A Resource Based Economy

[jtimon]

I think you're wrong on this. Maybe you're right in the number of developers but most free software is paid to be produced.
I bet Google alone (and is not the only big company that produces free software) produces more free software than all the volunteers together.

We could debate about numbers and quality, but it's beside the point.

The point is that it was questioned whether people would do anything without monetary compensation.

The answer is clearly: yes, they have and they will.

I agree with you on that. I was just pointing out the errors of your argumentation.

I don't think you can convince me that the scientific can tell you what to do, either with a video or with logic argumentation.
The seed of Nietsche is inside of me. I can't confuse science with morals anymore.

Finally, you admit that you have a personal belief, which cannot be changed, regardless of whatever evidence is proposed.

I guess that kind of ends it.

Faith over reason and reality.

No, is not a believe.
If you argue logically and based on premises that I accept as valid, you can convince me.
I believe you can't do it.

EDIT I don't want to be rude. I believe you can't do it in this particular case.

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[jtimon]

How did you get from "The free market won't provide that. The people within the free market have to do it. If they chose suicide and self destruction, there's nothing free market can do. Free market can't impede suicide." to "you have a blind faith, or a blind wish, that the free market will, somehow, avoid that." ?

OK, let me rephrase then.

1. How does the free market avoid the destruction of the inhabitable planet from which we depend on to survive?
2. How does the free market ensure that no people will starve unnecessarily?

Quite eager to hear.

No one is saying free market avoids the destruction of the planet. Is the people in the free market the ones who have to do it.

[Rassah]

OK, let me rephrase then.

1. How does the free market avoid the destruction of the inhabitable planet from which we depend on to survive?
2. How does the free market ensure that no people will starve unnecessarily?

Quite eager to hear.

1. Actually, this one is kind of easy. Market prices are based on supply/demand. Destroying things reduces it's supply. The more of something is destroyed in the free market, the more expensive it becomes, and the less people want it or are willing to pay for it. Eventually the market will get to a point where continuing to destroy some things is just not profitable any more. UNLESS we have a non-free market player, such as the government, deciding that some things are needed for the general good of the population, and subsidizes that good. Example is corn, which we use in many of our foods, which is subsidized to the point where it costs more to grow it than it's sold for, and which is screwing up our land with overfarming.
As for companies polluting, the bigger issue is the lack of a legal recourse for people to defend their property against polluting factories. I would argue that that's more a problem of the legal system than a free market.

2. People are greedy. They want things done to make them rich. If they are freely allowed to have other people work for them to make them richer, and pay those other people competitive wages, those other people will have money to buy food and not starve if they chose not to. That's not the case in Africa, where greedy free-market people are being kept out by greedy gun-toting people.

[jtimon]

Could it be that you might have grasped the text clearer had it said the people instead of the people in the free market?

People act according to their environment and stimula.

I'll ask again.

1. How do the people in a free market system avoid the destruction of the inhabitable planet from which we depend on to survive?
2. How do the people in free market system ensure that no people will starve unnecessarily?

1) They grow their own food, work near their home, drive electric vehicles, have solar panels in their homes, recycle...
But the market produces what people value. If people demand self-destruction we're doomed no matter the system.

2) Why there's no full employment?
Why homeless aren't hired for food wages?
Of course, first of all, there's violence and wars. That's the case of many countries in Africa.
Then there's regulations, for example, minimum wages laws that prevent the less productive people from working.
And finally there's capitalism.
With capitalism you don't have only to produce as much as you're paid, workers are treated accounted like rented machines (capital) and (as I explained earlier) they have to be as productive as money or they won't be financed. The productivity of the monetary capital is the interest.
This way interest prevents full employment.

[Rassah]

The productivity of the monetary capital is the interest.
This way interest prevents full employment.

Can you elaborate on this a bit please? I think I may be confused as to what definition of the word "interest" you are using here...

[jtimon]

The productivity of the monetary capital is the interest.
This way interest prevents full employment.

Can you elaborate on this a bit please? I think I may be confused as to what definition of the word "interest" you are using here...

I mean interest as the basic interest described by Gesell. Basically the interest of loans excluding the risk premium.
Here's how he thinks the removal of interest (by demurrage on money) would affect the labor market:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5k.htm

Although maybe reading the whole book is needed to understand (or believe) this chapter.

[Rassah]

The productivity of the monetary capital is the interest.
This way interest prevents full employment.

Can you elaborate on this a bit please? I think I may be confused as to what definition of the word "interest" you are using here...

I mean interest as the basic interest described by Gesell. Basically the interest of loans excluding the risk premium.
Here's how he thinks the removal of interest (by demurrage on money) would affect the labor market:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5k.htm

Although maybe reading the whole book is needed to understand (or believe) this chapter.

Yeah... I guess I just don't get it. How can money be free if the interest payment on money is often payment for time, and time is never free?...
Or maybe the author is just using a definition of "money" I'm not familiar with. though reading the Introduction to Free Money chapter, the entire "buy and attach stamps" idea is basically a more convoluted version of having inflationary money that inflated 5% a year...

[Michele1940]

BASIC STAFF - PART FOUR USERS A RESOURCE BASED ECONOMY

http://pointapp.blogspot.com/2011/07/basic-staff-part-four-users-as-resource.html

[jtimon]

Yeah... I guess I just don't get it. How can money be free if the interest payment on money is often payment for time, and time is never free?...
Or maybe the author is just using a definition of "money" I'm not familiar with. though reading the Introduction to Free Money chapter, the entire "buy and attach stamps" idea is basically a more convoluted version of having inflationary money that inflated 5% a year...

Is not the same as inflation. With demurrage you can have a stable monetary base while increasing it leads to malinvestments, creating for some time the illusion that there's more resources available than exist in reality.

The time preference theory of interest is a source of conflict between Gesell and the austrian school. He calls it "abstinence theory". Maybe this helps:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5m.htm

I still recommend to read the whole text.

Also Bernard Liater explains how interest promotes short term thinking. In the page 34 of this pdf (chapter "What do we invest in?") there's a simple example.
He states "Short-term thinking is not intrinsic to human nature, but created by today’s money system".
I have not read his book "The future of money" but I want to do it (if anyone finds it for free in the web, please give me the link).
I've just read some of his articles and watched some interviews, but he's an interesting man.

[Anonymous]

I think it's unnatural to have anything without profit. Whether it be monetary or deriving value from helping unfortunate. To say people can and should do things selflessly with actual sacrifice, is absurd. To say man should sacrifice is actually very insulting to me.

Wait until you are a parent.  

Taking care of people you love is not a sacrifice. If it feels like it, you shouldn't have children.

[Rassah]

Also Bernard Liater explains how interest promotes short term thinking.
He states "Short-term thinking is not intrinsic to human nature, but created by today’s money system".
I have not read his book "The future of money" but I want to do it (if anyone finds it for free in the web, please give me the link).
I've just read some of his articles and watched some interviews, but he's an interesting man.

Heh, that's a rather weird statement, considering the human lifespan used to be an average of maybe 30 years just a few centuries ago, and considering how comfortable we are with things like apps, podcasts, vlogs, twitters, snacks, and other short-term bits of information and activities.
To me, personally, interest is a guarantee that I will either get paid for use of my resources, or for taking on risk. No different than if I was to charge someone daily rental fee for using my power tools or my car, regardless of what they use it for.

In the long-run, though, if someone has an idea about something we have been using for a very long time, using very old technology, chances are someone else has thought of it hundreds of years ago already, and the idea already failed. I wouldn't be surprised if this stamp or destructive money idea was conceived many times in our past, or was simply destructive by it's nature, such as some culture using something that rots or withers (like tulips!

[Rassah]

To say man should sacrifice is actually very insulting to me.

Wait until you are a parent.  

Taking care of people you love is not a sacrifice.

It's not sacrifice, it's investment in your own retirement and long-term care

[Rassah]

The time preference theory of interest is a source of conflict between Gesell and the austrian school. He calls it "abstinence theory". Maybe this helps:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5m.htm

I still recommend to read the whole text.

Reading this text, there are some somewhat blatant flaws there. If I was a financier in such a free-money economy, what's to stop me from asking that when you pay back the loan, you add a few extra stamps or bills to the money you return, i.e. charge you interest on the loan?
There seems to be some lack of knowledge/understanding about things on his part, too. For example,

And what price was paid for a piece of land yielding a rent of $1000 ? The calculation was based on the fact that $100 bore $5 interest, and the price of the land was as many times 100 as 5 is contained in 1000. But how did this rate of 5% originate ? That is the crux of the matter.

The answer is, a bank that loans money to many houses calculates the probability that each new loan will default. The interest is calculated based on the overall chance of default per year, plus required operating costs (paying for employees and stuff). If the bank is operating in a perfectly competitive economy (no profit) is enough to ensure that if someone during the year defaults on their loan, that 5% interest fee should be just enough to cover the paychecks of employees, operating cost of the bank, and maybe still allow them to make an extra loan or two. So, again, time and/or risk.

If the answer is "there is already a lot of money going around, so the quantity of money will drive interest through competition to zero," that ignores the part where a lot of money means each bill costs less, meaning you just need more of them to buy the same thing, which, again, means that you will likely have to go to someone specific and scarce who has a lot of this money, who can still charge you interest. If the situation becomes too inflationary, likely people will abandon this money for something else.
I just really don't see a difference between money being inflated by a central government that prints more bills, and money being inflated by design, with the central government printing more stamps (bills)

[Anonymous]

To say man should sacrifice is actually very insulting to me.

Wait until you are a parent.  

Taking care of people you love is not a sacrifice.

It's not sacrifice, it's investment in your own retirement and long-term care

I am sick of men who claim they act selflessly. There is no such thing, unless you have no to little value for yourself.

[jtimon]

Also Bernard Liater explains how interest promotes short term thinking.
He states "Short-term thinking is not intrinsic to human nature, but created by today’s money system".
I have not read his book "The future of money" but I want to do it (if anyone finds it for free in the web, please give me the link).
I've just read some of his articles and watched some interviews, but he's an interesting man.

Heh, that's a rather weird statement, considering the human lifespan used to be an average of maybe 30 years just a few centuries ago, and considering how comfortable we are with things like apps, podcasts, vlogs, twitters, snacks, and other short-term bits of information and activities.
To me, personally, interest is a guarantee that I will either get paid for use of my resources, or for taking on risk. No different than if I was to charge someone daily rental fee for using my power tools or my car, regardless of what they use it for.

We want to suppress the basic interest, not the risk premium.
When you rent your car, it deteriorates and you get paid for that, but money lasts forever.
When you lend free-money, it deteriorates in the hands of the borrower, but you get payed the same quantity, to compensate you for the inconvenience of non being able to spend it during the loan. If you don't lend your free-money, it rots in your hands, but you can spent it when you want.
In some sense I think holding money is a privilege, because you're asking the society to wait until you decide how you want to be compensated for the value you provided earlier.

In the long-run, though, if someone has an idea about something we have been using for a very long time, using very old technology, chances are someone else has thought of it hundreds of years ago already, and the idea already failed. I wouldn't be surprised if this stamp or destructive money idea was conceived many times in our past, or was simply destructive by it's nature, such as some culture using something that rots or withers (like tulips!

In fact, in the same pdf, you can find:

Historical Precedents: Dynastic Egypt, “Age of Cathedrals”, Chinese Ming Period

Maybe not the best of history, because probably there was a lot of coercion and centralization too. But their buildings stand as prove of their long term thinking.

What do you think about the Tree Metaphor?

[Rassah]

We want to suppress the basic interest, not the risk premium.
When you rent your car, it deteriorates and you get paid for that, but money lasts forever.
When you lend free-money, it deteriorates in the hands of the borrower, but you get payed the same quantity, to compensate you for the inconvenience of non being able to spend it during the loan. If you don't lend your free-money, it rots in your hands, but you can spent it when you want.
In some sense I think holding money is a privilege, because you're asking the society to wait until you decide how you want to be compensated for the value you provided earlier.

Hmm. I guess in this case I would ask, why would the producing member of society, one waiting for someone who is sitting on money, want something that deteriorates, too? I would think deteriorating money would also not be wanted by those getting it, just like it wouldn't be wanted those hoarding it? In which case, wouldn't it be inevitable that someone who is selling goods will start to refuse this free-money, and ask for something else instead (any other more durable commodity)?
Also, I would likely not rent (loan) money to someone who will just have it sit and deteriorate, and since they are able to pay back at least the same amount, they are likely increasing the worth (amount) or my money by putting it to work. So, again, what's to stop me from asking them to pay me back more (interest), besides competition from other money hoarders?

What do you think about the Tree Metaphor?

Where is that metaphor?

[jtimon]

The time preference theory of interest is a source of conflict between Gesell and the austrian school. He calls it "abstinence theory". Maybe this helps:

http://www.community-exchange.org/docs/Gesell/en/neo/part4/5m.htm

I still recommend to read the whole text.

Reading this text, there are some somewhat blatant flaws there. If I was a financier in such a free-money economy, what's to stop me from asking that when you pay back the loan, you add a few extra stamps or bills to the money you return, i.e. charge you interest on the loan?

The fact that if you don't find no one that wants to accept that trade, you will actually lose money by demurrage. If you want to save, you better lend your free-money or do something else with it.

There seems to be some lack of knowledge/understanding about things on his part, too. For example,

And what price was paid for a piece of land yielding a rent of $1000 ? The calculation was based on the fact that $100 bore $5 interest, and the price of the land was as many times 100 as 5 is contained in 1000. But how did this rate of 5% originate ? That is the crux of the matter.

The answer is, a bank that loans money to many houses calculates the probability that each new loan will default. The interest is calculated based on the overall chance of default per year, plus required operating costs (paying for employees and stuff). If the bank is operating in a perfectly competitive economy (no profit) is enough to ensure that if someone during the year defaults on their loan, that 5% interest fee should be just enough to cover the paychecks of employees, operating cost of the bank, and maybe still allow them to make an extra loan or two. So, again, time and/or risk.

No, apart from the operating costs of the bank, the inflation/deflation premium and the risk premium, you pay basic interest
I should probably stop linking you chapters because you can get confused by jumping around through the book.

If the answer is "there is already a lot of money going around, so the quantity of money will drive interest through competition to zero," that ignores the part where a lot of money means each bill costs less, meaning you just need more of them to buy the same thing, which, again, means that you will likely have to go to someone specific and scarce who has a lot of this money, who can still charge you interest. If the situation becomes too inflationary, likely people will abandon this money for something else.
I just really don't see a difference between money being inflated by a central government that prints more bills, and money being inflated by design, with the central government printing more stamps (bills)

No, interest rates are not driven down by monetizing debt and printing but simply by demurrage.

However, there's a part that you won't like in the book (I don't like it neither). He says the central issuing authority could control prices levels.
A free-money central bank (yes, sounds weird) would have it easier to because the velocity of free-money would be more predictable.
He doesn't talks about stimulus packages or nothing similar, his central issuer would just provide stable prices and if there's price instability, is the fault of the central issuer, because the absence of liquidity in the market cannot be blamed due to built in incentive in free-money to circulate.
Luckily we now have the block chain and we can just have a stable monetary base for freicoin, letting prices adjust themselves while solving the potential problems of deflation and the problems of interest.

[LightRider]

To say man should sacrifice is actually very insulting to me.

Wait until you are a parent.  

Taking care of people you love is not a sacrifice.

It's not sacrifice, it's investment in your own retirement and long-term care

I am sick of men who claim they act selflessly. There is no such thing, unless you have no to little value for yourself.

An RBE is the height of acting in self interest. If you do not invest in making society better for everyone, then it won't be better for anyone.

[jtimon]

Hmm. I guess in this case I would ask, why would the producing member of society, one waiting for someone who is sitting on money, want something that deteriorates, too? I would think deteriorating money would also not be wanted by those getting it, just like it wouldn't be wanted those hoarding it? In which case, wouldn't it be inevitable that someone who is selling goods will start to refuse this free-money, and ask for something else instead (any other more durable commodity)?

Ok. You don't believe merchants would accept such a money. A common approach.
With bitcoin and freicoin in circulation, merchants would prefer to be paid in bitcoins, but buyers would prefer to spend freicoins first.
I bet merchants would accept both. Maybe even paypal dollars.
Also entrepreneurs would prefer to borrow freicoins (because of the lower interest rates).

Also, I would likely not rent (loan) money to someone who will just have it sit and deteriorate, and since they are able to pay back at least the same amount, they are likely increasing the worth (amount) or my money by putting it to work. So, again, what's to stop me from asking them to pay me back more (interest), besides competition from other money hoarders?

Only competition with other money hoarders. But these time all hoarders have the same disadvantage (or lack the same privilege) when negotiating with borrowers and that is that free-money rots like carrots.

Where is that metaphor?

In the pdf:

Also Bernard Liater explains how interest promotes short term thinking. In the page 34 of this pdf (chapter "What do we invest in?") there's a simple example.
He states "Short-term thinking is not intrinsic to human nature, but created by today’s money system".
I have not read his book "The future of money" but I want to do it (if anyone finds it for free in the web, please give me the link).
I've just read some of his articles and watched some interviews, but he's an interesting man.

[Rassah]

what's to stop me from asking that when you pay back the loan, you add a few extra stamps or bills to the money you return, i.e. charge you interest on the loan?

The fact that if you don't find no one that wants to accept that trade, you will actually lose money by demurrage. If you want to save, you better lend your free-money or do something else with it.

But, again, that's no different from current inflationary fiat currency, isn't it? What is being described is actually a real a problem for large companies and banks now, who are sitting on large piled of degrading cash, and can't find people to lend it to (more specifically invest in). What am I missing here?

No, apart from the operating costs of the bank, the inflation/deflation premium and the risk premium, you pay basic interest
I should probably stop linking you chapters because you can get confused by jumping around through the book.

I'm trying to understand what this basic interest is. In this article is feels as if Gesell somehow keeps forgetting that "money" itself is a commodity, too, also subject to laws of supply/demand (USD is same as sugar, oil, etc. People just don't think of it that way). In which case, wouldn't "basic interest" be the same as charging someone a premium for a rare commodity that may otherwise have lower use/production value? (I have a special tool that's fairly cheap to make, but because only I have it, I can charge you a bit extra due to your high demand for it, simply because I know you'll be willing to pay for it)

interest rates are not driven down by monetizing debt and printing but simply by demurrage.

But USD and gold also have very high demurrage costs. What will stop someone with hoards of depreciating money from just charging interest that is higher than their demurrage costs, if they are the scarce holder of a lot of funds (i.e. no other competing lenders)? I guess on an inflationary scale you can get to a point where EVERYONE will not want to hold money, and will run to the bank to cash in checks, and run to the store to buy goods, as soon as they get any. Which is what happened in Germany. But, isn't that what we already have with out inflation-driven economy?
By the way, just remembered, this would also put a large strain on society as a whole because a lot of work/time/money will also be wasted just to keep this type of money going. In Germany, during their high inflation period, banks had to hire a lot of skilled people just to run their teller windows, due to huge influx of people wanting to cash out, and that pull of skilled people from the rest of the economy actually ended up hurting them, too...

However, there's a part that you won't like in the book (I don't like it neither). He says the central issuing authority could control prices levels.
A free-money central bank (yes, sounds weird) would have it easier to because the velocity of free-money would be more predictable.
He doesn't talks about stimulus packages or nothing similar, his central issuer would just provide stable prices and if there's price instability, is the fault of the central issuer, because the absence of liquidity in the market cannot be blamed due to built in incentive in free-money to circulate.

Only way I can see that such a bank can control price levels is by creating or destroying this free-money, thus keeping it's supply relatively even with the supply of goods it's pegged to. That's also pretty much what our central bank already does, though they sometimes do it in the roundabout ways...