2018, WEA On Line Conference
The 2008 Economic Crisis Ten Years On in Retrospect, Context and Prospect
Discussion Forum: from October 15th to November 30th, 2018
ECO-LOGIC DEMOCRACY -The Geonomic Argument-
Stephen I. Ternyik
The root cause of economic crisis is identified, and key thoughts on policy reform are being formulated. An appendix of 10 links shall serve for the attentive reader as a means to broaden the scientitifc overview of the research problem.The basic geonomic argument is that also the latest economic crisis is a logical result of classical land value accumulation via monetary agency. A gradual introduction of earth sharing economic policy, via land value taxation as public revenue, is proposed to be the remedy for unnecessary deep economic crisis, which is coupled to the natural (physical) motion of economic cyclicity. Land, economic value, money, taxation, crisis, remedy. JEL: P59
Social science economist (-1985) Techno-Logos, Inc. StephenJehucal@web.de www.sociostudies.org/authors/ternyik_stephen_i/
We do not own the earth Good economists are rare creatures, but the economics profession is anyway all about scarcity by origin and nature. The Hayekian test for a good economist requires the fundamental ability to distinguish between the demand for goods and the demand for labor. The Keynesian test for a good economist requires the fundamental distinction between long-term and short-term factors of human economic action. A Friedmanite test would be about the quantities of money, and a Georgist test would challenge you on land value. From all factors of production (land, labor, capital), their respective economic returns or payback (rent, wages, interest) and their intermediating social conventions (money, time), land is a long-term factor of human economic action, i.e. the territorial origin and nature of the human economy persists into the highest forms of civilization, namely the age of electronic automation or the final point of industrial capitalism. The economic crisis, which started at the end of year 2000 and deepened in 2008, with the money illusion of the new information economy, is a ‘resurrection’ of the age-old social forces of economic rent (for natural resources, e.g. energy extraction, of land and the location fee of real estate; it even entered the information highway of cyberspace). The modern capitalist market system has to battle with the classical civilizational problem of ownership vs. stewardship of spaceship earth; this Sisyphean economic root problem is not based on you owning (maybe) a (rent or interest free) house, car and bank account. Since Sumer, land is the essential banking collateral for credit money and accounting economic value. Mass attracts mass and money attracts money; owning a mass of land value attracts money, like an electromagnet, especially in economic times of crisis, when liquidity flows into assets, thus curbing human productivity even more, towards point zero. In economics, distribution and production cannot be disconnected; the post WW2 economic cycle (1950-2000) ended, with high financial debt levels and technological innovation, not to mention the eco-logic externalities of the excessive consumer society, which became the leading wealth model across the whole and populated globe.
Where do economic cycles generate from? The human economy cannot be disconnetced from the physical or natural world, it is basically an energy transduction circuit, with inputs, human processing, outputs, and payments, to close the circuit again. We all know that nature works in cycles and that cyclicity is a natural phenomenon, like the water cycle on earth. Waves translate into cycles, and cycles translate into spirals, with the physical motion of contraction and expansion. The paper sheets of our economic accounting system are only pale shadows of these complex evolutionary processes of organizing and sustaining a living human economy. Only transhumanism and singularity want to fully undo these economic movements and developments of matter, living matter and human life cycles. On the other hand, there is the scientitifc argument that social systems are human made systems and can never die a natural death, but that only human will and thought power can elaborate the economic living condions. The approach of the physics of social (socio-economic) systems can reconcile this scientific research problem of natural and cultural phenomena as humankind today has become a dangerous geophysical force on earth, i.e. the hunger for energy causes the need for ‘more money’ , and the expansion of the global monetary volume causes the demand for ‘more energy’. As there is until now, no such thing as ‘free energy’ (it is at least not technically available), it is a simple economic fact that the wealth of a nation or political entity is based on the use of energy resources; no cultural technique (maths, logic, ethic, language, tool-making) can alter or substitute this physical fact. More energy consumption leads to an acceleration of socio-economic life (non-stop society; 24/7), and the accounting system must book (‘create’) more money to maintain the balance sheet. The huge mass of the ‘created’ money flows, resembling a physical law, to the mass owners of land value assets, among them energy resources, precious materials for production and central locations (of real estate) in highly urbanized areas of the globe. The natural limit, however, is in this case, not the sky, but the bottom of the earth. One reason for this fundamental civilizational error is the disconnection of technology from humanism in modern science, which has become part (specialized division of labor) of the economic production assembly line. Such a full disconnection from natural or physical reality can no more be tolerated, for the very reason of the survival of the human race on this planet. In addition,
the many segmented pieces of this scientific edifice are neither compatible nor conclusive; it is not enough to be a technically competent expert. To sum it up: the monetary agency of our social system causes economic cycles; we must learn to better manage our monetary system, according to the laws of nature.
Land, economic value and money Our dominant economic accounting system (the accounts of society) treats money as neutral towards production; most production functions do omit to mention the means of payment as economic factor or variable. Economic value is being counted in monetary units as measurement technique and most balance sheets do calculate land as (into) capital. From the perspective of a natural science of a human economy and society, this ‘mathematical’ or ‘statistical’ practice is a grave error or fundamental mistake, which is repeated endlessly. The temporal dimension of all these calculations, equations and formulae is the statistical calendar year; the relationship between time, money, energy and economic value is being kept opaque. All economic procedures are about counting and managing private wealth, in terms of property, credit, interest and growth; what comes short, is the eco-logic aspect of human economic action. Political democracy is a quantum leap in human affairs, with a helter-skelter curve, due to economic cyclicity, but what we need is to create balance sheets for an eco-logic democracy. We have to check and modify our accounting system to detect economic rent, which is unearned income from accumulated land value Economic rent must be taxed and made public revenue; this will free labor and capital from burdensome taxation to produce and to create value from the resources of land. The banking system should not be allowed to use land value as transaction collateral, e.g. for entrepreneurial projects; credit money will then flow into real saving and investment, instead of ‘magnetic’ asset hoarding. The capturing of economic rent can also realize a citizen’s dividend as basic income, making the social welfare bureaucracy obsolete (in most countries, we need 2$ to distribute 1$, or even more). Applying such economic policy is the political pathway to maintain a capitalist market system, which is not based on cronyism and nepotism. Geonomics, an earth sharing economic policy is the best practice to avoid great social
conflict, war and revolution. It is a peaceful and gradual ‘perestroika’ of economic systems inefficiency by taxing all types of rent from land value (cyberspace included). It is better to start walking one step into the right direction than to head with a high-speed train into the ocean of social chaos. Human thought and will can accomplish this historical task to introduce the ultimate tax.
LINKS https://www.nobelprize.org/nobel_prizes/economicsciences/laureates/1984/stone-lecture.pdf http://www.mattrognlie.com/piketty_diminishing_returns.pdf http://www.foldvary.net/works/policystudy.pdf http://www.academia.edu/4996856/The_Last_Tax_Henry_George_and_the _Social_Politics_of_Land_Reform_in_the_Gilded_Age_and_Progressive_ Era https://www.researchgate.net/publication/320299559_The_%27Babylonian %27_Accounts_of_Society https://www.researchgate.net/publication/308916607_Geonomics_in_1_Le sson3_Key_Observations http://www.humanthermodynamics.com/NLSS.pdf https://www.researchgate.net/publication/256056320_Monetophysics https://www.barnesandnoble.com/w/global-wave-energetics-stephen-iternyik/1116295232?type=eBook http://www.urbantoolsconsult.org/