Situation Clarification D

My feeling is that shillings need to be delineated further in terms of purpose. They not only need to be the chosen currency in the bank accounts of ordinary people, but need to be the currency of operation of all enterprises which shouldn't be profit-making. So it becomes a matter of decisions being made on whether or not the NHS should make profits, the rail system should make profits, the post office ditto, the road network ditto, and so on. As soon as we have decided that a certain sector should be non-profit, shillings become its currency. Current private operators are served notice on the termination of their contracts, and we begin the process of recasting needed to make these sectors actually efficient again i.e. strongly providing a service as fully as possible, with the greatest benefit to the most people.

As a result a network develops, between the enterprises that are there for everyone's good and don't require the profit motive, in fact suffer from its inclusion, and the people who work in them. A huge sector which is exclusively involved in providing for the people in the wellbeing of their ordinary lives. The principles of Modern Monetary Theory are used to supply the funds for those needs to be met. Obviously there would be interactions with the world of the pound, where goods and services are needed which are produced by the profit-making sector. But it's interesting that the process of provisioning would highlight those areas very clearly because there would need to be payments in pounds by the accounts departments of these public shillings-based enterprises. One could then look at whether or not funding the new production of those particular goods and services would be worthwhile for the public purpose to be involved in, or whether it was more efficient to remain a purchaser-in of them in pounds. So we have a situation where some new enterprises could come about if the model of public production was worthwhile, so as to provision enterprises we already run: an expanding sector in terms of results achieved, rather than profits made i.e. the right sort of expansion for the public sector. Because of course not only are necessaries produced, but people are employed, all outside the world of profit-taking by individuals.

Which helps me to circle back to what some may see as a truism, but something I feel it's good to underline. A likening may help. Imagine, in your rounds on the web, you go in for your daily session on Youtube. And you gravitate for some reason to gruesome medical videos, which abound there. And you are fascinated, and appalled, by one showing a transection of the lungs of a dead creature which has died because of a parasitic attack: there are loads of wormish-leechish parasites glued en masse to the lungs, which had been sucking the lifeblood away from the creature and caused its death. They are awful to see in such huge numbers, wriggling and swaying in their hundreds - to think of attached and sucking inside a living body, killing it by denuding it of lifeblood.

In a strong sense, that's what a culture of profit-taking in publicly necessary systems is. It's a siphoning away of useful resources to private pockets. One can picture those shareholders and private owners as these parasites. But what we do instead is lionise them as public providers, inexplicably avoiding the realities of the situation. Somehow we've lost confidence in our ability to supply ourselves with our needs, like we've been the victim of a confidence-trick. We've been sold a story about inefficiency when we do it, efficiency when they do it, which is the obverse of true. 

But of course there are points which needs addressing. The main one, expressed in a slightly bilious and superior way, by exponents of private-ownership efficiency is "well, I remember the 70s and nationalised industries, I remember how awful it all was". Of course, there are a couple of issues here. The first, to their credit, is the fact that no doubt there were inefficiencies in those old nationalised enterprises. But they were nothing out of the ordinary, and often the result of poor management or corrupt unions, not the inherent inefficiency of the enterprises themselves. Certainly not the result of the fact that those enterprises should have been privately owned. The faults were next level down - management issues. But these strictly management issues were manipulated into being seen as fundamentally structural - in order to hive these enterprises off to a sector where they became less efficient than ever: worse issues were created, rather than the existing issues fixed. The evidence? Well, we have only to look around us.

Which leaves us with this fact, contrarily: note that in this split scenario of some public enterprises, some private ones, the world of profit-making is still in existence. There is nothing overly wrong in essence with taking a profit. The wrong comes in with where it happens. If you're a private individual or shareheld company making sweets or PVC tubing or bicycle locks, good luck to you in your profit-seeking. But if we're talking about the provision of services for public wellbeing, the opposite is true. So, we have an imagined world here where the full panoply of colour of human endeavour is retained, we're not envisaging a grey Stalinist nightmare. We're simply being intelligent about how we do what we do, with the strong proviso that people need looking after as a first principle. Profit is a second-level issue, not a first.

Situation Clarification C

 

OK, so given that we have reached this realisation that we are being manipulated by a narrative that does not represent the true state of affairs, what can be done? I feel very little, because the most interesting observation, simple though it may be, is that the people who control the money supply also control the narrative. That's a very freeing recognition in one sense, it's a getting down to brass tacks. Money-control is people-control, pure and simple. Suddenly all those who make desperate efforts to 'remain in government', and fight like billio over control of their companies and markets and so on, are doing so for very clear reasons. But it's very unfreeing also, because their doing so means that our society becomes progressively more and more starved and decayed. That neoliberal paradigm, despite not being true at all, in completely overt evidence that we can all see, is the one which is adhered to by those in power. I don't know how we have got to here - I'm assuming that there are enough intelligent people out there who are consistently registering the illogic of this position that there has to be another reason why nothing progresses. It's there in black and white: we claim a system which prioritises efficiency, and have a system starved and decayed and inefficient. We seem caught in a lock. Do those in power get asked questions this simple? I can't say I've heard it happening. But maybe I'm not in the right loops? What I am used to is spin, so I am able to imagine your classic 'politician-speak' which simpers around the edges of the issues, and presents only certain shards of information, so as not to address the basic conflict in truth which emerges here. 

I do have a few ideas of things we can do, though I haven't tested them with anyone for devil's advocacy, and they'll need that. One of the main ones in the short term would be to create a second currency, directly alongside the pound. Let's call it the shilling. This second currency would have to be mandated right to the very top, legally, and potentially (?) be pegged to the value of the pound: what you can buy for 20 pounds, you can buy for 20 shillings. Everywhere pounds are accepted, so must shillings be. You can pay your tax in it, you can charge someone else in it etc etc. But there are a few key differences. Shillings would be, for lack of a better term, a "people's currency". Preferring it would be a political move, so you might say to your bank, even if you are paid in pounds, "please denominate all my funds in shillings", and they would be legally bound to do so. But the key thing would be that shillings would have to have some protections attached, the main one being that you may not speculate with shillings, and they will never appear on currency markets - they are a strictly UK-only affair, unlike the pound. If you want to do that stuff, you're free to, but you'll need to denominate in pounds to do so. And there would probably need to be some other protections attached which would mitigate against any speculatory or world-market oriented changes in the value of the pound - perhaps a point at which value would divorce, so that ordinary people denominating in shillings would never lose the ability to obtain food or necessaries because of stupidities in the market for pounds. Would this work as a means of exiting ourselves from the control via money spoken of above? I need the devil's advocacy to know, but I like the idea as a starting point. "Leave the pound and all its market craziness and control-mania to those who like that kind of thing; we'll ensure our safety and peace and freedom through a currency alongside, but not intimately connected, and with key separations." I say at the head of this paragraph 'short-term' because I like the idea that it will become the pound that will undergo a starving process, and that, before long, the shilling might just win out, or can be mandated to through natural gravity, and we can thus exit all the nonsense that goes with internationally floated currencies. The "currency market" does seem particularly superfluous in terms of the value in ordinary people's lives.

 

Situation Clarification B

 

So, we're in this anomalous situation where we're claiming one thing, but have another: "we're working systematically in the clear direction of the best efficiency" versus "our enterprises are phenomenally inefficient at providing their services" and never the twain shall meet. They are efficient, but in which ways? They're efficient at providing income for private owners and shareholders, perfect working for that model. They are inefficient, but in which ways? They're inefficient at providing for the public purpose, a bad result for that aspiration. So in effect the claims above are coming from different angles, and it therefore comes down to: which are we trying to do? Do we want an NHS, for example, which treats the public for its medical ills? If we assume that we do, why is the way we're undertaking that job so contributory to inefficiency? Do we want a rail system that gets the maximum amount of people where they need to go in an efficient manner, where the notion of maximisation needs to include the larger numbers of the less well off, and therefore pricing needs to be low to reflect that? Then why is there such fracturing of the system and unaffordable ticket-pricing? Each time we follow the principle of 'including the private sector will increase efficiency' we get inefficiency and far from maximised performance. And again, this is obvious to see. But somehow not seen. It's like we somehow need to blind ourselves to these simple facts. Some deep inner need means that we can't look these things in the face, just for what they are.

Working on the assumption that some of us can indeed see these things (if I can, then hopefully loads of other people can too), what is possible? What can we do, and how? This is where Modern Monetary Theory comes in. It says that the supply of funds for public purposes is not unlimited, but is far greater than currently imagined. The government, through its agencies like the Treasury and the Bank of England, can fund all sorts of public programs simply by creating the money necessary to do so. If one has been schooled in orthodox economics, an immediate warning light will go on. "But you can't just print any amount of money, because this flood of money will cause inflation: all the extra cash in people's pockets will find an equal and answering extra in prices, since we will be able to afford them, and pricers won't be blind to that." But Modern Monetary Theory answers this with: "to an extent this is true, but the extent is limited. Many of us have optimal levels of consumption without even knowing that we do. There's only a certain amount of anything that we want, or need. Inflation is calculated generally across all sectors, whereas, specifically, the greatest inflation can often occur in luxury items which are not the province of many, and will remain so even if we have extra money in our pockets. Also, all the spending for public projects is spread quite evenly among the workers who contribute, each worker getting a comparatively small boost, so big spending is not predicated - the inflationary effects are there, no doubt, but really reflective of how things currently already are in terms of extent." Basically, Modern Monetary Theory states that those price increases that there will be, will be minimal and perfectly 'digestible' by our economy. 

But the picture of hyperinflation that can be drawn by orthodox economics is that of the last stages of Weimar Germany i.e. people wandering around with wheelbarrows of 'useless' currency in order to try to buy loaves of bread. There is a practical example which illustrates this as an error: Japan. On the orthodox paradigm, Japan should have been a basket case forty years ago. It should indeed have collapsed into a Weimarian nightmare. They have consistently provided funds for public purposes in a large way - but this provisioning has not inaugurated a hell-period, in fact quite the opposite. They have remained remarkably stable as an economy. I'm sure there are subtleties in this story that I'm not including, associated with specificities of the Japanese situation, but I think the general takeaway is stunningly clear: spending money (and creating it to do so) is not inherently catastrophic in inflationary terms. 

In the few examples in history where inflation has occurred to a catastrophic level, rather than an ordinarily expectable one, there have been very specific reasons for it happening, not that of general public-purpose spending. These reasons are associated with limitations to resources - in Weimar's case, put simply, it was the phenomenal level of war reparations, and the destruction of productive capacity as a result of the First World War. It's important to look at those kinds of things in terms of their function as imperators of catastrophic inflation, particularly how rare they are. One, because their rarity should give the lie to the orthodox claim as applied to our non-rare circumstances, two, because they send a valuable lesson about how inflation at a catastrophic level really comes about, and it's not what orthodox economics says it is, and three, how the fear of these rare catastrophic circumstances is 'managed' by those who have skin in the game to dampen down responsible efforts at change for the better. The fear-claim is, after all, very 'useful'. The problem is that this dampening is spun as the responsible iteration - but the evidence out there in the real world proves the opposite.

And of course there are examples of the falseness of this narrative in our own situation. Note that spending on a suddenly arising need, like the pandemic, or perhaps a military conflict, is always passed through with strong intent, and quickly. "Well, we have to do that." But when spending on a similar level is mooted for something like the NHS or rail or education or....whatever it may be, up comes the objection that we can't do it, because too much spending will cause inflation. Even though, having spent what we have done on the pandemic and other 'critical' causes, we are still not wheeling out our barrows of currency to the supermarket. Make no bones about it, inflation has occurred, and has been occurring for all of our lives, at varying levels. But somehow the idea of the ordinary-level inflation that it is (not joyful at the moment, for sure), and always has been, is able to be co-opted so as to prevent spending on many things which would not particularly cause that scenario to change at all, and certainly not to catastrophic levels. This should make it clear that what we are dealing with is what is called a "straw-man" or "bugbear" - a falsehood designed to dampen us, to frighten us off from the territory. 

Situation Clarification A

 I've been struck by the "new" paradigm presented by an increasingly noted system of thought among economists called Modern Monetary Theory. It seems to provide those things many of us have been searching for: workable answers for what seemed an intractable situation. We discover that we are not locked into a prison cell of insufficient funds for society to operate, and structures all around us falling into decay as a result. Instead, we are being kept in that space by a dominant paradigm which is not an inevitability. Immediately the question comes up - who is doing the imprisoning? Who has skin in the game in keeping things as they are, starved and decaying? 

The answer appears to be the economics of what has been called neoliberalism. This is the line which, among other things, says "publicly owned enterprises are inherently inefficient, so we need to get the private sector involved". It also says "when we get the private sector involved we are contributing to 'lean and mean' tendencies that are already there in our environment as a natural consequence of our being human - the 'survival of the fittest' fight which occurs will keep things fresh". In other words, there is nothing more essential or more basic and bedrock than these ideas. So of course it's interesting that there is incredible inefficiency in a lot of public enterprises now, even though the private sector is playing a huge part, or even the whole part, in them. The proof of that one's in the pudding, literally. 

And subsequently of course the question comes up: "a lot of money and resources are flowing through these chains, but the chains themselves are starved and decaying, so where are the money and resources going, and why aren't they achieving more?". Which leads to the basic realisation that private involvement predicates the owners of these concerns, sometimes a small group of individuals, sometimes a larger group, where we are including shareholders. It would seem that that's where a lot of the money goes. So, again, the vision develops: private owners in small numbers but having large pockets, shareholders in large numbers whose collective pocket is equally sizeable, requiring their emolument. This requirement being solid, a first consideration. So the public purpose which any given enterprise might have becomes a subsequent concern, a next level down thing. We are helped to understand: "without our input this enterprise would be sloppy and inefficient, so we are worth the money paid in order to obtain the better result". Except that this better result is not how things are. And this is not a difficult or subtle analysis. It's obvious for pretty well anyone to see. 

And of course this neoliberal thing stretches back deep into the 1970s, so it's been on the go for 50 years and more, even before the big cheerleaders of its virtues, Reagan and Thatcher, came to power. 50 years and counting of slow starvation and decay in public enterprises has meant that there are now entire generations younger than myself who simply assume that this is the only way things can be - our society's trajectory has only ever been thus to them. (As an aside, it's interesting (possibly only to me!) to think about what somebody from prior to that period might make of where we are now. Imagine 'reviving' Churchill even, let alone some other less 'capital C' conservative leader, let alone someone of more "left" principles, from that era, and having them see how we've arranged things, and where the money's going, and what the results are across society. I think they'd be a bit shocked by our arrangements: "why can't they see what they're doing?")