My Comments on: Jason Kuznicki, Twenty Questions on Mises, HNN, Nov. 23, 2006--Jan. 11, 2007

https://web.archive.org/web/20111216233154/http://hnn.us/blogs/4.html

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HNN post, Jason Kuznicki, Twenty Questions on Mises, Part I

http://hnn.us/blogs/entries/32158.html

(now) https://web.archive.org/web/20111203083535/http://hnn.us/blogs/entries/32158.html

[Other Peoples Comments Not Retrievable]

(11/24/2006 06:56 AM)

Well, if you carry Von Mise's idea to the level of someone like Barbara Ward, and her study of Malaysian shopkeepers, there is no such thing as a generalized businessman, a generalized worker, etc. There are vast numbers of groups of businessmen, vast numbers of groups of workers, etc., each group with its own imperatives and rule set. For an example, see Abner Cohen's _Custom and Politics in Urban Africa: A Study of Hausa Migrants in Yoruba Towns_ (1969). This is a study of an outpost, in Ibadan, Nigeria, of a trading diaspora involved in supplying the coastal jungle Guinea Coast region of Nigeria with beef from the greasy upland Western Sudan region, and covers such items as the economic role of religious identity. These vast numbers of rule sets, summed together, do not necessarily add up to anything more than noise, like the noise of a thousand unrelated conversations taking place at once. This implies that there is no such thing as macroeconomic law. That means that economists do not have any special competence in respect of things like budget deficits, taxes, and tariff barriers.

(11/24/2006 08:32 PM)

The counterargument [against] free trade runs as follows: high tariffs discourage employers from looking for cheap labor, and create incentives for mechanization and automation, which reduce costs the most in the long run. The trade issue thus becomes one of the feasibility and desirability of automation. Not only does this depend on the particular circumstances, but it is not a question which economists have any special expertise to answer. The same kinds of arguments apply for the related issue of economy of scale (Adam Smith's hypothetical pin factory). It all depends.

Most of the social sciences abandoned the pretension of positivism by 1970, or thereabouts. Economics has become an outlier, making claims which no one else makes, and without any discoverable factual basis.

(11/26/2006 08:20 AM)

To: Steven Horwitz

Well, for the record, I don't pretend to know what the ultimate implications of free trade are-- and I don't think anyone else knows either. Certain types of queries are "computationally infeasible," in the sense that you can demonstrate that the permutations of, say, a thousand objects are well in excess of ten to the hundredth power. When you take account of all the possible nth-order interactions between different groups of people, and recognize that all of these are only imperfectly measurable, and the cumulative error makes it impossible to draw a net balance. Free trade is good for some people, bad for others, and how do you strike a balance?

I dare say I am using the term positivism rather loosely, not just to refer to Wittgenstein as such, but to the whole kind of body of thinking, reaching back to the eighteenth century, which says that you can reduce anything as complicated as human society to numbers or class-archetypes. Obviously, adherence to this idea is relative rather than absolute. If you read Henry Mayhew, for example, you will find a circumstantial richness which is of an entirely different order from the specimens of Von Mises which I have read. I notice that Roderick Long has just put up a review of Barbara Ehrenreich’s _Nickel and Dimed_. Mayhew's _London Labor and London Poor_ is the ur-text of that type, the standard against which such works are compared.

A furher conversation with Sudha Shenoy, Re Tariffs: [her part is irretriveble]

You are assuming that a firm is in one country or another country. At this stage, the reality is that of a firm which directly or indirectly employs workers in various different countries, and moves bits and pieces of work in progress around between these different countries. It is often possible to design the product itself so that bits and pieces do not have to travel to places where they might get hit with comparatively steep import duties. The firm reasons approximately as follows: "We can either do this little manufacturing operation ourselves in the United States, or we can outsource it to a firm in China. If we do it in the United States, we would have to invent a robot to do it. If our engineers should attempt to develop such a robot and fail, we would still be out of pocket for their expenses. If we outsource it to a firm in China, they will worry about the details, and they will give us a certificate signed by the Chinese government to the effect that there is no child labor or anything like that. The United States Department of Commerce will accept this certificate. It is not our job to investigate the Chinese government for corruption!"

If it turns out that the goods in question are being produced by half-starved six-year-olds, then the American firm is "Shocked, Shocked, I tell you!" So it goes, according to business school logic.

The prevailing wage in China's export industries is only about twenty-five cents per hour. Some of that reflects the extremely low standard of living of the workers, who usually live in factory dormitories, under conditions little better than American farm animals. I gather they tend to live on things like millet porridge. In the United States, millet (sorghum) is usually fed to hogs. Some of the low wage reflects the even lower standard of living of the Chinese peasants who subsidize the factories. Therefore, an American worker would have to be forty or fifty times as productive as a Chinese worker to keep pace. Designing a machine good enough to give that kind of edge is not always easy.

Given the overwhelming character of the difference between the United States and China, if you are going to make free trade a point of doctrine, you do have to address the cheap labor issue.

(11/27/2006 04:12 AM)

[It] is a commonplace in industrial circles that the Chinese are notorious for buying one of a machine, reverse-engineering it, and cranking out copies. If they use the machines internally rather than exporting them, they don't have to worry about what view a western legal system might take. Things like automobiles, sewing machines, etc. are basically nineteenth and twentieth century technology. There really aren't a whole lot of secrets about them, and if you have a sufficiently large supply of wretched peasants, you can easily produce them in the traditional way. Now, producing them in a developed country, without wretched peasants, is considerably more difficult, just as it was somewhat difficult to find ways of growing cotton without stoop labor. There are a few technologically advanced products, where delivery of the product does not constitute disclosure of the information necessary to replicated it. A case in point would be the most advanced microcircuits, but these only involve tiny numbers of workers in any case.

For what it is worth, I have heard that some of the big discount store chains are setting up "consolidation warehouses" in China, where they can collect goods, sort and repack them to the last detail, and minimize the amount of work which has to be done in the United States. Global air freight is only about a dollar a pound, so it might well be profitable to make up mail orders in China, particularly for comparatively expensive lightweight goods such as clothing, and ship them by air freight to regional airports within the United States.

Of course, the ultimate issue is "telepresence," remote control over global distances. I already get telephone sales call from people in India. As the bandwidth widens, the effective distance decreases. Of course, these Indians fail in their efforts to pass themselves off as Americans-- their accent gives them away.

Here's a question for you, does the concept of "enervation," which Gilberto Freyre speaks of in _The Masters and the Slaves: A Study in the Development of Brazilian Civilization:_ (1964), apply to a situation in which the developed countries are entirely electronically plugged in to that portion of the third world which is on the verge of starvation?

(11/28/2006 02:45 AM)

Your understanding of reverse engineering is rather different from mine. I am an engineer, so I rather think my understanding is correct. Reverse engineering means that you take a device apart to find out how it works, and write documents explaining how it works. You can then design similar machines from the ground up. To someone skilled in engineering, a piece of equipment dismantled on the table is like a conversation, or a book. Incidentally, the Japanese have for a long time been the best mass-production machine designers in the world, so there really isn't anyone for them to copy from. It reminds me of the line from _The Magnificent Seven_: "If he is the best, then with whom does he compete? With himself, of course!"

The American automobile industry puts an enormous effort into engineering style changes, the whole point being that if you buy a new car, people will be able to recognize it as a new car, even though real engineering changes in automobiles are glacial in pace. Judged by the key performance criteria of how fast it gets you there, the automobile has not improved at all in the last fifty years. So the only way to sell more automobiles is to make them into fashion items. If you buy a new car, people will therefore be able to recognize you as a big spender, but the danger is that they may merely dismiss you as a parvenu. American automobile engineers, in a sort of angry self-disgust, call this kind of thing "perfuming the pig." They have developed a highly evolved inferiority complex, vis a vis the Japanese, the way the English used to have, vis a vis the Americans. Obviously, if, like the Chinese, you want transportation pure and simple, you don't go in for all that kickshaw. Basic transportation is at substantially the level of the work which American engineering students do, as an incident of their training.

What makes a developed country developed has much less to do with physical capital than with mental capital or social capital. The worst of the physical damage of the Second World War in Europe was substantially repaired within several years, because most of the mental capital was still substantially intact, and still more of the social capital.

For manufacturing machinery, your starting point is general-purpose machine tools-- things like metal-cutting lathes, planers, drill presses, etc. You can use your general-purpose machine tools to make additional general purpose machine tools-- in effect, they can be made to breed like rabbits. When you have enough general-purpose machine tools, you can use some of them to make special-purpose machine tools, which do a more efficient job of manufacturing certain devices-- for example, the transfer machines which are used to make automobile engines. I should think you might be able to get the machines to replicate each other at a rate of 1000% annually, maybe more. The supply of machines is not a limiting factor. The immediate limiting factor is likely to be the supply of people who know how to use the machines. Human capital, in short.

Taken as a whole, China seems to have little or no difficult producing just about everything up to the limits of the formal and informal trade restrictions of the various developed countries, and further, in producing nearly all the various "pre-requisite" goods and services which do not involve being land-rich (eg. the mines of Australia, the grainlands of North America). Where China may be running into difficulties is in producing goods cheaply enough that ordinary Chinese can afford to buy them.

At the same time, there are ultimate limits to the export trade. It is, I believe, an economic dogma that wants are unlimited. This is somewhat problematic. The reality is that consuming is more or less laborious. This has been noted in the computer, electronics, and software industries. There comes a point where consumers resist upgrades and new products for fear of having to learn how the new system works. Just because clothing is very cheap does not mean that western consumers will go in for unlimited dressing-up. Similarly, the obvious upgrade from an automobile is an airplane, but airplanes are very hard to learn to fly. There simply isn't much middle ground between a nonpilot and a fighter pilot. Even if the Chinese could make a private airplane for almost nothing, flying would still be an exclusive club.

China has a problem with water shortages, of course. But the Israelis have done some very interesting things with desalination, drip irrigation, etc.

http://www.google.com/search?hl=en&q=%2Bchina+%2B%22sewing+machines%22&btnG=Google+Search
http://english.people.com.cn/english/200008/13/eng20000813_48093.html
http://www.made-in-china.com/showroom/cnbaihui
http://www.business-in-asia.com/taizhou.htm
http://www.saigon.com/~nike/nike-china.htm

http://www.amazon.com/Masters-Slaves-Development-Brazilian-Civilization/dp/0394435613

(11/28/2006 10:32 AM

Here is something which might interest you:

http://www.thenewatlantis.com/archive/13/crawford.htm

I should think it is probably impossible to grow up in the United States without being taught to work with one's hands. I don't know exactly what your background is like. However, you seem to be starting from very different tactile presuppositions than I start from.

2.

Twenty Questions On Mises, Part II: Spooky Action at a Distance

Mon, 2006-11-27 20:15

https://web.archive.org/web/20111205025614/http://hnn.us/liberty_and_power/articles/32281

https://web.archive.org/web/20111205024804/http://hnn.us/node/32281#comments

3.

Twenty Questions On Mises, Part III: The Stars, Like Prices...

Tue, 2006-11-28 19:34

https://web.archive.org/web/20111205033212/http://hnn.us/node/32328#disqus_thread

https://web.archive.org/web/20111205033212/http://hnn.us/node/32328#disqus_thread

4.

Questions on Mises IV: Updates and a Challenge to Historians, December 5, 2006 - 09:38

http://hnn.us/blogs/comments/32585.html#comment (now)
https://web.archive.org/web/20090725062517/http://hnn.us/blogs/comments/32585.html

(12/09/2006 10:34 AM)

Ration Coupons

One point you might want to deal with is wartime rationing, and peacetime food stamps. A ration coupon is a kind of money, but an extremely intricate kind. One thing you often find about rationing systems is that the often have a strong minatory and didactic content.

http://www.worldwar2exraf.co.uk/Online%20Museum/Museum%20Docs/foodration.html

http://www.nymcam.co.uk/key31c.htm

http://www.johndclare.net/wwii10_rationing_longmate.htm

http://www.google.com/search?hl=en&lr=&q=%2B%22british+restaurant%22+%2Bwar+%2Brationing&btnG=Search

========================================================================

Angus Calder, The Peoples War: Britain 1939-45, Jonathan Cape, London, 1969

Reading Note Follows:

calder, the peoples war

   This is an account of daily life in england during the war, mostly constructed as an enormous number of vignettes. Calder's argument is that most of the wartime reforms were never planned by anyone, but were simply the agregate of an infinity of individual acts of regulation or provision designed to meet particular situations.

   His treatment comes under two headings. essentially: 1) response to the blitz, and 2) the needs of mobilization.

   The essential consequence of the blitz was that anyone could be rendered homeless, and practically anybody could be rendered destitute by a random act.

To put it on a more explicit basis than Calder does, the distinction between the lower working class and homeless and shiftless was an extraordinarily local and particularistic thing. The best study is probably a sociological one, Family and Kinship in East London, by Michael Young and Peter Wilmot. They stress that a respectable family would live in a row house or flat obtained by the wife's mother's intercession with the estate agent who was her landlord, and the husband worked at a job obtained by his father's intercession with his employer, one of the small proprieters with which east london abounded. Add to this a cetain quantity of furnishings and you have the distinction between the two castes. All this meant that social status could be liquidated in one bombing raid.

   Obviously this was intollerable, so, as a matter of pure self defence, there had to be an improvement in the treatment of the most down-and-out. This turns up in the way various schemes immediately intended to deal with problems caused by the bombing were converted to deal with more fundumental problems like poverty.

   For example, when a particular borough in london's east end was obliterated by bombing, the local authorities were simply incapable of coping, so the central government had to step in, and the cumulative result of such interventions was that provision for the homeless became a responsibility of the central government, instead of the local government with its finances limited by the poverty of its area. The effect on things like the fire service was similar. Fire Brigades were amalgamated into a National Fire Service, which quite apart from its superior ability to concentrate in response to the Luftwaffe, could in peacetime deploy its resources according to fire hazard instead of ability to pay.

   Returning to purely social services, the evacuation of women and especially children from london illustrates the process of transformantion. On the outbreak of war, when it was not reallized how ineffective aerial bombing really was, the government assumed that the Luftwaffe would stage an attack on the scale of tokyo or hiroshima. In view of this, the initial evacuation from london was conducted in a pell-mell fashion, with an emphasis on loading the people into the trains and getting them out in time. The result was that no particular care was taken to match evacuees to their hosts, and a considerable portion of midland suburbia recieved an unusually direct exposure to the way the other half lived, one normally experienced only welfare workers, and which must have contributed to the later labor victories. When it became apparent that the bombing would be in manageable driblets, most of the evacuees filtered back, and gradually the program changed. It came to focus more on aiding whole families to go to their own relatives elsewhere in the country. The remaining part of the evacuation program proper became more concerned with providing for war orphans and the like, gradually becoming more like a foster parent- placement agency.

   For those who it turned out would be staying in the cities, bomb shelters were provided. The government produced and issued shelter kits, the first of which was the anderson shelter which could be used to create a sort of covered foxhole in one's garden. Later the Morrison Shelter was introduced, which could be used indoors, making it useable for those who did not have gardens. A Morrison Shelter was essentially a steel table with wire-mesh skirts. Insubstantial as this was, it was enough to stop flying glass, etc, and protect one from falling objects. Both shelters were efficient enough against anything except a direct hit, but they were never universal, and their social significance was even less. In a way, one might say that the Morrison Shelter was the perfection of non-interference, since the user did not even have to displace his lifestyle to the semi-public zone of his garden.

   What were far more significant were the communal shelters. A communal shelter could be roofed-over trenches in a park, a subway station, the space under a bridge, or even an ordinary building, such as a church. In many cases, it was worse than useless from the point of view of objective safety. When a shelter was struck, there were hundreds of casualties. But even so, people flocked to them. In a manner familiar to the readers of S. L. A. Marshall, what they found terrifying was not so much being under fire as being alone under fire. Increasingly, some people came to practically live in the shelters (or absolutely, in the case of many who had been bombed out), so the government recognized the situation, and set about furnishing them properly. Ultimately, a shelter would become attractive enough that the poorest people prefered it to their own homes (not to mention the permanently homeless). As the bombing tapered off, and rehousing programs got under way, the bomb shelter became more and more of a homeless person's shelter. In england, this was the traditional role of the workhouse. But workhouses had traditionally been run along much the same lines as jails. The 'bomb shelters' were much less punitive, since their inmates were designated as large-scale arson victims instead of shiftless folk who wouldn't work.

Food: the practical effect of food rationing was to implement something approaching de-facto vegetarianism. Bread, potatos, and other vegetables were unrationed (as a sidenote, I should add that the conversion efficiency of most farm animals is on the order of 10%) There were significant channels of 'off-ration' meals in the form of restaurants, including the new low-priced government caffeterias, or 'British Restaurants.' The authorities were primarily concerned that the meat should be diluted in other foods, and to that end they regulated how much could be served per meal. A range of less popular animal products, such as fish, poultry, wild game, and offal were also unrationed. Official spokesmen extolled such dishes as fish and chips, which had the advantage of being produced in britain without requiring grazing land. The same principle applied to whole-meal bread. Incidentally, rationing did not nearly approach enforcing dietary equality. Even without recourse to true black-marketeers, the better classes could generally supply themselves as well as their social consciences would allow. The sense is that food rationing was not meant so much to allocate hunger, as to deal with an intensely conservative common people, who were quite capable of starving out of pure ignorance when they could not get their usual and customary foods, and could not grasp that the offered substitutes were edible, or could not successfully prepare them. The spirit of rationing was more oriented to preventing a panic, in which people might get hurt.

   There were an extraordinary variety of mass-participation organizations: Home Guard, ARP, auxiliary firemen, air raid rescue, firewatchers, Women's Volunteer Service, and so on. At first these were voluntary, but they gradually merged into the labor direction-conscription system. Additionally there were salvage drives (e.g. housewares for scrap metal), and sponsorship schemes. The net effect of these was to give practically everyone a sense of being an active participant in the war.

   Appropriate bodies were set up to run the war economy proper, mostly consisting of self-direction by the industry concerned. Additionally, there was a system of directing labor which eventually became more or less comprehensive. One significant aspect was that, under the ex-trade-unionist labor minister Ernest Bevin, obtaining relatively favored status within the system of priorities was often conditional upon a firm becoming a union shop, establishing full cooperation with the relevent trade union, including various forms of industrial democracy (among other things, what sounds like an early form of quality circle). The labor unions had agreed to dilution, the temporary replacement of skilled workers (generally men) with unskilled workers (women and youths). In many cases this meant reorganizing the job on a more nearly assembly line basis, but there was also an emphasis on setting up technical school courses to supply new skilled workers. The continual shortage of labor required exploring more and more unconventional sources of it, such as employing handicapped people, as well as setting up arrangements whereby women could work at home.

5, 6. Questions on Mises V and VI: Two Questions on Fiat Money

: Tuesday, December 12, 2006 - 22:05

http://hnn.us/blogs/entries/32908.html

https://web.archive.org/web/20111126181503/http://hnn.us/blogs/archives/4/200612?page=1

and scroll down to Dec. 12, comments not saved.

(12/13/2006 05:24 AM)

(My comment)

Poll Taxes, Requisitions

Well, there is a certain amount of anthropological literature pertaining to poll taxes in West Africa, and the so-called "Journalero" [day laborer] system in Central America (I cannot recall whether it was Nicaragua or Guatemala). The basic thing you have to understand is that peasant cultivators do not want to be in the market. They prefer to "provision the household," that is, to produce things which they can consume directly. So the government has to find some means of forcing them into the market. In the land-scarce regions of the world, such as most of Asia and the Middle East, the government collects taxes on land, or monopolizes the irrigation water supply (Wittvogel's "hydraulic despotism"). Landlordism is generally a fossilized form of tax collection, and indeed, in some cases, eg. the Zamindar system of India, it is impossible to make a distinction between the two. In the areas where land is abundant (Africa. Latin America), this system of collecting taxes on land does not work. People simply escape into the remote jungle. The most common solution was some form of slavery or serfdom, eg. the Spanish colonial "encomienda." But there were other systems. West Africans were obliged to work for wages on plantations, or make cash crops, in order to get the money to pay the poll tax. In the case of the Journalero system in Central America, peasants owning less than a stipulated amount of land were required to work for wages a certain number of days, and to collect a receipt to that effect from their employer, to show to the officials. With pre-industrial technology, market transaction costs tend to outweigh efficiencies of scale, etc. Under premodern/early modern conditions, there was an emphasis on "customshouse taxation," that is, the government used its limited power to collect taxes at a port, or a bridge, or the gates of a city, rather than trying to control the hinterland, and compensated for its limited power by levying a draconian rate on the goods thus taxed. Thus, it simply did not make sense to produce things for sale until one had exhausted the possibilities of self-consumption.

You might also find it interesting to read the eighteenth-century military theoretician, Marshal de Saxe, on the subject of "requisitioning." His system, in occupied territory, involved requiring village notables to come in to headquarters and buy "Protections." A raiding party would then go out and check if villages had "Protections." The raiding party would move stealthily, and arrive in a given village without warning. If the village did not have a Protection, the raiding party would burn down a house, without any further discussion or negotiation, and then leave, fast, before an ambush could materialize.

Reveries on the art of war [by] Marshal Maurice de Saxe,translated and edited by Brig. General Thomas R. Phillips., Harrisburg, Pa., The Military service publishing company, 1944.

7.

Questions on Mises VII: A Gold Standard by Any Other Name

Thursday, December 14, 2006

https://web.archive.org/web/20111126181503/http://hnn.us/blogs/archives/4/200612?page=1

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8.

Questions on Mises VIII: The Paradoxical Value of Cake. And Pennies.

December 15, 2006

http://hnn.us/blogs/comments/32993.html#comment

https://web.archive.org/web/20111126181503/http://hnn.us/blogs/archives/4/200612?page=1

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(12/17/2006 11:27 AM)

A Counter-Question

Here is a question of my own, if I may take the liberty of inserting it. Has anyone within the Austrian School done a systematic response to William Morris, in particular to Morris's utopian novel, _News From Nowhere_ (1890). In the tradition of utopian novels, News From Nowhere is about half Socratic dialog, and half travelogue as illustrative example. Morris's big point was the insight that work is fun, that creating things is fun, or to put it in his own words, "Plenty of reward-- the reward of creation. The wage which God gets... If you are going to paid for the pleasure of creation, the next thing we shall hear of will be a bill being sent in for the begetting of children." (I should add that Morris was referring to the natural way, "making whoopee," not to test-tube babies and suchlike. Ch. 15, p. 274,   A. L. Morton, ed., Three Works by William Morris, 1968,4th printing, 1977).

See also the "shopping" episode in ch. 6, pp. 216-18.

In Morris's terms, if production is an innate drive, the finer details of money and exchange are essentially irrelevant. At present, the overwhelmingly most important development in the political economy of technology is the Open Source Movement, and Morris is a kind of unacknowleged theoretician for this movement. I do not know whether Richard M. Stallman has ever read Morris, but he and his followers act as they would act if they were all carrying around copies of New From Nowhere in their pockets.

I google-searched the Von Mises Institute website, and judging by what I found, the authors posted there seemed to lump Morris as a "romantic," without knowing very much of his work. They seemed rather more aware of open-source software, but my general impression was that they lumped it in with the free market.

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http://www.mises.org/

http://www.google.com/search?as_q=&hl=en&num=100&btnG=Google+Search&as_epq=+william+morris&as_oq=&as_eq=&lr=&as_ft=i&as_filetype=&as_qdr=all&as_nlo=&as_nhi=&as_occt=any&as_dt=i&as_sitesearch=http%3A%2F%2Fwww.mises.org%2F&as_rights=&safe=images

http://www.google.com/search?as_q=&hl=en&num=100&btnG=Google+Search&as_epq=news+from+nowhere&as_oq=&as_eq=&lr=&as_ft=i&as_filetype=&as_qdr=all&as_nlo=&as_nhi=&as_occt=any&as_dt=i&as_sitesearch=http%3A%2F%2Fwww.mises.org%2F&as_rights=&safe=images

As Morris would say, like the book about the snakes in Ireland

http://www.google.com/search?as_q=&hl=en&num=100&btnG=Google+Search&as_epq=open+source&as_oq=&as_eq=&lr=&as_ft=i&as_filetype=&as_qdr=all&as_nlo=&as_nhi=&as_occt=any&as_dt=i&as_sitesearch=http%3A%2F%2Fwww.mises.org%2F&as_rights=&safe=images

The Piece of Cake Paradox, Solved? [Apparently in lieu of Qestion IX]

December 19, 2006

https://web.archive.org/web/20111126182043/http://hnn.us/liberty_and_power/articles/33114

10.

Questions on Mises X: Now with Current Events Tie-Ins

January 5, 2007

https://web.archive.org/web/20111206192615/http://hnn.us/blogs/archives/4/200701?page=2

Scroll down to Jan 5, comments not saved.

http://hnn.us/blogs/entries/33665.html

(01/11/2007 02:19 PM)

Socially Embedded Money

Below is a quick search-list for Ithaca Hours, the most well-established and well-documented local currency. Ithaca Hours seem to circulate among a fairly definite social strata, approximately the small college-dropout-shopkeeper class in a college town. This is a group which knows each other socially, and in any event, would be trading among themselves on a basis not available to the general public. The effect of the Ithaca Hour is that, instead of negotiating "neighbor discounts" on a case-by-case basis, they can let the discount rate float. It is a means of regularizing their pre-existing practice. There is probably a nontrivial support from state-paid liberal academics whose social position requires them to buy Ithaca Hours for dollars and to be seen to spend them. I suspect it's a bit like being in the local food co-op. We are talking about socially embedded transactions. Orthodox Jews do not eat ham and cheese sandwiches, no matter how cheap they are. End of discussion. For a local merchant, there are substantial economic consequences to being part of the local "old-boy network," such as referral business, access to non-bank credit, etc.

At a guess, Provincetown, Mass., might have a similar social stratigraphy. I believe that, at one point, Kurt Vonnegut lived there. The "Dune Doubloon" might well prove to be viable, within similar limits.
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Jeffrey Jacob, Merlin Brinkerhoff, Emily Jovic and Gerald Wheatley, The Social and Cultural Capital of Community Currency: An Ithaca HOURS Case Study Survey

http://209.85.165.104/search?q=cache:rVSOT7nlbg8J:www.le.ac.uk/ulmc/ijccr/vol7-10/IJCCR%25208no4.pdf+%2B%22Ithaca+Hours%22+%2Bdistribution&hl=en&gl=us&ct=clnk&cd=3
http://www.le.ac.uk/ulmc/ijccr/vol7-10/IJCCR%208no4.pdf

A basic study of who trades in Ithaca Hours, to what extent, etc.
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http://www.ithacahours.com/
http://www.ithacahours.org/

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Keith Hart, IE + IT = ED?: Is informal economy plus information technology a path towards economic democracy?

http://www.rethinkingeconomies.org.uk/web/d/doc_29.pdf
http://72.14.209.104/search?q=cache:MwpIFXW9_-oJ:www.rethinkingeconomies.org.uk/web/d/doc_29.pdf+%2B%22Ithaca+Hours%22+%2Bkula&hl=en&gl=us&ct=clnk&cd=4
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http://iang.org/free_banking/boyle_fm_ithaca.html
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http://www.abbedon.com/electricminds/html/edg_scan_1528.html
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http://www.motherearthnews.com/Livestock_and_Farming/1993_August_September/The_Ultimate_Barter
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HNN post, Jason Kuznicki, Questions on Mises X: Now with Current Events Tie-Ins

(01/11/2007 02:25 PM)

Reading note for an analogous book
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Muldrew, Craig,   The economy of obligation: the culture of credit and social relations in early modern England (Basingstoke: Macmillan; New York: St. Martin's press, 1998)

In the towns of late medieval England, and an undetermined distance out into the countryside, credit worked rather like primal honor (vide Bertram Wyatt-Brown). People of extremely modest means were enmeshed in networks of modest borrowings and lendings, primarily in the form of trade credit, eg. a small cobbler who sold shoes on credit and in turn obtained both leather (raw material) and food (personal consumption) on credit. It was normal for almost everyone to both owe to many people, and be owed by many people, total sums on the same order of magnitude as their net worth or their annual income. These debts could be continued more or less indefinitely, provided the debtor retained the reputation of an upright and honest man. It was only with probate that accounts were finally settled. This system was held together by a network of mutual trust. It was important to be seen to be an upright man within a small face-to-face community. This implied being seen to be a hard worker, and simultaneously, a modest consumer. Someone who did not behave in the approved fashion was likely to have a creditor demand payment, whereupon other creditors would demand payment, and in the end the debtor might be hauled off to debtors' prison.
   At the end of the sixteenth century, and the beginning of the seventeenth, this system was breaking down. Litigation reached an all-time high, as people began to panic about the consequences of being linked through chains of credit to strangers of whom they knew nothing. The rate of imprisonment for debt also soared.
   The courts eventually became the nucleus of a new system of credit. First, they served as a mechanism of identifying deadbeats, then lawyers became experts in creditworthiness, and then the lawyers went into business for themselves as "writers," ie. proto-bankers. At the same time, the national government began to permanently fund its debt, and this became a locus for investment. In the long run, government paper became the medium of exchange, allowing individuals to simplify their finances.
   This book has a solid core of statistical evidence (tax, probate, and court records, or one sort or another) from King's Lynn, in Norfolk, but it is fleshed out by statistics from other towns, and anecdotal sources from all over England.

Questions on Mises XI: A Stumbling Block

January 10, 2007

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