Saturday, April 27, 2013

Moving to the Other Side

After reading the previous postings on The Other Side of Capitalism, perhaps you more or less agree with the points we made. Perhaps you are asking yourself what comes next. Let us do that. Rather than listing directives toward a specific plan right now, this will be more of a discussion. It is time for you to engage your minds in thinking about the future and its possibilities. Be like the rich and spend some time working on your visions of our collective future. Here are some thoughts that may help.

Most important, the goals must be "good." We must spend our time and resources as best we can toward ends that expand human minds, encourage everyone to improve themselves, and encourage everyone to participate freely in the markets, as both consumers and producers. We must deny our time and resources to ends that diminish, dominate, and exploit others. If you are someone who seeks to dominate others, then you are by nature an opponent of The Other Side of Capitalism.

While we are imagining new futures, however, we should remain grounded in reality. It is so easy to lose touch with reality. Great wealth can even amplify the problem because people can only indulge their delusions until the money runs out. Rich people can indulge their delusions for a long time.

To keep touch with reality, we must work with people the way they are, not as we wish them to be. Communism failed in part because it had a rigid but simplistic and incorrect view of human nature. Since "re-education" does not really work, in many cases communist policy devolved into simply isolating or killing those who did not "think right." North Korea is still in this phase now with its gulags, starvation, and even outright killings. After the historical evidence of the last hundred years, those who are still communist today are holdouts from reality. Communism does not work. Give it up and join the other side of capitalism.

The reality is that to get what we want, we work and get paid, and we want an environment in which we can do that. Then we spend our pay in markets that offer what we want.

The key individual determinant in this process is whether individuals can earn more than they spend. Whether they can produce more than they consume.

Some produce nothing at all. Others produce some, but not enough to support themselves. Still others produce enough, but not much extra. Those who have a lot of economic strength produce a lot of extra wealth, over and above the amount they need to support themselves.

It is only natural that energetic and productive people control more resources than those with less economic power. That does not mean that they should control all resources, however. History shows that freedom for the few and slavery for the many, total wealth for the rich and only subsistence at best for the rest, make weak and poor societies.

The key point about markets is that individuals have to have wealth to participate in either the buying or the selling. Subsistence dwellers cannot participate. Shortsighted leaders make policies that drive people out of the markets, often under the mistaken impression that they are gaining wealth. They need to change their thinking. The size, strength, and energy of their free markets is their wealth. Damaging their markets to try to make themselves richer or in some perverse fantasy of dominating others simply damages themselves.

This is a greater danger if a society feels that it has peaked and that the future at best will only equal the past. If we reach a summit, the only way forward is down, and perversely our leaders will be just as energetic taking us down as previous leaders led us up. It is not clear that we are in this position today, but there are signs. The journalist Tom Brokaw famously memorialized "The Greatest Generation," those who lived through the Great Depression and then "won World War II." It makes for great publicity and politics, but in reality Mr Brokaw set off a destructive bomb in American psychology  If there really was a "Greatest Generation," then the rest of us are doomed to mediocrity and decline.

If you are prone to feeling that the future will be worse than the past, then you should work to get over this "decline-and-fall" mentality. It is not helpful. We should look and walk forward into the future. We will only stumble if we look backward and walk backward. It is wise to learn from the past, but not to invest in it.

So let us forget about "greatest" generations and other "Golden Age"-style mythologies. Let us get to work on the future.

Earlier we were making the point that it is in our leaders' interests to seed the public with wealth and encourage market participation. U.S. leaders have done that more than others around the world. We think that is the main reason for the enormous wealth in the U.S.

Even individuals who consume more than they produce can help energize the markets. Therefore it is wise to subsidize them rather than complain about them. We should not ruin them or drive them into ruinous debt. We should train them as best we can to improve their skills and increase their market participation.

To some extent we already do this in the U.S. with a variety of programs including food stamps and student loans. However, these policies are not effective enough because they are bound up in archaic prejudices, concepts, and laws. Food stamps have a slight advantage over student loans because they are grants rather than loans and in some senses they are a different currency from the dollar.

Student loans are worse than food stamps because they are denominated in an international currency and, because of politics, there is no escaping them. Bankruptcy will not save the borrower from unreasonable amounts of student loan debt. That is not to say that it will be impossible for borrowers to get out from under impossible levels of student loans, but that it will be a political decision, not an economic one. This raises the spectre of a serious movement toward a political economy rather than a capitalist one in the U.S., one in which individuals must submit to domination by political patrons in order to survive. has already commented on the folly of this path.

Despite their faults, these programs show the way. Food stamps in particular could be turned into an internal, exclusive currency, and the program could be expanded to include most of the people (excluding the rich). This might be the first logical step toward our goals.

There are several other logical steps we might take. Let us list a few here.

Another logical step might be to create a political movement. It is probably worthwhile to start down this path, but it should be done carefully. It would be very easy to overpromise and then fail the people. It will take a lot of political capital to make these changes and we cannot afford to waste any.

Third, it might be possible to merge with an existing party. This would be a fast-track to political influence and should be seriously considered.

Finally, it might be better to demonstrate results in a smaller venue first. There are many ways to accomplish this.

Perhaps a smaller nation than the U.S. would try it. We have already suggested that a possible way out of Greece's economic problems would be to bring back the drachma as an exclusive internal currency. The same is true of Cyprus, but there are other nations such as Venezuela or Argentina that might benefit from multiple exclusive currencies and markets.

U.S. states, individually or in groups, could try the ideas, too. This would require some national support because the U.S. Congress regulates the currency. There may be a precedent in that U.S. food stamps are already distributed by the states and to some extent the states administer them.

Alternatively, multiple exclusive currencies and markets might be tried first by private business. There are already multiple electronic or digital "currencies" being tried online, such as bitcoin. Right now the volume of transactions is low so the regulatory interest is also low. It is not clear how these will be received by Congress if large numbers of people start to live by them. Even so, there is a precedent in the U.S. for corporations providing a living for individuals that is outside the dollar-denominated markets, so the possibility of corporate sponsorship for's ideas is possible.

We expect that it would take a major corporation to attempt it, perhaps even multiple major corporations working together with multiple retailers. The idea is that seigniorage would make the system profitable for the corporations and maintain corporate interest. With enough employee producer-consumers and their dependents in these markets, it seems likely that the markets would be large enough to give these ideas a try.

We suggest that financial firms, including insurance companies, consider organizing such a trial. These companies might find it easier than other types of businesses because the business of these companies is money and also participation in the businesses of other companies. Organizing other businesses around new currencies and markets seems like a natural extension of their existing work.

There are many ways that the ideas presented by could be put into practice, both public and private. We hope that this discussion has inspired readers to have their own ideas and think of their own possibilities. Done properly and well, we believe that these concepts will prove to be a benefit to society, so we are out to recruit as much help as we can get.

TheOtherSideOfCapitalism (

The way capitalism should be.
Socialism for the socialists and capitalism for the capitalists.

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