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Why Economics Don't Matter
Thomas Greco, local currencies & Karl Marx
by   Richard   Rieben
Review of Thomas H. Greco's book, New Money for Healthy Communities
Written July 2002, in Thailand. Published as a pamplet in 2003 by BPI.
 
Economics and Ideology

Let's look at economics and the rationale for local currencies, fiat money, and the dynamics of government money. These are some mechanical details of how you set things up under liberty that effect a different outcome, but they originate in the principles of liberty, not the principles of accounting or economics.

The applications of local currencies are mostly put forth by "alternative" social idealists, advocates of socialism, labor, ecology, communitarianism and other ideologues who are against big business, corporations, capitalism, globalism and other ideologies of the dominant power structure. We tend to muddle what they actually imply with the sort of folks who use and advocate them. Guilt by association.

Local currencies work. Local Employment and Trading Systems (LETS) are active in communities in the U.S.A. and around the world. That's partly why I included them in my constitution of liberty. The "gold" or metal base that I also include is a commodity base for international/interregional trade. The government that I propose is not just for a tribe, but for a country. It would work for a tribe (in which case you wouldn't need a gold base, but could suffice with local currency).

Anyway, participation in government is local. Actually I hate calling the thing "government" because that's not what it is. It is the principles of natural human boundaries implemented by the people themselves. Locally and regionally. But for a regional sweep, it helps to have a standard commodity of exchange for the government (whenever it uses money).

In my proposal, all payment of government fees for local services can be made in local currencies – that's there in the Reciprocia Constitution. But when you're doing regional or international stuff, then I have (arbitrarily) established the commodity of gold as the unit of exchange (or silver or whatever is to be chosen). I called it a "gold standard," and then go on to explain that it is a fixed standard – it can be gold or anything else, but we agree to some commodity for regional and international exchange. I even mention, in the constitution, that we can have as many different standards of exchange as the market is willing to bear, as long as each unit is stated in terms of its own standard and there is no fiat standard established – whatever standard is established must be tied to a commodity.

Further, it doesn't come from the government or from the international governments. A standard is established specifically to prevent them from "creating" money, specifically from creating fiat money or fiat standards. I further state that the government shall have no power to mint, print or establish money. Whatever is used for exchange is open to popular consensus (the choices of individuals) and, at various levels – locally, regionally, internationally – it will probably be different kinds of things. Not all local currencies presently in use are based on labor, some are based on time (which is a similar concept), others have an ecological base of sustainability, which also works.

Power brokers have never used gold or any other commodity – they have endeavored to create fiat money time and again – governments have always done this throughout history. Corporate businesses do likewise. A commodity, be it gold or some other value, limits their ability to gain power and enslave people. And when they succeed, through political machinations, then they devalue commodity exchange (which is why gold and other metals have lost value – because we are not merely using fiat money, we are living in a fiat – false – power structure).

In his book, New Money for Healthy Communities, Thomas H. Greco, Jr. writes:

"The power of money lies in the fact that in any modern industrial society it is readily accepted in exchange for whatever one may want. This is potentially liberating as it promotes specialization of work, which in turn provides greater personal satisfaction and economic efficiency."

Substitute for "money" the concept of "an agreed upon commodity of exchange" and you will see the usefulness of establishing such a commodity. Labor or Time or other values will work with local currencies, but it doesn't have the same reach (to liberalize individual creativity and productivity) as a regionally agreed upon commodity of exchange. Gold works at these levels. Or other precious metals. Because they are good from community to community, and they liberate people from being dependent upon their clan – people can expand outward, if they choose. It has the potential to liberate people from social chains.

Unfortunately, Greco goes from that premise to the idea that money is the root of all evil, that we become materialistic in consequence of having a common unit of exchange. He gets befuddled with the "back to nature" and other small, tribal movements because local currencies do work well at this level. And he is taking his main thesis – LETS – and saying we need to go back to the tribal level because that's where this system works best ... and drawing upon all the New Age stuff to support his thesis (or he's using his monetary thesis to support the New Age stuff, I'm not sure where his horse and cart are).

Greco's main thesis is to liberate the control over the source of money. To prevent its seizure by groups (whether they call themselves governments or businesses or religions), who then use it to control and enslave a population. I agree with this part of his premise and with the value of using LETS to accomplish this (although in a roundabout, nonpolitical, nonprincipled fashion). We can extend this thesis, in the context of the present world where most commodities are controlled by power brokers, to using a commodity that they don't control, and using LETS as a guide in our selection.

I also recognize the need to mandate that no group has the official capacity to create fiat money. Money must be based on a commodity. In the Reciprocia Constitution, I postulate a gold commodity base in order to spell this out in specific terms. But that's theoretical in the fact that whatever a group of people puts in their constitutional charter as a recognized commodity is probably going to have to conform to what other groups (countries) agree to, and gold or precious metals is a common and even sensible solution. However, the people who actually implement such a constitution may specify diamonds or rubies or whatever else they wish.

The "gold" base is not the relevant or defining characteristic of the Reciprocia Constitution (especially in that it recognizes local currencies anyway), but that it does not allow the government to mint any money nor any group (including banks) to issue fiat money.

Yeah, the FED and the Federal Reserve and a lot of other schemes devised by power brokers are complex and diabolical, but the problem does not lie with gold or with money or with commodities of exchange. Even local currencies can be abused by local groups, devising ways to gain power over their neighbors, if the political mechanisms are not disbarred.

The book, Reciprocia doesn't attack or even recognize the existence of such a thing as the Federal Reserve because there are no mechanisms by which such a thing could come into existence under the Reciprocia Constitution. Its proclamation of a "gold standard" bears very little relationship to the present world in which fiat money rules via political machinery that is designed to create and sustain power structures.

By the way, I agree with most of what Greco (and the New Age people) say about our materialist values overriding our natural bonds and playing havoc with our values. That is, I agree there is a problem, but not as they have defined it, and I reject their solutions as being worse than what we have now. I have a different approach, and I have developed it in my three other books to such a degree that I am tired of going on about it. But my solution for the problems (social, cultural, personal, metaphysical, sexual, etc.) is a proposal of political liberty. I keep harkening back to that because nothing else is relevant.

Under my proposal of political liberty there is no governmental mechanism to create fiat money, or for any group to deprive, disempower or enslave other people. It's just not there. The mechanism hasn't been allowed for because the purpose of this form of government is not traditional – not even at a tribal level. It says "screw off" to all forms of authority, including that carried by the community. It says our social interaction is voluntary and not economically (or in other ways) coercive. It is very disruptive of all forms of social oppression, which is why it repudiates the communal solutions of Europe, or of the New Age people, or of the Small is Beautiful people, or of the Sustainable Green people. It refuses to force people; it refuses social utopianism (tyranny) in any form.

And Greco, even if he's not one of those, is pitching his ideas to these people with the notion that his monetary principle is going to somehow allow them to succeed with their little local utopias. Indeed, most LETS groups have a similar ideological base, and I find them all rather horrifying in their essential rejection of liberty. And I find them hard to study precisely because they are bound up in ideology. I suppose a lot of them are former communists or socialists looking for some new mechanism to implement their horrible ideals. And people like Greco, if he's not as ditzy as they are, is simply pandering to them. The whole thing leaves a foul smell in the air. Something's rotten here.

There's nothing wrong with local currencies and there's nothing wrong with using a commodity such as gold as a regional or international currency. What goes wrong is in the politics, not in the economics. I think Greco is misguided to focus so much on the economics of the world. I know it is skewed, but that is for sociopolitical reasons that tend to get ignored. People keep looking for an economic solution. And there isn't one. The other thing that people seem to want to retain is the option of traditional, domination enforcement of social values in and over a social body. This is what liberty rejects at the very outset. Once that is rejected by anyone over anyone, then the economics are mostly local and other standards are arrived at cooperatively in a world without the big bad power bullies that we have now.

I accept Greco's economic descriptions. These are coherent descriptions of reality. However I reject ideology ... all ideology. Liberty is not a belief system, but a rejection of the enforcement of social values. It is distinctively nonideological. It disarms all the bullies, including the state, including society, including religion, including utopists of any description. It doesn't "control" the outcome to any given set of values or parameters. It says that if we disallow bullies on principle, we'll be (get) healthy. But it doesn't try to anticipate what that condition of health will consist of because once the bullies are disarmed we will be healthy period. Many of the bullies are ideologues and utopists. And these are much, much, much worse than the present bankers. They're even worse than the FED. But they're also of the same cloth.

This thesis skims the surface of what I've put in my books. It intrigues me because I don't know how to get the idea across to liberal, socialist, communist ideologues that the problems they are tightly focused on are absent under liberty. And I suspect this is less a matter of "explaining" anything, because, cynic that I am, I think most of them love all the tools of traditional, domination government, but just want to hold the power themselves. Some of the most authoritarian, dictatorial, tyrannical documents I've come across have been written on ecology platforms, or labor platforms, or minority platforms. All of these are bitching and moaning about the abuse of power, but they don't reject power; they just want it for themselves. Furthermore, they hate being shown that this is what they are doing! I've never seen such a bunch of power-mongers – whinging because they want that power for themselves (and will abuse the hell out of it once they have it). Because that's what this kind of power is all about – abuse.

The solution of liberty solves the specific little gripes and injustices they are complaining about, but it offers no similar "group" empowerment of their value system. All they are conscious of is power systems and they want one in their favor – is all. Liberty? – no way. I don't think people like that can be reached with ideas about liberty. At some basic level, they are psychotic – disconnected from reality. What they want is revenge. Not real solutions, but a means of empowering themselves and wreaking vengeance upon their real/imagined oppressors.

But it won't work. And I feel sorry for them and their blindness. But I'm not a psychologist, so I figure it's a waste of my time trying to "sell" liberty to such people. Solutions aren't their objective, just revenge. People want to be "liberated" from the oppression of the FED, or the corporations, or "management," or government, or religion – but this isn't liberty. It's like all those colonial societies that threw off their overlords in the name of "liberty" – but it wasn't Liberty, it was only changing one set of masters for another (local) set of masters. No post-colonial society has Liberty. You don't clear the slate until you address the political mechanisms that allow for oppression in the first place ... but that's a story nobody's interested in hearing because it doesn't satisfy their thirst for blood.

The Trouble with Karl

The main problem with the legacy of Karl Marx is that he set a lot of people thinking and believing that the solutions to the problems that beset us are economic. It doesn't matter what side of the fence we are on, or whether we are communists, socialists, capitalists, or various other denominations. He set the terms of the argument: that the solution is economic and will derive from one economic system or another.

There are all sorts of problems with the economy of the world, locally and globally, whether we are talking about problems with labor, with exploitation, with the global fiat monetary system, or with the corruption of businessmen and politicians in various endeavors. And we think that we can fix these problems by tinkering with the mechanics of the economic system or revising that system or changing to a different brand. Our problems appear to be mechanical and, so, we are looking for mechanical solutions.

This was Marx's greatest contribution to modern thinking. Out of an age of scientific positivism, he approached the problem mechanically. And, in one variety or another, other economists also look for scientific, mechanical and economic solutions to social/political problems. Such problems do, indeed, have economic aspects. But these are consequences, not causative. To address the economics is to address the consequences, the symptoms ... and to ignore what causes them. The modern "science" of economics, realizing this to some small degree, operates in a reverse-engineering mode most of the time: "let's try this, and see what happens." But, because the political and philosophical goals are defined by traditional domination power structures (enforced, controlled, utopian social orders), the economic results are always screwed.

I have argued elsewhere against the piecemeal fix-it approach to what are systemic and philosophical flaws. We won't get anywhere by patching up a flawed system or continuing to muddle along with fundamental philosophical misunderstandings. But the argument here is different: it has not to do with our persistence in short-term fixes, but, rather, with our fixation on mechanical dimensions of what are philosophical flummoxes. Economic prosperity is a concrete result that we want to achieve, but we think it can be achieved by rote, mechanical engineering in a utopian manner – we think we can force it into existence, by political fiat.

History shows, time and again, that prosperity arises under liberty, not in statist, regulated, controlled societies. It comes from a lack of governmental, social and political control. Utopist management of economics is what spells the end of economic prosperity. The sad joke is that any attempt to create or sustain prosperity by directly meddling with the mechanics is what kills it. The solution to economic problems is more liberty, not more regulation.

But economic prosperity is not what really drives or motivates social and political idealists. They use economic disparities (recognized problems) as an excuse to implement utopian agendas of social control and enslavement.

They hook people by promising to solve the economic disparities and promote prosperity. In this respect, all economic tinkering is a shell game, a smoke screen, a scam. And it is used by all utopian groups – capitalist, socialist, communist, corporatist, ecologist, religionist – to promote their right to rule. Economic prosperity, or the promise thereof, is the justification for their utopian brand of tyranny.

They claim that their system provides prosperity. They show examples and manipulate the figures to "prove" that their system "works." And, ever since the Age of Enlightenment, we the people are suckers for mechanical, scientific proofs. Moreover, we concede the point that, if it works (provides economic and material prosperity) then it must be good for us, which is definitely putting the cart before the horse.

But they don't work anyway. It's a shell game. Fiat money and other systems are scams that give an illusion, for a period, of creating prosperity. Perhaps for some people, but at the expense of others. Perhaps for some time, but the bill comes due later (in a recession, depression, or war).

Liberty does provide economic and material prosperity, but that's not the focus or justification of it. Moreover, it is not an engineered or controlled prosperity. It is a consequence of individual health and well-being, which are, themselves, a consequence of defining and respecting the sovereign political boundaries of individuals.

Economics Don't Mean a Thing

The prattlings of the corporate capitalists or the catholic socialists or the third world marxists or anyone else on economic matters are vapid and pointless. Trying to posit a better world using an economic model is a scam. Economics are end-game results. The game is political in the fundamental sense of that term.

Only political liberty has or can produce economic prosperity. But to argue for political liberty on the basis of its material consequences, in the same manner that ideologues argue for their systems, suggests that it, too, is just a scam ... with a secret utopian agenda for power and enslavement. And sometimes, with the religious right or the corporate capitalists, it is just a scam. Actual liberty has nothing to do with such agendas.

The mechanical, economic details of how you set things up under liberty originate in the principles of liberty itself, not in the principles of accounting or economics.

People have a notion (some with greed, some with apprehension) that under liberty "anything goes" in the field of economics. Some contend that since liberty doesn't dictate anything economically, they are free to invent systems any-which-way in order to amass wealth for themselves and for their clan or group. In a sense, they are free to attempt whatever they like, but they are rigorously limited by the principles of liberty. Liberty doesn't allow for power structures or utopias.

Liberty is delimited by its principles, which are designed to effect the security of sovereign individuals in respect to one another and in respect to groups. You are free to do anything you like, but you are not free to violate the sovereignty of others. Period. That means "you" as an individual, as a group, or as a government. (A pyramid scheme that defrauds people of their property, such as the Federal Reserve or fiat government money or social security, is violation of individual rights regardless of who or what perpetrates it.)

Once the political boundaries of individual sovereignty are established and effected, then, yes, anything goes – within the limits of those boundaries. But these boundaries are not recognizable to our primitive grasp of political boundaries. (I think cave-dwellers were a bit more advanced than we are in this respect.)

In other words, all we can imagine are political power structures of the same stamp, brand, model that we presently have. Under these systems, it is clear that people do not know where to draw the line in terms of their own protection or the functions of their governments. They are not operating from principles, but from clan mores, traditions, and customs, which they try to justify by reference to spreadsheets, statistics, economics and scientific proofs.

Political liberty does not have an economic model or system.

It has a constitutional recognition of sovereignty of the individual that defines, in principle, how we are free and how that freedom is limited (reciprocally, in regard to the equal freedom possessed by every other individual). It results in a free market, in a level economic playing field, and in increased responsibility by the individual for his own choices. But it isn't defined by these consequences. It is not reverse-engineered.

 

copyright © 2006 by Richard G. Rieben