This blog is in reply to comments made on the ASPO blog on economics.
Mallencolly:
@mallencolly on July 13th, 2010 at 3:26 pm
1. Secondly, externalised costs are externalised *because* they are costs that someone else pays (whether through medical bills, cleanup costs, etc) rather than the polluter.
2. “...by not including them, you reduce the price of goods, increasing demand at every price level, causing the equilibrium price level to be too low and the equilibrium demand to be too high. ie overconsumption of the resources used and charged for as well as an overconsumption of the resources used not charged for.”
Does (1) include monetised costs (“pecuniary externalities”) or not?
@mallencolly on July 13th, 2010 at 3:59 pm
3. As for whether or not people should listen to economists, if people had listened in the early seventies about pricing for pollution we would not be having this discussion.
(2) and (3) suggest that you don’t have a problem with externalities as such, only with the lacking feedback, which makes your objection to Lawrence Summers confused, although this may have something to do with Pareto optima – see my discussion with Simon below.
@mallencolly on July 14th, 2010 at 1:09 pm
4. I take it from your last paragraph, then, that only violence can show caring? Why arent psychologists? Why arent politicians? Why arent lawyers? Why arent doctors? All of their fields are also affected.
The threat of violence makes non-violent tactics more effective (see serious histories of India’s independence struggles, US civil rights struggles, etc – non-violent tactics require the threat of violence in the background to work, and the non-violent leaders are usually quite frank about this relationship). With marginal exceptions, it is only through economic relations that psychologists, other doctors and lawyers are affected – there is no chance in hell that US and Canada are going to acknowledge their participation in genocide, especially not their real participation in genocide (mainly against Hutus, through genocidal royalist maniac, Paul Kagame, and genocidal maniac, Romeo Dallaire) in Rwanda, which lead to the Congo genocide – it would require reversing their lies about Rwanda. Politicians set up the relevant networks – why would the perpetrators work against their own life’s work? Economists are in the relevant position to study the dynamics. At the very least they could publicize the matters, although threats of violence are necessary in order to get change going.
@mallencolly on July 15th, 2010 at 4:55 pm
5. You link Applying Behavioral Economics to International Development Policy
http://www.rrojasdatabank.info/devecon/AndersonStamoulis.pdf - it contains the choice quotes “...market liberalization policies may end up in less market exchange than predicted” and “...farming unsustainably...” with regards to non-industrial farming, as compared to the west.
Maybe people participate less in market exchanges because they judge non-market alternatives to be better, and participate more in market exchanges as non-market alternatives are destroyed? The discussion of unsustainable farming is plainly psychotic in view of the implicit North American and green revolution reference farming behaviour – again, the latter steal from future generations.
6. You link ‘Rational Choice Models of Political Violence’
https://www.ihssnc.org/portals/0/PubDocuments/IHSS-RBv7.pdf
If one reverses this paper’s ideological assumptions (who’s doing the violence to whom), it becomes almost descriptive of reality. The ‘terrorist’ violence is negligible both in scale and economic effect to the violence of the west. It is precisely this study of the West’s violence and its relationship to the west’s economy that I’m asking for, and not finding.
Breeders aren’t going to solve any entropy problems, even under the most optimistic assumptions, including sending nuclear waste to Jupiter. (Can we avoid tinkering with the sun, please? I know you didn’t say anything, but the suggestion does recur.)
Simon:
@Simon on July 16th, 2010 at 1:45 pm
The poor cannot afford the price to undo the harm, and the harm falls disproportionately on the poor – incidence is utterly important in understanding the economic dynamics of externalities. Using mallencolly’s definition above, the poor cannot suffer an externality, as they don’t pay anything. Should one redefine an externality to be the cost necessary to undo the harm, then one can meaningfully speak of the market value of the harm, as the victim can decide to spend the money in another fashion. Surely, were the victim rich, I doubt you’d find fault with the quantity decided by a suit for damages, irrespective of whether they actually use the funds to undo the harm or use them on something else – why would you find differently if the victim is poor?
I take it that that comment was directed at me, rather than X Cepting. You’ve supplied a list of economists who deal with externalities in the abstract and market valuation, but none with the systematic export of entropy and its relationship to market valuation.
@Simon on July 20th, 2010 at 8:54 am
Any business manager makes use of some economic understanding, but I would hardly consider a hobbyist, or someone with only minimal understanding, as an economist, just as I wouldn’t consider a typical amateur radio operator to be an electrical engineer. To the extent that one has a detailed understanding, e.g. the radio amateur who has a detailed understanding of circuits, and can design a meaningfully new circuit, or the politician with the economic training who uses his economic understanding to devise a new situation (Pareto-optimal, for example, although substantially different from a previous Pareto-optimal situation from which the change occurred, and that places many people in a substantially worse situation, i.e. the change was not necessarily a Pareto-improvement), I consider him to be a practicing economist. To the extent that academic economists aren’t making empirical and theoretical studies of these matters, I consider them culpable; that includes you, with regards to efficiency. If an entrepreneur accidentally exports inflation, but doesn't see the pattern, his moral culpability is fairly small.
Both before and after the transfer, the situations may be Pareto-optimal (one candidate for your economic efficiency), but the switch is not Pareto-improving. It is however Kaldor-Hicks improving insofar as the X-efficiency, allocative efficiency and productive efficiency of western societies are higher than of less developed societies – the worst-affected have changed (non-Pareto-improving) but so what? Efficiency (X and productive, both economic) are dependent on creation and dispersal of entropy. In cases where the worst-affected have enjoyed improvements, it was necessarily at the expense of future generations, by using more available energy.
The ‘social cost’ (of externalities) consists of two elements, namely 1. (as mallencolly pointed out) a lack of feedback of reducing stock materials (and associated overconsumption in other stock materials), and 2. the harm to the victim (or differently seen, the transfer from the victim to the producer). You seek to transfer the (undue) profit to the producer to the (actually, a) general public (as only those with funds to buy the product can benefit from the correction), to correct (1); you are clearly not interested in undoing the harms to the victims, at least not in proportion to the harm that they suffer.
Perhaps then I was wrong to say that you are unaware of these facts, as your other statements seem to suggest that you are at least subconsciously aware of what is happening. You seem rather content to profit from the poor as long as relevant feedbacks are in place to prevent overconsumption. Insofar as the victims are in different currency zones (markets, in my and common usage, i.e. the purchasing power of a currency, or the ‘market’ for a currency, e.g. how many shoes will clear three hundred Rand, and therefor not terribly problematic), if the inflation is exported onto them, as long as some feedback is in place to deal with resource depletion, I don’t see you objecting – you seem to hide that they suffer the inflation – none of your suggestions, nor any of the suggestions/papers you link suggest that you want to end the transfer, only that you don’t want it to lead to an imbalance in your economy. Where are those economists who discuss inflation export explicitly? The links you gave are on externalisation, and as mallencolly (perhaps unwittingly) suggested, deal with bringing the economy closer to a Pareto optimum, but not with the basic question of justice, namely which Pareto optimum, i.e. whether or not inflation is exported – I keep on getting this feeling that you understand exactly, and that you are merely trying to hide it.
With regards to universities, I made one mistake, which was to claim that the extremes skew the averages. In fact, that is not the fundamental problem. You are confusing correlation with causation; to see the problem, do some ANOVA on university vs non-university, non-university certification vs its absence, and income. Extremes may play a role, but I suspect that if certification (which is somewhat correlated to university education, in that someone with university education will typically have greater opportunity to be aware of and to afford such certification) and university education are checked for connection to income, certification will win out; all my engineering and consulting friends point certification out as the key to income and job advancement, and can point to individuals who skipped the university education to go straight for certification. The census data given cannot resolve this matter.
Simon on July 21st, 2010 at 8:18 pm
How empirically useful (again) is Pareto-optimal/’efficient’? What we are discussing is the relative merits of different Pareto-optimal situations, some of which produce more than others, and which produce distinctly different harmful situations as a necessary feature of their operations.
@Simon on July 21st, 2010 at 8:22 pm
The matter regarding Grameen is that it only has a market insofar as dubious schemes (green revolution-caused debts, which would not have happened if proper accounting of future agricultural performance were considered – green revolution methods destroy soils, etc.) are in place. Most of the people using the services of this bank are using it to cover costs that odious seed prices etc. cause. Why aren’t they farming (anymore)? Or why are they fleeing to India to farm? The reason that there is a need for uncollatoralised debt is precisely because the investments forced onto them don’t make economic sense, and there is little economy to be had, so Grameen games don’t help – Bengalis wouldn’t be working all over the Muslim world (including Sudan) if their economy were growing, and it is too heavily loaded with entropy (destroyed soils, rivers etc) to grow. Grameen cannot solve these problems, but gives the hope of a solution; people seeing what is happening are naturally disgusted, as it merely sells off more of the remaining negative entropy. By analogy, a sufficient dose of arsenic can cure HIV by killing the patient.
@Simon on July 22nd, 2010 at 3:12 pm
Pigou’s (and others’) methods only solves the problems that mallencolly identified; they don’t undo the harms to the primary victims (incidence again), and again, the gross harms I point out (Somalia, CK) do not make the situation necessarily Pareto-suboptimal.
There are two reasons for wanting papers on Somalia and CK. The first is that their situation define much of the state of the world (state variables regarding entropy and its diffusion). The second, to play with your analogy, could be phrased as “Why would I want to know about malnutrition AND HIV?” (see leptin...) or “Why would I want to know about Schizophrenia AND the Dutch?” The connection is precisely that Somalia and CK are critical case studies in the (thermodynamic) operation of the system – you aren’t going to escape thermodynamics, and (again) your X-, productive and allocative efficiency (to achieve a Pareto-optimal efficiency) are dependent on your dumping on Somalia and CK. Lawrence Summers understands, and understands not only that efficiency is Pareto-optimal, but also that different Pareto-optimal situations are possible, and that just because shifting from one Pareto-optimal situation to another is not Pareto-improving does not mean that all Pareto-optimal situations are equal; he just picked the class of Pareto-optimal solutions most in his society’s favour.
I took my time to read all the references, to see if I had missed something. I conclude confidently that I haven’t.
Harry Stotle:
A better analogy would be, why is there no discussion in the literature about over-feeding and leptin suppression leading to diabetes? In the nutritional literature, there certainly is, but a meaningful analog is missing (as far as I can tell – I’ve read all the papers cited here so far, and not one deals with the issues I’ve been raising).
Orson:
@Orson on July 15th, 2010 at 9:48 pm
Why are economists (I include you and Simon – mallencolly let the substance slip) fudging (deliberately or not) about motivation and efficiency? Again, where is the literature on inflation export (the motivating aspect of externality that I raised, rather than externalisation in general, on which you guys have continually harped)? And how is this matter irrelevant to efficient allocation? See my remarks to Simon above.
@Orson on July 16th, 2010 at 3:02 pm
See my remarks above and to Simon – the issue is not (lack of) awareness (or responsibility per se) for externalities in general (among academic economists), but are culpable for failure to explain why they are utilised internationally, and for giving ‘solutions’ that fail to terminate externalities and their associated wealth transfers between societies, but instead give solutions that merely avoid certain repercussions of externalities to the perpetrating societies (and which happen to reduce certain externalities).
@Orson on July 19th, 2010 at 4:21 pm
Michael Hudson (for example) doesn’t have difficulty explaining the substance of what happens (at least, the part that he is interested in). Likewise, I’ve had no difficulty explaining above, in economic terms no less, why market actors do what they do, while pointing out the significant omissions by academic economists. Real economists don’t avoid these issues? Really? Where are the economists who frankly discuss how to achieve externalisation with feedback for resource depletion etc. for the purpose of exporting inflation (especially while achieving Pareto-optimality in the final analysis, irrespective of whether the shift is Pareto-improving)? I can point only to Hudson and a few other radicals, and Summers. Not even Stiglitz discusses these matters, as his concern is Pareto-optimality, and not maximising average utility. None of the links you supply below (@Orson on July 21st, 2010 at 3:07 pm ) discuss honestly the effects of the interventions, namely that they don’t undo the externalisation, but only avoid the repercussions to the perpetrators (I’ve read all of them except Baumol - see at the bottom - which is why I’m only answering now). Efficiency as economists use it refers to Pareto-optimality and comparable concepts, e.g. as listed to Simon above, so yes, it entails costs to all, but not to all equally – your concern is not general welfare, at least if the literature (including what you’ve supplied) is anything to go by. As such, the remarks on Zoologists and Physicists stand. Now that I’ve read their papers, their status as more or less mainstream is irrelevant to me – they don’t deal with the issue I’ve raised, namely the utilisation of externalities to export inflation; again, they just give methods to undo the harm to the perpetrating societies, in terms of closer-to-Pareto-optimal allocation. I keep on having to repeat this, but this seems to be a consistent failing in your (Orson, Simon, mallencolly) understanding.
@Orson on July 22nd, 2010 at 5:25 pm
Is it by now clear why incidence matters, and why none of the economists listed propose anything that substantially undoes the harm to the primary victims? To restate what I said to Simon, you are socialising the profit of the harm done to these communities. That does to some extent lessen the incidence, as the primary perpetrator obtains less profit by his action, but it does not solve the root problem, and thermodynamic considerations suggest that you’ll only shift the problem elsewhere (e.g. CO2 and the energy costs of manufacturing a Prius vs the lifetime/manufacturing and use CO2 costs of a Hummer).
Krugman’s paper actually works more or less for your argument, because the ultimate incidence of CO2 is roughly publicly equal. Thermodynamic considerations call his scheme into question (and this is why I harp on Somalia and CK) – CO2, Somalia and CK are the ‘externalities’ on which the system depends. “The gangrene is attacking his upper legs, but we aren’t concerned, as our interventions prevent harm to the brain.” Breeders won’t solve the negative entropy problems – fifty years ago there were ten times as many big fish in the seas, and privatisation of the seas have made matters worse – look up commercial fish farming, sea-lice and the effects of sea-lice on wild fish stocks. The iatrogenic chickens have begun coming home to roost.
Final comments on the papers listed:
Arrow discusses how externalisation can occur through lack of information - i.e. not the dynamic in which I'm interested. Stiglitz discusses taxation as a means to shift spending and so reduce average externalisation transfers inside a (national) economy - his suggestions would at best, when applied to the dynamics to which I refer, modulate in the fashion that Pigou does, i.e. manage the misallocation. Wendner (I take it that he rather than Becker was intended - I couldn't find the Becker paper) discusses technical details of Pigouvian taxes, and is as such an addendum to Pigou's management. Coase similarly provides an allocation solution, not an undoing of the externality, and again, the broader public profits at the expense of the primary victims, with appropriate allocation. I haven't read Baumol yet, but why would he be different?
Sunday, 25 July 2010
Sunday, 14 March 2010
Lyndall Beddy, Kwanzaa and related topics
What is Jeffrey Tayler's scientific background, or who does he cite with the appropriate scientific background (anthropology, epidemiology etc) to make such a claim? Arab and Persian traders (in slaves and other commodities) are known to have traded into southern Africa, and some (non-Muslim) black South Africans have some Arab ancestors.
As for googling, well, I'm a researcher, and as such, google filters my selections somewhat (cookies and all). I was not able to find much of anthropological interest on the Tsetse fly using google (including through google scholar).
As for the claim that the Tsetse fly prevented such expansion, I find it simply strange - Arab societies had enough conflicts of their own, e.g. who is to be considered an Arab (the Arab vs Berber identity issue which still raises problems in North Africa, or Nubian vs Arab identity in Sudan, etc.), resources for the relevant raids, lack of acclimatization to local pests, etc. But the strangest part of the claim is that many of the ethnic groups that lived and live in areas where the Tsetse fly is dominant were/are pastoralists, thus shredding Tayler's claims. Then again, the 'chanting suras' bit is a highly emotional way of saying that they might have been Muslims (horror of horrors! Wat sal die dominee sê?), and as such, I strain to take such claims seriously.
As you raised the issue of Tsetse fly with regards to Arabs, you flatly contradict your Tsetse fly related claims about the inhibition of an Islamisation of Africa with your paragraph about slave trading around lake Malawi - it is in the middle of the present Tsetse fly belt. While you contradict yourself, I disagree with both your (conflicting) beliefs.
As for your previous claim, namely that Nigerian northerners believe themselves to be of Arab ancestry, I'm aware of a belief among the (Afro-Asiatic) Hausa that they have an Iraqi ancestor, but I've not heard of any such belief among the (Niger-Congo) Fulani. And how different is that from the belief among the Nguni groups that they have an ancestor, Nguni, who is said to have been an Egyptian general? Compare 'ewe' with western Afro-Asiatic 'aywa' (e.g. Masri Arabic, Tigray), and consider that ewe->jebo is more plausible than jebo->ewe linguistically, then if we interpret ancestor as founding leader of the ethnic group (or constellation of ethnic groups), the Hausa and Nguni claims are entirely plausible.
As for Kwanzaa, show that Davis is influenced by it. If you can not, your claim is entirely dishonest. If you can show that he is influenced by Kwanzaa, the onus is still on you to show that he obtained that belief from Kwanzaa (as opposed to reading anthropological and demographics studies), and to show that Kwanzaa is teaching something false. While I'm personally uninterested in Kwanzaa, it strikes me that you are simply using it to demonise rather legitimate scientific work (which appears to be entirely unconnected to 'Kwanzaa' in any case).
As for googling, well, I'm a researcher, and as such, google filters my selections somewhat (cookies and all). I was not able to find much of anthropological interest on the Tsetse fly using google (including through google scholar).
As for the claim that the Tsetse fly prevented such expansion, I find it simply strange - Arab societies had enough conflicts of their own, e.g. who is to be considered an Arab (the Arab vs Berber identity issue which still raises problems in North Africa, or Nubian vs Arab identity in Sudan, etc.), resources for the relevant raids, lack of acclimatization to local pests, etc. But the strangest part of the claim is that many of the ethnic groups that lived and live in areas where the Tsetse fly is dominant were/are pastoralists, thus shredding Tayler's claims. Then again, the 'chanting suras' bit is a highly emotional way of saying that they might have been Muslims (horror of horrors! Wat sal die dominee sê?), and as such, I strain to take such claims seriously.
As you raised the issue of Tsetse fly with regards to Arabs, you flatly contradict your Tsetse fly related claims about the inhibition of an Islamisation of Africa with your paragraph about slave trading around lake Malawi - it is in the middle of the present Tsetse fly belt. While you contradict yourself, I disagree with both your (conflicting) beliefs.
As for your previous claim, namely that Nigerian northerners believe themselves to be of Arab ancestry, I'm aware of a belief among the (Afro-Asiatic) Hausa that they have an Iraqi ancestor, but I've not heard of any such belief among the (Niger-Congo) Fulani. And how different is that from the belief among the Nguni groups that they have an ancestor, Nguni, who is said to have been an Egyptian general? Compare 'ewe' with western Afro-Asiatic 'aywa' (e.g. Masri Arabic, Tigray), and consider that ewe->jebo is more plausible than jebo->ewe linguistically, then if we interpret ancestor as founding leader of the ethnic group (or constellation of ethnic groups), the Hausa and Nguni claims are entirely plausible.
As for Kwanzaa, show that Davis is influenced by it. If you can not, your claim is entirely dishonest. If you can show that he is influenced by Kwanzaa, the onus is still on you to show that he obtained that belief from Kwanzaa (as opposed to reading anthropological and demographics studies), and to show that Kwanzaa is teaching something false. While I'm personally uninterested in Kwanzaa, it strikes me that you are simply using it to demonise rather legitimate scientific work (which appears to be entirely unconnected to 'Kwanzaa' in any case).
Saturday, 13 March 2010
Review of War Junkie
War Junkie by Jon Steele, Bantam Press UK
The book is a partial autobiography. The writer is 'n cameraman who works for the British TV channel ITN, mainly in Moscow. He recounts his recollections of what happened when he was in, amongst other places, Abkhazia, Sokhumi, Russia (during Yeltsin's attack against the Russian parliament and democracy), Sarajevo (Bosnia), Kigali (Rwanda) and Goma (DRC).
He is clearly very sensitive toward the nature of Yeltsin's behaviour wrt democracy, and one wishes to believe that he is critical generally. Yet this wish is repeatedly disappointed, especially by his description of and behaviour in Goma and Kigali. He clearly feels much more comfortable with Canadians than Russians, and a well-spoken and neat general won his respect by dint of the persona he (the general) projected. I thus next discuss his behaviour and interpretation of events in Kigali (capital of Rwanda).
Steele observed several corpses that were hacked to death; the corpses appeared to be almost exclusively Tutsi. As the corpses were hacked to death, he concludes, quite reasonably, that machetes/pangas were used in the murders. At one point, they (he and the soldiers with whom he travels - an early example of `embedded journalism') come upon a group of civilian Hutus. The Canadian general (Romeo Dallaire) insists that his soldiers search the civilians, and they find some small arms and machetes. From this, Steele concludes that these civilians participated in the large-scale murder that had been happening for a while by that time, otherwise known as the 'Rwandan genocide'. I have one hell of a problem with this conclusion. Could they not be e.g. small farmers, who use the arms to ward off cattle thieves, and use the machetes to geld and slaughter cattle? After all, it would be difficult to hack large groups of people to death without soldiers standing guard with automatic arms to prevent resistance. At another point, he sees a group of murdered Hutu civilians who were fleeing a refugee camp, that also housed cannons which Hutu soldiers were using to attack parts of Kigali. Steele uncritically accepts the suggestion of a Canadian soldier that the civilians were murdered by the soldiers among them, yet the same Canadian soldier indicates that the victims had been dead by that point for at least eight hours, based on the caking of their blood, but protecting civilians against infantry is not a simple proposal when your main arms are artillery - why is it not plausible to him that the camp may have been overrun by Tutsi soldiers, with the Hutu soldiers fleeing, and the Tutsi soldiers leaving the artillery (or taking it - he gives no indication either way), and killing the civilians? Further, I feel strongly that Dallaire should be convicted of the murder of those groups of civilians whom he disarmed.
Then I also ask myself (and Steele gives no indication that such a thing ever happened) how many Tutsi civilians were searched by Dallaire. Yet strong evidence has emerged that Dallaire assisted Kagame (Kagami in the book) in the assassination of two prominent Hutu leaders, thus leading to the slaughter, and that the majority of the dead in the slaughter were Hutu, with a great portion killed by the royalist Tutsis of Kagame. Kagame also invaded Congo-Kinshasa on behalf of the west, instigating a civil war that has claimed five million victims, so that the west could have cheap access to Tantalum (for high quality capacitors, at that point for one of the gaming consoles, Playstation II if memory serves). Steele is very impressed by Dallaire's 'fatherly' approach to him, and clearly warms to soldiers who are kind toward the press. I wonder how he would have covered the Russian press had they sold him on the story (since used as a theme in several Hollywood movies and at least one US computer game) that the Russian leadership was trying to instigate a genocide in Russia/the former USSR.
Steele is also a cocaine addict, and neglected his wife and child. He comes across as largely morally and intellectually underdeveloped. Groups who must regularly deal with the press may find this book useful.
The book is a partial autobiography. The writer is 'n cameraman who works for the British TV channel ITN, mainly in Moscow. He recounts his recollections of what happened when he was in, amongst other places, Abkhazia, Sokhumi, Russia (during Yeltsin's attack against the Russian parliament and democracy), Sarajevo (Bosnia), Kigali (Rwanda) and Goma (DRC).
He is clearly very sensitive toward the nature of Yeltsin's behaviour wrt democracy, and one wishes to believe that he is critical generally. Yet this wish is repeatedly disappointed, especially by his description of and behaviour in Goma and Kigali. He clearly feels much more comfortable with Canadians than Russians, and a well-spoken and neat general won his respect by dint of the persona he (the general) projected. I thus next discuss his behaviour and interpretation of events in Kigali (capital of Rwanda).
Steele observed several corpses that were hacked to death; the corpses appeared to be almost exclusively Tutsi. As the corpses were hacked to death, he concludes, quite reasonably, that machetes/pangas were used in the murders. At one point, they (he and the soldiers with whom he travels - an early example of `embedded journalism') come upon a group of civilian Hutus. The Canadian general (Romeo Dallaire) insists that his soldiers search the civilians, and they find some small arms and machetes. From this, Steele concludes that these civilians participated in the large-scale murder that had been happening for a while by that time, otherwise known as the 'Rwandan genocide'. I have one hell of a problem with this conclusion. Could they not be e.g. small farmers, who use the arms to ward off cattle thieves, and use the machetes to geld and slaughter cattle? After all, it would be difficult to hack large groups of people to death without soldiers standing guard with automatic arms to prevent resistance. At another point, he sees a group of murdered Hutu civilians who were fleeing a refugee camp, that also housed cannons which Hutu soldiers were using to attack parts of Kigali. Steele uncritically accepts the suggestion of a Canadian soldier that the civilians were murdered by the soldiers among them, yet the same Canadian soldier indicates that the victims had been dead by that point for at least eight hours, based on the caking of their blood, but protecting civilians against infantry is not a simple proposal when your main arms are artillery - why is it not plausible to him that the camp may have been overrun by Tutsi soldiers, with the Hutu soldiers fleeing, and the Tutsi soldiers leaving the artillery (or taking it - he gives no indication either way), and killing the civilians? Further, I feel strongly that Dallaire should be convicted of the murder of those groups of civilians whom he disarmed.
Then I also ask myself (and Steele gives no indication that such a thing ever happened) how many Tutsi civilians were searched by Dallaire. Yet strong evidence has emerged that Dallaire assisted Kagame (Kagami in the book) in the assassination of two prominent Hutu leaders, thus leading to the slaughter, and that the majority of the dead in the slaughter were Hutu, with a great portion killed by the royalist Tutsis of Kagame. Kagame also invaded Congo-Kinshasa on behalf of the west, instigating a civil war that has claimed five million victims, so that the west could have cheap access to Tantalum (for high quality capacitors, at that point for one of the gaming consoles, Playstation II if memory serves). Steele is very impressed by Dallaire's 'fatherly' approach to him, and clearly warms to soldiers who are kind toward the press. I wonder how he would have covered the Russian press had they sold him on the story (since used as a theme in several Hollywood movies and at least one US computer game) that the Russian leadership was trying to instigate a genocide in Russia/the former USSR.
Steele is also a cocaine addict, and neglected his wife and child. He comes across as largely morally and intellectually underdeveloped. Groups who must regularly deal with the press may find this book useful.
War Junkie Resensie
War Junkie deur Jon Steele, Bantam Press VK
Die boek is deels-outobiografiese. Die skrywer is 'n kameraman wie hoofsaaklik in Moskou vir die Britse TV-kanaal ITN werk. Hy gee sy herinneringe aan wat in o.m. Abgasië, Soggoemie, Georgië, Rusland (tydens Jeltsin se aanval teen die Russiese parlement en demokrasie), Sarajevo (Bosnië), Kigali (Rwanda) en Goma (DRC) gebeur het.
Hy is duidelik hoogs sensitief teenoor Jeltsin se gedrag t.o.v. demokrasie, en mens wil glo dat hy 'n kritiese siening het, maar dan word mens in die steek gelaat, o.m. deur sy beskrywings en gedrag in Goma en Kigali; hy voel duidelik meer gemaklik met Kanadese, en 'n netjiese generaal wen maklik sy (onverdiende) respek. Ek bespreek dus volgende sy optrede en interpretasies in Kigali (hoofstad van Rwanda).
Steele het heelwat lyke wat opgesny was gesien; die het hoofsaaklik as Tutsis voorgekom. Deur dat die lyke dood gesny was, lei hy heel redelik af dat machetes/pangas gebruik was. Op 'n stadium kom hulle (hy en die soldate met wie hy reis - 'n vroeë voorbeeld van 'embedded journalism') af op 'n groep burgerlike Hutus. Die Kanadese generaal (Romeo Dallaire) dring aan daarop dat sy soldate die burgerlikes deursoek, en hul vind dan 'n paar pistole en machetes. Hieruit lei hy af dat hulle aan die grootskaalse moord deelgeneem het. Hiermee het ek 'n moerse probleem: Hoekom sou hulle dus noodwendig moordenaars wees? Kon hulle nie o.m. kleinboere wees wat die goed gebruik om vee te kastreer en te slag nie? Sou die machetes en pistole nie nuttig vir selfverdediging wees nie? Dit is tog moelik om mense dood te sny in die afwesigheid van outomatiese gewere om te verhoed dat mense teenstaan. Op 'n andere stadium sien hy vermoorde Hutu burgerlikes van 'n vlugtelingkamp waar daar kanonne was wat Kigali bestook het. Hy aanvaar outomaties dat hulle deur die Hutu soldate in die kamp vermoor was, soos aangedui deur een van die Kanadese soldate, sonder bewys, tog dui dieselfde Kanadese soldaat dat hul waarskynlik al agt ure lank dood is - dit is tog moeilik om 'n vlugtelingkamp teen voetsoldate met 'n kanon te beskerm - hoekom is dit nie vir hom moontlik dat hulle deur Tutsi soldate vermoor is nie? Ek voel sterk dat Dallaire verder skuldig bevind moet word op die moord van die groep(e) burgerlikes wie hy ontwapen het.
Dan vra ek my ook af (en Steele gee geen aanduiding dat dit ooit gebeur het nie) hoeveel Tutsi burgerlikes Dallaire deursoek het. Tog is dit nou 'n geskiedkundig duidelike saak dat Dallaire met Kagame (Kagami in die boek) deelgeneem het aan die sluipmoord van twee Hutu leiers, wat tot die Hutu moorde gelei het, en dat die meeste van die vermoordes Hutus was. Kagame is self verdink aan baie moorde in Rwanda en Congo-Kinshasa, en het sterk bygedra tot 'n 'burger-oorlog' in Congo-Kinshasa, namens die weste, sodat die weste goedkoop toegang tot tantalium (vir hoë gehalte kapasitors, op daardie stadium vir die Playstation II, as ek reg onthou) kon bekom. Vyf miljoen mense is as gevolg van daardie oorlog in Congo-Kinshasa dood. Steele is baie beïndruk deur Dallaire se 'vaderlike' gedrag teenoor hom, en hou duidelik baie van soldate wie mooi met die pers saamspeel; ek vra my af hoe hy teenoor die Russiese soldate sou optree as hulle vir hom 'n kaksmoesie oor hoe die parlementslede besig was met 'n volksmoord in 'n andere deel van die land sou gee, en Engels met hom sou praat - daar was tog verskeie Amerikaanse films, en selfs 'n rekenaar spel met daardie (volksmoord in Rusland/ou-VSSR) tema.
Steele is ook verslaaf aan kokaïne, en het sy vrou en kind afgeskeep. Hy kom oor die algemeen as grotendeels moreel en intellektueel onderontwikkeld voor. Groepe wie gereeld met die pers te doene het sal wel die boek nuttig vind.
Die boek is deels-outobiografiese. Die skrywer is 'n kameraman wie hoofsaaklik in Moskou vir die Britse TV-kanaal ITN werk. Hy gee sy herinneringe aan wat in o.m. Abgasië, Soggoemie, Georgië, Rusland (tydens Jeltsin se aanval teen die Russiese parlement en demokrasie), Sarajevo (Bosnië), Kigali (Rwanda) en Goma (DRC) gebeur het.
Hy is duidelik hoogs sensitief teenoor Jeltsin se gedrag t.o.v. demokrasie, en mens wil glo dat hy 'n kritiese siening het, maar dan word mens in die steek gelaat, o.m. deur sy beskrywings en gedrag in Goma en Kigali; hy voel duidelik meer gemaklik met Kanadese, en 'n netjiese generaal wen maklik sy (onverdiende) respek. Ek bespreek dus volgende sy optrede en interpretasies in Kigali (hoofstad van Rwanda).
Steele het heelwat lyke wat opgesny was gesien; die het hoofsaaklik as Tutsis voorgekom. Deur dat die lyke dood gesny was, lei hy heel redelik af dat machetes/pangas gebruik was. Op 'n stadium kom hulle (hy en die soldate met wie hy reis - 'n vroeë voorbeeld van 'embedded journalism') af op 'n groep burgerlike Hutus. Die Kanadese generaal (Romeo Dallaire) dring aan daarop dat sy soldate die burgerlikes deursoek, en hul vind dan 'n paar pistole en machetes. Hieruit lei hy af dat hulle aan die grootskaalse moord deelgeneem het. Hiermee het ek 'n moerse probleem: Hoekom sou hulle dus noodwendig moordenaars wees? Kon hulle nie o.m. kleinboere wees wat die goed gebruik om vee te kastreer en te slag nie? Sou die machetes en pistole nie nuttig vir selfverdediging wees nie? Dit is tog moelik om mense dood te sny in die afwesigheid van outomatiese gewere om te verhoed dat mense teenstaan. Op 'n andere stadium sien hy vermoorde Hutu burgerlikes van 'n vlugtelingkamp waar daar kanonne was wat Kigali bestook het. Hy aanvaar outomaties dat hulle deur die Hutu soldate in die kamp vermoor was, soos aangedui deur een van die Kanadese soldate, sonder bewys, tog dui dieselfde Kanadese soldaat dat hul waarskynlik al agt ure lank dood is - dit is tog moeilik om 'n vlugtelingkamp teen voetsoldate met 'n kanon te beskerm - hoekom is dit nie vir hom moontlik dat hulle deur Tutsi soldate vermoor is nie? Ek voel sterk dat Dallaire verder skuldig bevind moet word op die moord van die groep(e) burgerlikes wie hy ontwapen het.
Dan vra ek my ook af (en Steele gee geen aanduiding dat dit ooit gebeur het nie) hoeveel Tutsi burgerlikes Dallaire deursoek het. Tog is dit nou 'n geskiedkundig duidelike saak dat Dallaire met Kagame (Kagami in die boek) deelgeneem het aan die sluipmoord van twee Hutu leiers, wat tot die Hutu moorde gelei het, en dat die meeste van die vermoordes Hutus was. Kagame is self verdink aan baie moorde in Rwanda en Congo-Kinshasa, en het sterk bygedra tot 'n 'burger-oorlog' in Congo-Kinshasa, namens die weste, sodat die weste goedkoop toegang tot tantalium (vir hoë gehalte kapasitors, op daardie stadium vir die Playstation II, as ek reg onthou) kon bekom. Vyf miljoen mense is as gevolg van daardie oorlog in Congo-Kinshasa dood. Steele is baie beïndruk deur Dallaire se 'vaderlike' gedrag teenoor hom, en hou duidelik baie van soldate wie mooi met die pers saamspeel; ek vra my af hoe hy teenoor die Russiese soldate sou optree as hulle vir hom 'n kaksmoesie oor hoe die parlementslede besig was met 'n volksmoord in 'n andere deel van die land sou gee, en Engels met hom sou praat - daar was tog verskeie Amerikaanse films, en selfs 'n rekenaar spel met daardie (volksmoord in Rusland/ou-VSSR) tema.
Steele is ook verslaaf aan kokaïne, en het sy vrou en kind afgeskeep. Hy kom oor die algemeen as grotendeels moreel en intellektueel onderontwikkeld voor. Groepe wie gereeld met die pers te doene het sal wel die boek nuttig vind.
Monday, 15 February 2010
Debt and Production
I was arguing with a guy who insisted that money must have a time value (Link deleted - I'm trying to avoid having that blog owner having to deal with people who don't start to share his politics; apologies if that causes offense). My own education suggested to me that he was referring to concepts like the MARR (Minimum Acceptable Rate of Return), which is a corporate policy that evaluates the profitability of a project in terms of the time to achieve a future project, given inflation and a desired additional return, i.e. a profit. It turns out that he meant a desire to get a substantial amount of money up front for a purchase, e.g. a house loan. Oh well. It got me thinking about profitability (the argument was about debt, and the relative importance of debt vs theft of production in Marx's sense). I had a strong impression that profit-seeking would lead to inflation, and did some exercises in search of a model, to confirm this suspicion. The following conclusions and thought experiments are a result of those exercises.
Consider an economy which has only one production unit/company, that creates things-for-sale that maintain their value over time (i.e. one can sell an old one for the price of a new one). The company creates M items, of which it sells N, at a price of P per unit sold. Its expenses for materials, wages etc. are C. Thus its profit is PxN-C, and its return is R=(PxN-C)/C. Where does this profit come from? Possibilities include the workers' funds (from which they buy the units), money created by a bank or government, and a loan (possibly via a bank) that the owner/production unit makes to the workers to buy the product. To remain profitable, the company must make more than it pays - some portion of the sale can be made through the materials cost, which can be realized in this example as a wage paid to the extraction workers, to keep the production unit singular for simplicity sake, but some portion of the profit has to come from elsewhere. [Correction: 17 February 2010 The number of items represented by the money in existence increases, so this example is actually deflationary. To see the point I had in mind, let the products be destroyed, although that just jumps ahead a few steps.]
Once the company has sold enough units to deplete the workers' funds, it can either stop operating (at least at a profit) or it can continue operating by suffering inflation through the creation of money, or by issuing debt to the workers to buy more product - which will require inflation later, before they start paying the interest portion of the loan. By working to pay off the interest (no purchases), the workers don't solve the problem of the money distribution, because in that case, the business ceases to be profitable (no sales), and must cease to operate. This inflation is thus due to the distribution of money.
The situation does not change much with extra producers and their workers. At most, one producer can sell to another, and the workers of one producer can buy from the other producers. The net transfer of money between producers and workers is of determining importance. Let us partition the economy into three units: Profitable producers, non-profitable producers, and workers. Non-profitable producers may transfer a net amount to profitable producers and workers considered together. Their effect may be inflationary or deflationary, depending on how much they produce before going belly up, but if the economy is overall profitable, one again sits with this problem - workers must use their funds to buy product, or must get the funds from elsewhere. Slavery in a production sector does not solve this problem - money will have to be created to a greater extent to buy slave-produced goods, or the profits must be redistributed, to avoid the disappearance of the market arising out of lack of funds. (End of correction)
Now let us consider consumer goods. We destroy the market value of an item as we buy it (e.g. by eating it, opening the package etc.). By buying and using, we create an inflationary tendency (we destroy that which the existent money presents a claim on), and by producing, we create a deflationary tendency (by shaping that which the existent money presents a claim on). Consider when the production and consumption occur at the same rate (a stationary economy); we have the same problem, namely an accumulation of profit, which must come from somewhere. (Should the production unit continually reinvest its profits, inflation of this type might be avoided, otherwise there must be either an inflation, or a loss of general profitability - debt/loans only postpone the problem until the point when the cumulative payment on the debt including interest covers the profitability).
Now consider where an economy grows consistently, with some degree of net saving of profits, and thus has a money-induced inflation. Next a further saving/efficiency improvement/increased rate of return occurs. Now the production sector has a choice of how much of the saving to pass on to consumers/the market. If it collects the entire profit, there is necessarily further inflation as before, and if it is invested, there is the risk of inflation in one production unit, and deflation in another, as funds are transferred, but without the above money-induced net inflation. In practice, banks will borrow out their bank accounts to avoid this accumulation, with some money generation through debt (fractional reserve lending). In this way, the money distribution problem is solved by growing debt, with associated interest, as the bank is not in the first instance a consumer. The new problem is somewhat mitigated through the institution of bankruptcy.
Beyond the additional debt arising from accumulation in this scheme, there is a further problem that interest payments due to the additional debt reduce the demand in primarily worker-serving markets, and/or cause inflation as workers demand higher pay to make their interest payments.
North American comment: Notice that I've avoided the question of the material basis of the economy - other inflations, such as reduced energy content in a product at a given price etc. that are often hidden, have escaped consideration (notice how the cheese packages of a given presentation cross-sectional area get lighter with time at a constant price - packages that used to contain 1kg is down, depending on the brand, to 750g or 500g.)
Consider an economy which has only one production unit/company, that creates things-for-sale that maintain their value over time (i.e. one can sell an old one for the price of a new one). The company creates M items, of which it sells N, at a price of P per unit sold. Its expenses for materials, wages etc. are C. Thus its profit is PxN-C, and its return is R=(PxN-C)/C. Where does this profit come from? Possibilities include the workers' funds (from which they buy the units), money created by a bank or government, and a loan (possibly via a bank) that the owner/production unit makes to the workers to buy the product. To remain profitable, the company must make more than it pays - some portion of the sale can be made through the materials cost, which can be realized in this example as a wage paid to the extraction workers, to keep the production unit singular for simplicity sake, but some portion of the profit has to come from elsewhere. [Correction: 17 February 2010 The number of items represented by the money in existence increases, so this example is actually deflationary. To see the point I had in mind, let the products be destroyed, although that just jumps ahead a few steps.]
Once the company has sold enough units to deplete the workers' funds, it can either stop operating (at least at a profit) or it can continue operating by suffering inflation through the creation of money, or by issuing debt to the workers to buy more product - which will require inflation later, before they start paying the interest portion of the loan. By working to pay off the interest (no purchases), the workers don't solve the problem of the money distribution, because in that case, the business ceases to be profitable (no sales), and must cease to operate. This inflation is thus due to the distribution of money.
The situation does not change much with extra producers and their workers. At most, one producer can sell to another, and the workers of one producer can buy from the other producers. The net transfer of money between producers and workers is of determining importance. Let us partition the economy into three units: Profitable producers, non-profitable producers, and workers. Non-profitable producers may transfer a net amount to profitable producers and workers considered together. Their effect may be inflationary or deflationary, depending on how much they produce before going belly up, but if the economy is overall profitable, one again sits with this problem - workers must use their funds to buy product, or must get the funds from elsewhere. Slavery in a production sector does not solve this problem - money will have to be created to a greater extent to buy slave-produced goods, or the profits must be redistributed, to avoid the disappearance of the market arising out of lack of funds. (End of correction)
Now let us consider consumer goods. We destroy the market value of an item as we buy it (e.g. by eating it, opening the package etc.). By buying and using, we create an inflationary tendency (we destroy that which the existent money presents a claim on), and by producing, we create a deflationary tendency (by shaping that which the existent money presents a claim on). Consider when the production and consumption occur at the same rate (a stationary economy); we have the same problem, namely an accumulation of profit, which must come from somewhere. (Should the production unit continually reinvest its profits, inflation of this type might be avoided, otherwise there must be either an inflation, or a loss of general profitability - debt/loans only postpone the problem until the point when the cumulative payment on the debt including interest covers the profitability).
Now consider where an economy grows consistently, with some degree of net saving of profits, and thus has a money-induced inflation. Next a further saving/efficiency improvement/increased rate of return occurs. Now the production sector has a choice of how much of the saving to pass on to consumers/the market. If it collects the entire profit, there is necessarily further inflation as before, and if it is invested, there is the risk of inflation in one production unit, and deflation in another, as funds are transferred, but without the above money-induced net inflation. In practice, banks will borrow out their bank accounts to avoid this accumulation, with some money generation through debt (fractional reserve lending). In this way, the money distribution problem is solved by growing debt, with associated interest, as the bank is not in the first instance a consumer. The new problem is somewhat mitigated through the institution of bankruptcy.
Beyond the additional debt arising from accumulation in this scheme, there is a further problem that interest payments due to the additional debt reduce the demand in primarily worker-serving markets, and/or cause inflation as workers demand higher pay to make their interest payments.
North American comment: Notice that I've avoided the question of the material basis of the economy - other inflations, such as reduced energy content in a product at a given price etc. that are often hidden, have escaped consideration (notice how the cheese packages of a given presentation cross-sectional area get lighter with time at a constant price - packages that used to contain 1kg is down, depending on the brand, to 750g or 500g.)
Skuld en Produksie
Ek het onlangs gestry met 'n ou wie aangedring het dat geld 'n noodwendige tydswaarde moet hê. Die tydswaarde van geld het twee betekenisse, nl. dat R100 tien jaar gelede meer waarde gehad het as nou, weens inflasie - in die bedryf gebruik mens 'n syfer wat as die MARR (Minimum Acceptable Rate of Return) bekend staan, bo inflasie, vir sulke berekeninge, om te besluit of 'n projek die moeite werd is, en dit (MARR) is as sulks 'n aanduider van die tydswinsgewendheid van 'n projek; verder kan die tydswaarde van geld ook verwys na 'n behoefte tot 'n groter som geld, om 'n groot aankope te maak, wat dan tot 'n toekomstige verlies lei, b.v. huislenings; daai ou het die tweede bedoeling in gedagte gehad. Vir my het dit geblyk dit dat winsjag (wat ons lei tot die tydswaarde van geld) sou lei tot inflasie; ek het toe 'n model probeer opstel, en van daardie oefening het ek tot die volgende gevolgtrekkings en gedagteseksperimente gekom.
Beskou 'n ekonomie waar daar net een produsent is (die enigste werkgewer), wat items skep wat hul markwaarde permanent behou, d.w.s. die items kan enige tyd herverkoop word vir dieselfde prys as 'n nuwe item. Die produsent skep M items, waarvan N suksesvol verkoop word, teen 'n gemiddelde prys van P per item. Sy onkoste vir materiale, lone, ens. is C. Dus is sy wins PxN-C en sy winsgewendheid is RR=(PxN-C)/C. Waar kom hierdie wins vandaan? Moontlikhede sluit in sy werkers se fondse, die regering (geld skep) en 'n lening aan sy werkers (moontlik d.m.v. 'n bank) - om winsgewend te wees moet hy meer in kry as wat hy uitbetaal - op die ou end kan dele van die betaling uit die materiaal onkostes kom, maar 'n deel van die wins moet elders vandaan kom. [Korreksie (17 Februarie 2010): Hierdie situasie is deflasionêr - die geld bly dieselfde, maar die aantal items verteenwoordig verhoog. Om my punt deur te bring, laat die items gesteel/vernietig word - maar dan gaan ons eenvoudig 'n paar stappe vorentoe - die omgewing word eintlik in hierdie voorbeeld vernietig, so in 'n mate is dit nie eintlik deflasionêr nie.]
Sodra hy genoeg eenhede verkoop het dat die werkers se fondse opgebruik is, moet hy 'n verlies ly, inflasie ly of 'n lening aan sy werkers maak, wat die geld-skep tot later los, nog voor hulle 'n netto rente betaal het. Deur later te werk sonder om te koop, los die werkers nie die probleem van geld verspreiding op nie, want in daardie geval is die bedryf nie meer winsgewend nie (benewens die tekort aan kopers), en kan dus nie voort hou nie. Hierdie inflasie is dan weens die verspreiding van geld.
Die situasie verander nie veel met ekstra produsente en werkers/kopers nie: Al wat verander is dat 'n ander produsent nou sy produksie kan koop. Wat van belang is is die netto oordrag tussen produsente en werkers. Kom ons verdeel die ekonomie in drie: Produsente wie winsgewend is, produsente wie nie winsgewend is nie, en werkers. Nie-winsgewende produsente dra netto geld oor aan winsgewende produsente en werkers. Hul effek is moontlik inflasionêr of deflasionêr, afhangend van hoeveel hulle met hul geld produseer voor hul bankrot speel, maar as die ekonomie in die netto winsgewend is, het ons dieselfde probleem as voorheen - werkers moet hul fondse gebruik om goed te koop, of moet elders die geld kry. Slawerny in 'n gegewe produksie sektor los nie die probleem op nie: Geld sal soveel te meer geskep moet word om die slawe se produkte te koop, andersins sal die winste op 'n ander manier herversprei moet word, voor daar nie meer 'n mark is nie.
Kom ons verander die produksie na verbruikersgoedere: Nou vernietig ons die markwaarde van 'n item soos ons dit koop (o.m. deur dit te eet of andersins te verbruik, b.v. deur die pakket oop te maak). Deur te koop en te verbruik veroorsaak ons 'n neiging tot inflasie (die bestaande geld kan nie meer daardie goedere eis nie), en deur dan te produseer veroorsaak ons 'n neiging tot deflasie (ons skep goedere wat die bestaande geld kan eis). Laat die produksie en verbruik teen dieselfde tempo plaasvind (d.w.s. 'n stasionêre ekonomie), dan sit ons met dieselfde probleem - 'n akkumulasie van wins, wat iewers vandaan moet kom. (Indien die produsent gedurig sy winste herbelê, kan inflasie verhoed word, anders moet daar óf inflasie óf 'n verlies aan algemene winsgewendheid wees - skuld/lenings maak stel net die saak uit tot die eerste rente betaling.)
Beskou nou verder die geval waar 'n ekonomie konsekwent groei, met 'n mate van besparing, en gevolglik 'n inflasie-neiging het. 'n Besparing in die produksie proses word gemaak: Die produsent het nou 'n keuse hoeveel van die produksie-besparing hy aan die mark wil oordra: Spaar hy die volledige wins, is daar 'n noodwendige verdere inflasie, en belê hy dit, is daar moontlik inflasie in een sektor, en deflasie in 'n ander (soos geld tussen sektore oorgedra word), maar sonder die bogenoemde geld-verwante netto inflasie. In die praktyk sal die geld in bankrekeninge gaan, om hierdie akkumulasie te verhoed, en dan word die geld uitgeleen (met geldskep weens 'fractional reserve lending'). Nou word die skuld probleem ten beste aanhoudend - die heruitdeling van geld vind deur skuld plaas, wat dan tot verdere rente betalings lei - die bank is nie in die eerste plek 'n verbruiker nie. Onbetaalbare skulde lei dan tot bankrotskappe, wat die probleem in 'n mate verlig.
Buiten die bykomende skuld van akkumulasie, is daar ook 'n probleem dat die ekstra rentebetalings weens die bykomende skuld die aanvraag in die werkerbedienende markte sal inkort, of tot inflasie sal lei namate die werkers hoër lone eis.
Dus kan skuld en produksie nie geskei word nie.
Beskou 'n ekonomie waar daar net een produsent is (die enigste werkgewer), wat items skep wat hul markwaarde permanent behou, d.w.s. die items kan enige tyd herverkoop word vir dieselfde prys as 'n nuwe item. Die produsent skep M items, waarvan N suksesvol verkoop word, teen 'n gemiddelde prys van P per item. Sy onkoste vir materiale, lone, ens. is C. Dus is sy wins PxN-C en sy winsgewendheid is RR=(PxN-C)/C. Waar kom hierdie wins vandaan? Moontlikhede sluit in sy werkers se fondse, die regering (geld skep) en 'n lening aan sy werkers (moontlik d.m.v. 'n bank) - om winsgewend te wees moet hy meer in kry as wat hy uitbetaal - op die ou end kan dele van die betaling uit die materiaal onkostes kom, maar 'n deel van die wins moet elders vandaan kom. [Korreksie (17 Februarie 2010): Hierdie situasie is deflasionêr - die geld bly dieselfde, maar die aantal items verteenwoordig verhoog. Om my punt deur te bring, laat die items gesteel/vernietig word - maar dan gaan ons eenvoudig 'n paar stappe vorentoe - die omgewing word eintlik in hierdie voorbeeld vernietig, so in 'n mate is dit nie eintlik deflasionêr nie.]
Sodra hy genoeg eenhede verkoop het dat die werkers se fondse opgebruik is, moet hy 'n verlies ly, inflasie ly of 'n lening aan sy werkers maak, wat die geld-skep tot later los, nog voor hulle 'n netto rente betaal het. Deur later te werk sonder om te koop, los die werkers nie die probleem van geld verspreiding op nie, want in daardie geval is die bedryf nie meer winsgewend nie (benewens die tekort aan kopers), en kan dus nie voort hou nie. Hierdie inflasie is dan weens die verspreiding van geld.
Die situasie verander nie veel met ekstra produsente en werkers/kopers nie: Al wat verander is dat 'n ander produsent nou sy produksie kan koop. Wat van belang is is die netto oordrag tussen produsente en werkers. Kom ons verdeel die ekonomie in drie: Produsente wie winsgewend is, produsente wie nie winsgewend is nie, en werkers. Nie-winsgewende produsente dra netto geld oor aan winsgewende produsente en werkers. Hul effek is moontlik inflasionêr of deflasionêr, afhangend van hoeveel hulle met hul geld produseer voor hul bankrot speel, maar as die ekonomie in die netto winsgewend is, het ons dieselfde probleem as voorheen - werkers moet hul fondse gebruik om goed te koop, of moet elders die geld kry. Slawerny in 'n gegewe produksie sektor los nie die probleem op nie: Geld sal soveel te meer geskep moet word om die slawe se produkte te koop, andersins sal die winste op 'n ander manier herversprei moet word, voor daar nie meer 'n mark is nie.
Kom ons verander die produksie na verbruikersgoedere: Nou vernietig ons die markwaarde van 'n item soos ons dit koop (o.m. deur dit te eet of andersins te verbruik, b.v. deur die pakket oop te maak). Deur te koop en te verbruik veroorsaak ons 'n neiging tot inflasie (die bestaande geld kan nie meer daardie goedere eis nie), en deur dan te produseer veroorsaak ons 'n neiging tot deflasie (ons skep goedere wat die bestaande geld kan eis). Laat die produksie en verbruik teen dieselfde tempo plaasvind (d.w.s. 'n stasionêre ekonomie), dan sit ons met dieselfde probleem - 'n akkumulasie van wins, wat iewers vandaan moet kom. (Indien die produsent gedurig sy winste herbelê, kan inflasie verhoed word, anders moet daar óf inflasie óf 'n verlies aan algemene winsgewendheid wees - skuld/lenings maak stel net die saak uit tot die eerste rente betaling.)
Beskou nou verder die geval waar 'n ekonomie konsekwent groei, met 'n mate van besparing, en gevolglik 'n inflasie-neiging het. 'n Besparing in die produksie proses word gemaak: Die produsent het nou 'n keuse hoeveel van die produksie-besparing hy aan die mark wil oordra: Spaar hy die volledige wins, is daar 'n noodwendige verdere inflasie, en belê hy dit, is daar moontlik inflasie in een sektor, en deflasie in 'n ander (soos geld tussen sektore oorgedra word), maar sonder die bogenoemde geld-verwante netto inflasie. In die praktyk sal die geld in bankrekeninge gaan, om hierdie akkumulasie te verhoed, en dan word die geld uitgeleen (met geldskep weens 'fractional reserve lending'). Nou word die skuld probleem ten beste aanhoudend - die heruitdeling van geld vind deur skuld plaas, wat dan tot verdere rente betalings lei - die bank is nie in die eerste plek 'n verbruiker nie. Onbetaalbare skulde lei dan tot bankrotskappe, wat die probleem in 'n mate verlig.
Buiten die bykomende skuld van akkumulasie, is daar ook 'n probleem dat die ekstra rentebetalings weens die bykomende skuld die aanvraag in die werkerbedienende markte sal inkort, of tot inflasie sal lei namate die werkers hoër lone eis.
Dus kan skuld en produksie nie geskei word nie.
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