During the Occupy Wall Street protest of 2011, famed economist Paul Krugman used his New York Times op-ed column to explain that If Banks Are Outlawed, Only Outlaws Will Have Banks:
“The crucial thing is to understand what banks do. And it’s not mostly about money creation! Instead, what banks are for is helping to improve the tradeoff between returns and liquidity.
“Like a lot of people, my insights draw heavily on Diamond-Dybvig (pdf), one of those papers that just opens your mind to a wider reality. What DD argue is that there is a tension between the needs of individual savers — who want ready access to their funds in case a sudden need arises — and the requirements of productive investment, which requires sustained commitment of resources.
Banks can largely resolve this tension, by offering deposits that can be withdrawn on demand, yet investing most of the funds thus raised in long-term, illiquid projects. (…)
The problem, of course, is the vulnerability of such a system to self-fulfilling panics: if people believe that a bank will fail, everyone will in fact want to withdraw funds at the same time — and because the bank’s assets are illiquid, trying to meet those demands through fire sales can in fact cause the bank to fail.
This then leads to the need for policy: deposit insurance and/or lender of last resort facilities to head off bank runs, and bank regulation to reduce the moral hazard from these explicit or implicit guarantees.
So, according to Professor Krugman’s defense of Bagehot banking, the alleged purpose of banks is to resolve this “tension” between the need of individuals for ready access to their funds, and the “sustained commitment of resources” required for “productive investment”. The banking system — designed in the 17th century — can “largely” resolve this tension, but is vulnerable to bank runs, and so requires complex regulation, and deposit insurance and/or central banks to support it.
Here is an alternative solution to the Diamond-Dybvig-Krugman “tension” problem.
By giving everyone a tool to create ‘money’ in the same way that banks do — by simple double-entry bookkeeping — individuals can always have ready access to funds, and make sustained commitments to productive investments. No vulnerability to bank runs. No need for complex regulation, deposit insurance, or a “lender of last resort”.
“Tension” problem solved.
This is, after all, the 21st century Paul. Things have moved on a bit.
The inversion of values can be traced back to the ancient Semitic empires of Mesopotamia, and the fertility cult worship of Inanna-Ishtar, goddess of Sex and War, the “Queen of Heaven”:
Central to the goddess as paradox is her well-attested psychological and more rarely evidenced physiological androgyny. Inanna-Ishtar is both female and male. Over and over again the texts juxtapose the masculine and feminine traits and behavior of the goddess.1
Her androgyny (also) manifests itself ritually in the transvestism of her cultic personnel. The awesome power of the goddess shows itself in the shattering of the human boundary between the sexes: “She (Ishtar) [changes] the right side (male) into the left side (female), she [changes] the left side into the right side, she [turns] a man into a woman, she [turns] a woman into a man, she ador[ns] a man as a woman, she ador[ns] a woman as a man.”2
The most vivid expressions of the goddess’s innate contradictions appear in the following passage:
To destroy, to build up, to tear up and to settle are yours, Inanna….
To turn a man into a woman and a woman into a man are yours, Inanna….
Business, great winning, financial loss, deficit are yours, Inanna….3
“To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in them both, to use logic against logic, to repudiate morality while laying claim to it (…) To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality.”
— George Orwell, defining “doublethink”, 1984
Within a few centuries, the new capitalist spirit challenged the basic Christian ethic: the boundless ego of Sir Gales Overreach and his fellows in the marketplace had no room for charity or love in any of their ancient senses. The capitalist scheme of values in fact transformed five of the seven deadly sins of Christianity – pride, envy, greed, avarice, and lust – into positive social virtues, treating them as necessary incentives to all economic enterprise; while the cardinal virtues, beginning with love and humility, were rejected as ‘bad for business,’ except in the degree that they made the working class more docile and more amenable to cold-blooded exploitation.4
— Lewis Mumford, Myth of the Machine
“Today, many nations are revising their moral values and ethical norms, eroding ethnic traditions and differences between peoples and cultures. Society is now required not only to recognise everyone’s right to the freedom of consciousness, political views and privacy, but also to accept without question the equality of good and evil, strange as it seems, concepts that are opposite in meaning. This destruction of traditional values from above not only leads to negative consequences for society, but is also essentially anti-democratic, since it is carried out on the basis of abstract, speculative ideas, contrary to the will of the majority, which does not accept the changes occurring or the proposed revision of values.”
— Vladimir Putin, Presidential Address to the Federal Assembly, December 12, 2013
* “And Cush begat Nimrod: he began to be a mighty one in the earth.
He was a mighty hunter before the Lord: wherefore it is said, Even as Nimrod the mighty hunter before the Lord.
And the beginning of his kingdom was Babel, and Erech, and Accad, and Calneh, in the land of Shinar.”
This article by request for Renegade Inc – For Those Who Think Differently
As the election results poured in, usually dour Russians sat in their favourite cafes, beaming smiles, shaking hands, and cheerfully buying each other coffees, united by a common feeling of relief and celebration.
“Ok, so Hillary won’t nuke us after all.”
America’s new President-elect had pledged to “get along great” with Russia. To cooperate, rather than compete. To trade, not fight.
To Russian ears these words were music to rival Rachmaninov, Shostakovich and Tchaikovsky. Russians wanted Trump, because they do not want war.
Renegade economist Sergei Glazyev aptly described Hillary Clinton as a symbol of war, reflecting that “Americans had two choices: World War Three, or multilateral peace.”
Behind the hand-wringing cries of a “shocked” western Establishment, one can almost hear the sounds of the US neocon warmongers’ Project For A New American Century beginning to rattle in its own death throes, and a new New World Order being born. As professor of political economy Mark Blyth observed, “The era of neoliberalism is over. The era of neo-nationalism has just begun.”
In the week since, more “Russia-friendly” presidents have been elected in Moldova and NATO member Bulgaria. Expectations are rising that so-called “populist”, “nationalist”, and “pro-Russian” parties and presidents may well be elected in the Netherlands, Italy, France, and Germany. The very heart of Western Europe — that of ordinary people — appears to be turning to Moscow.
Prompted by the election of “drain the swamp” Donald Trump, in Russia too a long-awaited “purge” of powerful comprador elite neoliberals — the “Fifth Column” in Vladimir Putin’s government — may now be on the horizon. Minister of the Economy Alexei Ulyukaev has just been detained, subject to an investigation on serious bribery charges. Rumours are flying that more will be arrested or removed from high office shortly*. In a radio interview on Tuesday, economist and former government advisor Mikhail Khazin implied that other high flyers likely to fall include Dmitry Medvedev’s Deputy PM, Arkady Dvorkovich.
Former politician and director of the Problems issued by Globalization institute (IPROG), the economist Mikhail Delyagin says that with the election of Donald Trump, the “liberal clan” formed within Russia’s elite during Bill Clinton’s 1993-2001 presidency has now lost its western backing. Like Sergei Glazyev (A Genocide: Russia and The New World Order), he argues that after the dissolution of the Soviet Union, the new Russian Federation formed a hybrid state, in which foreign and internal policies are “largely” patriotic but socio-economic policy (under the powerful neoliberal elite faction) has been a “national treason”. Delyagin predicts that the Minister of Finance, Anton Siluanov, and the head of Russia’s Central Bank, Elvira Nabiullina, will also lose their jobs.
While still invisible to many, Trump’s election marked what was so necessary for humanity; a turning point. A deeper reason for change. It coincided with the revival of “The Russian idea”.
Known to everyone who ever read Fyodor Dostoevsky, this idea became the case study for Russian philosophers such as Nikolai Berdyaev and Ivan Ilyin (a favourite of Vladimir Putin). “The Russian idea” offers a unique way of peaceful co-existence between different nationalities and cultures. It is an idea of higher unity that until today had only existed in the hearts and souls of Russian people. But now, it appears, it may become key to the salvation of us all.
The Russian idea holds no room for the radical individualism of the West, or such notions as an “indispensable nation” or “God’s chosen people”. There is no hierarchy or separation between “us” and “them”. One cannot be happy unless the whole of humanity is saved. Viewed in cosmic unity each person should be concerned for the well-being of every other. The same with nations.
The enormous land mass of Russia, so rich in natural resources — and so inviting for foreign invaders — forms a kind of world bridge between the West and the East. So too the Russian people embody a natural, human bridge between cultures. Many famed philosophers, historians, saints and seers — and not only Russian ones (e.g., Oswald Spengler, The Decline of the West) — have long predicted that this is precisely the role that Mother Russia and her people will play in the future of our world.
In a vast country containing multiple nationalities, and united by state-endorsed Orthodox Christianity for over 1000 years — 74 years of revolutionary communism a mere aberration — Russians possess a characteristic openness and tolerance toward all peoples, religions and cultures. Even more so, a desire to understand them and have a dialogue with them. That’s where you meet Dostoevsky’s famous idea of the “Russian soul” having a generosity and sensitivity to everyone – an ability to live someone else’s tragedy and joy like your own; to let it inside oneself.
This might help explain why countless thousands of Russian people prayed for the salvation of America on Election Day last week. “Russians are responsible for everyone”, Berdyaev used to say.
Highly educated — the policy of free education up to and including university remains from Soviet days — and deeply aware of their country’s tragic history, ordinary Russians can often be heard expressing a genuine empathy for the struggles of ordinary people in the West. The memory of the horrors of the 1990s — rightly blamed on their own comprador elites rushing to adopt the “Shock Therapy” economic policies recommended by their US neoliberal “advisors” — remains painfully vivid.
To many Westerners it may come as a revelation to discover that beneath the unsmiling facade, Russians are eternal optimists. Theirs is a unique, culturally-embedded optimism, born of centuries of adversity; indeed, of simply surviving.
“We can survive anything. Only we have this thing, that we can resist anything.”
The Russian people see themselves as ultimately unbeatable in the basic fight for life. This humble form of national self-belief comes from having survived everything that external invaders and those they see as internal enemies have thrown at them over centuries; from Napoleon to Lenin, Hitler, Gorbachev, and Yeltsin.
According to Ilyin, Russia is a child of historic catastrophes. Wars were brought on Russia ceaselessly. Moscow was burnt by the Tatars, Poles and the French. Soviet Russia repelled Nazi Germany at a cost of 27 million souls. But each time Russia rose back to her feet like a Phoenix, and she flourishes again. The Russian idea of everyone’s salvation was born from her catastrophic past.
Today the whole world — despite its appearance of material well-being and technological progress — is being pushed toward a catastrophe. That is why Russia’s experience in overcoming adversity offers an important example for everyone.
As the Western powers have first encircled Russia through relentless expansion of NATO, and then imposed economic sanctions in retaliation for her entirely justified (and remarkably restrained) moves to simply defend herself and protect her “soft underbelly” — those vital, historic spheres of influence on and near to the Black Sea and Caucasus — the Russian government under President Putin has responded in a very Russian way; with flair, speed, creativity, flexibility, and adaptation.
Standing ever politely (Putin: “our Western partners”) yet resolutely against an Anglo-US -centric western world that is once again, a la the 1930s, suffering the consequences of another boom-bust debt deflation, and is, once again, being driven by elite vested interests towards the creative/destructive ‘growth’ solution of another world war, since 2014’s US-sponsored ‘colour revolution’ coup d’etat in brother nation Ukraine the Russian government has calmly shifted its primary focus away from trying (as ever) to befriend the West as respectful equals, and towards increasing self-reliance and cooperation with the East.
This has proven remarkably successful to date. Russia’s economy, though struggling, has not succumbed to the West’s economic sanctions. Unsurprisingly, neither has her people responded to their renewed economic difficulties by losing faith and moving to overthrow their government (as hoped by US neocons).
On the contrary, it is the EU nations, compelled by their dominant NATO ‘ally’ across the Atlantic to impose sanctions that appear to be suffering more. Numerous regions and opposition parties within the EU (e.g., France, Germany, and northern Italy) have begun to break ranks, visiting ‘annexed’ Crimea, and calling for restoration of normal trade and economic relations with Moscow. Importantly, Russia has succeeded in establishing ever stronger economic cooperation ties with the still rapidly-growing China, along with other Eurasian, African and South American nations.
The western Establishment’s now failing economic model has striven to dominate a unipolar world order through deregulated ‘free’ (i.e., increasingly rigged) market, dog-eat-dog competition – a kind of neo-Darwinian, brutal, amoral and unconscionable “survival only of the strongest” and most corrupt.
In sharp contrast both to neoliberal globalist capitalism, and to the lebensraum (“living space”) -seeking national socialism (“nazism”) of the 1930s, the Russian way is not expansionist. Instead, it strives to survive and thrive in the spirit of prince Pyotr Kropotkin’s Mutual Aid: A Factor Of Evolution – through cooperation, and avoidance of confrontation wherever possible, in a mutually respectful, diverse, multipolar world order.
As the global balance of economic power continues to shift from the West to the East, it is the “Russian idea” and this, traditionally Russian approach to basic survival that may well come to serve as the world’s leading light, and the key to the salvation of us all.
* UPDATE 17 November: More Russian Officials Detained As Nationwide Anti-Corruption Drive Gains Momentum
Pleasures, pains and desires are by nature especially human; and from these, of necessity, every mortal creature is, so to say, suspended and dependent by the strongest cords of influence. Thus one should commend the noblest life, not merely because it is of superior fashion in respect of fair repute, but also because, if a man consents to taste it and not shun it in his youth, it is superior likewise in that which all men covet,—an excess, namely, of joy and a deficiency of pain throughout the whole of life. That this will clearly be the result, if a man tastes of it rightly, will at once be fully evident. But wherein does this “rightness” consist? That is the question which we must now, under the instruction of our Argument, consider; comparing the more pleasant life with the more painful, we must in this wise consider whether this mode is natural to us, and that other mode unnatural. We desire that pleasure should be ours, but pain we neither choose nor desire; and the neutral state we do not desire in place of pleasure, but we do desire it in exchange for pain; and we desire less pain with more pleasure, but we do not desire less pleasure with more pain; and when the two are evenly balanced, we are unable to state any clear preference. Now all these states—in their number, quantity, intensity, equality, and in the opposites thereof—have, or have not, influence on desire, to govern its choice of each. So these things being thus ordered of necessity, we desire that mode of life in which the feelings are many, great, and intense, with those of pleasure predominating, but we do not desire the life in which the feelings of pain predominate; and contrariwise, we do not desire the life in which the feelings are few, small, and gentle, if the painful predominate, but if the pleasurable predominate, we do desire it. Further, we must regard the life in which there is an equal balance of pleasure and pain as we previously regarded the neutral state: we desire the balanced life in so far as it exceeds the painful life in point of what we like, but we do not desire it in so far as it exceeds the pleasant lives in point of the things we dislike. The lives of us men must all be regarded as naturally bound up in these feelings, and what kinds of lives we naturally desire is what we must distinguish; but if we assert that we desire anything else, we only say so through ignorance and inexperience of the lives as they really are. What, then, and how many are the lives in which a man—when he has chosen the desirable and voluntary in preference to the undesirable and the involuntary, and has made it into a private law for himself, by choosing what is at once both congenial and pleasant and most good and noble—may live as happily as man can? Let us pronounce that one of them is the temperate life, one the wise, one the brave, and let us class the healthy life as one; and to these let us oppose four others—the foolish, the cowardly, the licentious, and the diseased. He that knows the temperate life will set it down as gentle in all respects affording mild pleasures and mild pains, moderate appetites and desires void of frenzy; but the licentious life he will set down as violent in all directions, affording both pains and pleasures that are extreme, appetites that are intense and maddening, and desires the most frenzied possible; and whereas in the temperate life the pleasures outweigh the pains, in the licentious life the pains exceed the pleasures in extent, number, and frequency. Whence it necessarily results that the one life must be naturally more pleasant, the other more painful to us; and it is no longer possible for the man who desires a pleasant life voluntarily to live a licentious life, but it is clear by now (if our argument is right) that no man can possibly be licentious voluntarily: it is owing to ignorance or incontinence, or both, that the great bulk of mankind live lives lacking in temperance. Similarly with regard to the diseased life and the healthy life, one must observe that while both have pleasures and pains, the pleasures exceed the pains in health, but the pains the pleasures in disease. Our desire in the choice of lives is not that pain should be in excess, but the life we have judged the more pleasant is that in which pain is exceeded by pleasure. We will assert, then, that since the temperate life has its feelings smaller, fewer and lighter than the licentious life, and the wise life than the foolish, and the brave than the cowardly, and since the one life is superior to the other in pleasure, but inferior in pain, the brave life is victorious over the cowardly and the wise over the foolish; consequently the one set of lives ranks as more pleasant than the other: the temperate, brave, wise, and healthy lives are more pleasant than the cowardly, foolish, licentious and diseased. To sum up, the life of bodily and spiritual virtue, as compared with that of vice, is not only more pleasant, but also exceeds greatly in nobility, rectitude, virtue and good fame, so that it causes the man who lives it to live ever so much more happily than he who lives the opposite life.
— Plato, Laws, Book V (732-734)
Neoclassical Economics: Creating A ‘Perfect’ Society .. In The Image Of Lucifer
I ended up finding myself being quite a believer in the whole idea of markets being equilibrating systems that bring supply and demand into balance, and all the problems of the system are caused by non-market interventions .. and when I look back on that period of my life, I realise that what economic education did at that stage was, it didn’t make me into an analyst, it made me into a zealot. You have a vision of a perfect society, and you then see your role as bringing about that perfect society by changing the real world to resemble the system you’re seeing in the textbooks. … [but] You take one step towards nirvana and you end up one step closer to hell.
— Professor Steve Keen
Quite serendipitously (thank you YouTube prompting algorithm) came across this talk by Professor Keen. A .. ahem .. perfect introduction for my postscript post yesterday, As Below, So Above: Economists Are Macro Modelling Lucifer.