Thread: Our economic system-- How it really affects our world

It seems to be accepted among many that our current economic system has been beneficial for our advancement.

There are a few questions I want to put forward.

What is beneficial about an economic system that has been the main cause of many of the earths social and environmental problems?

What is beneficial about a money system which ensures social debt?

And how can we as people let the banks and governments get away with having a scheme set up, where by which they can create money 'out of thin air', and use it to by up all our planets natural resources (the things we need to survive), and put a price tag on them. Making us have to work the jobs they create, so we can buy they products they own and pay their taxes. While having a loan system that ensures there is always more money being owed to the banks and governments than even exists in circulation.

We have enough resources on Earth, and we are technologically advanced enough to be able to live in an abundant free of money. This can happen right now, through the positive management of the human focus, and through the efficient management of the Earths resources.

The system we have right now is just the most efficient one anyone's ever tried. Communism and planned economies were a dud. Mercantalism had some very mixed results (rampant inflation in Spain after Aztec gold started circulating). You might not like money being created out of nowhere (ie: credit), but it makes for some very efficient economies.

There's probably a better system we'll adopt at some point. If not now then during the next economic crisis. Or the next. Just not sure what it would look like yet.

^How is this economic system efficient? It ensures social debt. It ensures that there is always more money being owed to the banks and governments than even exists in circulation. Other ways can't be tried because the controlling powers of the world are too strongly set in place. They know this way isn't sustainable, what they do know is that they profit from this system. And that is their number one aim.

Money out of nowhere causes inflation. Inflation is a massive problem in our society, it can lead to worsening in poverty (which is the number one cause of crime), increase in interest rates and many other socially crippling side effects.

A better system is a resource based economy. Which is a system where we can effeciently, and positively manage the supply, demand amd allocation of the worlds natural resources. That is what it is all about, the efficient management of our resources. Money acts as nothing more than a barrier to attaining these resources. When the world is really abundant enough, and we are advanced enough to be able to sustain all lifeforms, without the need for price tags.

The main problem, spaceman, is that it seems nobody had ever thought of a resource based system when it came time to decide which system we would adopt. The world population had never been large enough to make resources a serious concern, so there was no accumulated experience from which an economist could arrive at any conclusions about the issue.


I agree with you that we need to move toward resource based thinking. Adam Smith (the great god father of modern capitalism) only really concerned himself with organizing labor efficiently, and it seems to me that he must have believed the resources for them to work with would just spring out of thin air.

In old world economics, if you ran short of resources, you could simply invade your neighbor and take theirs. If you lost, then your population would shrink a bit, and you'd still suddenly find resources seemed more abundant. (Because they did, in a per-capita sense)

Economic institutions do not like to change paradigm. If they do change, they have to do it slowly (give investors enough time to reconfigure their portfolios around the new system, before it's actually in place). They'll wait until they're confronted with a new system that's very very convincing, because they don't want to have to make the change multiple times, if the system revises itself later, or fails and has to be replaced by yet another one.

It is not that we never thought of a resource based economy. Obviously, anyone with half a brain, can figure out that the Earths natural resources are our most valueable materials we have. And they did, and money was intentionally created, so that the controlling bodies of the world could control these natural resources. Thus, controlling the things we need to survive, thus controlling society.

We do not need experience to make positive decisions. We just need positive intentions in mind, and that was not the case when our economic system was created.

Economic institutions do not like change, because change can effect their profits. The current controlling bodies of the world will not take on a new system unless they benefit financially from it. Our current economic body places profit over all environmental and social costs. We will never live in a free world until we positively manage our human focus, and efficiently manage our worlds resources. No system will ever work unless it takes into account the well being of every life form on the planet.

Originally Posted by spaceman1

It is not that we never thought of a resource based economy. Obviously, anyone with half a brain, can figure out that the Earths natural resources are our most valueable materials we have. And they did, and money was intentionally created, so that the controlling bodies of the world could control these natural resources. Thus, controlling the things we need to survive, thus controlling society.

We do not need experience to make positive decisions. We just need positive intentions in mind, and that was not the case when our economic system was created.

If you've never experienced, nor even read about in stories, a population large enough that it could actually exhaust its natural resources by over using them, how would you come to see that possibility as a problem requiring fore planning?

How?

At the time when most of the first world's current economic models were being developed modern medicine had not progressed to the point where overpopulation was even possible. Were they supposed to predict that modern medicine was going to make the advances that it has made?

Economic institutions do not like change, because change can effect their profits. The current controlling bodies of the world will not take on a new system unless they benefit financially from it. Our current economic body places profit over all environmental and social costs. We will never live in a free world until we positively manage our human focus, and efficiently manage our worlds resources. No system will ever work unless it takes into account the well being of every life form on the planet.

"can affect their profits" == Can destroy them.

Funny to imagine that they don't want to be destroyed, and the rest of us don't want them to either, because our own economic well being would be swept away in the storm.

It's all just a question of degree. Of course a small loss of profitability is something we can agree they should not be afraid of. However, sudden or rapid changes to an economic system don't create small losses of profitability. They create catastrophic losses. That's the only kind they create.

And, by saying they would suffer a catastrophic loss, what I mean is that it would be totally impossible that they could continue to stay in business.

It's sort of like how... if you give a pint of blood, that's noble. If you give 3 gallons of blood (at one time), that's suicide.

Capitalism's efficiency is a subtle, but powerful force. If you can understand why it's efficient, maybe you can someday invent a better system. It's also hard to explain in a nice sound bite. Are you familiar with complex emergent systems? How small and simple parts can create a level of complexity far in excess of the parts? The economy is like that. From the aggregate of millions of people making millions of decisions with their money every day, wealth is created and consumed. This great emergent behemoth is far closer to the heartbeat of humanity than any planned economy could be. That means it responds to changes better.

Just like in evolution, it's not the strongest which survives, but the one most responsive to change. That is what I mean by efficiency.

Likewise the rich in a capitalist society are rich because they've had good investments. Whether through luck or skill. They then reinvest their wealth in new ventures to make more wealth. Again similar to evolution. If you view each single dollar as an "organism", dollars which are more successful than others at making more dollars eventually outcompete the less successful dollars. That means the aggregate investment yield for an economy as a whole will tend to be as close to optimal as a local search or greedy search (look the terms up to see what I mean. But in layman's terms you have to be able to get to there from here) could possibly arrive at. Where a planned economy might have miscalculated and have a 4% return rate, a Capitalist society did not and has a 4.1% return rate. Over years and decades this small margin compounds (see compound return) to a massive difference in wealth between the two societies.

Originally Posted by kojax

If you've never experienced, nor even read about in stories, a population large enough that it could actually exhaust its natural resources by over using them, how would you come to see that possibility as a problem requiring fore planning?

If the controlling bodies of the world had positive intentions to start with, that involved complete, healthy management then we would not of led ourselves into this experience. Positive management, with positive intentions can only lead to positive outcomes. Positive in the sense of being beneficial for all life forms on the planet. We would not need to plan for solutions if we didn't create the problems. And the problems have been created because the bodies in power never intended to have total management in mind.

Originally Posted by kojax

At the time when most of the first world's current economic models were being developed modern medicine had not progressed to the point where overpopulation was even possible.

Our current Federal Bank and economic model is not the first to be tried. In the 1800's there was a similar banking system which was thrown out by the then in state government because of the social debt it created. Overpopulation is not the issue we are talking about here, we are talking about how the banks, multi-national corporations and present day governments have taken hold of our lives through the way they have constructed society. They control everything we need to survive, and are able to charge basically any price they like.

Originally Posted by kojax

"can affect their profits" == Can destroy them.

Funny to imagine that they don't want to be destroyed, and the rest of us don't want them to either, because our own economic well being would be swept away in the storm.

An economy that ensures social debt, and ensures there is always more money being owed to the banks and governments than even exists in circulation. Our economy was never created to be efficient in all senses, thus why we have had so many recessions through the years. We would be much better off without an economy that gaurantees debt. What exactly is our economic well being? The only well being that should be of importance should be the well being of the Earth, its resources, and all its life forms. Anything else is a false truth.

Originally Posted by Numsgil

Capitalism's efficiency is a subtle, but powerful force. If you can understand why it's efficient, maybe you can someday invent a better system.

The only system that can ever work is one that allows all humans to express themselves totally, and positvely as living beings. And one that does not affect the health of our planet, and its life forms. There is a number of ways this can be achieved. If our scientists got together, and worked on a design for society that allowed all of this, they would have little problem. The thing is the governments, banks, and multi-national corporations do not want this to happen because this makes them lose societal importance and power.

Originally Posted by Numsgil

From the aggregate of millions of people making millions of decisions with their money every day, wealth is created and consumed. This great emergent behemoth is far closer to the heartbeat of humanity than any planned economy could be. That means it responds to changes better.

Wealth is created by the banks, and ends up in the banks. The only true emergence in the economy is what the banks create, so that they can profit. If our economy responds to changes why are we going through the massive crash that we are now?

Name some instances where our economy has responded well to change... I think part of the problem is it has not responded to our changing world. This economic system was created almost 100 years ago, and has little relevance with the world we live in today. But still we continue to give it importance, and play within its roles, even though it is our economic system that is causing much of our environmental and social damage.

Originally Posted by Numsgil

Likewise the rich in a capitalist society are rich because they've had good investments. Whether through luck or skill. They then reinvest their wealth in new ventures to make more wealth.

Wealth should not be measured by external material. It is our economy that creates importance around things that aren't really important. The only way we can ever get to the core of our problems is when wealth comes from the inside of every human being. If we give importance to things that really have nothing to do with being a complete, healthy human then we will always have problems to deal with.

Originally Posted by spaceman1

Originally Posted by Numsgil

Capitalism's efficiency is a subtle, but powerful force. If you can understand why it's efficient, maybe you can someday invent a better system.

The only system that can ever work is one that allows all humans to express themselves totally, and positvely as living beings. And one that does not affect the health of our planet, and its life forms. There is a number of ways this can be achieved. If our scientists got together, and worked on a design for society that allowed all of this, they would have little problem. The thing is the governments, banks, and multi-national corporations do not want this to happen because this makes them lose societal importance and power.

It isn't as easy as you might think. The problem is really quite old, and extremely fundamental: how many washing machines and how many ipods do you make? In modern society, economies of scale mean that it's far more efficient for 100 people to make 10000 ipods than it is for 1000 people separetly to try and make 1000 ipods. And if you bring in relative and marginal costs, maybe you can produce 100 washing machines and 10000 ipods, or 1000 washing machines and 1000 ipods, or 10000 washing machines and 10 ipods. How do you decide the exact number to produce?

In a capitalist society an individual iPod company decides how many to produce by a representational government weighted by who owns how much stock. If the company guesses right, it makes a tidy profit and the stock owners get richer. They can then reinvest their new money in more iPod companies, or maybe in other businesses. They'll have even more say in how the economy as a whole is run. If they guess wrong, and produce way too many, they'll lose money, and they'll have less of a say in how the economy is run. Their iPod company will be replaced (bought out or run out of business) by better iPod companies which can guess at the optimal numer of iPods better.

But these iPod companies can't just decide at random how much to produce. The actual maximally profitable amount produced depends on the availability of raw supplies, equipment, and labor (the "supply" curve), and the desire of society as a whole for iPods (the "demand" curve). Each individual person will decide how much a washing machine is worth. And how much an iPod is worth. If the company charges more than this, they won't pay. If they charge less, they will pay. This means the aggregate of all individual consumers' preferences is dynamically represented by the demand curve. This curve changes in real time as consumers' preferences change.

The supply curve also changes in real time, albeit slower, based on the availability of supplies. The supply curve is less responsive, because it has to rely on fewer, more successful people. But there's constant turnover in who runs this supply curve based only on how successful someone is at guessing at the demand curve. It's basically a committee of scientists, like in your example, where membership changes in real time based only on merit (ie: money to invest).

So if you were really good at understanding the demand curve 10 years ago, but you suck at it now, your wealth will be slowly sapped away from you and given to those who are better at this new economic game.

If there's a shortcoming of Capitalism, it's that this process takes so long to happen. A replacement system would find a way of rewarding new entrepreneurs faster, and sapping wealth from successful ones quicker.

Likewise conspicuous consumption is a problem. The ability for the rich to take millions of dollars from investments and buy 10 ferraris is sub optimal. One rich guy with 9 ferraris probably would value 1 more ferrari less than I would. But he can pay more so he gets it. But it's important for people to move money freely from investments to consumption whenever they want. It allows society as a whole to balance future consumption and current consumption to maximize utility (maximize the value to society).

So if you were inventing a better system, I would concentrate on those two areas.

Originally Posted by Numsgil

Wealth is created by the banks, and ends up in the banks. The only true emergence in the economy is what the banks create, so that they can profit. If our economy responds to changes why are we going through the massive crash that we are now?

Money is not wealth. It's just paper. Or increasingly it's just flipped bits in a computer. You can't eat it, drive it, smoke it, have sex with it, listen to it, or enjoy it in any way whatsoever.

Money is an IOU for wealth. It's artificial scarcity (theoretically there can be as much money as we want. Just print googleplex dollar bills) is the only reason it has value. How much one dollar (or whatever) can buy is a function of how much of it is in circulation, and the "real" wealth of a society. Money is just a lot easier than trying to pay for everything with whatever it is you do for a living (I'm a game coder. Haggling with the grocery store to give me food for a copy of my game probably wouldn't work).

Money is essentially a lubricant for the economic machine. Too much lubricant and it gums up the works. Too little and it starts screaching and wearing components out. The job of ultimately controlling the money supply, in the US at least, is held by the Federal Reserve, which sets a base level interest rate through price manipulation of short term loans to banks.

Name some instances where our economy has responded well to change...

How much did your computer cost you in loafs of bread? It's an easy calculation. Price of computer / price of bread. How does that compare with what a similar machine would have cost 30 years ago? That's a huge change, which our economy managed to cope with quite gracefully, minus a little dot com hicup in 2000. It's hard to point to the absence of problems, because by its nature we don't pay attention to what didn't go wrong.

The Soviet style planned economy, by contrast, had a hard time coping with technological changes and changing demand curves. Which meant, over time, small inefficiencies added up. Too many Tolstoy novels and not enough washing machines. Look at the marked distinction in wealth between East Berlin and West Berlin in 1989. If that's not proof positive that something weird is going on, I don't know what is.

This economic system was created almost 100 years ago

More like almost 300 years. Adam Smith really is the founder of Capitalism. Any changes to it since have been minor and mostly cosmetic.

Wealth should not be measured by external material. It is our economy that creates importance around things that aren't really important. The only way we can ever get to the core of our problems is when wealth comes from the inside of every human being. If we give importance to things that really have nothing to do with being a complete, healthy human then we will always have problems to deal with.

I suppose you consider this as something which has nothing to do with being a complete, healthy human? But people are buying it, which means what you consider important and what someone else does is different. Whos to decide who is right? Well, in a Capitalist society everyone does, by a weighted vote of how much they'd be willing to spend on it.

Spaceman

I solved the problem of economics with my article on 'My Brand of Socialism' in the 'Politics' sector.

It is based on the principle of SECURITY.

So with our Constitutions mandate of a 'government of the people, by the people and for the people' as Lincoln closed out his Gettysburg Address, we can eliminate this capitalisms yo yo economy.

By 'guaranteeing JOBS, NO UNemployment, Healthcare and pensions for all
citizens, we would not need religion and capitalism.
This system would ALLOW some 'free enterprise' but controlled by the government. So there would be NO free loading of dollars at the expense of the workers.
With this system, we would also outlaw the corruption of our politicians by having our elections financed by the government monies only .

So this should be the most stable economy in existance.

Cosmo