Then why have a fiat money system based upon and dependent upon infinite growth?

A debt-based money system most certainly is not sustainable.

And why do we allow externalized costs?

Could capitialism even exist if we paid as we went?

Don't think so.

MQ: "And why do we allow externalized costs?"

Um, who is 'we'? our social-democratic systems based on majority rule and income transfers from the most productive earners to the least productive workers is hardly the most efficient system imaginable. They just happen to work a lot better than many of the alternatives.

For most of our human existance the concept of externalized costs, the tragedy of the commons or shared resources was hardly even recognized. And then not universally.

Now we fully recognize these externalized cost in terms of environmental degradation, pollution, global warming, resource depletion and uncontrolled population growth, but there is no consensus as to what to do about it?

Concerned wrote:


Sorry, but your comments and insults do not even warrant a response. Believe what you want to believe. Thanks.

This is true, but for most of man's industrialized, fiat money existance, it has been well-known. We just chose to kick the can down the road and let future generations deal with it.


With the huge economic expansion since WWII, the failure to address these irrational economic distortions is now coming home to roost.



No consensus?

I care to differ. Amongst those who fully recogize the problem there is full consensus.

It has been well known that what our economic system needs to be sustainable is an honest market; one that tells the ecological truth. While it sets prices that reflects scarcity and abundance, it "externalizes" the true costs of providing those goods and services. It ignores the sustainable yield thresholds of natural systems, the ecological sinks that absorb and recycle wastes, and it shows little concern for future generations, focusing on quarterly reports for decision making.

Our capitalistic prosperity is an illusion; it is based upon running up ecological deficits that can never be repaid or passing them on to future generations.

It is selfish, short-term thinking, period.

Amongst the general population, the consensus is to ignore it. The tragedy of the commons. They are not willing to give up their high standard of living.

It's like I have been saying for years on here; we are facing asset inertia and cultural direction.

The time to pay the piper is coming.

I'm not sure compatible is the right question to ask IMO with all the directions this thing could go and all the contexts.

Debt based money system partnerships and cartels (government, corporations, banks and central banks) continue their underhanded mission of taking ownership of everything, controlling and screwing the general public.

Oil depletion is just another opportunity for wealth transfer and consolidation of power. Our debt based money system going into the oil/resource depletion abyss is compatible for large scale domination and control or at least a serious attempt of it.

IMO consider our current status quo of overpopulation and extreme consumption and the pervasiveness of drive towards an integrated global debt based model. It seems a serious solution to the overpopulation issue is the only solution that would repave the way for a stable global debt model and more importantly provide some serious buffer to the resource/energy issues.

It ain't fun to think about it but the population variable makes a huge difference in the whole equation.

compatible is the right question to ask
we need perpetual exponential economic growth for stability.
It's how the banking system is setup.

I think maybe MrBill meant to say a monetary system is about natural carrying capacity of a [macro/micro economic] system and sustainable growth.



Sure it is. However, I do agree with you insomuch as no monetary system can function if a small group of people are permitted to amass the majority of wealth.

I think you've probably seen statistics that say something to the effect that people 57 and older own/control 80% of the wealth in the US. That leaves everyone 57 and under fighting for the other 20% and obviously that kind of lop-sidedness is detrimental to any monetary system.

Your Hiltons, DuPonts, Kennedys, Rockefellers, Fords, Gates', Soros' ad infinitum ad nauseum have amassed incredible empires, mainly by hoarding wealth. Neither you nor I gain an advantage from that.

What is needed is appropriate tax/public policy laws that allow people to amass wealth during their life-time, but then forces them to return the wealth back into the system at their passing, instead of handing it over to their children.



No one "allows" them. They exist, regardless of the type of economic system or monetary system. Even if you had a barter system, you would still have externalized costs.

The difference between every other species on Earth and humans is that humans are the only species that depletes natural resources.

I'm not sure you'd be very keen on roaming around in herds munching on tree leaves and feasting on an occasional dead human/animal carcass.



Ah, now we see the problem.

You're confusing economic theory with economic systems. Capitalism is an economic theory, not an economic system. Capitalist theory posits that capital, ie the means of production, should be in the hands of private individuals/groups.

An economic system merely answers the 3 basic questions, of what shall be produced, how it shall be produced, and for whom it shall be produced.

In the Free Market system, aka the Market system, it is the market which answers those questions. The Market system is compatible with all economic theories, Capitalism, Socialism, Communism (although it hasn't been attempted yet), and other economic theories.

People who confuse Capitalism with the Market system, also seem to confuse free markets with open markets. They aren't the same.

Furthermore, people generally make the false assumption that Capitalists want free markets and like the free market system.

They do not.

Capitalists, historically, have always wanted open markets, because it is open markets that give them access to sell their goods/services.

Capitalists, historically, have always opposed free markets. The historical record is quite clear and convincing and the historical records always extends up until 1 second ago. You just have to go visit the FTC's website to see what actions are pending.

There are also several on-going actions by state attorneys general against milk suppliers who colluded to fix prices for the sale of milk and against other suppliers for collusion/price fixing.

Capitalists want access to all markets, and be able to set and control prices outside of the law of Supply & Demand, rather than allowing the market to set and control prices, or allowing a government or other group/oligarchy to set/control prices.

To answer your question, yes, Capitalism would still exist, and yes, the Market system would still exist if "we paid as we went."

The only difference is that the economy would not have grown as fast. There would be few, if any, two-income families/households, because there wouldn't be enough jobs existing to support that many workers in the economy.

Most of the economic growth over the last 20 years has been driven by the $1.3 TRILLION in credit card debt amassed by American consumers. If Reagan had not deregulated the banks in 1984 and credit cards had not proliferated, the word "Starbucks" would not be part of your vocabulary today.

Nonsense. A debt-based money system is based upon infinite growth in a finite world.



They exist only because they are not counted, and we allow that. Do you posit that an economic system cannot exist that counts the true costs? Why would there always be externalized costs?



Ok, let me rephrase that; could our level of capitalistic affluence even exist if we paid as we went? Not.

I need some economic primer or somefink...

this external cost thing is a function of reality called time

ie the space in time between a action and its effect is a deferred cost..
a animal(species) will have deferred lagged effects on the environment ..external costs, which are paid by other organisms or physical processes,

effects ,cost/benfits are all really impossible without external costs in energy terms.. thats the nature of reality

Am I right or stupid?

the boundary conditions which set up definitions of "sustainability" are time span dependent.. I suppose solar flux is assumed as forever in practical terms (for now)

and debt=leeching from external sources..which deplete in the finite
reality we find ourselves in

therefoe for external cost to have MQ's meaning they must represent what?

Boris
London

All financial systems are debt-based in one way or another, even the barter system, and all are predicated on the assumption of infinite growth. I said it was sustainable, not desireable. If anyone has a superior system, I'm willing to entertain suggestions.

We could go back to the gold standard, or silver standard or even the urine standard, but it would be very traumatic.

It would require obtaining a national consensus on a number of core value issues, such as the role of gender in society, age discrimination and the length of time people can work, expectations of retired workers, and the expectations of society as a whole, particularly with respect to social services.

And then society would have to be re-educated to accept the new core values.



They exist only because they are not counted, and we allow that. Do you posit that an economic system cannot exist that counts the true costs? Why would there always be externalized costs?[/quote]

They aren't counted because they are sometimes unknown, and often they exist as elusive variables. Admittedly, externalized costs sometimes arise because of poor planning, bad policy or inefficient operations.

If you want to factor externalized costs into the price of something, you first have to qualify the costs, then quantify them, then determine who should bear the costs and apportion the costs appropriately.

How many layers of bureaucracy would that take, how much would the bureacracy cost and who should pay for it?



I dare say most people would still be enjoying meatless dinners 2-3 nights a week, like they did up until about the 1970s. Having been at the local deli recently, I couldn't help but notice that Hot Souse and Chitlins aren't big sellers anymore, and I'll bet most people nowadays don't eat pork rinds while watching TV (typically at the home of one of the few neighbors on your street that had a TV -- and hopefully that neighbor was on the same telephone party line with you -- for convenience of course).

However, the Capitalists themselves would still enjoy a great deal of affluency.

ok.sorry for butting in..

are we being too mr nit picky...

isn't just a case of factoring the prominent external costs.. eco impact.. the cost of replacing the resource whatever rather trhan getting everything down from the get go.

the restructuring topic and this are related

post PO/Pfossil fuels economics really equates to an adjustment not a complete practopia for all future history.

surely the degree of disagreement is really how far ahead your definitions apply

nothing is sustainable in a absolute sense and some things are not sustainable in the short term..
your use of sustainable is in some ways unhelpful because its reaally another term for self correcting

animall/species behavior feeding back into the environment produces a sustainable ecosystem but the species itself may trigger events that see it go extinct.. from a pov of selection sustainability is linked to a system wider than ourselves..

this is not a helpful definition

sustainable in this context must equate to comfy/bearable living for a sustainable number of humans.

as you say the market is always correct .... if there is a famine people starve and the price of food goes up

I wouldn't call that a solution thou

I think you two are talking across each other to great extent

as for your demand on consensus(debate) gender roles etc etc..well why not?

Boris
London

How can something based upon infinite growth be sustainable?

"Sustainable growth" is an oxymoron.

Under our current paradigm, there is no superior or better system.

The only system that works is the one Mother Nature uses, which we need to learn to respect, accept, and implement.



Bullshit! Most, if not all, externalized costs are known in time. And we have had plenty of time for them to become self-evident. Smokestack effluents, industrial discharge of toxic wastes into rivers and streams, ICE exhaust that lead to smog, pesticide residues; all known for years and all externalized to avoid the true cost of our industrial production.

In some cases we have started to address them with the implementation of NEPA, the Clean Air Act, Clean Water Act, Endangered Species Act, etc.

But not enough to correct or internalize the problems and costs. To do so would impact "economic growth."

"Business" has fought these measures tooth and nail.

Global warming.
Loss of biodiversity.
Massive pollution.
Degrading water and air quality.
Rising health costs.
The list goes on.



We all should pay for it. But that would take a powerdown, restricted per capita consumption, restricted production, and reduction and stabilization of the population. It would entail an ecological paradigm where we accept the limits of our production dictated by nature's limits, not supply/demand.

In other words, a much lower standard of living as we know it, but most likely, a far better quality of life.

All things we are not willing to factor into the "equation."

In this day of salespeople practically chasing down everybody including beggars to open new credit card accounts, it may seem like an alien concept, but you know, in the misty depths of antiquity, there were income checks for any kind of loan and collateral must be given. And the bank could foreclose on any non-performing loan.

In an age of permanent economic contraction, banks can revert to this secure way of operation. They can still give out loans with interest rates, and some people will even be able to pay back these loans--oil companies anyone?--but for the majority of loans, the banks make their profit by selling the collateral. They will require the collateral to be much higher in value than the loan they are giving out, because everything will be depreciating over time. A company might, say, borrow money to set up a new branch, but in the end the whole company may be sold for little more than what a single branch is worth.

In this way, banks can serve as the engines of economic implosion even while continuing to rake in profits.

What do you think?

P.S. In reviewing this thread I saw that you provided convincing arguments that in a permanent recession 'there won't be money to go around' and hence the monetary system will collapse. (I'm going by the poll title 'Is a debt-based monetary system compatible with oil depletion?' here; during the discussion, WHAT exactly is supposed to collapse or not collapse becomes less clear.)

(BTW: debt-based monetary system = DBMS from now on.)

To this I say--of course there won't be enough money to go around. There won't be enough good or even food to go around, so this fits perfectly. People WILL starve and die, but does that mean the monetary system will collapse?

I think we need to define what is meant by 'collapse' AND *what* is collapsing here.

1. Are we talking about whether the 'debt-based monetary system' will collapse or not? (throughout the discussion you seem to have shifted to talking about an economic collapse. I think if you are talking about the economy, it will by definition collapse in a world where production is in permanent decline. But does that mean the 'debt-based monetary system' has collapsed?

2. If we *are* talking about the DBMS, what is meant by a collapse of it?
-Does it mean that nobody will ever lend 'money' to anybody anymore? (unlikely. Would the down-and-out compulsive gambler borrowing money from loan sharks be considered a continuation of the DBMS? If so, I suspect that in a world of permanent decline this monetary system will grow and grow )
-Does it mean that the currency will fall into disuse? (probable--but a lot of other things can cause that to happen. Japanese war banknotes didn't last long in China after they lost the war, either.)
-... and is not replaced by a new currency? (a lot of questions are involved here. Would the people that overthrow the current US government institute a new DBMS of their own? If such a system is bound to fail, does that mean that any revolutionary government that institutes a DBMS is bound to fail?
-what if any and ALL forms of centralized government is unsustainable in a permanently declining world? Does that mean the DBMS is also unsustainable? Or should DBMS be considered separately from centralized government?
-... (fill in your own definition here, that would be the best thing)

OR: Are you really trying to argue that a debt-based monetary system is not GOOD for society in a declining world?

Re: Joe0Bloggs,

I think the main argument is whether or not the monetary system will colapse as a medium of exchange.

MQ's position is, I believe, based on the premise that "A debt-based money system is based upon infinite growth in a finite world." I have attempted to point out (without success) that this is a true statement as long as you understand that the infinite growth it refers to is in the money supply and not the economy. In other words moderate inflation can aleviate the problem caused by a contacting economy to the money supply.

Only when inflation gets to the extreme of hyperinflation does it cease to function as a medium of exchange. With persistant moderate inflation people might not even recognize that the economy is contracting since inflation is currently deliberately under-reported.