Re: Return to the Source: Binary Theory and the Turnbull Heresy

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

It is because I consider the current monetary arrangements as
representing a federal monopoly funny money system that I support Kelso's
proposals to coerce central banks to fund ESOPs.  In a free market
banking system, local competing concurrent currencies would create the
credits to fund the replacement/expansion of procreative assets.  So
free markets in this sense would widely spread ownership with the
stakeholders needed for the business to exist instead of with investors
who may have no other relationship and so create a
"disconnected" form of capitalism. 

With a free banking system, stakeholders could both accept the risk of
credits not being repaid and obtain the rewards of it succeeding as they
do in Mondragon without local unfree banking.

A local currency which financed sufficient procreative assets to create
enough surplus values to counter the dissipation of value in consumption
and degenerate assets should maintain price stability.  Local
currencies financing too many consumption and degernate assets could
expect to suffer inflation.  According to the arguments of von
Hayek, competition between currencies would control inflation. 

However, I have always liked the idea of reference, if not a standard,
unit of value.  Bob Swann, my co-author of 'Building Sustainable
Communities', worked with Ralph Borsodi on the "Exeter
Experiment" in 1974 which used "Constants" based on a
basket of commodities proportioned according to their consumption in
society as suggested by Irvine Fisher.  However, the proportion
could change and be subject to political manipulation by those who
defined the currency to inforce the "golden rule".  That
is, those with the gold rule!

For reasons set out in my contribution to 'Building Sustainable
Communities', I have been attracted to the idea of a standard unit of
value being in the form of energy produced from sustainable sources such
as the sun, wind, waves, etc.  That is the creation of a reserve
currency defined in units of energy such as the Joule suggested by
Keith.  In my writings I use Kilowatt hours.  Either could be
used to create an ecological form of money which I describe as
"energy dollars".  Unlike commodies, changes in the use of
energy are slow and reflect modern standards of living.  It is
difficult to store, so it follows the principle "if you do use it
you loose it" which I apply to property.

In his posting of May 9th (Is binary economics either necessary or
useful? Part III ) Keith refers to "conventional economics, which
attempts to identify and quantify value as a subjective, psychic
phenomenon". The introduction of "energy dollars" would
overcome this problem and provide a reference unit of value and for some
"reserve" transactions "a medium of exchange". 
It would not, however, carry out the traditional role of money of being a
"store of value", because if you did not use it you would lose
it.

However, I have never used the term "productiveness" or
proposed that units of energy be used to define how value should be
distributed between workers and the owners of the machines they operate
or the owners of the business.  Energy dollars provide a unit of
value for free or unfree markets to sort out the matter like fiat
money.  However, the utility of energy dollars arises from their
ability to ground economic value in sustainable physical processes. 
As the technology improves for converting naturally sustainable energy
into economic use, the value of energy dollars would increase.  The
utility of energy dollars is to provide a self-correcting feedback
mechanism between the economic world and the environment to build
sustainable communities.

While energy dollars and my discussion above may share some resonance
with the concepts discussed in this forum,  I do not see how 
they might contribute to the question posed by Keith in relation to the
connection between the concept of productiveness and money.  The
above discussion should, however, makes some contribution as to how my
position is different from mainstream, but not all, orthodox
economists.   Beside showing these differences it may also
indicate differences in my approach to that of the binarians.  The
above remarks contribute to answering, in my way, the question posed by
Keith to the binarians to  "provide an explanation for the
sources, nature and role of money". 

Regards

Shann


At 12:35 AM 11/5/2000 , you wrote: 

> This particular subset of the COG forum was
> spawned when Norm Kurland jumped on a comment in (as I recall) the
> Homestead group by Turnbull as proof that Shann is not a "pure
> Kelsonian". As I understand it, Shann s heresy is to suggest that
> some ownership rights have a natural or logical end. Kurland warned that
> this would spoil the Kelso vision, and implied that COG s objectives
> would be frustrated if members allowed themselves to be excessively
> influenced by Shann s plan. I believe our conversation has reached a
> point where we can fruitfully address that initial controversy.
>
> One thing that does appear securely established is that
> "purists" believe the two-factor concepts to be tightly linked
> to achievement of the Kelsonian vision. Another is that they have failed
> to make an explanation of that link which (some of) the rest of us find
> cogent. In my three-part question posted in recent days, "Is binary
> economics either necessary or useful?", I carried my own recital of
> the binary rationale down to the point of observing that it does not
> provide an explanation for the sources, nature and role of money. It does
> presume the existence of money, but assumes that physical productiveness
> translates smoothly and perfectly into money prices without any
> explanation of the process. (That is the source of Zundel s challenge to
> the binary theory, and its defenders have not been able to answer him
> with anything more persuasive than an unexamined belief in the content of
> my previous sentence.)
>
> I conjecture that this fudging on the nature and role of money is
> implicated in the Turnbull Heresy. The link is through the notion of
> binary growth with its accompanying belief that wealth can be transferred
> from rich to poor without any interpersonal implications. A desire to
> believe that justice can be achieved through science (in this case binary
> economic science) is what motivates the purist insistence that there is
> no redistributive element in their plan, and that is why they cannot
> contemplate Shann s idea as having a place in it. I suggest that if we do
> some thinking together about money we will find that the two-factor
> theory falls apart.
>
> This hypothesis seems especially weird given the specialization of Kelso
> and some of his more prominent disciples in the field of finance.
> Nevertheless, the indicators are sufficiently strong, and alternatives
> sufficiently weak, that the possibility cannot be ignored.
> Keith Wilde
> Ottawa, Canada
> kwilde@magi.com
> 613 990-8125
> 613 747-6847

Shann Turnbull

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