Day 251: Living Income Guaranteed and Market Mechanics

This blog is in response to a comment made on Day 250: Economics Nobel Prize reduced to Laughingstock :
“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market. I agree with the criticism that empirical economics seem frivolous and misplaced. But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings. Wealth redistribution will only succeed in making us all equally poor. Well written piece, though, thank you for a thoughtful opinion.” - Matt Summers

“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market.”

The effectiveness of markets in being able to successfully allocate resources to ‘their most productive/urgent use’ is dependent on how effectively the market is able to capture supply and demand signals. Here, we currently have a problem as not everyone has an equal opportunity to access the field of the free market and cast their demand / signal their need. Access to the free market is restricted, and the only way to gain access is by having a ticket – where one’s ‘purchasing power’ is representative of such a ticket that will grant you access.

So long you do not have the money / financial means to back up your demands, your demands will fall on deaf ears and not be catered for. Alternatively, depending on the scope of purchasing power available to you, your demands may only be catered for partially, as you are unable to ‘validate’ or ‘redeem’ all of your needs into demands due to the size and scope of one’s purchasing power – and thus the free market will only pick up one those demands/needs that are backed up by purchasing power, while not registering others.
With not everyone’s demands in effect being picked up by the market, we get a distorted view and picture of what we believe is wanted/needed - and use this distorted picture as a map to allocate scarce resources. To actually be able to direct and allocate resources to their most productive and urgent use, we require a lot more information – information that is missing and not being received simply because not everyone has the capacity to validate their demands through purchasing power.

Whether we like it or not, we currently live in a world with huge levels of income inequality^[1] and thus purchasing power inequality – where there is an inverse relationship existent between the size of purchasing power and the amount of people who have purchasing power.
In terms of the mechanics of Supply and Demand, this structure gets translated into the market receiving a big amount of information about the demands of a few people, while receiving little to no information from the majority of the people who have smaller to no purchasing power.

Within providing a Living Income Guaranteed, the goal is not to ‘equalize’ the entire purchasing power structure – but merely to give those at the bottom / those who do not have access to the market mechanisms -- the chance to be heard and recognized within the market. Providing a Living Income Guaranteed effectively provides everyone with a base amount of purchasing power, so that at a minimum everyone can effectively signal their demands to be able to achieve a dignified living standard.

“Wealth redistribution will only succeed in making us all equally poor.”

Here I will assume that your statement is based on the same logic Nozick follows, where he perceives a problem in redistribution leading to disincentive for the productive members of the economy who would then produce less and less until they cover only their immediate needs and having no ‘surplus’ to redistribute.
In terms of the Living Income Guaranteed proposal, where we want to ensure that those who are unable to sustain themselves financially through providing them with a Living Income – we are not looking at a massive movement of redistribution. In terms of the capital and wealth that is available within the world, it only takes a small fraction^[2] being moved from top to bottom to give the majority of people the necessary ‘bump’ to be able to realize a dignified living standard for themselves.
There will thus still be a wide range of incomes, a wide range of competition and more than enough incentive to be innovative and keep producing.

A more drastic change will rather be seen within the market system within the mechanics of supply and demand being able to capture a lot more information about the needs and wants of people – which will provide society with more effective and accurate guidelines as to where resources should be allocated for their most productive/urgent use. The biggest change will be seen in the living standards of people and the actual realization of having everyone’s fundamental human rights secured.

Here, we can look for instance at the ‘ideal’ many people envisage when looking at the distribution of wealth in society. As you can see from the graph below, it still leaves plenty of incentive for those who are incentive driven to be productive and innovative – while at the same time allowing the bottom two quintiles to have sufficient wealth to live a dignified life (and to have any share of wealth at all for that matter! Since both the first and second quintile barely get registered on the ‘actual’/’current’ graph).

The Nozickian notion that redistribution will ‘leave us all equally poor’, is a very radical and extremist position, which takes on a very rigid and narrow view on human nature and values. It is assumed that we only care about ourselves and within this will go as far as compromising and sabotaging our own living standards just because we don’t want anyone else to reap benefits of ‘our work’ and ‘our effort’. There is no space for relating to one another and helping each other out – even when it comes down to something basic such as having everyone’s fundamental human rights covered. We suggest that humans are not the completely irrationally selfish beings Nozick assumes us to be, and that we are capable of compassion and can realize this compassion in the form of having everyone’s fundamental human rights secured.

“But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings.”

This statement is not necessarily true – as it assumes that we are currently experiencing a ‘lack’ in real capital and actual resources to effectively provide everyone with a proper living standard. The capital and the resources are already here – but through the market system operating at an inefficient level (due to our current supply and demand curves not capturing the full extent of demand as explained above), the capital/resources are not moving and not being directed towards those who need it most.

This is how we end up with scenarios of food dumping and having huge amounts of food destroyed and thrown away parallel to having high levels of hunger and starvation in the world. This is simply because our economic system is not sensitive and attuned to human needs and instead being irrationally driven by the profit motive. Economics and the market have become all about non-human elements as profit and numbers which have stopped serving the general human interest. By placing in a Living Income Guaranteed system, we are placing the human element back in the center of economics, allowing economics to be the life supporting instrument that it was destined to be. Economics and money are then here to support ourselves in living our life – and not the other way around where are lives are lived in the service of money and the economy, as how the majority of people’s lives are currently being lived.
It’s time to reverse the roles.
 
[1] See our blog on the World’s Lorenz Curve, which displays almost perfect inequality “Day 143: The Neo-Apartheid Era”
[2] See “World’s 100 richest could end global poverty 4 times over”, which is but one example of ‘how little it takes’ to make a ‘big difference’ for many

Related articles

• What is the Living Income Guaranteed?
• The Pope on Inequality and Unfettered Markets
• Day 251: Living Income Guaranteed and Market Mechanics
• Day 252: The Rich Be Cursed, The Rich Be Blessed
• Day 226: Living Income Guaranteed will Prevent Destruction of Homes

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Day 211: Labour Flexibility and Equal Money Capitalism

In Zimbabwe, the Reserve Bank has been laying off people as part of desperate cost-cutting measure. The employees that had been retrenched have not received their full retrenchment packages that they are supposed to get.

In the meantime, people are unemployed and are finding it hard to find a new job, with many resorting to work in the informal section. In Third World countries like Zimbabwe, entire families are often dependent on a single person’s income. This leaves many families suddenly without the necessary funds to pay for their medical aid, while kids are not going to school anymore since they can no longer afford to pay the school fees.

Some have gone as far as killing themselves as they succumbed to the stress of unemployment and no retrenchment package in sight.

In the light of all of this, one economist had the following perspective:

“The idea that people are deserving of compensation if their employers can no longer retain them has never been properly justified. The employees’ compensation for their labour was given to them as their wage every month while they were working. Why should compensation continue when their work is no longer needed?” Robertson told IPS.”

This is your typical ‘Free Martketeer’ opinion – where people are no longer considered as being living beings, but are reduced to mere commodities, which one should be able to hire and fire as one pleases. They also have a fancy word for it: “Labour Flexibility”.

Obviously a statement like this will only come from someone whose job is secure and will not find themselves being thrown around by the merciless tides of the labour market any time soon. The Corporation as an entity on its own has gained a superior status than living, breathing, human beings. The corporation is a dead thing – it’s merely an assembled structure. Yet, it’s the corporations who are in the position of ensuring life security to people, and when this is threatened there are consequences:

““The suffering of the retrenched workers is transferred to their families, children and spouses. Tension and stress grows, leading to unwarranted domestic disputes and eventual violence and abuse of children,” Bohwasi told IPS.”

Within Equal Money Capitalism, we get this.

That is why Labour Flexibility within Equal Money Capitalism will take on a whole new dimension. Instead of Labour Flexibility entailing the freedom of the corporation to hire and fire with no restrictions in place – Labour Flexibility will be a principle of understanding that one require to be Flexible with Labour, as it is clear that one will not always be able to occupy the same job position. This may be due to fluctuations in the needs and requirements of the population, the environment or technological innovation. Thus, within this flexibility, the corporation ensures that one can continue employment elsewhere (such as the compassion department), as the corporation understands and realizes that the only capital which matters is the Capital as Life as the employees who bring life into the corpus of the Corporation– and will thus tend to its Capital with the utmost care and respect.

To Read the full article on the Zimbabwe retrenchment disaster, go to: http://www.ipsnews.net/2013/03/zimbabwe-struggling-to-pay-laid-off-workers/

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Day 180: The Word 'Capitalism' in 'Equal Money Capitalism'

The Problem

If we want to correct the current capitalistic system, we have to correct the very starting point as what drives capitalism at the moment. And to do this, we look at the meaning of the word 'Capitalism' and what the origin is of the word in terms of how it is currently defined - as this will reveal the essence of the problem from which all the inadequate consequences of the current economic system as 'capitalism' flow. Once we see the origin of the word and how, from this origin, the entirety of the capitalistic system was created, we are able to REDEFINE the word 'Capitalism' in a way that it represents an economic system that produces the best results for everyone. So, understand that the word 'Capitalism' in itself is not the problem - it's just a word - a string of letters placed together to form a sound. The problem is the meaning we have given to the word and how we currently live out this word in our every day lives, without even being aware of it.

So - let's shed some light on the origin of the word 'Capitalism':

"The lexical roots of the word capital reveal roots in the trade and ownership of animals. The Latin root of the word capital is 'capitalis', from the proto-Indo-European 'kaput', which means "head", this being how wealth was measured. The more heads of cattle, the better."

Source: http://circleof13.blogspot.com/2009/04/etymology-of-capitalism.html

From this etymological explanation of the word, it is clear that the more 'heads' of cattle you owned, the more value you had. And, if we have a look at capitalism today: it still works according to the same principle: the more you own, the more you are, the more value you have, the more influence you have, the better a life you live.

What does this reveal about the word 'Capitalism' as how it is currently lived?

It shows how we have misplaced our sense of self-value through defining how valuable we are in something 'outside' of ourselves, more specifically: in the ownership of resources - where resources can mean animals, laborers, equipment, land, and 'stuff' in general. We've come to believe that our value is dependent on how much we have - because that is how 'the world', or rather, the economic system, has treated us: if you don't have anything, then you're not considered, you're not a part of the economy, you're not supported. And, obviously, if you're not considered, included or supported, it means you're not valued. If everyone were valued by the current economic system, then the system would consider, support and include everyone - but this is not the case.

The Solution

The solution to the problem can be found within the very same origin of the word 'Capitalism' - specifically, within the root of the word referring to a 'head'. Though, instead of looking at how many heads someone owns 'outside' of themselves, as in how many heads of cattle, for instance - let's look at how many heads a person really truly owns - and the only head a person every truly owns is one's own head. It makes no sense to claim that one can 'own' a part of nature or the Earth - as physical resources - outside of oneself. Why? Because the Earth and nature were here long before us and they will remain here after we are gone - so how can we say that any of it is 'ours' - it's not ours.

Each one owns one head and one head is all we require - and with each one owning one head, each one has equal value. A person's value should not be defined by anything outside of the person. The fact that a person comes into being, that a baby is born - should be enough to recognize that this person, this being, has value - simply because it is a part of Life.

Therefore, Capitalism can be defined as:

An economic system that recognizes each one's inherent self-value as being a part of Life, that recognizes this value of each being to be equal - and that strives to consider and support each one's value, because in supporting each one's value as a part of Life, we support Life as a whole - this including humans, animals, and nature.

The Rewards

Redefining the word 'Capitalism' in this way will not only have rewards on an economic level, because we are in fact re-aligning our entire value-system from ownership to Life. What rewards will this bring about?

We will no longer twist and shape ourselves in an attempt to try and get recognition and validation from others, because we will simply recognize and validate ourselves as Life. This means we will save ourselves so much worrying and sorrow over what other people think about us and instead, we'll have the space, energy and confidence to really express ourselves in terms of our particular capital.

Each one has equal value, but that does not mean that each one has the same capital. Capital is that which is particular to your expression and capabilities with which you are able to contribute to Life - in terms of making Life richer and better for everyone. We know each one's capital is not the same - some are more artistic, while others have a passion for engineering. This doesn't mean that an artist is worth less or more than an engineer - it simply means that those beings have a different type of capital - but both artists and engineers contribute to making Life on Earth richer and better.

So, Equal Money Capitalism will be an economic system that capitalizes on each one's particular capital - using the 1 + 1 + 1 equation to make Life on Earth the best it can be. This means that no-one's capital will be wasted, downplayed or ignored. Everyone will be able to engage and be a part of making this world a world of value. It means that one can be proud of oneself and proud of one's job - because your job becomes an expression of who you are - and not just a means to survive.

Within Equal Money Capitalism, each one will be valued and thus, supported, which means no more worrying about your quality of Life or the need to survive, because this will be guaranteed. It means no more worrying about your children's life and their future - because this will be guaranteed. It means there will be no more slaves doing another's hard or dirty jobs, because each one will value themselves and no-one will be willing to subject themselves to the will of another in order to get by.

And so, as you can see - redefining the word Capitalism will make it possible to create a Capitalistic system that will in fact change the face of the Earth and will change Life on Earth in about every way. The rewards will be all that you had always wanted, but were never able to achieve in the current economic system.

Related articles

• Day 175: The Economic Problem and Equal Money Capitalism
• Day 162: EQUAL MONEY CAPITALISM - The Way Forward
• Day 259: Give Happiness, Get Happiness
• Day 171: Life-Force and Expression in Equal Money Capitalism
• Day 174: Loyalty to Life in Equal Money Capitalism
• Day 165: Equal Profit Share and Equal Money Capitalism
• Day 173: Supply, Demand, Business and Scarcity in Equal Money Capitalism
• The Future of Integrity with Equal Money Capitalism
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Day 171: Life-Force and Expression in Equal Money Capitalism

Also see the following blogs on more points within EMC:

Day 162: EQUAL MONEY CAPITALISM - The Way Forward
Day 163: Equal Money Capitalism - Redefining Profit
Day 164: Equal Money Capitalism - Preparing the Road for Change
Day 165: Equal Profit Share and Equal Money Capitalism
Day 166: Corporate Social Responsibility in Equal Money Capitalism
Day 167: Harmony and Equilibrium within Equal Money Capitalism
Day 168: The Future of Integrity with Equal Money Capitalism
Day 169: Equal Living within Equal Money Capitalism
Day 170: Companies and Industries in EMC

Life-Force instead of Market-Force

Price is no longer going to be based on what the market dictates – there will be no more “market” force within Equal Money Capitalism – what will drive and regulate the economy, is the Life-force.

The Life-Force says that the Market-Force never looked after the life force – and therefore, you have lives that suffer. Thus we move to a Life-force that is based on ‘Capital’ as the People and not a Market-force which is based on ‘things’ and ‘products’ – Life becomes prior: the economy should be about sustaining Life effectively, not ‘selling stuff for the sake of money’.

AS such the market should not dictate – the value of each person’s Life must dictate the price of the product. It’s completely different. And that’s real ‘fair-trade’.

Expression and Creative Licensing

This will be more a ‘hobby’ point. For those people whose only income is derived from such activities, they’d have to be part of a greater collective like a Cultural Centre where many points of expression are explored and presented, where the general public can come and check it out and participate in community projects. It will be a place of coming together, having fun events, meeting people – socialising, which are all things people really enjoy.

In essence it’s about self-expression. You want the freedom to express. You will have the freedom to express and you will have the support that will give you the freedom to express. The concept of ‘ownership’ is only relevant to those points that are necessary to make your life function, like a house, a car – things like that. The other things are not really an ownership, because there’s nothing new. You’re simply expressing something that already exists. You are using notes in a particular sequence -- which forms a melody. The melody already existed - it’s just a coincidence that you’re the one that came up with that particular melody. The same goes for the lyrics of a song: the words you use for a song already exist, it’s just coincidence that you come up with it or another person comes up with it – it’s equally possible.

So it’s not about ownership there, or about having a copyright, or controlling it. That’s exactly the point we want to move away from – control. So that people can express themselves, if they like it.

Related articles

• Day 162: EQUAL MONEY CAPITALISM - The Way Forward
• Day 259: Give Happiness, Get Happiness
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Day 18: Who's Got the Most to Lose - The Rich or The Poor?

I forgive myself for accepting and allowing myself to believe that it is righteous that the owner of a company gets to make profit from running a business because he deserves it.

I forgive myself for accepting and allowing myself to believe that the owner of a company deserves to make profit from this business because in starting this company, he invested his money and herein took an apparently very courageous risk and should therefore be rewarded with profits.

I forgive myself for accepting and allowing myself to not realise that the person investing to start a mining company, though he bets with a lot or all of his money, still has less to lose than the miner who might lose his life working in the mine - and therefore, that there is no rationale that justifies profit.

I forgive myself for accepting and allowing myself to actually believe that the person who puts all his money on the line possibly loses more than a person putting his life on the line - and I forgive myself for accepting and allowing myself to herein justify a company making their employees work in crappy conditions in order to lower costs and increase profits, while the employees' lives are increasingly at stake.

I forgive myself for accepting and allowing myself to actually believe that the boss sitting at his desk making phonecalls deserves to get a higher income than the workers at the lowest level who do the actual hard, physical labour.

I forgive myself for not accepting and allowing myself to realise that if I want to pursue the line of thought as justification of 'those who earn more money do so because they deserve it', then all the workers doing the actual hard physical labour should be the ones who get the highest incomes, because they do the jobs those with higher incomes don't want to do - indicating that they are giving more of themselves in their job.

I forgive myself for accepting and allowing myself to accept that so many laws and regulations exist to protect the rich and their wealth from the poor, while mostly the rich are born rich and have therefore barely deserved any of their wealth.

I forgive myself for accepting and allowing myself to deliberately exclude the poor from becoming wealthier by making capital a prerequisite for making money and accumulating wealth - and on top of that making sure that poor people can't get loans to get capital with to be able to participate and become wealthier in the economy.

I forgive myself for accepting and allowing myself to claim that the poor are in their position because of laziness, while actually deliberately creating the barriers that keeps them from any significant participation in the economy as a strategy to rule out competition.

I forgive myself for not accepting and allowing myself to realise that as long as we as humans compete with each other in any aspect of our lives and as long as we are afraid of coming out the short end in losing everything we have, we will never live in a world where poverty is eradicated, because poverty is merely a consequential outflow of the designs of competition and fear of loss.

I forgive myself for not accepting and allowing myself to realise that each one requires to investigate their life and see where it is that they are participating in competition and fear of loss, and where they try to take out competition and remain 'on top of them' in the nastiest of ways, if we ever want to see a change in this world.

I forgive myself for accepting and allowing myself to believe that competition and fear of loss are part of 'what makes us human' and that we cannot live without such experiences, or that we would no longer be ourselves.

I forgive myself for not accepting and allowing myself to realise that competition and fear of loss cause consequences in our and others' lives of suffering, pain and misery.

I forgive myself for not accepting and allowing myself to realise that I can never lose myself and therefore, it is absolutely possible to stop the habit, need and desire to compete with others and to give up fear of loss and still be here.

I forgive myself for not accepting and allowing myself to realise that self-improvement should be about self, for self and not about trying to be better than and outshine others - self-improvement is about correcting the relationship one has with oneself in a way that there is no conflict with self, in self, towards self and self can live fully in every moment.

I forgive myself for accepting and allowing myself to define self-improvement in relation to how well I perform in comparison to others and use others and what others think of me as a benchmark for where I need to go or what I need to change, instead of realising and understanding that self-improvement is about looking at where I am not satisified with me, equal and one with me and to correct those points accordingly and where then, others who have already walked the particular point I'm busy correcting can assist and support in being an example where I then equalises myself to others, but not from the starting point of trying to outrace them or trying to outshine them.

I forgive myself for not accepting and allowing myself to realise that we cannot walk this process of change on our own and need to be able to stand as a group of equals, as one, to see the change we need in the world - and herein competition is unacceptable.

I commit myself to stop all desires, needs, wants, tendencies to compete with others in and as myself.

I commit myself to stop all forms of fear of loss within and as myself.

I commit myself to learn to work together as a group of equals as one, instead of against each other.

I commit myself to show how the current economic system works like a casino where each one places their bets, in terms of their capital, their life, their time, their efforts, their health - and where some can continue playing and others just lose it all.

I commit myself to the implementation of an Equal Money System where each everyone is always a winner and no-one loses out.

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