Tuesday, May 29, 2012

408: The Utopia of the Free Market - Money

"The market economy is a tool. That way I look at it. Like a pair of scissors is a tool. Is a pair of scissors moral or immoral? A pair of scissors is instrumental. When we use the thing in the right way, it can contribute to human happiness."
- end quote

Words of the top economist Joseph Stiglitz, Nobel prize winner and advisor of Clinton and now Obama in an interview February 2010. This also applies to money as element in the market. Money is only a means to simplify the exchange of goods.

If you have a surplus of apples and want to exchange it for a quantity of milk, but you have no immediate use of the milk, it is handy to have a medium of exchange, that represents the value of the quantity of milk. Then you can  exchange it later for milk.

Tho this may be a simplified explanation of how money came in to use, it is basically correct and leads me to the main question of today: Is money still a means to simplify exchange of goods?

Or has it become , especially in our modern market societies, an independent power? I guess you are already smiling , as this is in your opinion certainly a rhetorical question. But for Karl Marx (1818 - 1883) it was a scientific discovery.

In "Atlas Shrugged" (1957) Ayn Rand makes her character Franscisco d'Anconia give an eulogy on money, when someone at the party said that money is the root of all evil.

"So you think that money is the root of all evil?" said Francisco d'Anconia. "Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them." (p. 380)

"(…) money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires."(p. 381)

Here Rand comes into a head-on collision with Marx. She has read Marx's early text on "The Power of Money" (1844). She even copies part of his texts into the eulogy on money after editing it to fit her purpose.

Marx quotes Shakespeare:
“Gold? Yellow, glittering, precious gold? 
No, Gods, I am no idle votarist! ...
Thus much of this will make black white, foul fair,
Wrong right, base noble, old young, coward valiant.

This yellow slave
Will knit and break religions, bless the accursed;
Make the hoar leprosy adored, place thieves
And give them title, knee and approbation
With senators on the bench: This is it
That makes the wappen’d widow wed again;"

As Marx concludes…money is not just an innocent tool.
"That which is for me through the medium of money – that for which I can pay (i.e., which money can buy) – that am I myself, the possessor of the money. The extent of the power of money is the extent of my power. 

Money’s properties are my – the possessor’s – properties and essential powers. Thus, what I am and am capable of is by no means determined by my individuality. I am ugly, but I can buy for myself the most beautifulof women. 

Therefore I am not ugly, for the effect of ugliness – its deterrent power – is nullified by money. I, according to my individual characteristics, am lame, but money furnishes me with twenty-four feet. 

Therefore I am not lame. I am bad, dishonest, unscrupulous, stupid; but money is honoured, and hence its possessor. Money is the supreme good, therefore its possessor is good."
- end quote

Quintessential are his words :"Thus, what I am and am capable of is by no means determined by my individuality." Money is not a means, money is power and in fact alienates us from our humanity.

"Money, then, appears as this distorting power both against the individual and against the bonds of society, etc., which claim to be entities in themselves. It transforms fidelity into infidelity, love into hate, hate into love, virtue into vice, vice into virtue, servant into master, master into servant, idiocy into intelligence, and intelligence into idiocy."
- end quote

What Marx says is what I said in my previous lecture; our individuality is not defined by self-interest,  like Ayn Rand wants us to believe. We are also driven by other values in life. Like Marx says:

- quote
"Assume man to be man and his relationship to the world to be a human one: then you can exchange love only for love, trust for trust, etc. 

If you want to enjoy art, you must be an artistically cultivated person; if you want to exercise influence over other people, you must be a person with a stimulating and encouraging effect on other people. 

Every one of your relations to man and to nature must be a specific expression,corresponding to the object of your will, of your real individual life."
- end quote

The Discussion

[13:22] herman Bergson: Thank you.....
[13:23] Debbie Dee (framdor): more!!!!
[13:23] herman Bergson: But I just picked up a really special quote....
[13:23] herman Bergson: You should hear that one...
[13:24] herman Bergson: It is Fransisco with his eulogy on money....and so super Randian........
[13:24] herman Bergson: But I think it completes the picture....
[13:24] herman Bergson: I'll give it to you in full..
[13:24] herman Bergson: "If you ask me to name the proudest distinction of Americans, I would ?
choose—because it contains all
the others—the fact that they were the people who created the phrase 'to make money.’ No other
language or nation had ever used these words before; men had always thought of wealth as a static
quantity—to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the ?
to understand that wealth has to be created. The words 'to make money' hold the essence of human
morality." (p. 384)
[13:25] herman Bergson: Just that statement :"The words 'to make money' hold the essence of human
[13:25] Debbie Dee (framdor): well i never....
[13:25] Femtasia Rexen: saving that one for later
[13:26] Debbie Dee (framdor): making money (printing it) holds the essence of morality? How wierd
[13:26] herman Bergson: But there is no American among us today if I am not mistaken :-)
[13:26] Femtasia Rexen: there will be later
[13:26] herman Bergson: Yes debbie....that is the essence of today....
[13:26] Femtasia Rexen: cant wait to share that one with him
[13:27] herman Bergson: and the idea that we are NOT only driven by self-interest or greed
[13:27] herman Bergson: That we also have other values which define our humanity
[13:27] Debbie Dee (framdor): The effect of money is much wider than "value" of goods and services
[13:27] Bejiita Imako: yes
[13:27] Bejiita Imako: moneey is not everything
[13:27] Alarice von Doobie (alarice.beaumont): isn't that illusive? not driven by greed?
[13:27] herman Bergson: Yes...money is power....
[13:28] Bejiita Imako: as i said before, can you set a price on love or even a life?
[13:28] herman Bergson: Hedgefunds can dsrupt the economy of a country...
[13:28] Debbie Dee (framdor): and youth, and beauty, as we see from Shakespeare
[13:28] Alarice von Doobie (alarice.beaumont): money is not everything if you have enough :-) makes ?
you sleep better
[13:28] Bejiita Imako: money isnt everything there is so much more
[13:28] herman Bergson: Let me give you an example....
[13:28] herman Bergson: Europe....in crisis with its euro
[13:28] herman Bergson: There is talk of issuing Euro-bonds....
[13:29] Alarice von Doobie (alarice.beaumont): yes... listening to a discussion in tv right now
[13:29] herman Bergson: it means that the collective debt of all euro countries is put in one ?
[13:29] herman Bergson: The new French president says...let's do it....
[13:29] herman Bergson: The German prime minister says..over my dead body....
[13:30] herman Bergson: now here comes the catch....
[13:30] herman Bergson: what is the effect of issuing Euro bonds...
[13:30] Debbie Dee (framdor): more debt
[13:30] herman Bergson: it means that all euro countries can lend money from the financial market ?
for 3.5% interest...
[13:30] herman Bergson: at this moment...
[13:31] herman Bergson: Germany gets its money almost for free…. 0.61%
[13:31] herman Bergson: the Netherlands too 1.8%
[13:31] .: Beertje :. (beertje.beaumont): italy for over 6% i think
[13:31] herman Bergson: but Spain and Italy...6.8% or more...
[13:31] herman Bergson: there you see....
[13:32] herman Bergson: The French say…let's put solidarity first in Europe
[13:32] herman Bergson: Germany and the Netherlands say...let's put our individual interest first..
[13:32] .: Beertje :. (beertje.beaumont): how much is France paying now?
[13:32] Lizzy Pleides: you can't always reward those who have a bad economy
[13:32] herman Bergson: Well Beertje...that is a bit tricky indeed....lol
[13:33] herman Bergson: The French aren't isn such a good position either....
[13:33] Alarice von Doobie (alarice.beaumont): I'm not sure that is the point.. the germans don't ?
want to pay when the other don't make any efforts to reform their ill economy
[13:33] herman Bergson: but that is not the point...
[13:33] herman Bergson: yes Alarice....true....
[13:33] herman Bergson: We have to pay for the bad behavior of Greece,Italy and Spain and only may ?
hope they will improve their behavior
[13:34] Fred123 Aiten: Herman, could I ask what might seem a stupid question.? What was the purpose ?
of setting up the Euro in the first place?
[13:34] Annie Brightstar (anniebrightstar): It is easy to be generous with someone else's money
[13:34] Alarice von Doobie (alarice.beaumont): well... in that case hope is just not enough
[13:34] Alarice von Doobie (alarice.beaumont): it 's obvious that the greek aren't willing
[13:34] herman Bergson: lol Good question Fred....
[13:34] Alarice von Doobie (alarice.beaumont): should be easy to get the taxes.....
[13:35] Bejiita Imako: europe thought they could do as USA and create a similar system like they do ?
with the dollar
[13:35] herman Bergson: What I understand of it , it removed the fluctuations of national valuta ...
[13:35] herman Bergson: or what do you cal l it...
[13:35] Bejiita Imako: but USA is one country with same culture all over European countries have way ?
dofferent cultures
[13:35] herman Bergson: Ilack the economic vocabulary....
[13:35] Alarice von Doobie (alarice.beaumont): yes... think the idea wasn't too bad - counter part ?
to the states.. more independence from the us dollar
[13:35] Bejiita Imako: a common currency can thus mean trouble and indeed
[13:36] herman Bergson: I guess the idea was federalist  and emulating the US dollar
[13:36] Bejiita Imako: yes
[13:36] Fred123 Aiten: fluctuations in a country's currency help it recover from recession
[13:36] herman Bergson: But let me give you an other example which illustrates the idea that we do ?
not live only for money....
[13:36] Merlin (merlin.saxondale): There was the ERM
[13:36] Bejiita Imako: european countries are much more individual and independent then USAs states
[13:37] Fred123 Aiten: unless all countries are at the same point in the economic curve it will ?
never work
[13:37] Bejiita Imako: thats why a common currency in europe will spell trouble i think
[13:37] Bejiita Imako: cause all countries think different
[13:37] Merlin (merlin.saxondale): Britain was in the ERM but not the euro
[13:37] Bejiita Imako: no common system
[13:37] .: Beertje :. (beertje.beaumont): sorry I have to go
[13:37] Lizzy Pleides: TC Beertje
[13:37] Merlin (merlin.saxondale): Bye Beertje
[13:37] .: Beertje :. (beertje.beaumont): have a goodnight
[13:37] Bejiita Imako: cu beertje
[13:37] herman Bergson: Yes Bekiita....that is the whole point....all countries think ?
different....that is...are driven still by self-interest
[13:37] Alarice von Doobie (alarice.beaumont): bye Beertje
[13:37] Debbie Dee (framdor): bye
[13:38] Annie Brightstar (anniebrightstar): Goodbye Beertje
[13:38] Bejiita Imako: yes plus as i say way different cultures compared to the starts in the US
[13:38] Bejiita Imako: states
[13:38] Bejiita Imako: wich are more similar
[13:39] herman Bergson: Maybe yes Bejiita...
[13:39] herman Bergson: But to give you some hope for the future....
[13:39] Fred123 Aiten: what Greece needs now is a reduction in their exchange rate that will ?
increase exports and decrease imports. But with the Euro they cannot do this
[13:40] Debbie Dee (framdor): I miss the point of it all. the free market world is indebted to china ?
and the third worlds. the economy slows down - so more money is borrowed (via bonds) to get out of ?
[13:40] herman Bergson: Some farmer who produces a very special wine...expensive....was asked why ?
not produce more....
[13:40] herman Bergson: that would bring more money...
[13:40] Alarice von Doobie (alarice.beaumont): oh they can... if they just lower their wages and all ?
[13:40] Bejiita Imako: a prob with greece i took up before also is that they lack all kind of ?
industry besides tourism and selling some foods
[13:40] Alarice von Doobie (alarice.beaumont): Can you believe how much they raised their salaries ?
and their prices since they are having the euro?
[13:40] herman Bergson: He said no.....because it wont bring a better wine.....only worse
[13:40] Lizzy Pleides: i hope greece will go out of the €, to be honest
[13:40] Bejiita Imako: no cars or machine or general product manufacture at all
[13:41] Bejiita Imako: that can power the greek economy
[13:41] herman Bergson: There is another solution Lizzy....
[13:41] Lizzy Pleides: ..and which?
[13:41] Alarice von Doobie (alarice.beaumont): lower down their salaries and their prices.... in ?
comparison with german for example
[13:42] herman Bergson: Greece has to pay very thing in euros to the other countries in Europe, but ?
cna introduce the Drachme for only internal use...
[13:42] Femtasia Rexen: hmmm
[13:42] herman Bergson: I read that in my newspaper this morning
[13:42] herman Bergson: I wonder who understands this all anymore?!
[13:43] Bejiita Imako: its a mess indeed
[13:43] Debbie Dee (framdor): well, clearly not the economists.
[13:43] Bejiita Imako: make my head spin
[13:43] herman Bergson: But at least I guess Marx was right....
[13:43] Annie Brightstar (anniebrightstar): I would be surprised if that would work Herman
[13:43] Lizzy Pleides: do you think they will be honest from now to tomorrow? what about the ?
subventions they got for nothing?
[13:43] herman Bergson: Money is way beyond being just a tool to simplify the exchange of goods....
[13:43] Penelope Apparatchik (penelope.grau): Jeffrey Sachs, maybe?
[13:44] herman Bergson: Money is pure politics....
[13:44] Bejiita Imako: and power
[13:44] Bejiita Imako: and its used in the wrong way
[13:44] herman Bergson: And in that sense I think that capitalism has lost its ....well everything ?
[13:44] Debbie Dee (framdor): Why are there so many expensive first world weapons in every poor ?
african trouble spot?
[13:45] Debbie Dee (framdor): who pays?
[13:45] Penelope Apparatchik (penelope.grau): but are there really?
[13:45] Qwark Allen: the starving population
[13:45] Penelope Apparatchik (penelope.grau): aren't they all just $15/ piece as replicas from ?
[13:45] herman Bergson: Rich countries like China and others are buying Africa at the moment....
[13:46] Alarice von Doobie (alarice.beaumont): Hey Qwark :-)
[13:46] Debbie Dee (framdor): nope. they are from america, uk and europe. I live in south africa
[13:46] Qwark Allen: ? ˜*•. ˜”*°•.˜”*°•   Helloooooo!  •°*”˜.•°*”˜ .•*˜   ?
[13:46] Qwark Allen: Hey!
[13:46] Bejiita Imako: big companies come there take the resources for themselves while murdering ?
the locals
[13:46] herman Bergson: They buy all fertile areas in african countries....
[13:46] Bejiita Imako: really terrible
[13:46] herman Bergson: Yes Bejiita....
[13:46] Penelope Apparatchik (penelope.grau): yes but who was that russian just convicted for arms ?
trafficking, by the american prosecutors?
[13:47] herman Bergson: Just because the economy must grow....share holders must be paid
[13:47] Debbie Dee (framdor): so - who is in debt to who, and whose economic policies stink? Greece ?
is minor....
[13:47] Alarice von Doobie (alarice.beaumont): i don't believe that the economy always have to ?
[13:47] herman Bergson: Tax evasion in Greece is legendary...
[13:48] Qwark Allen: i remember years ago, oil had a rise of prices cause of a nigerian internal ?
[13:48] herman Bergson: corrution in healthcare too....you always need to bring an extra envelop
[13:48] Debbie Dee (framdor): Growth at any cost is the current plan - and it is insanity.
[13:48] Qwark Allen: everything nowadays is related
[13:48] Bejiita Imako: yes they just sant MORE MORE MOOOOOOREEE!
[13:48] Fred123 Aiten: surely as the population is growing then the economy must grow or we will all ?
be worse off.
[13:48] Bejiita Imako: for infinity
[13:48] Bejiita Imako: totally crazy
[13:48] Bejiita Imako: want
[13:48] herman Bergson: Well fred that is one option....
[13:49] Debbie Dee (framdor): Fred, we are worse off. except for a very small minority of very rich ?
[13:49] Penelope Apparatchik (penelope.grau): isn't it really all just anthropology, Herman?
[13:49] herman Bergson: but when all wealth is in the hands of a few then redistribution of wealth is ?
also a good option...without the need to grow
[13:49] Fred123 Aiten: I agree the wealth should be spread more fairly
[13:49] Bejiita Imako: yes
[13:49] Fred123 Aiten: but I still think we have to grow
[13:49] Bejiita Imako: but the rich ones want to keep all for themselves
[13:49] Bejiita Imako: not sharing
[13:50] herman Bergson: Yes Bejiita....a weird phenomenon...
[13:50] Bejiita Imako: even they have 100s billon of dollars at one person sometimes
[13:50] Debbie Dee (framdor): growth = more consumption - in a resource constrained environment.
[13:50] Bejiita Imako: what to do with so much money?
[13:50] Femtasia Rexen: who says life has to be fair
[13:50] Penelope Apparatchik (penelope.grau): it's not fair
[13:50] herman Bergson: UNless you have so much that you really don't know what to do with it except ?
giving it away...like Bill Gates with his charity organizations
[13:51] Fred123 Aiten: but if the population is growing then total consumption will have to grow
[13:51] Fred123 Aiten: we need more food for all the additional people
[13:51] Debbie Dee (framdor): Human values - morality - suggest we should be fair to each other
[13:51] Merlin (merlin.saxondale): Yes Debbie
[13:51] herman Bergson: Yes Debbie......
[13:51] Penelope Apparatchik (penelope.grau): only within our own tribe, though
[13:51] Merlin (merlin.saxondale): That saying about 'live is not fair' raises alarm bells to me
[13:51] Femtasia Rexen: our values and morality are being eroded but that is another topic
[13:51] herman Bergson: and still cherishth ebelief that we are not only driven by self-interest...
[13:52] herman Bergson: and that this basic idea of the free market is a utopia
[13:52] Penelope Apparatchik (penelope.grau): yeah tell that to Alan Greenspan
[13:52] Debbie Dee (framdor): nothing utopian about it at all!
[13:52] herman Bergson: Wel...I think you are ready now for the revolution...:-)
[13:52] Femtasia Rexen: haha
[13:52] Merlin (merlin.saxondale): hahaha
[13:52] Alarice von Doobie (alarice.beaumont): lol
[13:52] herman Bergson: SO, tahnk you for your participation again....
[13:52] Bejiita Imako: hahaha yes lets start NOW!
[13:52] Penelope Apparatchik (penelope.grau): why, the last few just made things worse
[13:53] Penelope Apparatchik (penelope.grau): far worse
[13:53] Merlin (merlin.saxondale): It might start here
[13:53] Debbie Dee (framdor): yay herman - lead us to fairness
[13:53] herman Bergson: Class dismissed.... ^_^
[13:53] Femtasia Rexen: thank you so much for a through provoking lesson
[13:53] Alarice von Doobie (alarice.beaumont): thanks Herman :-)
[13:53] Lizzy Pleides: Thank you Professor
[13:53] Femtasia Rexen: oops thought
[13:53] Fred123 Aiten: many thanks Herman
[13:53] herman Bergson: Well Debbie ...I hope to come up with at least some answers to that
[13:53] Alarice von Doobie (alarice.beaumont): very good lecture
[13:53] Debbie Dee (framdor): great Herman , tyvm ;)
[13:53] Qwark Allen: ¸¸.?´ ¯¨?.¸¸`?**  **?´ ¸¸.?¨¯`? H E R MA N ?´ ¯¨?.¸¸`?**   **?´ ¸¸.?¨¯`
[13:53] Qwark Allen: ty
[13:54] herman Bergson: Nice to see you Qwark...
[13:54] Alarice von Doobie (alarice.beaumont): hope to make it next tuesday again :-)
[13:54] Qwark Allen: glad i come in the end
[13:54] Qwark Allen: :-)))
[13:54] herman Bergson: Didnt see you come in..sorry
[13:54] Alarice von Doobie (alarice.beaumont): bye everyone :-))
[13:54] Qwark Allen: its ok, i was very silent
[13:54] Merlin (merlin.saxondale): Bye everyone
[13:54] Qwark Allen: :-)))
[13:54] Bejiita Imako: cu soon all
[13:54] Femtasia Rexen: thank you everyone, see you next week
[13:54] Bejiita Imako: nice as always
[13:54] Bejiita Imako: ?
[13:56] Debbie Dee (framdor): hey fred, it can't keep expanding
[13:57] Fred123 Aiten: I agree but unless the population stops expanding then it has to
[13:57] Fred123 Aiten: or else many people will die
[13:57] Debbie Dee (framdor): The population is already starting to show signs of dying off.
[13:57] Lizzy Pleides: it was interesting again Herman
[13:58] herman Bergson: yes.....preparing for the lecture is too....
[13:59] Debbie Dee (framdor): Fred, I agree. but the whole system is hitting a wall.

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