|This is a William Pensinger Piece, incomplete as it is, due to Mr Pensingers work disappearing from the internet. MR Pensinger has already developed the entire base platform from which Quantum Economics has sprung. The planet owes a debt of gratitude, for the bandwidth transferred.|
Silvio Gesell's notions of “free money” and “free land” were embraced by Karl Liebknecht and Rosa Luxemburg, given that Gesell was made Finance Minister of their Bavarian Soviet Republic. Karl and Rosa were killed in 1919 when the secessionist Marxist republic was crushed; while Silvio survived his imprisonment and was acquitted of treason at trial. Formation and eradication of the Bavarian Soviet Republic was, by intense back-reaction, part of the run up to Nazification, the process which destroyed the Weimar Republic and led to larger tragedies. This is no exaggeration; loathing of communism was one great motivator of Nazification. And it is not surprising that Karl and Rosa endorsed Gesell's ideas for “free money” and “free land”, as the descriptors are misnomers, Orwellian black propaganda terms. Not only usury, not only low interest, not only all interest is to be outlawed by legislation, but an invariant small negative interest rate is to be universally imposed on all money held. Not a transaction rent, no user's fee: accumulation escrow (held in trust for redistribution). The “free money” has attached to it a negative interest rate: the holder of this money must pay a small holding fee; the longer the money is kept, the more holding fees paid (even if you keep it stuffed in your mattress). And, of course, the more money accumulated, the greater the fees due. This, of course, will be the biggest boon to hoarding gold since free silver -- unless gold too must be stamped. And then a boon to… The purpose of the negative interest rate is to make money move, increase its velocity -- and to make accumulation too costly to contemplate. Accumulation being a source of inequities of benefit and of the nature rape entropy generation entails. Buy now, don't save later or now, as an approach to postponing extractive consequences of the second law of thermodynamics. The money is not “free” to you; you must pay to hold it. The money itself is “free” to move. This is the actual meaning of the word “free” as used by Gesell. And who receives the negative interest charged as a holding fee? The government issuing the money, of course, takes the fees into escrow. The money holder must buy a stamp from the government at regular intervals and affix it to the specie so long as it is held. Were this scheme to be adopted today, RFID tags would probably be involved. This fee, this negative interest on money held, is actually a tax not called a tax, a progressive tax called “free”. This tax not called a tax is a redistribution scheme requiring government intervention and government execution. A double-speaking Commissariat of Free Money will have to be created, and its bureaucracy will surely grow and grow, because it will have to, not only collect and redistribute the holding fees, but it will also have to determine actual productive output of the economy and modulate issuance of money accordingly (algorithm of issuance being rate-governing, like speed limits: matter of velocity, with acceleration and time rate of change of acceleration generally being economically neglected). We are told that, if the currency is a commodity-basket currency, modulation of issuance will take care of itself. It is hard to imagine quite how that would be the case, however, as a commodity futures market is precluded by the very nature of “free” money. Where is the incentive to participate in a futures market? Absent a futures market on commodities in the basket, the government will have to set prices of the commodities involved in the currency basket, for, so long as there is more then one such currency, there will be complexities of articulating currencies which will require government oversight and management, irreconcilable conflicts of vested interest (the other kind of interest) being involved. And since Gisell's idea is not only for “free” money but for free trade and for free movement of labor, one must expect, given that increased velocity of money movement is a major objective of this scheme, there eventually will be only one we-are-the-world currency (coercive “we”), as currency exchange, and associated fees, will be an unwelcome constraint on the movement of money. Global implementation of “free” money will necessarily involve creation of a world government with a Global Commissariat of Free Money determining actual productive output of the global economy and issuing money proportionately (or price management of the commodity basket currency referent) -- not to mention collecting and redistributing the holding fees. Everybody will be trying to get rid of money so fast, the bureaucracy will have to have less and less computers to keep track of the holder's fees it will be getting less and less of. Maybe “fee-simple” eventually will have the same meaning in this context, as it once had in early America relative to land ownership. But don't be too sure! No mere blatherskiting Americanism, I could not have lived for six years in a gingerbread cottage tucked into woods of Virginia's Wedderburn Station, an abode dating to prewar years as a liaison stop on the underground railway, without being a free-soiler. Nonetheless -- and realizing how closely associated were free-soil, geographical determination, natural right and growth, manifest destiny, the Star of Empire… hmmmm. Gisell's “free land” -- necessary for the global free movement of labor implicit in “free” money that cannot be accumulated -- also is not free to you; you will not own it; you will rent it. And guess who your landlord will be. The same landlord as my landlord: the government, of course. The government will pay fair market value to all current landowners, then redistribute the land thus nationalized on an equitable basis, charging rent to the new tenant. In this case, one is uncertain as to the actual meaning of the word “free” in “free land”, as clearly the land will not be free to you and it likely, unlike “free” money, will not itself be free to move, at whatever velocity.
High velocity money these days is called “hot money”. Hot money makes positive interest; therefore, cannot be “free” money. Interest is a kind of viscosity; it slows money down, parks it for shorter or longer periods. If you don't “place” your money somewhere, no one will pay you for its use. Even though I have frequently been an over-saver, in order to have periods free of labor and full of study, I know this mostly through speculation and hearsay, as the interest I have accrued in my lifetime with my chosen “placements” has been unmentionably small change (inflation considered, often a negative interest rate, like “free” money). And if you want to use someone else's money, you have to pay them positive interest for the privilege. Hot money is magical; it often receives over-market interest rates, and yet is relatively free of the viscosity that usually goes along with the presence of interest. The magic without magic associated with hot money is due to systemic partitioning, to boundaries that long ago established differential “initial” conditions which have historically summed to the present array of superposed internalities and externalities (characterized with econometric difference equations). Hot money moves between systemic partitions seeking to better itself through playing across the fault lines the partitions delineate. The “play” is a very interest-filled movement toward and away from perceived risk and expected gain. The velocity of hot-money-condemned is that on a unidirectional vector: movement away, not toward. No one condemns hot money when it arrives -- at whatever velocity. One of Gisell's intents in creating the notion of “free” money is to slay the dragon of unending growth. This, he felt, could be accomplished by creating circumstances whereby money would increase in velocity bidirectionally: both toward and away. The faster money moves bidirectionally, the less viscosity, the less accumulation, and the less unending growth. Indeed, no growth; likely negative growth, with its attendant problems.
Economic issues of unidirectionality versus bidirectionality have a natural correlate in the “partition law” of cellular physiology. Speaking here of the living cell of biological science, that is (a rather arrogative way to put it, the reader must countenance). It could validly be said that one of the objectives Gesell hoped to achieve with “free” money was establishment of an equilibrium distribution of economic value. We'll get back to value in a moment. “Free” money, by making accumulation of money (not necessarily goods, gold, gems, illicit drugs, black market interest) impossible (thereby necessitating government maintenance of a very broad blue line, as history of “prohibition” informs us), will assuredly redistribute money (maybe even value under some definitions) until some equilibrium distribution is achieved. Inside the living cell the concentration (accumulation) of some solutes is higher than the surrounding medium; for other solutes, the concentration (accumulation) is lower than the surrounding medium: these differentials being largely responsible for the potential difference, the voltage, associated with cellular life, absence of which is associated with cellular death. Capital accumulation in economics -- capital treated as a bulk phase -- is sort of like edema in cell physiology: both involve unidirectional adsorption, a viscosity in movement away. The cell pays over-market interest (through the good offices of ATP). Concentration lower than the surrounding medium, biologically, involves partial exclusion (which the “partition law” describes), viscosity in movement toward. The cell pays lower (sub-market) interest. The Troshin equation describes both of these directionalities in a single statement. “Free” money, in paying negative interest, would altogether remove both forms of viscosity, thus increasing velocity of monetary motion toward and away, while orchestrating an equilibrium distribution -- at the expense of depleting potential difference, the voltage of economic life. The act of removing all viscosities would be tantamount to using a sledgehammer on processes of spontaneous order operative in the very nature of exchange processes.
What, by contrast, is socio-economically optimizing (though certainly not utopian) is development of the capacity for self-organization of the modulation of various classes of viscosities according to well-tempered macro-goals that delicately adjust the micro-goals of market actors. Gisell is correct in imagining that velocity of money in movement presents an “instrumental inference” (to borrow a term coined by economist Adolph Lowe) in regards to modulation of viscosities. He was also prescient in dwelling upon the nature of economic value and pointing out that absence of insight into the properties of such value signifies a fundamental failure of economic thought. Well-temperament in macro-goals (such goals being altogether disallowed, scoffed at, even, by contemporary “free” marketeers -- this “free” also being a black propaganda term) surely must have some important connection with economic value (a notion also disallowed by “free” marketeers), that value which self-organized modulation of viscosities would constantly be redistributing into one or another non-equilibrium phase such that the alternating current of economic cycles is optimally smoothed. This current would be a 3-phase AC current, as the modulation operators would involve effects on, not only velocity of money in movement, but also acceleration and time rate of change of acceleration of money in movement (rates, rates of rates, and rates of rates of rates being the time-ordered information quanta of what I call an “autopoionomy”: quantum mechanics, according to David Bohm, being a theory of “clocks within clocks within clocks”, clocks treated as waves, waves treated as clocks: in economics, cycles). Velocities map intrasystemic flows, providing instrumental inference primarily concerning carrier functions. Accelerations map intersystemic flows (having much to do with externalities and origin of business cycles), while time rates of change of acceleration map self-referential non-orientabilities (what George Soros has employed the term “reflexivities” to designate, and which involve expectations and their Heisenberg-like subversion of linear-time reference by virtue of the m-logically-valued properties of the involved self-referential propositions). Successful such modulation (particularly in regards to accelerations) would have profound effects relative to preventing extreme disparities of benefit without imposing thermodynamic equilibrium, which is the very definition of death. Successful such modulation (particularly in regards to time rates of change of acceleration) would have profound effects relative to the issue of unending growth, a growth which presumes a linear-time reference that is non-subvertible. This rate-of-the-rate-of-the-rate order of modulation would decisively engage what economist von Hayek called the “time-shapes” of total capital stock, a particular reading of which sets the “initial” conditions of economic partitions historically imposed (anthropic principle). For a fuller account of the universalistic roles played by these three dynamic variables see our paper entitled “Toward a General Theory of Process”.
Let's hear from our novel The Moon of Hoa Binh concerning the properties of economic value. Excerpted from pages 541-43, Vol. 2, wherein a discussion in Kyoto is recounted:
“Quantum economics!” Yoshio blurted out enthusiastically.
“Autopoionomy,” Derek suggested. “Newtonian perspectives begin on the left with anarcho-syndicalism and span to the right terminus at anarcho-capitalism; stepping off this narrow Newtonian wafer into the vast deep of the quantum sea, one discovers autopoionomy.”
“Hmmmm.” An atmosphere filled with musings.
“And,” continued Derek, “the central hypothesis is an allelotropic theory of value: rooted in relative-state, superintegration, overdetermination.”
“Allelotropic?” asked Ilse, harping back.
“Yes,” Derek affirmed. “Allelon: of each other. Trope: a turning. Value is a measure of the three factors I mentioned: relative-state, superintegration, overdetermination. It's the quantum potential in an autopoionomy: an economic process self-organizing on the basis of quantum principles. Value is a measure of the capacity to integrate the subsystem-system-supersystem composite. A wave function would be required to represent it. Value is the index of a turning to each other; it is a metaphorical embodiment -- an allegorization -- of the 'other-awareness', as I like to say… economic value being only a special case of the general principle having applications in physics, sociology, sexology, ethics, metapsychology, and so on. Behaviors that exhibit value are allegiant: loyal.”
“But how would it work?” asked Ilse.
“Movement of money through the system composite is information pulling activity after itself,” said Tadao. “The flow of capital in pursuit of gains draws resources in its wake. It is the movement of exchange that is the information about the total structure of the autopoionomy, not the unit price itself. Capital movement creates a field of activity: resource allocation. Using the electron analogy, movement of charge creates a magnetic field which is a system of event gradients. If money stands still there is no field of activity; if an electron stands still there is no field generated. Each electron carries multivalued information characterizing the total state of the system of which it is a part; that is, the integration of the system's component processes. Self-organization results from the quantum properties of electrons, which require a wave-function to describe.”
“The single-value attached to metal and currency,” said Derek, “would continue to be a supply and demand determined price relation of commodities, including labor. But the weight-system for the allelotropic computerized multiple values of the exchange unit would be self-regulated on the basis of preference functions and optimization criteria. Planometrics would be tied to econometrics in establishing modal micro-goals and sanctions in the market as an expression of non-equilibrium transitions in autopoionomies.”