Critic: Daly being taken out of context

[Charles Brown <cbrown@xxxxxxxxxxxxxxxxx>]

-----Original Message-----
From: C H [mailto:craighubleyca@xxxxxxxxx]
Sent: Monday, April 09, 2007 8:04 PM
To: ami@xxxxxxxxxxx; gunnar.tomasson@xxxxxxxxxxx; cbrown@xxxxxxxxxxxxxxxxx
Cc: mcmurtry@xxxxxxxxxxx
Subject: Daly being taken out of context

The Wikipedia article selectively quotes Daly.  In his
analysis, which did advocate 100 per cent reserves, it
is also necessary to divide benefit, cost and capital
into three different accounts on every level (page
113, "Beyond Growth".  Each encourages a different
mode of behaviour:

"1. The accumulation of stocks and funds would be
satisficed" which he defines as "seeking a sufficient
or satisfactory level rather than the optimum".  Then:

"2. Service would be maximized, given the sufficient
accumulation."

"3. Throughput would be minimized, given the
sufficient accumulation."

As this suggests, Daly advocated throughput accounting
and disavowed encouragement to overbuy capital assets,
as most national governments use to put economies on
just enough crack to get re-elected.

"1 and 3 would be in direct conflict with the goal of
maximizing GDP" which goal Daly considers to be wrong.

Daly, who originated the term "natural capital" in its
modern sense of a capital base that delivers services
to humankind, would not have fallen into the trap
Gunnar does in his reply:

Pretending that all types of assets are honestly
valued and all types of liability are honestly
recorded, taking the problem of banking reserves and
capital adequacy entirely out of the scope of the
casino manager to resolve, making it a non-problem so
the money creation can continue unabated with every
question of fundamental value referred down the line.

It's a problem if any one group (bankers, valuators,
nationally biased economists, even ecologists) has
exclusive control over what is exchangeable "value".

But it's no more a solution to hand the definition of
asset value to a large undisciplined uncoordinated
group ("the market") especially for assets that are
held in common and never honestly bid on or changed
hands (rivers, lakes, the atmosphere, etc.).  Thanks
to the attitude that reserves in kind (cash) can be
eliminated in favour of capital adequacy rules, the
game has become easier and easier to rig in favour of
those who control the valuation.  Dotcom boom for
e.g..

Thanks to acceptance of this kind of passing of bucks,
the money game now diverges completely from underlying
asset games, which is the sign that game is about to
end in a burst of hyperinflationary musical chairs...
But it takes a long time for the degradation of the
under-valued asset (natural capital) to become clear,
for ecological debts (like GHG damage to the climate)
to be collected (by nature herself, a psychotic and
murderous and ruthless collector who will first target
the poorest and least defended and wipe out many at
once for the debts of the rich - see recent reports of
who suffers under climate change in the NY Times,
etc.)

Has any money game ever ended any differently?  The
Romans debased their currency and eventually destroyed
North Africa's what growing capacity with
over-growing.

North Americans are doing the same sort of thing but
faster.  The money collapse merely presages nature's.

The difference is, when one type of money fails, it
can be quickly replaced.  When nature fails, it's the
whole civilization built on that is replaced, after a
good deal of horror and mayhem.

It's not clear what the solution is, but it won't be a
group of sociologists deciding what they can pass off
as "value" and it won't be a group of bidders setting
bogus values by bids that aren't ever turned into real
payments of stores of value.  It may be a group of
very disciplined ecologists bidding on what to save
and having their valuations coordinated in some very
disciplined way.  But they won't be bidding in cash,
but in human lives.  (The value of life ratio, etc.).

There is some good reporting in Wikipedia but you
won't find it with nonsense article names like
"debt-free money".

Craig Hubley