accordance with their relative costs on the market.

Changes in the total gold stock will be governed by the same causes as changes in other goods. Increases will stem from greater production from mines; decreases from being used up in wear and tear, in industry, etc. Because the market will choose a durable commodity as money, and because money is not used up at the rate of other commodities--but is employed as a medium of exchange--the proportion of new annual production to its total stock will tend to be quite small. Changes in total gold stock, then, generally take place very slowly.

What "should" the supply of money be? All sorts of criteria have been put forward: that money should move in accordance with population, with the "volume of trade," with the "amounts of goods produced," so as to keep the "price level" constant, etc. Few indeed have suggested leaving the decision to the market. But money differs from other commodities in one essential fact. And grasping this difference furnishes a key to understanding monetary matters. When the supply of any other good increases, this increase confers a social benefit; it is a matter for general rejoicing. More consumer goods mean a higher standard of living for the public; more capital goods mean sustained and increased living standards in the future. The discovery of new, fertile land or natural resources also promises to add to living standards, present and future. But what about money? Does an addition to the money supply also benefit the public at large?

Consumer goods are used up by consumers; capital goods and natural resources are used up in the process of producing consumer goods. But money is not used up; its function is to act as a medium of exchanges--to enable goods and services to travel more expeditiously from one person to another. These exchanges 3%3 are all made in terms of money prices. Thus, if a television set exchanges for three gold ounces, we say that the "price" of the television set is three ounces. At any one time, all goods in the economy will exchange at certain gold--ratios or prices. As we have said, money, or gold, is the common denominator of all prices. But what of money itself? Does it have a "price"? Since a price is simply an exchange-ratio, it clearly does. But, in this case, the "price of money" is an array of the infinite number of exchange-ratios for all the various goods on the market.

Thus, suppose that a television set costs three gold ounces, an auto sixty ounces, a loaf of bread 1/100 of an ounce, and an hour of Mr. Jones' legal services one ounce. The "price of money" will then be an array of alternative exchanges. One ounce of gold will be "worth" either 1/3 of a television set, 1/60 of an auto, 100 loaves of bread, or one hour of Jones' legal service. And so on down the line. The price of money, then, is the "purchasing power" of the monetary unit--in this case, of the gold ounce. It tells what that ounce can purchase in exchange, just as the money-price of a television set tells how much money a television set can bring in exchange. What determines the price of money? The same forces that determine all prices on the market? That venerable but eternally true law: "supply and demand." We all know that if the supply of eggs increases, the price will tend to fall; if the buyers' demand for eggs increases, the price will tend to rise. The same is true for money. An increase in the supply of money will tend to lower its "price"; an increase in the demand for money will raise it. But what is the demand for money? In the case of eggs, we know what "demand" means; it is the amount of money consumers are willing to spend on eggs, plus eggs retained and not sold by suppliers. Similarly, in the case of money, "demand" means the various goods offered in exchange for money, plus the money retained in cash and not spent over a certain time period. In both cases, "supply" may refer to the total stock of the good on the market.

What happens, then, if the supply of gold increases, demand for money remaining the same? The "price of money" falls, i.e., the purchasing power of the money-unit will fall all along the line. An ounce of gold will now be worth less than 100 loaves of bread, 1/3 of a television set, etc. Conversely, if the supply of gold falls, the purchasing power of the gold-ounce rises.

What is the effect of a change in the money supply? Following the example of David Hume, one of the first economists, we may ask ourselves what would happen if, overnight, some good fairy slipped into pockets, purses, and bank vaults, and doubled our supply of money. In our example, she magically doubled our supply of gold. Would we be twice as rich? Obviously not. What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor and capital. Multiplying coin will not whisk these resources into being. We may feel twice as rich for the moment, but clearly all we are doing is diluting the money supply. As the public rushes out to spend its new-found wealth, prices will, very roughly, double--or at least rise until the demand is satisfied, and money no longer bids against itself for the existing goods.

Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its price, the change does not--unlike other goods--confer a social benefit. The public at large is not made richer. Whereas new consumer or capital goods add to standards of living, new money only raises prices--i.e., dilutes its own purchasing power. The reason for this puzzle is that money is only useful for its exchange value. Other goods have various "real" utilities, so than an increase in their supply satisfies more consumer wants. Money has only utility for prospective exchange; its utility lies in its exchange value, or "purchasing power." Our law--that an increase in money does not confer a social benefit--stems from its unique use as a medium of exchange.

An increase in the money supply, then, only dilutes the effectiveness of each gold ounce; on the other hand, a fall in the supply of money raises the power of each gold ounce to do its work. We come to the startling truth that it doesn't matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of the gold-unit. There is no need to tamper with the market in order to alter the money supply that it determines.

At this point, the monetary planner might object: "All right, granting that it is pointless to increase the money supply, isn't gold mining a waste of resources? Shouldn't the government keep the money supply constant, and prohibit new mining?" This argument might be plausible to those who hold no principled objections to government meddling, thought it would not convince the determined advocate of liberty. But the objection overlooks an important point: that gold is not only money, but is also, inevitably, a commodity. An increased supply of gold may not confer any monetary benefit, but it does confer a non-monetary benefit--i.e., it does increase the supply of gold used in consumption (ornaments, dental work, and the like) and in production (industrial work). Gold mining, therefore, is not a social waste at all.

We conclude, therefore, that determining the supply of money, like all other goods, is best left to the free market. Aside from the general moral and economic advantages of freedom over coercion, no dictated quantity of money will do the work better, and the free market will set the production of gold in accordance with its relative ability to satisfy the needs of consumers, as compared with all other productive goods.”

While it is true that under the Federal Reserve and fractional reserve system there is a profit, both to the banks and the government from the creation of fiat money. Under a gold monetary system the vital function of interest is not profit, but compensation or timed rent on money loaned. It provides for certain economic forces that are vital for the function of the economy, otherwise the economy would have to be artificially regulated and manipulated to replace the vital functions of interest within an economy.

http://www.1776solution.blogspot.com

"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner

"With a nation willing to subsidize the industry and lay siege on ours...until the inevitable death of American industry- much like Japan has done in the TV, auto, and electronics industries, how can you hope for a nation to prosper?"

I disagree. Yes, we have to compete with this, but so what? In the end the US will have been stronger for it, because we will have to adapt and find what we are *good at*. The model that something like this is catastrophic to the US is predicated on the notion that any given one of us "deserves" to stay in whatever job we hold; and that is antithetical to capitalism. If some nation decides to "steal" one of our industries, then what we should be doing is finding another one to adopt.

Sadly, our choice in this matter has run its course, and we chose "the financial sector" but ultimately that only happened because the government through no immediate, obvious, direct fault of its own (except not following the constitution) subsidized the development of the financial sector.

We must remember that through the decades of economic distortions, there has been a very complex structure that has formed throughout the system, including the balance of trade between countries. Today, we have managed trade, not free trade, it is as heavily manipulated today as it was during the monopolistic period that brought about the East India Company. The influences on trade has little to do with trade itself, but is a political contrivance used in various ways to apply pressure on trading partners to conform with political agendas. The global trade agreements are primarily socio-political agreements instead of actual trade agreements.

Under the fiat regimes, they all tend to play the same game among themselves, one attempting to trump the other in the trade game under the guise of free trade. Free trade doesn’t require governments, only manufacturers of products who agree to form private contracts to conduct trade between them. That is free trade.

Tariffs are not necessarily the answer to the problems, the answer is to get governments out of the trade business and allow it to fall where it belongs and that is in the hands of the actual people who produce.

Thanks for the email by the way, I appreciate it.

http://www.1776solution.blogspot.com

"If I want to be free from any other man's dictation, I must understand that I can have no other man under my control." ~William G. Sumner

Any imposed tariff is ultimately passed to the **buyer** as a higher price. The only thing such a policy accomplishes is to decrease prosperity for the population of the nation-state that imposes the tariff; the very one's such a policy is intended to "protect."

More info here:
http://en.wikipedia.org/wiki/Comparative_advantage