The Immediate Economy

The Immediate Economy (IE) book, 137p, Table of Contents and Introduction below might be emailed on request to:

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The Reality of Money

Money is generally thought of as a valuable substance. It can be taken to shops and exchanged for goods with real value there. It can also be used to buy services - other people's work, and for rights - such as to live in a rented room for a month. Money as value stuff can be hoarded by hiding it under mattresses. It can also be lent with or without interest.

This sort of thinking made more sense when money was metal coins minted by monarch's treasuries than it did when it became paper bills with numbers and faces printed on them. Such pieces of paper are useless for any other purposes than proving that their owner has a right to obtain real value - such as goods in shops - whose total prices are equal to the sum of the numbers printed on the paper tokens. If those tokens were acquired honestly, the buyer gave real values to the rest of the economy whose total value, or price, was equal to the numbers printed on the tokens. Prices are measured in arbitrary units, $, €, £.. These differ from one economy to another, but must be used consistently within such economies to have meaning. Unit measures of value are thus comparable to unit measures of length - feet, meters. A $, €, £.. represents value - it is a symbol with no intrinsic value, just as a meter has no real length. The word 'water' (eau, mayu, pani, ab, voda...) quenches no thirst.

Paper money is a symbolic medium for communicating information about values just as a language is a symbolic medium for communicating information about other aspects of reality. This becomes more obvious when payments are made with credit cards and accounts are balanced daily. Then no material substance with supposed intrinsic value changes hands. The gap between giving real value to get symbols for value and exchanging those symbols for other real value shrinks as accounts are balanced more frequently and less money is saved.

Money is used for sharing as well as for exchanging rights to real value. A company may earn a great deal of money by selling a great many desirable goods, rights or services. That money symbolizes rights to other real goods, rights or services that the company's clients owe to its employees and other personnel for having made and sold them, and for having acquired the necessary equipment, buildings etc needed to do this. To be fair, the real value of the goods, rights or services owed to the company's employees, investors and other personnel (managers..) should be shared amongst them immediately as it is received in proportion to the value of their individual contributions to the company's total income. Such contributions can be services - management as well as labour, and they can be rights - to use tools, own land, use communication networks...

It is not only that company's employees and investors who deserve fair fractions of its income. Many other people worked to make that company's products. People probably traveled over roads to work there. Raw materials and semi-finished goods probably had to be delivered to it. The people who acquired and delivered those materials and goods should also earn fair shares of that company's income as they are received by the company. People had to be educated to know what to do in it, kept healthy and safe.. government, management, communications and banking services were needed to organize all these people in many ways.

Goods, rights or services have real value because they are desirable. When money has symbolic value only, payments for real value are not fair unless they are immediate. If payment is delayed, the buyer benefits from real value that belongs to the seller until the transaction is complete. When payment is immediate, the seller can immediately buy other real value and enjoy whatever makes it desirable - delay defrauds the seller of that real value. In a fair symbolic money economy the flow of symbolized value should match that of the real value; directions reversed.

When money becomes symbolic and has no intrinsic value, there is confusion the gap between giving real value of some kind to get symbolic money and giving those paper or number tokens to get other real value. This is a sort of double barter - real for symbolic for real. It implies double ownership. During the gap, the symbols are thought of as though they had real value - anyone who owns symbols can use them to acquire real value of equal price. There is thus one set of owned goods, rights or services with certain real desirability, and another owned set that is valuable because it can be exchanged for real value.

Symbolic-real value confusion has been used to acquire power since money was invented. Coins cannot be minted if their face values were smaller than their production costs. They are melted down if their face value shrinks below that of their metal content, More power is acquired creating symbolic tokens cost less and their face value is higher. Though this is a form of theft. Powers so acquired by an authority can be used to do things for the other members of the economy that they cannot do for themselves. That authority can tax the public to pay for public services - health care, education, justice, standards, research and much else, in a coherent way, such that all benefit by belonging to a single well-organised society.

The money-creating authority is under no obligation to use its powers for the public good. It can also use them to build private palaces and pleasure gardens - or to dupe the public into paying for huge quantities of weapons and kill itself in foreign wars, or to so manage the media that it believes it needs nuclear energy because global warming is caused by CO₂. Powers to create money also confer powers to decide what 'good' is, promulgate laws and punish evil-doers. The authorities that create money are above the law. Money is thus always created for the public good - even if the public is being taxed and tyrannized to death in several ways at once. Kings and presidents are unquestionably wise, just, benevolent, farsighted protectors of the people, defenders of the nation and the faith. They have the power to decree that anyone who disagrees with them is seditious, unpatriotic, guilty of treason, in need of imprisonment, torture, death..

Printing paper and lending or spending numbers into circulation is less bothersome than minting coins. In our times, banks and governments combine to regulate the economy for the 'public good'. Banks create money by lending more money and at higher interest rates than was deposited in them at lowers rates. Borrowers spend that money into circulation to build factories or found other enterprises. They owe borrowed moneys and interest to banks, own their buildings and enterprises, charge clients most, pay workers least, try to avoid taxes, and keep the difference for themselves as profits.

Company incomes are not distributed fairly to the individuals who contributed to the real values of their products and services in this arrangement. Workers real work has real value. It earns hardly more than inflation when deposited in banks - it loses value to inflation when hoarded as paper. While the real value is sterilized, borrowers' companies can make huge profits by investing the money they borrowed from the banks . The sterilized real value is exchanged for the properties, environment, organisation needed to make highly profitable industrial concerns. The continuous creation of new credit money that must pay interest increases the money supply exponentially.

Workers are weak and disorganized - unions are regularly infiltrated to make them bargain for wages rather than fair shares of company income. Fixed wages are always unfair. Fair distribution of joint income is in fair fractions of total income. Fairness is determined by bargaining until each realizes that he/she cannot get more for what he/she gives. This includes everyone in the economy - not just workers, investors and bosses. Everyone suffers from the inflation of the money supply and its devaluation - except the money creators. They use their control of the media to make it understood that inflation and depressions just happen - like the weather. "There is another depression rolling in. No, it's not a low pressure trough bringing rain and cold. But the expert economists at the national reserve bank know what they are doing. They will soon reduce its effects on the economy. ".

The experts decided that the economy was overheating. So the banks make no new loans, raise interest rates and oil prices, foreclose mortgages, and reduce payments to the government that has to raise taxes to do its job. Cooling depressions are fine weather for the money creators. When small companies go broke in droves and real estate prices plummet, the money managers can buy them up at bargain basement prices. The unemployed are also willing to accept any work to stay alive, assassinate unwanted politicians, risk death in foreign wars, sell drugs, or their bodies.. The boom promissed by the experts occurs when the experts decide the economy needs to be stimulated. So the money makers pump huge quantities of new money into it. Almost everyone can get loans at low rates under easy conditions. New factories are go up, unemployment dries up, prices and wages rise - the whole economy bathes in a cozy, rozy optimistic glow. When people are up to their necks in debt and debt money, the noose is pulled tight again. This sort of rock and roll is known as "fine tuning the economy". Real value raked in, then fake money is reeled out -presumably to boom and bust the economy to stability and prosperity..

Banks and borrower-bosses also cheat when they do not redistribute jointly earned incomes entirely, fairly and immediately to workers and others who contributed to those joint incomes. Companies pay a fraction of their gross incomes to governments as taxes and bribes, and repay debts to banks. Managers and investors keep more or less what they want for themselves and to invest in more efficient equipment, buildings etc - which will also belong to them. Large corporations can thus force small competitors into bankruptcy, buy them out, and grow some more as small farmers, craftsmen, shopkeepers, restaurants and other little people who are not in on the money creation game, but suffer from inflation and pay taxes, go broke. The large corporations then combine to holdings that manage agribusinesses, supermarket, hotel chains, key energy, transport, communications defense other industries that get large contracts from the government. Those contracts are paid by taxing the little people.

These enormous frauds would not be possible without the gap between the sale of jointly produced goods, rights or services and the complete, immediate and fair distribution of company income to all who contributed to providing them. That does not only include company managers, investors, workers, and all subcontractor employees. The whole economy can be compared to a single living organism with many interacting parts. In the ultimate analysis, everyone in the economicy in involved in the fair sharing of everything everyone makes, does, owns - for, and with, everyone else. A single pin prick can put a whole body in pain; a single beautiful view can give pleasure to the entire person. The is not something that economists, who think of money as something that has intrinsic value, understand. A different kind of thinking is required.