Thursday, October 27, 2011

The Euthanasia of the Saver - More on Currency

Robert Hibbs chimes in with a timely review of Keynesian thought in The Euthanasia of the Saver | The Beacon:
"In chapter 24 of The General Theory of Employment, Interest and Money, John Maynard Keynes laid out his screwball idea that capital might soon become, or be made to become, no longer scarce; hence no payment would have to be made to induce people to save, and that condition would be splendid inasmuch as it would entail the “euthanasia of the rentier.” This stuff really must be seen to be believed; here is the meat of Keynes’s discussion in his own words:"
Quoting Keynes:  
"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce.
"I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution. [pp. 375-76]"
Should we economically-bomb ourselves back to the stone age?
If currency (credit and capital) are the lifeblood of Capitalism - is currency needed when Capitalism dies? What is the next best economic model to follow (Euro-Socialism?)

What is the correct leadership framework for a data-centric economy and how would you recognize that leadership? 
"Influencers"? "Klout score"? "Followers"?  "Committee Meetings Decisions"? "Mash-Up output"? "Crowd-Sourced Imagineering" "Team Ideation"? 

Bottom Line: 
I do not want my surgeon to have a high Klout score, I want my surgeon to be an expert, with plenty of education and experience. I am willing to pay for those skills (assets).

I'm still not sold on the imminent demise of currency or capitalism or the ability of OWS to precipitate either. See: Minyanville article by Conor Sen   

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