united for freedom 

Ending Poverty 2

The biggest problem local markets have is a lack of money. When local economies and businesses are dependent on Globally minded sources for money the money will likely only be forthcoming if local plans fit in with the Global Market.

Businesses often feel they need the help of government to create jobs because of the difficulty of raising enough capital at a cost that justifies the risk. But governments by their size and the pressures on them have dificulty thinking solely in terms of local needs, even when we are talking about local governments. Many times when a local economy struggles the local government becomes obsessed with global fixes or at least ones that are not specifically local in their focus.

The irony is that selfishness is considered a good thing and promoted as an antidote to government intervention. At least from 1776 it has been accepted that if those who can are allowed to accumulate wealth and by implication power, the best of all possible worlds will come about. What of course happens is that the power to stack the deck of opportunity is concentrated in fewer and fewer hands as power becomes centralized collusion is inevitable. Needless to say as a business grows it ceases to be a local business and takes on a national if not international flavour.

The idea that compitition benefits the general population was based on two assumptions both boarderline plausible when presented by Adam Smith in 1776. We have had over 233 years of market mayhem, bubbles , depressions, robber barons, pollution, corruption, fraud and consumerism. It is time to realize the rich will not permit whatever moral impulses they have to interfere noticably with their wealth accumulating activities and that society will not forever tolerate this on the hope that the common good will one day be made visible.

Whether we wish to blame government intervention for making things worse or praise it for keeping the worst absuses with a tolerable range, it is obvious that the market is not able provide for the common good as most of us understand it. The Free Market has not turned greed into an amiable helpfulness. Greed turns good men bad and bad men worse and where there is a way to circumvent market forces and government oversight it will be exploited for all it is worth.

Adam Smiths theories have put sentient beings at the mercy of an invisible and disembodied hand.

Adam Smith did not and probably could not writing in the era in which he lived, realize the consequence of giving control to the free market.

Adam Smith was not a naive man who thought the best of people but he was naive to think the consumer is king when he or she is dependent on the wages they earn as workers. The consumer only has the power given to him or her by the income they earn. Without wages the consumer lapses into invisibility. The more wealth is concentrated the more the consumer is the few who are rich and powerful.

The man in the street may determine which breakfast cereal sells but this is of little consequence if she is only given the choices provided by a single corporation. What is usually considered the consumer has only the choices available to her or him provided by the local supermarket and this is largely determined by which company purchases shelf space.

Even if collectively the middle class pays the most taxes, our numbers make us invisible individually. The large corporation is able to get the ear of a politician because it is one voice that speaks for millions of dollars. Our voice os buried under a cacaphony of differing positions and represents but a few thousand dollars in tax payments.

You may have noticed that few ex politicians work beside you - unless you work for a high end lawyer. Most politicians appear to use their political office to leverage fancy public relations positions in law and insurance firms. When they hold office who can they most afford to disappoint, you or their future boss and his clients?

If you have a 'winner take all' mentality then Capitalism will still seem to be the best possible system. But the theory is static and from that standpoint erronous. The market does not remain in perfect homeostatsis. Someone always has an advantage and this advantage allows them to rig the market to maintain and enhance the advantage.

Smith thought that if someone sacrifices immediate gratification and assumes the risk of saving capital and invests this in a business the person is entitled to reap the rewards. This posits a moral right to the fruits of ones investment but this simple idea covers a lot of ground.

To start with, it assumes the wealth is earned and saved not embezzled or stolen. It assumes that the risk is centered on the immediate investors in the firm. It also tends to assume a business that buys material and adds value to it. But none of these assumptions necessarily hold true. A business by its size and position can assume a position of power and governance that it really ought not to have.

The system, which I shall unfold here is founded on the belief that self government is a right that ought not to be abrogated or constrained. It is a description of a unit of self governance called an Exchange.

This short introduction is no more the complete story of the system than an Encyclopedia entry on capitalism would consider its every feature.

The Exchange system is fractal in that the basic unit is repeated at every level of organization. The fundamental building block of the system is a group of five to twelve families or what is called an Exchange. An Exchange is a local self-governing local market.

 Exchanges can be started with as few as five people. An Exchange is just people helping one another using rollars as an internal currency or medium of exchange to make the exchange of goods and services more efficient.

Exchanges are based on the organizational dynamics of our Social Networks.

If Bill purchases a car from Sue using conventional methods the possibility exists that one or the other will try and take advantage of the other person. In an Exchange the buyer buys the vehicle from the Exchange that is from the whole group and the car is sold to the whole group. If the car is misrepresented it is misrepresented to the Cooperative Exchange (Waste Free Exchange) to the detriment of the entire community.

The Cooperative acts as a broker, buying the car from the seller and selling the car to the buyer eliminating rick for both parties. The Cooperative assumes all risk thereby effectively eliminating all risk for the individual members.

The accounts of the Cooperative always remain at zero, the inputs and outputs remain in balance, the credits given to the seller are balanced by the debits given to the buyer. The purchase of the car is a recorded transfer of equity from one member to the other. The debit and the credit remain within the economy of the Cooperative and serve to benefit the members of the Exchange. Sue has earned credits from Bill, which prompts her to purchase goods and services from others in the Cooperative. Bill has a debit balance so members are encouraged to buy goods and services from Bill to liquidate the debit balance, the accounts of the Cooperative and members are always tending towards zero thus balance and harmony. This transfers the debits and credits to others in the group as transactions are completed. Thus economic activity remains centered on the Exchange benefiting all members equally.

Regardless of how large the Cooperative grows the books are always balanced, each group buying and selling equally from one another. The balance is always zero, the purchases always equal sales because all that is happening is equity being transferred from one member of the Cooperative to another.

It requires no money to join the or start up an Exchange Cooperative. The Exchange does not use money. Exchanges are just Social Networks based on the principle of friends helping friends with a local currency being used to make the exchanges more efficient. Cooperatization (the addition of a local internal currency to a Social Network) makes formal what was an informal activity.

 June 09, 2009; August 23, 2011; September 13, 2011, July 2015

 

Note On Economics

Ending Poverty 2

 

 

 

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