 
Money Facts:  
Simple, Obvious, but Neglected

Bob Blain, Ph.D.

Sociologist

Emeritus Professor

Southern Illinois University Edwardsville

Copyright Bob Blain 2014

Smashwords Edition

ISBN 978-1-311980-17-5

Table of Contents

Overview

Chapter 1. Money Facts: Simple, Obvious, but Neglected.

Chapter 2. A Metric for Money: Unity in Diversity

Chapter 3. Cooperation; The Wealth of Nations Game

Chapter 4. From Autonomy to Policy

Chapter 5. Bell the Cats

Chapter 6. Capitalism Has No Brakes

Chapter 7. Lifetime Economics

Chapter 8. Economic Democracy

Chapter 9. Looking Backward Again

References

About the Author

Bob's Other Books

Connect with Bob Online

Overview

In this book you will learn the money facts that can make money work better. The key is understanding money as a medium of communication that strangers use to cooperate. The economic simulation, Cooperation: The Wealth of Nations Game shows that an economy with money created debt-free and its value defined in work time is superior to barter, socialism, and capitalism in producing economic well-being. It explains why capitalism can't stop and how economic democracy is the natural next step in the evolution of democracy. With money properly understood and instituted, we can have local and global markets that are both fair and free.

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Chapter 1. Money Facts: Simple, Obvious, but Neglected.

Four simple, obvious but neglected money facts are: 1) Money is a note; 2) New money has seigniorage, 3) Percents increase inequality, and 4) Money has no unit that defines its value.

1. Money is a note.

Here is an example of money. Obviously, it is a note.

It is words, pictures, and numbers printed on paper. Could anything be simpler and more obvious? It is a neglected money fact because it is not explained as a note.

What is a note? The dictionary I have defines "note" as "a brief record of something, written down to aid the memory." Money is a note to aid the memory. If so, then what is it that money helps us to remember? We answer that question by observing how money is used.

Person B works for person A who has nothing that B wants, so person A gives person B money. Person B then passes the money on to person C who gives person B commodities B wants in exchange for the money.

What is the money doing?

The money is conveying a message from person A to person C that person B deserves to be paid. Although we are in the habit of saying that a person is "paid" when they receive money, Person B was not paid when B received the money. Person B gets paid when B passes the money on to C in exchange for commodities. The commodities are the actual pay. It is person C who pays B for the work B did for A. You could call this the essential ABC of money.

What, then, is the money note remembering? It is remembering that B is owed for the work done for A. In general, money's job is to remember who has contributed to our collective household that we call the "economy" and thereby earned the right to be paid an equivalent of what they contributed.

Notice that C did not need to know what B did to earn the money, nor was it necessary for C to know person A. Money is not a personal note. It is a general note – for everyone – and it is anonymous – except for the markings that tell people the authority that put the money into circulation. In general, a money note is used to communicate a message from one stranger, A, to another stranger, C, neither of whom are present at the same time and place. And it is a note that needs to be understood by many different kinds of specialists.

In the poetic words of Marshall McLuhan:

Like words and language, money is a storehouse of communally achieved work, skill, and experience.... Even today money is a language for translating the work of the farmer into the work of the barber, doctor, engineer, or plumber. As a vast social metaphor, bridge, or translator, money—like writing—speeds up exchange and tightens the bonds of interdependence in any community. It gives great spatial extension and control to political organization, just as writing does, or the calendar. It is action at a distance, both in space and in time. In a highly literate...society, 'Time is money,' and money is the store of other people's time and effort (McLuhan, 1964:136).

The difference between a government legal tender money note and a personal check "money" note is that a national government validates legal tender whereas a personal check usually requires additional validation such as a driver's license or photo ID. Consequently, government legal tender is more widely accepted than personal checks.

2. New money has seigniorage.

Seigniorage is the difference between the cost of printing a money note and its face value. A $1 Federal Reserve Note costs about three cents to produce. It buys 100 cents of product. Its seigniorage is then 100 – 3 cents = 97 cents. A $10 note also costs about three cents to produce. The seigniorage for each $10 bill spent into circulation is $9.97. The seigniorage for each $100 bill is $99.97. Seigniorage is huge when you consider that the federal Bureau of Engraving and Printing prints billions of dollar bills. Some replace worn bills, for which there is no seigniorage because that occurred when they were initially spent into circulation. New bills spent into the economy as additions to the money supply have seigniorage equal to the difference between three cents and the face amount on each one.

Who gets the seigniorage?

Only the first person or organization to spend new money into circulation gets the seigniorage. After that, the money circulates at face value. This money fact is simple and obvious but also neglected.

If banks owned privately by stockholders introduce new money into circulation, they get the seigniorage. This is an enormous "profit" considering that it takes very little effort, a few keystrokes on a computer, for banks to create new money as loans entered as the borrower's new bank account. If banks create the money, bank owners get the seigniorage.

If government creates the new money, the seigniorage goes to the government, saving taxpayers huge amounts of money not only in what seigniorage buys but also in interest that does not need be paid.

How much money do private banks create and how much do governments create? I have not found the answer to that question. A favorite topic of economics textbooks is how banks can multiply the amount of money they create by pyramiding loans by means of "fractional reserves" (Taylor, 2007: 584-590). But I have not found there the proportion of money created by banks and the proportion created by the government.

Taylor's textbook in its fifth edition is 800 pages. I cannot find seigniorage anywhere in it. I looked in the Table of Contents, the glossary and the index; nowhere is seigniorage mentioned. How could such a huge "profit" from money creation be overlooked?

Maybe it is because economics and government are taught as entirely different subjects. Taylor tries to explain why the invisible hand of the free market is superior to the visible hand of government in his Chapter 27 on monetary policy. It is best, he writes, for central banks to be independent of government because democratically elected representatives will reduce interest rates to increase investment to reduce unemployment to get re-elected. What is wrong with that? According to Taylor, it is beneficial only in the short run because it will cause inflation in the long run. What is Taylor's evidence? Figure 27.1 on Taylor's page 698 shows GDP rising in the short run followed by prices rising in the long run. However, Figure 27.1 restates Taylor's claim; it is not evidence that the claim is valid.

Taylor shows bias against government in what he does _not_ say about money; namely, that it is legal tender. The United States dollar has printed on it, "This note is legal tender for all debts, public and private." That legally binding statement means a merchant within the United States cannot refuse to accept United States currency as payment for what he or she is selling. I could find no mention of the legal tender feature of money in Taylor's textbook. Banks apparently get and government loses the seigniorage of new money.

Seigniorage from government creation of money is government's prerogative and greatest creative opportunity because it means that government can spend new money into circulation for people to produce valuable public goods and services like roads, water systems, and schools. Those goods would then belong to everyone.

The colonies in North America issued their own money until forbidden to do so by the British Parliament. After declaring independence from Great Britain, the Continental Congress financed most of the Revolutionary War with paper money that it emitted under the Articles of Confederation (Zarlenga, 2002:433ff). However, the drafters of the Constitution deleted from its first draft the power of Congress to issue money (U.S. Constitutional Convention, 1787: 341,413-414, 477-478). The First Congress under the Constitution then gave that power to privately owned banks (The American Iceberg, 2012).

Privately owned banks are the most prosperous institutions in our society while individuals, corporations, and governments, including the Federal government, are sinking under a growing burden of debt. When in 1791 Alexander Hamilton was advising the First Congress to grant a charter to private bankers for the First Bank of the United States, Thomas Jefferson urged President Washington to veto it in these words:

If the American people ever allow the private banks to control the issue of currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered (Turner, 1966:12).

A national government should never borrow money; it has the authority and duty to create whatever money is needed to mobilize people and material to add real treasure to society such as water supply and sewage facilities, transportation, education, and health care. To do otherwise is to neglect the simple and obvious money fact that the first to spend new money into circulation gets the seigniorage.

Don't you wonder why a fifth edition economics textbook does not so much as mention seigniorage? And what makes bankers presumably so much wiser than elected government officials? And why is economics taught independently of political science? Money governs us in just about everything we do, what we eat, where we live, and how we spend our time. Banks govern money, yet banking is not taught as part of political science while economists applaud bank independence from government.

3. Percents increase inequality.

Another simple, obvious but neglected money fact is that the use of percents with money increases economic inequality. Here is a simple example. Increase $1 by six percent and you have $1.06. Increase $2 by six percent and you have $2.12.

Example: $1 + 6% = $1.06

$2 + 6% = $2.12.

The initial difference between $1 and $2 was $1. After the increase, the difference is $1.06, six percent larger. The difference increased by the same percent as the percent that each amount was increased. A little algebra shows why.

If _a_ and _b_ are multiplied by _c,_ the difference ( _a – b)_ is increased by _c_.

ca – cb = c (a – b).

Percents increase differences by the same percents. Mathematically, any set of unequal numbers increased by the same percent will become more unequal by that same percent. This is a simple, obvious but neglected mathematical fact about money with serious implications.

We use percents to measure inflation. We then make wage and salary "cost of living" adjustments using the same percents. This practice may seem fair, but it increases income inequality by the same percent. Figure 1.1 shows how differences in wages per hour of one dollar grow with annual six percent increases over 60 years.

The example starts with wages per hour of $5, $4, $3, $2, and $1. The difference between the top rate of $5 an hour and the bottom rate of $1 an hour is $4. With increases of six percent per year, sixty years later the bottom rate of $1 an hour has grown to $33 an hour, which seems like a substantial improvement. However, the top rate of $5 an hour has grown to $165 an hour. A difference of $4 grew to a difference of $132.

Percents used to measure inflation and to give raises helps to explain why wages and salaries have grown astronomically unequal. We need not wonder why the incomes of athletes, movie stars, and CEOs and lottery prizes have grown to millions of dollars. It did not happen overnight; it happened at the rate of a few percentage points a year, year after year after year. Percents would be fair if people were charged percents when they purchased goods and services, but they are not. They are charged dollars. Let me explain.

The cost of living is a dollar amount, not a percent. Suppose that the dollar cost of living 60 years ago, 1952, corresponded with the middle amount in our example, $3 an hour. Working 40 hours a week for 50 weeks, $3 an hour would be an annual income of $6,000. With six percent annual inflation, that $6,000 would need an additional $360 to purchase the same goods and services in 1953.

With the same percentage increases, incomes below $6,360 fell further below the dollar cost of living while incomes above that dollar amount rose further above it. Take the person making $2 an hour for an annual income of $4,000. That person was $2,000 short of the annual dollar cost of living that we assumed above to be $6,000. Give the $4,000 a year person a six percent raise to $2.12 an hour, for an annual income of $4,240. Now that person is $6,360 - $4,240 = $2,120 below the dollar cost of living. If you were that person, you might have thought that your raise kept your relative position unchanged. Instead, you had fallen another $120 dollars below the dollar cost of living.

Meanwhile, what happened to the person paid $5 an hour, $10,000 a year? Before the raise, they were $4,000 above the dollar cost of living. Their six percent raise was to $5.30 an hour, $10,600 a year. Now he or she is $10,600 - $6,360 = $4,240 above the dollar cost of living. If it were you, you would probably have felt that you were getting ahead, and it would have been true. You would have been an additional $240 above the dollar cost of living.

Such increases in income inequality can be easily overlooked from one year to the next. However, they add up. We are astonished by the huge incomes of top level executives. They did not become that huge in one year. Step by step, year after year, they grew more and more above the dollar cost of living, increasing discretionary income. Discretionary income translates into political power.

Persons above the dollar cost of living gain more discretionary income to do whatever they want, including influence public policy, the further above that cost, the greater their influence. On the other hand, persons below the dollar cost of living have no discretionary income to influence public policy in the first place and fall further behind the dollar cost of living becoming power-less in the process.

What would you have done if, in spite of regular raises, you were falling further and further below the dollar cost of living? I imagine that you would at least be confused. Maybe you would have taken a second job. Maybe your spouse would have entered the labor force. Maybe you would have put more expenses on credit cards. If nothing else worked, crime might be an option. Many people have chosen these various options. Percents for measuring inflation and giving raises help to explain why these strategies became necessary.

Another corollary of dispersing incomes is that feeding the increases at the top of the hierarchy drains more and more money from more and more people at the bottom. From where does the money come to give a CEO a million dollar raise? It could come by giving $1 less to 1,000,000 people. We can only guess how many millions of workers received less in their paychecks to finance the rising top incomes and how many lost their homes as a direct or indirect result.

4. Money has no quantity to define its value.

The most important simple, obvious, but neglected money fact is that money has no quantity to define its value. To see this fact, we must recognize the difference between a note and the things to which a note refers. If I send you a note that our meeting will be February 10 at 8 AM, you know that the note is not itself "February 10 at 8 AM." The note is a reminder of the date and time; it is not actually itself the date and time.

What would you need to be on time for the meeting? You would need a calendar and a watch. If no one had a calendar or a watch, it would truly be a matter of trial and error for anyone to get to a meeting on the correct date at the correct time. You might be able to estimate the time approximately using the position of the sun, but how would you know what "8 AM" meant? And how would you know what "February 10" meant? Your ancestors and mine invented instruments for measuring dates and times so we could coordinate our meetings.

Measurement is one of mankind's oldest and most practical activities. It is, in fact, an essential tool for survival – it is often said that what can't be measured can't be managed (Joseph, 2005).

Yet with money, we are told to rely on trial and error to judge its value. We can never know what our money is worth until we spend it. That means we never know how much we are paid when we receive our paychecks. The situation is similar to having fuel dispensed by pumps with numbers but uncertified as accurate.

We would not know the amount the pump dispensed. We would learn how much fuel we had received only by how many miles we were able to travel on it. Imagine having to wait until we ran out of gas to know how much gasoline we had received. Our gas gauge would be useless because whatever value it showed might or might not correspond with the numbers on the gas pump. Gas gauges would probably be unknown. Perhaps we would carry dipsticks to insert in our tanks the way we check our oil level. But what would we put on the dipstick? "Gallon" would be undefined. What could you do if you thought you had received less than your gallon's worth? You could buy your gasoline at a different station, but what good would that do?

The situation is entirely different with gasoline pumps certified by your state government as accurate. You could complain to the state agency responsible for certifying those pumps. However, you would rarely need to complain about the gallons showing on the gas pump because the pump is checked periodically and certified. But, what about the _price_ of the gasoline? We never know how much we are actually paying for the gasoline. We know what it says on the pump, but is that price correct? Are we paying too much or too little? We can only complain when the price goes up.

The quantity we need for defining the value of money is simple but not so obvious. To see it, we must interpret Gross Domestic Product, not as a measure of product, but instead as a measure of the general price level of an economy. We will do that in the next chapter.

Overall

The four simple, obvious, but neglected money facts are:

1. Money is a note.

2. New money has seigniorage.

3. Percents increase inequality.

4. Money has no quantity to define its value.

How could such simple and obvious money facts be neglected? The answer is also simple. For all of their sophisticated graphs, economics textbooks boil down to one piece of advice; make money, more money, always and in all ways make more money. Everyone wants more money, whether they are paupers or billionaires. Ironically, with no quantity to define money's value, even billionaires do not know the actual value of the money they have. Without a known quantity to define its value, money cannot remember accurately.

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Chapter 2. A Metric for Money: Unity in Diversity

Everyone needs money. In today's world, no one can live without it. Money is our link to vital goods and services, our lifeline. We produce goods and services in exchange for money and we obtain goods and services in exchange for that money. That is why it is vitally important that money function properly, which is to say, correctly.

The most elementary and complete money transaction, as you saw in Chapter 1, involves three people. Person B works for person A. For that work, A gives B money. This is the first half of a complete money transaction.

The second half is person B passing the money to person C who pays person B with goods. This completes the money transaction.

The question A, B, and C must answer is, how much money? How much should A pay B? How much should B accept? How much should C charge B? How much should B be willing to pay? These questions today have vague answers such as trial and error, supply and demand, and the market. Money is too important for prices to be left to such vague and uncertain generalities.

The first principle of exchange is that it be reciprocal, equal, _quid pro quo_ , this for that of equal price. The price A pays and B receives should equal the price of the work done. The price B pays and C receives should equal the price of the goods B receives. Such an exchange is fair and equitable. That is money's job, to communicate reciprocity.

Complicating the process is that the work done and the goods received are not the same. They are qualitatively and quantitatively different. For B to receive an equivalent for what B produced, money must communicate a price shared in common by both the work done and the goods that pay for the work. Multiply this example by the billions of people and money transactions taking place every day in towns, cities, and nations around the world and you have the money challenge facing us today. The challenge is to make money prices accurate.

There are more than 100 currencies today with names that tell us their nationality, but not their value: "dollar," "peso," "ruble," "dinar," etc. People judge the value of their national money from the prices they see in the stores and the wages and salaries that they know about, judgments that vary from person to person, place to place and time to time.

When people cross the border from one country to another, they must exchange the currency of the country they are leaving for the currency of the country they are entering. They may have no idea what the new currency is worth.

Some monetary reformers advocate returning to what was called the Gold Standard. However, only gold experts know gold by weight and karats. Most people are not gold experts, so a weight of gold would not help them to know what to pay or accept as a fair wage and what to charge or pay as a fair price for a good or service.

A message can communicate accurately only if its words are clearly defined and understood in the same way by all the people who send and receive it. Gold does not qualify. The proper unit must represent the price that everyone in the world knows to be the actual price they pay for goods and services. We expect money to represent that price. Money is a note about price; price is its referent, not itself.

One relatively new approach to defining the equitable exchange rate of different currencies is purchasing power parity, PPP. The money prices of about 1,000 similar household items in different countries are added and their totals compared. If that basket costs, say, 2000 pesos in Mexico and $1000 in the United States, purchasing power parity says that the proper exchange rate of pesos for dollars is 2 pesos for 1 dollar. While this approach makes more sense than a return to a weight of gold as the money unit, it assumes that household items are similar in kind and price across all cultures and does nothing to improve money communication within countries.

The money price unit must be something that all citizens of earth understand to be basic and essential to the production and distribution of goods and services of all kinds everywhere so that we can treat each other fairly and honestly as members of an interdependent global community. The metric system tells us what to look for.

An actual quantity defines every unit of the metric system. The meter is an actual length. The liter is an actual volume. The kilogram is an actual weight. Compared to the metric system, money today is in a state of arrested development.

We need to follow the example of the metric system with money by asking, what quantity organizes all our economic activities and how do we measure that quantity? What price do all citizens of the world across all occupations, national borders, and cultures pay for goods and services? What unifies us in all this diversity?

Time organizes all our economic activities and we measure time and work with clocks and calendars. We use time for the work day, the work week, age to begin work and age to retire, when to pay rent, mortgages, interest, dividends, and taxes. We use time to measure inflation and annual Gross Domestic Product.

The hour is stable, certain and universally used to measure work. It is not the only measure, but it is the only universal one. As Adam Smith wrote in his 1776 classic, _The Wealth of Nations_ , labor is the real price of all things; money is the nominal price only (Smith, 1963:26). Smith rejected using time to measure work, but left us with nothing in its place except shopping around and haggling in the market.

With an hour of work as their standard, A, B, and C can set their prices with accuracy and fairness. Reciprocity can be routine.

Variations in the quantity and quality of things produced within an hour can always be taken into account as we do for various reasons when people are paid half-time, full time, time-and-a-half, and double time. People can always negotiate variations in pay per hour. Money gives people that freedom, just as the meter gives people the freedom to produce things of different lengths.

Another benefit of defining money in hours of work would be seeing differences in income and wealth for what they are. For example, the GDP per hour of the United States in 2010 was $50 per hour. One year's income at that rate would be $100,000. One million dollars would equal 10 years; $10 million would equal 100 years; $100 million would equal 1,000 years of income. A recent lottery prize was $650 million, which is equivalent to 6,500 years at $50 per hour, a magnitude we cannot appreciate when expressed in dollars.

We can also express any pay per hour. For example, $100 million received in one year is $50,000 per hour, clearly too much. What could anyone do hour after hour, day after day, at that rate to justify it?

Equal Work at the Center of Currency Exchange Rates

For as long as the International Monetary Fund has published the data needed to see it, equal work time has been at the center of currency exchange rates. Here is an example for 2009.

The horizontal axis is the Gross Domestic Product of each country in its own currency divided by the hours of work that produced it. The vertical axis is each country's currency exchange rate per US dollar. Both axes are in powers of 10. They correlate r = .8998. Correlations can only go to 1.00, so a correlation of very nearly .90 is very strong. Similar strong correlations have existed for all the years that the International Monetary Fund has published the data to see it in its monthly journal, _International Financial Statistics_.

The centerline represents equal work time. If all currencies were on the center line, they would exchange for equal amounts of work time. Countries above the center line have exchange rates that are too high. Countries below the center line have exchange rates that are too low. Disparities are larger than they might appear to be because the axes are in logarithms. We can appreciate the size of the disparities by converting currency exchange rates to minutes of work. We do this conversion by dividing the exchange rate by a country's GDP per hour of work, then multiplying by 60 to convert it from hours to minutes.

Three countries below the line of equal work time in the graph and their currency exchange rate in minutes of work are: the United States ($1 equals 1.18 minutes of work), Austria (1.01 minutes), and Norway (.73, three quarters of one minute). Three countries above the line of equal work time and their exchange rates per U.S. dollar are: Moldova (29.12 minutes of work), the Philippines (25.40 minutes), and the Ukraine (21.15 minutes). Expressed in domestic currencies, these disparities are invisible. The market is said to operate as if guided by an invisible hand. You see how unequal exchange rates are because the hands of the market are invisible.

GDP's per hour all equal one hour of work. Rather than express exchange rates in dollars, which is itself undefined, internationally, we can use the ratio of any two countries GDP's per hour, which is their equal time currency exchange rate. Internationally, equal time currency exchange rates would equalize wage levels and promote accurate comparative prices that include transportation costs. In 2004 the Provisional World Parliament meeting in India, adopted the hour as the world money unit www.worldproblems.net . Domestically, GDP per hour can become the national standard of a fair wage for one hour of skilled labor. People can always negotiate variations below and above that standard. Already the hour has been adopted by communities with local currencies, notably Ithaca Hours. It remains for nations to adopt the hour as their money unit.

Money has been operating without a proper definition of the meaning of its numbers, "1," "5," "10," etc. When the International Monetary Fund was founded, members were asked to specify the par value of their currencies, but they were told to define it in gold. As a result, the IMF has been plagued throughout its history with perplexing problems that seem to have no solution. Now we can see that currency exchange rate disparities have been invisibly biased against poor countries and in favor of rich countries for the entire history of the IMF. It is time to add accuracy to the criteria for judging currency exchange rates.

Ninety years ago, economist Alfred Marshall recognized that a more exact money standard was needed.

The sway of gold and silver has, on the whole, been widened and strengthened throughout the ages: but it is in some danger of being partially superseded by an even more exact standard. For, as the arts of life progress (and indeed as a condition of that progress) man must demand a constantly increasing precision from the instruments which he uses, and from money among others: and he is beginning to doubt whether either gold or silver, or even gold and silver combined, give him a sufficiently stable standard of value for the ever widening range of space and time over which his undertakings and contracts extend (Marshall, 1929:53-54).

We can be the generation that adopts that more exact standard.

The country first to adopt an hour of work as its currency denominator will lead the world in adopting a metric for money the way that France led the world in adopting metrics for all other weights and measures. The Hour would modernize money and improve economic theory and policies.

Each country's GDP per hour can be an intermediate step from money's present undefined and troublesome condition to an hour of work as the common standard unit of price worldwide. The Hour translates into every language. "Hour" can be added to every country's currency's name, Hour Lei, Hour Peso, Hour Rupee, etc.

Then, money can operate with the same clarity, stability and accuracy as every other unit of the metric system.

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Chapter 3. Cooperation: The Wealth of Nations Game

Cooperation: The Wealth of Nations Game is an economic simulation that enables players to compare barter, socialism and capitalism to appreciate their strengths and weaknesses and then learn an economic system that uses those strengths and avoids those weaknesses to model an economy that is better than all of them in producing well-being with a minimum of work for all people who follow its rules.

I began developing Cooperation: The Wealth of Nations Game (hereafter, simply Cooperation) with my friend, Bob Gill, in 1975. By that time, I had been teaching sociology at the university level for nearly ten years. It was clear to me that some students needed more than words to understand insights that sociology offered. I had played CLUG, the Community Land Use Game, with colleagues in sociology and we did no better than our students. Our community was a complete failure. How could professional sociologists, I asked, fail so miserably at building a community? I decided then to test ideas with simulation whenever possible.

For more than 25 years, I watched students play the board game version of Cooperation. Groups of up to six students would play for four consecutive class periods. First, they played Barter: the beginner's game, then Majority Rule: the socialist game, then Making Money: the capitalist game, and finally the game that grew out of learning from the other three, Autonomy: the expert tournament game. Enrollment in the course, Sociology 200: Cooperation and Conflict, was generally 60 students, so ten or more games were played simultaneously. All told, about 1,500 students played Cooperation in those 25 years.

Brief Idea of the Game

The game object of Cooperation is for players to obtain five resources for their cities: food, fiber, wood, metal, and fuel, employing the fewest people to obtain free time points. Resource points plus free time points equals city wealth.

50 Resource points + 20 Free Time points = 70 City Wealth points

The game goal was to get what you need at the lowest cost to have wealthy cities.

Simulation over so many years allowed us to make many changes to increase the accuracy of the simulation of barter, socialism, and capitalism, then to find a system that incorporated the advantages of each system with none of their disadvantages. That system we call Autonomy. Its rules simulate lifetime economics that I explain in Chapter 7.

The game board is the middle of North America because at the time I was teaching a class on the social structure of the United States. The game now exists as a computer game that you can download free from my website, which you will find at the end of this book.

The computer version has the option of a random game board. Players can adjust the terrain types to explore their effects. The information chain theory inspired the game. The theory is presented in _Weaving Golden Threads: Integrating Social Theory_ (2010) and earlier articles.

The Information Chain Theory

The information chain theory is based on the general proposition that cooperation produces wealth, the larger the scale of cooperation, the more wealth produced.

As the scale of cooperation grows larger, however, communication becomes more difficult as messages must pass longer information chain person-to-person-to person distances involving many different specialized occupations. Two problems increase as the scale of cooperation increases: 1) Messages undergo entropy, misunderstanding, decay, disorganization and 2) The volume of information accumulates, which can overload people with too much information. To enlarge the scale of cooperation, both message entropy and volume must be reduced (Figure 3.1)

The advantages of specialization and reciprocity complicate the communication problem as the scale of cooperation, that is, the length of information chains, increases. Barter, socialism, capitalism, and autonomy differ in how effectively they reduce message entropy and how efficiently they reduce message volume.

Spoken messages convey large volumes of information short person to person distances (Figure 3.2).

Written messages convey smaller amounts of information longer person to person to person distances. A written message lacks the body gestures and variations of speech that enrich meaning. Numbers carry still less information, but longer interpersonal distances because of their simpler structure than word grammar. Money is a specialized use of written numbers to carry the least, but essential information the longest information chain distances, really around the world.

Money today is operating by the rules of capitalism. The board game, Monopoly, is a simulation of capitalism. More people have played Monopoly than any other board game. How many realize that they were simulating the self-destructiveness of capitalism?

Monopoly was based on The Landlord's Game invented by Lizzie J. Magie who applied for a patent of it in 1904. Lizzie wanted to create a way that people would understand what Henry George described in his 1879 book, _Progress and Poverty_. It is a beautifully written book of about 500 pages. Lizzie wanted to get Henry George's point across with a game.

The Landlord's Game had two parts. The first part simulated the problem; unequal exchange. The second part simulated the solution as proposed by Henry George, a tax on unearned income known as rent. Basically, the game showed the solution as tax the landlords. When Parker Brothers picked up the game from Charles Darrow in 1935, they kept the first part and dropped the second part. Monopoly became fun to win by making everyone else lose. It taught us to enjoy the problem, unequal exchange.

Bob Gill and I did not want our game simulation to teach one way; we wanted students to play to compare the three economic systems we generally talk about today, barter, socialism and capitalism. So we had to write the rules for each one. By comparing results from each system, we were able to identify the rules that work best for everyone. Those rules are simulated in what we are calling Autonomy.

As a simulation, Cooperation is the reverse of most games like Monopoly that start out easy and become more difficult as players improve their skills. Cooperation is difficult at the beginning and gets easier as players learn to cooperate. Hard at first, easier with experience, is more true-to-life than competitive games with one winner. In real life, everything is easier when everyone helps. As the Chinese say, many hands make light work.

Barter

In Barter, the beginners' game, players learn: 1) how to use the equipment, and 2) the advantages and disadvantages of a barter economy.

Barter, as a real life economic system, has two advantages; it is simple and it raises the standard of living of those with resources to trade.

However, barter has four disadvantages.

1. Each party must have extra of what the other party wants.

2. Both items must be ready at the same time.

3. Both items must be transported to the same place, and

4. Both items must be equivalent.

Each player has one city in three generations of play to get resources with people to employ producing or bartering for them.

Student Responses to Barter

After students have played Barter and the other three games, Majority Rule, Making Money, and Autonomy, I ask them six questions about each game.

1. Did you share the work?

2. Did you share the wealth?

3. Did you communicate?

4. Did you specialize?

5. Did you reciprocate?

6. Did you have wealthy cities?

Number 7 in the tables and bar graphs below reports the total percent and number of Yes responses. The respondents are 145 students from three classes in 2003. The responses are typical.

1. Shared the work, 74 percent.

2. Shared the wealth, 75 percent.

3. Communicated, 94 percent.

4. Specialized, 50 percent.

5. Reciprocated, 92 percent.

6. Wealthy cities, 66 percent.

7. Total yes, 75 percent.

Specialization was weakest, 50 percent. Barter discourages specialization. It is too difficult to have the right combination of things to trade at the same time in the same place. Players produced their own food, which was necessary to keep their cities from starving, so they had nothing to trade with each other. They specialized more in the second and third generations as they realized the benefit of bartering, namely, that each city by bartering could get a resource it did not have, which increased its wealth indicated by resource points.

Majority Rule

Majority Rule is the socialist game because all resources are owned collectively by all players. Both Barter and Majority Rule do not use money; the game goal for both is wealthy cities, which means getting all five resources, food, fiber, wood, metal and fuel for resource points, employing the fewest people to gain free time points. The differences are:

1. In Barter each player makes decisions independently while in Majority Rule everything is owned collectively and decisions must be made by voting, and

2. In Barter each player gets their own city wealth score while in Majority Rule city wealth scores are averaged and every player gets the same average city wealth score.

How did students respond to Majority Rule?

1. Shared the work, 90 percent.

2. Shared the wealth, 82 percent.

3. Communicated, 93 percent.

4. Specialized, 72 percent.

5. Reciprocated, 79 percent.

6. City wealth, 69 percent.

7. Total yes, 81 percent.

Overall, students cooperated more in Majority Rule than in Barter. That is a good thing for students to experience. Socialism is one of those words in the United States that evokes negative images so it is a good thing for students to see that socialism has benefits.

What does Majority Rule teach about socialism as a system for producing wealthy cities? It teaches that discussion can improve decisions, but not by much as shown by an improvement in city wealth of only three percentage points. Students communicated more but they did not follow the rule to vote on every decision. This reduced the discussion that might have revealed the strengths and weaknesses of different options. Voting is inefficient even in a group of only six people. It takes time and becomes tedious if done for every decision.

Without exception, students quickly abandoned voting. Instead, they switched to consensus. When someone wanted to do something, instead of proposing an action, discussing it, and voting, a player might ask, "Does anyone object if I...?" People seldom objected, so consensus, which you would think harder to achieve than a simple majority, turned out to be more efficient than voting. Consensus is efficient when people suppress their own dissent. When no one else objects, a person might assume that their concern is not valid or that raising an objection would simply delay the game.

Collective ownership and everyone receiving the same score may also have caused one or two players to emerge as leaders, even dictators. They wanted the game to move along and they probably believed that their ideas were good ones, so they began telling people what to do. The other players welcomed such assertiveness because it made play easier.

The suppression of dissent and the emergence of leaders are characteristics of real life socialist systems as Robert Michels found in his study of socialist political parties. He called it "the iron law of oligarchy." The suppression of dissent and the emergence of an oligarchy found with socialism need not be evidence of evil intentions. They are the natural consequences of the inefficiency of political democracy, everyone voting on everything.

Collective ownership increased specialization because who did what could be planned in advance and resources simply distributed to every city because the score that counted was overall average city wealth.

What about reciprocity? It was a bit lower than in Barter, 79 percent to Barter's 92 percent. In Barter, players experienced reciprocity directly because they traded one resource directly for another resource, for example, food for wood. In Majority Rule, produced resources were often distributed from a common pool. Also, because the score that counted was average city wealth, scores were improved by having the most efficient producers produce everything. The skill level of a player's cities is determined by random draw at the start of a game. Skill levels are Primitive, Pioneer, and Privileged. Primitive cities use the most labor to produce resources, while Privileged cities use the least labor.

In Majority Rule, players with Privileged cities did more than players with Pioneer or Primitive ones. This increased free time points, which raised average city wealth scores. Sometimes a player with Primitive cities did nothing, to save a few more free time points, placing a larger burden on Privileged cities.

Real life socialist economies have similar reciprocity problems. The motto of socialism makes unequal exchange a virtue: "From each according to their ability, to each according to their need." Socialist economies have been weakened by "brain drains" of professional people feeling overworked. The reciprocity problem can also be termed, weak individual accountability. Since the primary goal is that everyone gets their needs met, no distinction is made between those who work more and those who work less.

Overall, the strength of socialism as simulated in Majority Rule is encouraging people to think of themselves as members of the same group, as in it together, that the fate of each depends on the fate of all. However, its weakness is expecting political democracy to be the best way to make decisions. Instead, it leads to suppression of dissent and oligarchy. Also, giving everyone the same score weakens individual accountability.

Making Money

Making Money is the polar opposite of Majority Rule and that explains why capitalists are so opposed to socialism. It is as individually competitive as Majority Rule is collectively cooperative.

The rules to simulate capitalism were as follows.

First, the goal of the game is making money. No longer is the goal obtaining five resources with a minimum of labor. The goal is to make money. The only thing that counts at the end of game is how much money each player has; the player with the most money wins.

Second, to a capitalist, free time is a waste of time, so players were required to employ all their people in every generation or pay unemployment tax penalties. Although city wealth was not calculated, just as it is not calculated in real life capitalism, players were required to obtain all five resources for their cities or pay tax penalties for each resource they failed to get. We found tax penalties necessary to keep players in the game. The tendency was for some students to withdraw from competing. Taxes forced them to stay engaged.

Taxation also meant that players had to have money. They got money by borrowing it from one player who became banker at the start of a game by a roll of the dice. Players had to pay interest on such loans at the end of each of the three generations of play. All the money paid back to the banker, principal and interest, counted as part of the banker's money for winning the game. Sometimes a rare student would object that the rules seemed to guarantee that the banker would win. With a simple reassurance like, "Let's play and see," he or she would play.

Penalty tax money went to the government, whose president was elected from among the players by adding votes and money. Players had an equal number of voters, the 20,000 people in each of their cities. The money they had at the time of an election determined their money votes. An election in the game is called, "the Plutocracy Option" because money determines the outcome. Bankers can create as much money as they need to win an election, but this was so blatantly unfair, that players who were bankers never thought of doing it, or did it without other players knowing.

How did students respond to Making Money?

1. Shared the work, 31 percent

2. Shared the wealth, 8 percent.

3. Communicated, 73 percent.

4. Specialized, 64 percent.

5. Reciprocated, 48 percent.

6. Wealthy cities, 45 percent.

7. Total yes, 45 percent.

Making Money, it should surprise no one, is anti-cooperation. Capitalists will tell you that we need to be more competitive. They do not encourage us to be more cooperative. Students were asked which game they liked least; Making Money won by a landslide. However, some students enjoyed Making Money more than Barter and Majority Rule. They found it to be more fun.

Making Money is anti-economic in the Greek sense of economic, namely, _oikos nomos_ , household management. To beat other players, you must not think of them as members of your household. You must think of them as outsiders, strangers, aliens, even enemies, certainly competitors. Only one of you can win.

Making Money is also uneconomical in the sense of wasteful. To employ everyone, particularly in the third generation, players need to waste labor overproducing resources and building unnecessary lines of transportation. To avoid "losing money" by buying from other players, players try to produce all their own resources. This lowered specialization to below that of Majority Rule, 64 compared to 72 percent.

The banker always wins Making Money. The banker lends into circulation all the money in the game, which means the banker owns all the money. The banker also collected 10 percent interest on that money at the end of each of the three generations in a game. Is that unfair? Yes, but the purpose of simulation is not to be fair; it is to be accurate. In Monopoly, the banker is not a player to make that game fair. The purpose of Cooperation is to simulate reality. In real life the banker is a player. We do not witness the banker winning because in real life there is no "end of the game" when everyone tallies up their money and sees who wins.

Does an election overcome the banker's advantage? No, because the problem is in the rules, not in the character of the banker or the player who is elected president. The outcome is always the same because the rules dictate it. The outcome can be changed only by changing the rules. As long as the rules of capitalism remain capitalist, all players including the banker, who must maintain it, are in the debt trap.

The Debt Trap

All money in Making Money enters the game as loans from the banker. Because the loans cost interest due at the end of each generation, players collectively owe more money than exists in the game. Collectively, they are in the debt trap. They cannot all repay their loans plus interest. One player can escape the debt trap only by putting another player more deeply into it. The player on the losing end of the unequal exchange in capitalism, known as profit making money, goes deeper in debt then bankrupt. If you have played Monopoly, you have seen it happen. The banker is in the debt trap because he or she must maintain it.

Players try to beat the banker by winning an election to president and getting tax penalty and election money. The student elected president could not beat the banker because they did not realize that they had to change the rules governing money. They live in a society that operates by the same rules as in the game, so they had no idea what changes to make. Only by playing Autonomy would they learn what rule changes were needed.

Making Money is anti-cooperation. To win Making Money you have to violate every principle of cooperation: 1. Keep secrets, even lie, instead of communicate; 2. Duplicate instead of specialize; and 3. Hoard instead of reciprocate.

I almost hated to have my students play Making Money. Playing Barter and Majority Rule, they began to see how cooperation increases wealth. Then Making Money twisted them back into the competitive winner-take-all mode. Behavior changed dramatically. Voices in the room got loud with some laughter. They appeared to be having a lot of fun. However, there were changes in what they said and did.

Instead of being open and honest with other players, they lied and cheated. They hid their money. They avoided paying tax penalties if they could or paid less than an agreed price. Sometimes they tried to beat the banker by starving the banker's cities. They accepted a city dying for lack of food, because now they did not have to get resources and worry about achieving "full employment." It was all in fun, but you can see the similarity with real life in a capitalist society.

Just as it is good for students to experience positive features of socialism because U.S. culture stresses competitive capitalism as the ideal and denigrates socialism, it is also good for students to experience negative features of capitalism. Nonetheless, capitalism has positive features.

Money overcomes the limits of barter as well as the tedium of trying to make all decisions by voting. Money decentralizes decisions. Money gives players the freedom to buy from and sell to whomever they want. Defenders of capitalism emphasize freedom as its paramount virtue and in that respect they are correct. However, the freedom to make money through unequal exchange means that others will lose money and eventually go broke.

When individuals go broke, we blame them rather than the rules. As I write this, the world is experiencing record bankruptcies and job losses. We are told that it is because people took out home mortgages that they could not afford. We are not told that the fault lies with how money enters the economy. Not knowing the actual cause, Congress authorized hundreds of billions of dollars, which the Congress had itself to borrow, to bail out the banks. They should play Making Money to understand the problem. To understand the solution, they should play Autonomy.

Simulation over more than 25 years led to the rules for Autonomy. I call it the "expert tournament game" because it incorporates the best of the other three games and can be played on indefinitely with everyone winning, provided they know how to cooperate autonomously.

Autonomy

With Autonomy, the game goal returns to city wealth, meaning meeting people's needs by getting all five resources for a city with free time by employing only as much labor as necessary. Money enters the game as a grant, debt free and interest free. The numbers on the money represent work time; number of workers employed. Prices of resources, transportation, and education are set according to the number of workers that produced them. All players pay equally for building transportation and educating cities as public goods. All players vote on where transportation lines are built and when cities are educated. Unequal work and incomes occur in the first and second generations but by end of the third generation all players must end the game with the same amount of money as they started with or lose "cash balance" points for having too much or too little money. Each player's score is the average city wealth of that player's three cities at the end of the game.

How did students respond to Autonomy?

1. Shared the work, 96 percent

2. Shared the wealth, 79 percent.

3. Communicated, 95 percent.

4. Specialized, 95 percent.

5. Reciprocated, 95 percent.

6. Wealthy cities, 89 percent.

7. Total yes, 91 percent.

In cooperating and producing wealthy cities, Autonomy did better than Barter, socialist Majority Rule, or capitalist Making Money. That's why simulation is such a helpful tool. We can test different rules and see which ones work best. Here we have evidence of how we can change rules in real life to make our economic household function better than it does now.

Bar charts show the percents for each economic system.

Here are the game comparisons in words.

Autonomy combines all the good features of barter, socialism, and capitalism. Players trade with money, which overcomes the four limits of barter. Players vote and pay equally but only for public goods, which minimizes the congestion, oligarchy, and suppression of dissent in socialism. Money decentralizes decisions and players focus on city wealth, which means meeting citizen needs, instead of hoarding money. Autonomy's disadvantage is that players must learn its rules.

When asked which game they liked best, Autonomy was their overwhelming favorite although Barter received many votes. Students who liked Barter best said it was easier to play and understand than Autonomy. In Autonomy students had to calculate prices, taxes, and cash balances, making it more difficult than Barter.

The good results of Autonomy are not surprising. That is the beauty of simulation; we could change the rules until we got good rules, rules whereby everyone could win. Gone was the competitiveness of Making Money. In its place was good economics, _oikos-nomos_ , household management, where players worked together like members of one family to produce a high standard of living at a low cost of living for everyone, real wealth with free time to enjoy it.

Autonomy is a win-win economic system. Everyone benefits in the lowest prices when everyone is educated to the highest level. Everyone uses the lines of transportation so everyone pays a fair share of the cost. The requirement that everyone have an equal amount of money by the end of the game discourages hoarding the work or the money.

In Making Money, the numbers on money are not defined. Players must decide prices by trial and error, supply and demand. In Autonomy, the numbers on the money have a definite meaning. They stand for productive work time, one unit of money equals the work time of one person during one generation.

In Autonomy, there is no banker or president. Debt-free and interest-free money with a definite denominator, work time, to calculate prices reduced the need for either one. In an economy based on Autonomy, banks would exist to help people keep track of their incomes and expenditures. Government would exist to tax people to pay for public goods, like education and transportation, to prevent people from hoarding work or money, and to increase the free time people have to enjoy life by periodically reducing the hours of work for everyone.

Its name, "Autonomy" means self-management signifying that self-government, like capitalist freedom, is one of its strengths. Autonomy signifies personal competence and responsibility, in the same sense that parents want their children to grow up to be responsible adults, that is, autonomous. In Autonomy, individuals think and act interdependently, together, cooperating.

Where is the Communism?

Bob Gill and I never intended to simulate communism. We did not realize that we had done so until recently. Communism entered the game to avoid an unnecessary complication. Each player starts the game in the first generation with one city. If that city survives, each player gets a second city in the second generation and a third city in the third generation. (This feature was changed to make the game easier to play. Now each player has only one city for the entire game. However, it is worthwhile to understand how communism entered the game when each player has multiple cities.) The game issue was how players would handle relations among their own cities. Would they be required to barter resources among their own cities? Would each city of the same player need its own money supply so the player had to buy and sell resources among its own cities? Such complications seemed unnecessary, so we settled on the rule that a player could simply distribute resources freely among his or her own cities provided lines of transportation linked the cities. Free distribution without barter or money or voting is communism.

I grew up in the McCarthy era. I remember rushing home from eighth grade to watch the Army-McCarthy hearings on our new black and white television, expecting at any moment that Senator McCarthy would expose the "commonests," as he liked to pronounce communists, who had infiltrated our government. I wondered what people meant by communism. Here we were in a life and death struggle in the Cold War with Communism, yet I heard no one explain what it was. A priest told me it was godless, therefore wrong. But godless is atheism. What was communism? As a person educated in Catholic schools from first grade to my freshman college year in a Catholic Seminary, I was taught that Jesus Christ shared goods freely and preached against hoarding wealth. Was that not communism?

Recognizing communism in the relations among a player's own cities, I now feel confident that I understand communism, both its advantages and its limitations. I can share that understanding by directing your attention to relations that you may have with members of your own family. There we are all communists. We allow members of our own families to use its resources without barter or money. Family means share and share alike. It would be difficult, indeed offensive, if every family member had to barter or use money for a place to sleep or a meal at home. Sharing is how we expect people who love one another to live. Communism at home is probably a good thing.

What about communism in the larger community? We enjoy some facilities communistically; for example, parks, playgrounds, and most roads and bridges. People come and go freely. However, communism would not work for neighborhoods, grocery stores, or factories. We would not want anyone in our neighbor uninvited to help themselves freely to what we have in our family refrigerator. We would not want people able to take whatever they want from grocery shelves without paying for them. We would not want workers in a factory to come and go freely, working sporadically if at all.

Communism can work well in small intimate groups where people know each other and interact face to face, but not in large ones. Like barter, socialism, and capitalism, communism has good features and bad ones. Our responsibility is to distinguish and separate the good features from the bad ones and use each system appropriately. As adults we need to be more discerning than eighth graders running home from school to see "commonests" caught, pardon the pun, red-handed.

Back to TOC

Chapter 4 From Autonomy Game to Policy

How could the good rules of Autonomy be translated into policy?

The features that make Autonomy successful are:

1. Game objectives,

2. Pricing,

3. Money creation,

4. Sharing costs of transportation and education, and

5. Limiting incomes.

Policies could be personal, familial, local, corporate, urban, statewide, national, and international. I will cover only a few of these because I think that you will be able to see their relevance on your own.

1) Game Objectives.

The first game objective of Autonomy is to obtain five resources for each city: food, fiber, wood, metal, and fuel. These represent basic human needs for food, clothing, housing, machines, and fuel to run the machines. Autonomy says to judge success by how well we are meeting basic human needs. Individuals and families judge their success every day by what they eat, what they wear, where they live, the machines they use, and their access to energy to power their machines. Since money gives them access to these resources, individuals and families use money to judge their success. However, money is a means to the end, not the end itself. You can't eat money.

The Making Money game fails miserably because money is an end in itself. We see this perversion of money from a means to an end in real life in the accumulation of personal money incomes and wealth far beyond any reasonable level of human need and convenience. As noted earlier, a wage of $50 an hour, $2,000 for a 40 hour week, $100,000 for a 50 week year, over 50 years of work amounts to $5 million. Today we see athletes, movie stars, corporate executives, and heirs to great fortunes receive many multiples of that amount.

We see the perversion of money from a means to an end in reports of stock market movements on the evening news. We seem to think that rises and falls in the prices of stocks and bonds reflect rises and falls in real wealth when they reflect only rises and falls in who is winning and losing the Stock Market making money game.

We see the perversion of money from a means to an end in our use of Gross Domestic Product to measure economic performance. GDP estimates the total selling price of goods and services produced in a year. As such, GDP is a measure of price, yet it is interpreted as a measure of value.

Autonomy succeeds because players measure value in real terms; do people in our cities have food, fiber, wood, metal, and fuel? Translating that measure to a state, national, or international level would mean measuring economic performance by the percentage of people who have adequate food, water, clothing, housing, tools, and fuel. The goal should be that 100 percent of people have all their needs met. That is a proper standard of the real wealth of a nation, not money, GDP, or stock prices.

The second Autonomy game objective is to obtain those resources employing the fewest people. Translated to policy, that becomes annually reducing the number of hours of work by the rate of unemployment. If the average workweek is 40 hours and unemployment is five percent, the average workweek would be reduced five percent to 38 hours. Initially, the reduction might not reduce unemployment because unnecessary work is everywhere. However, as unnecessary work is wrung out of the economy, we would soon begin to see jobs opening up for the unemployed. This policy could be applied without reducing the pay of most of the employed because most people are underpaid. Leaving their pay unchanged while reducing their hours of work would simply help adjust their wages upward and closer to fair wages.

2) Pricing.

In Autonomy, price is set at cost measured by the number of people whose labor produced a resource, built a line of transportation, or educated a city. The calculation is people employed divided by units produced. If it took 6,000 people to produce six units of food, the price of one unit of food, enough for one city, was 1,000 in money.

Translated to policy, goods and services would be priced by the simple calculation of hours of work divided by units produced. The United States Department of Commerce of the Bureau of the Census at one time published precisely this kind of information. It reported that in 1950, for example, 28 hours of labor produced 100 bushels of wheat (Historical Statistics of the United States Colonial Times to 1957, page 281). Therefore, a bushel of wheat in 1950 actually cost 28 hours /100 bushels for .28 hours of work per bushel. Twenty eight percent of an hour is 16.8 minutes per bushel. The actual price of wheat in 1950 was 16.8 minutes of work per bushel.

The price of wheat quoted February 10, 2009 was $5.56 per bushel. Based on the United States GDP per hour of work in 2009, that price is ten percent of an hour or six minutes of work. How that compares to the actual labor of producing a bushel of wheat depends on how much more efficient farmers were in 2009 than in 1950. A reduction from 16.8 to six minutes of work per bushel is reasonable.

Wages are the money paid to labor. The wage principle in Autonomy is that labor is paid the equivalent of an hour of money for an hour of work. I say "equivalent" because the time frame in the game is generations, not hours. Translating that rule to policy requires calibrating the value of a national currency to an hour of work. That would be done with GDP per hour of work.

In Autonomy, Privileged workers are more efficient than Pioneers who are more efficient than Primitives. Consequently, the selling prices of resources produced by Privileged workers are lower than the selling prices of Pioneers, which are lower than the selling prices of Primitives. Wages of all three are equal, a generation's worth of money for a generation's worth of work. The productivity of each skill level differs; therefore, their selling prices differ. A Privileged worker produces more in the same time as a Pioneer or Primitive, so prices of resources produced by workers in Privileged cities are lower. The goal in the game to increase free time means that the best purchase is the product that required the least work time. In an actual economy based on Autonomy, the desirability of lower prices makes it in everyone's interest to educate everyone to their highest potential.

Autonomy is a free market system. Buyers are free to buy the cheaper products of Privileged workers. Primitives have difficulty selling their more expensive products, which is their incentive to increase their efficiency. It is also an incentive to Privileged workers to help Primitives and Pioneers become more efficient so the cost of buying their products is lower. Autonomy functions by pure market logic, with the difference that prices are set at work time rather than the vagaries and ambiguities of trial and error, supply and demand.

Could some people be paid more per hour than others?

In a money economy, it is impossible to prevent inequalities in pay. Money decentralizes decisions. A person with the money can always pay someone they hire more than the standard rate and can always offer them less than the standard rate. The prospective employee can always demand more or accept less. The difference from the present system is that each would have a clear standard that does not now exist, an hour of money for an hour of work. That standard would allow variation in rates of pay but nothing like the extremes that exist today. Variations would need to be reasonable to the people directly involved.

3) Money creation.

Autonomy is successful because money comes into the game debt free and interest free. Each player receives 20,000 in money at the start of the game. They are expected to end the game with the same amount of money, although variations are justified during the game. Making Money fails because money enters as loans that cost interest. This puts all players including the banker into the debt trap. There is no debt trap in Autonomy.

I would make one improvement in translating the Autonomy money creation method into policy; that is to _pay_ the money into circulation rather than simply give it to people. People would be paid to produce public goods represented in the game by transportation and education. It would be excellent public policy to pay people to go to school. This would get the money into circulation and add to the real treasure of society, a competent population with a well-maintained infrastructure.

4) Sharing the cost of transportation and education.

Autonomy succeeds where Majority Rule fails because Autonomy limits the use of voting to public goods. It is clear with highway transportation that collective ownership supported by taxes is more efficient than private ownership of fragments of roads with tolls to cross out of one owner's stretch of road into another owner's stretch of road.

It is also clear that the segments of roads for a large area must be coordinated. In Autonomy, everyone decides where roads go and everyone shares the cost. Translated into policy, lines as well as forms of transportation would be planned with citizen input and be paid for by taxes.

What of people who do not own cars or travel?

People who do not use roads benefit from their existence. How else would food be delivered to stores, and health, fire, and police help be available?

Perhaps it is less obvious that education benefits everyone. We may think that education benefits only the person who receives the education. However, a little thought makes the point that the person served by the person with the education is also a beneficiary. We want our doctors and nurses to be well educated. The same should apply to all professionals and all occupations. Therefore, education is like roads; we all benefit directly or indirectly and we should all pay taxes to optimize education for everyone.

5) Limiting incomes

Everything has limits, except numbers. Numbers can go to infinity. Production and consumption cannot. We are more aware of limits than ever before because of resource depletion and global warming. Are we ready to limit incomes? In Autonomy, income inequalities occur appropriately. At the start of a game, it is best that Privileged workers do most or all of the work. They can do it more cheaply than Pioneer or Primitive ones. However, because of the rule that too much money as well as too little money will cost points at the end of the third generation, it is smart for Privileged workers to educate Pioneer and Primitive workers to Privileged in the first or second generation. Then cities that accumulated money producing in the first generation can enjoy free time while those who worked little can earn the money back in the second and third generations. The game shows that strategy to be a wise one.

I truly enjoy thinking and writing about the kind of household management that Autonomy simulates. We deserve a better system than barter, socialism, or capitalism. Each has its strengths and its weaknesses. Autonomy builds on their strengths and avoids their weaknesses. The downside is only that we need to convert its rules into policy in order to live by autonomous cooperationt.

How do we get there from here?

If you have played and mastered Autonomy as a computer game, you have already taken the first step. You have experienced Autonomy and have seen that it works. The board game involves as many as six players, so there is a dynamic to it absent in the computer game.

You can take the next step by encouraging other people to play Cooperation: The Wealth of Nations Game. Anyone with internet access can download the game and instructions free from http://hourmoney.org/. The more people who know that Autonomy works, the closer we are to seeing its rules translated into policy.

You can take another step. Implement its rules yourself whenever and wherever you can. As an individual and as the member of a family, you already judge your performance by the degree to which you and your family are able to meet your daily needs for food, clothing, housing, and other necessities and conveniences. You can encourage similar thinking in your local community.

For example, encourage your elected officials to assess the needs of your community in real terms. Have them report the state of the town, city, or county in the real terms of the percentage of people who have adequate food, housing, clothing, fuel, and education. We all know that many communities have hungry people, yet how many officials make it their duty to track those people and adopt policies that will move the community toward meeting their needs, not through welfare but through work fair.

We know when our roads have potholes, so it does not take long to see them filled. There are solutions to the food and housing needs of citizens, real solutions that empower people. You have heard of Habitat for Humanity where people help to build their own homes. You also have heard the saying, "You can give a man a fish and feed him for a day, or you can teach him how to fish and feed him for a lifetime." If people in a community use their minds together, they can solve problems creatively, compassionately, and to mutual benefit. You can also encourage candidates for higher political office to play Autonomy and to implement its policies.

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Chapter 5. Bell the Cats

Here is something you can use right away to bell the cats; convert their millions of dollars into years of income. Here is an example based on the following news article from CNN.

House oversight committee prepares to investigate why executives at companies battered by the mortgage crisis were awarded big payouts.

By Ben Rooney, staff writer March 6, 2008

NEW YORK (CNNMoney.com) -- Three chief executives with ties to the mortgage crisis were paid $460 million over five years, according to a congressional report issued Thursday. . . . Charles Prince, former CEO of Citigroup Inc.; Stanley O'Neal, former CEO of Merrill Lynch & Co.; and Angelo Mozilo, chief executive of Countrywide Financial Corp., the nation's largest mortgage lender ....The three companies combined lost more than $20 billion in the last two quarters of 2007, as investments related to subprime mortgages fell apart.

These cats took $460 million while millions of families lost their homes. Let's bell these cats.

In 2007, the Gross Domestic Product of the United States was $13.8 trillion produced by 146.2 million people. If they worked 40 hours a week for 50 weeks, they worked 2000 hours that year for a total of 292.4 billion hours. So the GDP was produced at the rate of $47 per hour of work. Round it to $50 per hour of work.

At that hourly rate a person would earn $100,000 a year. To earn $1 million, a person would need to work 10 years.

$1 million = 10 years

$10 million = 100 years

$100 million = 1,000 years

To convert millions of dollars to years, just add a zero.

Our three cats received $460 million. That means they received income equivalent to $50 per hour for 4,600 years. We know that $460 million is a lot of money, but only in a vague way. Timing it to 4,600 years of income tells us clearly how outrageous, insane, beyond all reason, $460 million income in five years to three people actually is. If money were paid in work time, consider how compensation negotiations might go for our three cats this year.

Over five years, they received 4,600 years of income. How much would it be reasonable for them to ask for this year? Would they dare ask for more? How receptive would a compensation committee be to a request for more? How tolerant would you and I be of reports of income of this magnitude? How likely would such compensation be in the first place, if we had timed money years ago?

Compensation today takes place without regard to the size of the "pie." We hear vague justifications such as, "We would lose these people if we paid them less?" The "pie" is $50 per hour of work. When some people receive more than $50 an hour, other people must receive less than $50 an hour. Money is not corn. You can't plant it and get more. When one person gets more, someone else must get less.

Forbes magazine, March 26, 2012, reported Bill Gates as the richest person in the United States at $61 billion. The GDP of the United States at the present time in round numbers is $50 per hour. Working a 40 hour week for 50 weeks, it would take 610,000 years to earn $61 billion. Just add a zero to millions to convert it to years. You do not need to believe that everyone should be paid the same to understand that 610,000 years of income at $50 an hour is beyond all reason. And Bill Gates is only the richest person in the United States. Forbes reports 1,226 billionaires in the world. One billionaire's claim to wealth equals half the GNP of his homeland, Bidzina Ivanishvili of the former Soviet Republic of Georgia (Forbes, page 122). While he is generous with his wealth, his $6 billion (61,000 years) worth of claims to wealth make him the ruler. He is now focused on becoming prime minister. That is typical of capitalism; get rich then buy the government.

Too much goes to the top while the middle and bottom levels of income are squeezed from less to nothing. One billion dollars paid to one million people would increase their income $1,000 each.

Philosopher John Ruskin (1819-1900) in 1879 proposed that there be an upper limit on wealth and income with the following benefits.

The temptation to use every energy in the accumulation of wealth being thus removed, another and a higher ideal of the duties of advanced life would be necessarily created in the national mind; by withdrawal of those who had attained the prescribed limits of wealth from commercial competition, earlier worldly success and earlier marriage with all its beneficent moral results would become possible to the young; while the older men of active intellect, whose sagacity is now lost or warped in the furtherance of their own meanest interests, would be induced unselfishly to occupy themselves in the superintendence of public institutions, or furtherance of public advantage.

People could always negotiate deviations from strict economic equality. That is the beauty of money; it decentralizes decision-making. However, deviations from one hour of money for one hour of work would be based on negotiations between employers and employees. With one hour of money for one hour of work as the standard, it would be difficult for anyone to justify deviations of the magnitude we see today.

Deviations would be modest and temporary compared to the persistent and increasing millions and billions of "dollars" going to the few at the top while an increasing number of the rest of the population go underpaid, uninsured, hungry, and homeless, not only in the United States but all over the world.

You can think of good reasons for paying people more or less than GDP per hour of work, for example, experience, skill, overtime work, equipment costs, education, and risk. You can think of good reasons for providing income to the millions of unemployed and mothers, children, retired and various other people unable to work. The money can be provided from a share of GDP per hour of work. The figure $50 per hour is before any deductions such as taxes. The point is not that everyone would be paid exactly the same; the point is that timing money would make wage and salary negotiations more closely related to economic reality. Timing money to bell the cats sounds the alarm when and where compensation is beyond reason. The question should always be, are deviations from GDP per hour of work reasonable.

So the next time you hear of someone getting $100 million, just add a zero to know that they received the equivalent of 1,000 years of income at $50 an hour. I apply this rule to lottery jackpots as well. The most recent (2012) jackpot was $650 million. Imagine, 6,500 years of income for buying a lottery ticket. When people buy lottery tickets, no doubt they want to win. Do they realize for them to win, everyone else must lose? Do they realize that the prizes have grown far beyond reasonable? Money is the medium of communication that makes it possible for strangers to cooperate. How do CEOs and lottery players getting thousands of years of income affect how willing we strangers are to cooperate honestly and responsibly and what damage does it do to our well-being? I especially like the way that Kahlil Gibran explains economics in his 1923 classic, _The Prophet._

And a merchant said, Speak to us of Buying and Selling.

And he answered and said:

To you the earth yields her fruit, and you shall not want if you but know how to fill your hands.

It is in exchanging the gifts of the earth that you shall find abundance and be satisfied.

Yet unless the exchange be in love and kindly justice, it will but lead some to greed and others to hunger.

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Chapter 6. Capitalism Has No Brakes

Capitalism does not know how to stop growing. Nothing in orthodox economic theory explains how to live well with a stable or declining Gross Domestic Product. In the United States landfills grow to mountains. Storage facilities mushroom. People give stuff away at yard sales. Home closets are stuffed beyond capacity. We have more cars than drivers. Markets are saturated. Still we are told to buy more, that GDP needs to grow. The growth of GDP slows and we are told that we are in recession with the only way out more consumption. Global warming continues unabated. We dare not think of China and India following our example.

At the core of the problem is using GDP as a measure of value rather than _price_. Economists admit that GDP is imperfect as a measure of value, noting that some things like repairing the damage of natural disasters and automobile accidents add to GDP. Some economists have proposed modified GDP measures such as the Genuine Progress Indicator. There is a lot more to this issue than we need to address here. The bottom line is to understand GDP in the way it is compiled, namely, as Gross Domestic _Price_. That is a much more elegant and valid solution than trying to judge each item as a plus or a minus to GDP.

Why has this simple change not been made? On one level, it has not been made because orthodox economists equate price and value. They tell us that price measures value. It follows that GDP must grow if we are to increase value.

We know that endless growth is unsustainable. Nothing we know of can grow forever. The condition of our landfills and closets tells us that we have grown too much. We need to change the conversation to economic health, not growth. Economic health requires distinguishing value from price. Value refers to usefulness. Economic health means food, clothing, shelter, health care, education, and free time. We must pursue all these healthful conditions on their own terms, using money as a measure of their price to be minimized. Why do we not stop growing GDP? Capitalism.

The rule for capitalism is make money, more money, always more money. The capitalist equation for making money is:

Money Price – Money Cost = Money Profit.

Buy cheap and sell dear. For this equation to work, price must be understood as value. Otherwise, money price and money cost become equal and money profit is zero.

Capitalists avoid calling themselves capitalists. "Capitalist" shouts out its bias; capitalism favors capital. That is one side of economic exchange, the money side. Labor is the other side. These days, in the United States capitalists use the label Republican. Republican is a better "brand" than capitalist. "Republicans" are more likely to be able to sell the idea of tax cuts for the rich than "capitalists." "Republicans" sell themselves as "free" marketers. Who can be against freedom? We all want to control our own lives. Labels matter.

"Supply-side" economics is another favored label of capitalists. Who could be against supply? We need food, clothing, and fuel. If a policy increases the supply of needed goods and services, it must be good policy.

What is "demand-side" economics? Where is it? You will not find it in the economics textbooks because it is all "supply-side" economics. Supply-side is another euphemism for capitalism. Economics as theory and academic discipline is capitalist.

Here are three examples.

First, orthodox economists warn that raising the minimum wage is inflationary but say nothing about multi-million dollar incomes to actors, ballplayers, and CEOs being inflationary.

Second, orthodox economists call for endless economic growth, which benefits capitalists while it trashes the environment and threatens life itself on the planet.

Third, orthodox economists warn that government issued money would be inflationary but accept bank creation of debt as its substitute with no warning about or apparent awareness that bank created money has caused debt to grow exponentially from $70 million in 1790 to $70 trillion in 2010 (Blain, 2012).

The basic rule of capitalism is make money. Whatever amount of money you have, get more. We say "make" money, but only a printer actually makes money, namely, by printing it. The more accurate phrase would be "take money," but that would be more difficult to justify.

The phrase "make money" betrays a fundamental misconception of money; namely, that it is a thing, something that can grow like corn. If you plant seed corn, you will get more corn than you planted. In a similar way we speak and think of money as something you can "plant" that will grow into more money. In fact, of course, money does not grow. It is, as you can see by looking at it, a note, and notes do not grow. They convey messages.

In the United States, everyone is a capitalist in the sense that everyone is trying to get more money. Your employer tries to reduce what he or she pays for your labor and materials and to increase the money he or she gets by selling the product. The merchant who sells commodities tries to do the same thing, reduce costs and increase prices. Not to leave you out of the picture, you also try to pay as little as you can and increase what you are paid.

Capitalist thinking starts with an amount of money, M, looking for a way to get more money, M+.

M –> M+

By thinking of money as if it were corn, we can avoid thinking of the social consequence of getting more money, namely, that someone else gets less money:

Person A +M means Person B – M.

What A gains B loses. Money does not grow on trees, or anywhere else. Money is printed notes, recorded and transferred by checking accounts and ATM machines. The technology is effective and efficient. It is great to use a card to make money transfers. The problem is that capitalism has everyone trying to get more money, now and forever. It cannot be done. Some people may get more money, but it means that other people get less money. No wonder we are told to compete; we are all trying to do what requires some of us to lose. That is the short term. What about the long term?

In the long term, everyone loses because we destroy the environment.

To keep getting more money, producers produce more commodities. There is no end to getting more money, so producers use ever more resources so consumers consume and throwaway more and more stuff.

As the money piles up on the winners' side, less money remains on the losers' side. The losers suffer and die while the winners find it more and more difficult to find ways to get more money. The process is continuous and hierarchical. From top to bottom, people make little or no money at the bottom with a bit more at each level of the hierarchy. On the way up, we pass millionaires, billionaires and multi-billionaires, with Carlos Slim Helu at the top in the world with $69 billion (Forbes, March 26, 2012). If we made a pyramid of children's blocks, each layer representing $100,000, "99 percent" of us would be within the first two inches of the ground while Mr. Helu at the top of the pyramid would be more than 21 miles high.

Please check my arithmetic. I must have made a mistake.

Children's blocks are about two inches high. Everyone worth $100,000 or less is within that bottom level of the pyramid.

Six times two inches gets us up to the first foot. Everyone worth $600,000 or less is within the first bottom foot of the pyramid.

5280 feet gets us up to the first mile. Everyone worth $3,168,000,000 is within the first bottom mile.

The pyramid twenty one miles higher is $66,528,000,000. Mr. Helu at $69 billion is at the top of the pyramid at 21.8 miles high.

The math is correct. It still seems unbelievable that economic inequality has become that extreme. Each two inch layer of the pyramid equals an additional $100,000, so we are not making the pyramid that high by using a small amount of money for each layer. The pyramid grew year by year. Back in his 1976 economics textbook, Paul Samuelson, who used this same analogy, described the top of the pyramid as "far higher than the Eiffel Tower." The Eiffel Tower is 984 feet high, representing a "mere" $590 million above the ground. What caused the explosion of economic inequality? Annual percentage increases.

Percents, bad math for money, caused the distribution of money to become astronomically unequal, like distances between planets, stars, and galaxies. Percents make the process exponential. Each year the transfer of money across the full range of incomes gets larger. There are ever-bigger winners, ever bigger loses, and everyone in between.

Capitalism has no brakes. It only knows more and more, then more. The magnitude of accumulation at the upper reaches of the pyramid, now with 1226 billionaires in the world, is driving people in the lower layers to extinction, surrounded by mountains of trash called landfills. What a tragic end for 99 percent of the human race. And what would happen to the top one percent without the rest of us?

What choice do we have? If capitalism is killing us, must we return to barter or socialism? The fourth option was simulated in the Autonomy rules of Cooperation: The Wealth of Nations Game. In the next chapter, those rules are presented as lifetime economics.

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Chapter 7. Lifetime Economics

To read a typical economics textbook you would think that it takes a Ph.D. to understand economics. The textbook that I have in front of me is 800 pages. It is an introductory textbook in its fifth edition published in 2007. It weighs about six pounds; every page is ten by eight inches with graphs and tables on most of them. I imagine that students, when they first see it, must wonder how they will ever pass such a tough course.

Immediately, we encounter confusion. We are told "More than anything else, economics is the study of how people deal with scarcity" (Taylor, 2007, page 3). Scarcity is then defined in the very next line as "a situation in which people's resources are limited." Do scarcity and limited mean the same thing?

My dictionary defines scarcity as "insufficient amount or supply; shortage." Scarcity means there is not enough; there is a shortage.

My dictionary defines limit as "the point, edge, or line beyond which something cannot or may not proceed; the final or furthest confines, bounds, or restriction of something."

Everything has limits. That does not mean that there is a shortage of everything. The two terms are confounded because economic theory cannot deal with limits. There may be a limit without a shortage. There is a limit to how much a person can eat. It does not follow that there is a shortage of food. Limits and shortages are two distinct issues.

Orthodox economic theory requires the assumption that there is never enough. Only from that assumption does it follow that we must compete for what there is. If there is never enough, we must have endless growth. Capitalism may be killing us but we are expected to believe that we can do nothing about it because there can never be enough!

How is that scarcity allocated? Capitalist economic theory says by competitive trial and error, supply and demand. Here is how economist Paul Samuelson describes it.

Goods go where there are the most votes or dollars. John D. Rockefeller's dog may receive the milk that a poor child needs to avoid rickets. Why? Because supply and demand are working badly? Quite badly _from ethical viewpoints_ , but not from the standpoint of what the market mechanism is alone geared to accomplish. Functionally, auction markets are doing what they are designed to do — putting goods in the hands of those who can pay the most, who have the most money votes (Samuelson, 1976, pp. 46-47).

Samuelson used this example in the four editions of his textbook that I have examined.

No economy could function if ethics were beyond its domain. What economist would say that bank robbery is simply supply and demand and not an ethical question whose answer vitally affects the mechanics of the economy? Yet here we have an economist claiming that indulging dogs while children are crippled is the market doing what it is designed to do! Samuelson never claims that money voting is democratic. With vast inequalities in income, economic voting is plutocratic. Some have called it the golden rule; those with the gold rule.

Are we to believe that ethics has nothing to do with economics? Economics has been called the "dismal science." Now you can understand why. Scarcity supply and demand competition has gotten us into the mess we are in today. That paradigm is actually anti-social; it is inherently destructive as shown by the Making Money rules of Cooperation: The Wealth of Nations Game.

Economics based on limits is what "ecological economists" are working on (Costanza, et al, 1997). It promises to produce a very different economic paradigm than the one represented by Samuelson's and Taylor's textbooks, one based, not on competition, but on cooperation. The ecological economists conclude their introduction with the following:

Making the transition from the present unsustainable course of plundering the earth to a sustainable course is the major challenge to humankind today. ... Above all, and in many ways most difficult of all, we must confront _personal failure_ in our individual choices about consumption, lifestyles, habitation, and work styles, and recognize that these are the decisions that ultimately determine environmental quality (Costanza, 1997:242).

Their emphasis on _personal failure_ by italicizing it I regard as misplaced. We should and do expect _economists_ to teach the correct rules. We have an example of the failure of economists to get it right in Samuelson separating ethics from economics and in Taylor treating scarcity and limits as essentially the same. The rules of lifetime economics that you are about to read are the ones they should be teaching - at least that is my view as a sociologist long concerned with understanding the interrelationships of _all_ the institutions of human social life (Blain, 2010).

Everyone practices economics everyday when they work, when they shop, when they save, when they invest. Good economics must be simple. Good rules must be easy to understand and be ecologically sustainable. We need to be able to teach economics to children. It should be no more difficult for an adult to be a good economist than it is for him or her to be a good driver. See if you think that lifetime economics meets that test.

I call the rules of lifetime economics "lifetime" rules for two reasons. First, you can follow them your entire lifetime. They will increase your real wealth, which includes your health, because they will reduce your work time and increase your free time. These rules will have beneficial results even if you follow them alone, but they will have even greater benefits the more people that follow them with you. Second, I call them "lifetime" rules because lifetime is the measure of value; work time is the measure of price.

There are just three rules to lifetime economics, which you will probably recognize as common sense.

Rule 1: Value goods and services in useful lifetime.

Rule 2: Price goods and services in work time.

Rule 3: Maximize profit where

Value - Price = Profit.

Lifetime - Work time = Free time.

Here profit means more freedom from obligatory work. It is not difficult to explain how to follow each of these basic rules.

To maximize life time:

1. Build to last.

2. Choose goods and services wisely.

3. Service and repair regularly.

To minimize work time:

Cooperate by following the good rules:

1. Communicate.

2. Specialize.

3. Reciprocate.

Communicate and specialize add up to: Share the work.

Reciprocate means: Share the wealth.

You can see already how different lifetime economics is from scarcity, competition, trial and error, supply and demand economics. Lifetime economics recognizes cooperation as the foundation of good economics.

There are three evolutionary levels of cooperation:

1. Family.

2. Political government.

3. Money.

Cooperation first developed among small groups of biologically closely related persons that we know as families, clans, and tribes. They communicated face-to-face. They learned specialized skills by observing and working with family members and close relatives. They enforced the reciprocation of duties and rights face-to-face, with words and gestures of approval and disapproval.

The limitation of family cooperation is small size. Few people can produce relatively little. More people can specialize more, to produce more effectively, efficiently, and abundantly. The evolution of political government through kingship, monarchy, and parliaments facilitated an ever-larger scale of cooperation.

The essential roles of national government today are to:

1. Originate an adequate money supply,

2. Regulate its value, and

3. Prevent hoarding.

First, money must originate somewhere; it does not grow on trees. Second, it must have a defined value. Third, hoarding must be prevented. It has been said that money is like manure; it does the most good when it is spread around. A major reason that economic relationships have broken down is hoarding.

Here are ways government can provide an adequate money supply, from the best to the worst ways.

**Best way** : 1. **Spend** it into circulation to pay for public goods and services. This way money issue increases national infrastructure, which is real national treasure.

2. **Lend** it at no interest to pay for public goods and services. Money loaned by government can increase national infrastructure but must be repaid, so it is a temporary money supply.

3. **Give** it to people. This increases the money supply and citizen purchasing power, but does not increase public goods. It is a good to way to infuse money, and would increase personal goods directly and public goods through taxes indirectly.

**Worst way** : 4. **Borrow** it and pay interest on it. By borrowing, government loses its sovereignty to its creditors and must repay more than the amount of money borrowed. Borrowing leads to ever more debt and increasing taxes to pay compounding interest on unpaid balances.

Here are ways government can regulate money's value, from the best to the worst ways.

**Best way** : 1. Denominate money in hours to represent work time. This way defines an hour of money as worth the products of an hour of work.

2. Use a Consumer Price Index. A CPI encourages price stability but not price fairness. Stable prices may be unfair.

3. Use interest rates. Raising interest rates fuels inflation in the name of fighting it.

**Worst way** : 4. Supply and demand, a trial and error method. We would never use trial and error to set length, weight, or volume units; we should not use it for money units.

Here are ways government can prevent hoarding, from the best way to the worst way.

**Best way** : 1. Limit income to work time. Everyone's work time is limited to hours, days, weeks, and years.

2. Limit income to lifetime. Life times vary. Using life time as a standard of income sufficiency would allow more variation in incomes than work time. A person might accumulate a lifetime's worth of income in a few years.

3. Freeze wages and prices. Freezes are arbitrary and temporary.

**Worst way** : 4. Tax incomes progressively. The rich still get richer and use their accumulating advantage to influence government policy to subvert the intent of progressive taxes.

Money, the Highest Evolutionary Form of Cooperation

Whereas government has primary responsibility for originating an adequate and properly denominated money supply, once that money passes into circulation, the money becomes the operative governing instrument. Government's role on the sidelines, as it were, is to monitor the distribution to prevent hoarding.

Money is the long distance medium of communication. Money facilitates cooperation worldwide while supporting local autonomy. It passes from hand to hand to hand. At each step, people are free to choose how they earn money and how they spend it, so it supports personal autonomy.

Money passes all around the world. Today people must exchange currencies when they cross international borders, which reduces the efficiency of money. If all currencies were denominated in hours of work, such exchanges would be much more efficient and understandable.

Money must be a general message that applies to all specialties without exception. The common denominator of all occupations is work time. Money's job is to communicate reciprocity across all occupations. Money denominated in hours would encourage everyone to exchange goods and services by an equitable and reciprocal standard, an hour of work time for an hour of work time.

Life time economics can and should replace the trial and error system we use now. The powerful and essentially positive words "market," "capital," "profit," "supply," "demand," "price," and "value" have been perverted to serve the interests of a small portion of the human family. It is time to convert to rules that are healthier for all people and that can reduce our waste of the generous earth's precious resources.

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Chapter 8. Economic Democracy

Economic democracy is the natural next step in the evolution of democracy. Political democracy is the current stage of democracy. Its foundation is one person, one vote. The votes are counted and the person or policy with the most votes wins. Political democracy is many votes with one outcome.

The foundation of economic democracy is one hour of money for one hour of work. With that foundation, people vote every time they do work and with their every purchase. The aggregate of all job and purchase votes add up to the world we live in. Economic democracy is like capitalism in that earning and spending money is people casting votes, but the money is more equitably distributed than with capitalism. The key is to print Hour on money so its value is as clear and stable as the length of a meter or the weight of a kilogram. Variations in pay are always negotiable.

Political Democracy

What we call "democracy" is political democracy. "Political" is from the Greek word _polis_ , meaning many. In political democracy, the votes of many people are collected and counted to produce a single outcome; the person or policy that receives the most votes, wins. The minority loses.

We distinguish two forms of political democracy. First, we have representative democracy, where many people vote for a few other people to be their representatives who in turn vote on legislation. Second, we have what we call "direct democracy" such as a town meeting, a citizen initiative or a referendum where many people vote directly on legislation rather than having representatives vote for them. Both of these meanings of democracy are "political," that is, _collective_ democracy where everyone is bound by the single outcome of many votes.

We often call democracy _self_ -government. However, by "self" we mean a nation, not a person. We say that nations governed by political democracy are self-governed. Is there a form of democracy beyond political democracy, one that is literally _self_ government in the personal sense of self? The question is particularly important today because of the many anomalies of political democracy that only become more troublesome when we consider government at the global level.

We support political democracy because we believe that policies that draw a majority of votes are more likely to be correct than policies that draw less than a majority. However, we recognize many anomalies of political democracy, conditions that do not fit the model, that detract from the expected functioning of political democracy. We act as if the only corrective for the failures of political democracy is to elect better people to be our representatives. Here are thirteen anomalies of political democracy that are inherent to, systemic with, political democracy no matter whom we elect.

**One: minority rule**. Representatives are a minority. We may comfort ourselves that they were elected, but representatives are a tiny fraction of their constituencies. Representative democracy in practice is minority rule.

**Two: tyranny of the majority.** General elections, as well as votes by representatives, are usually decided by small differences in percentage of votes received. A few votes one way or the other would change the result. Why should 49 percent of a population or a legislative body be bound by 51 percent? How correct is a policy that passes by such a small margin and that could be reversed later by a similar small margin?

**Three: elections are rare.** If voting is the criterion of democracy, in a political democracy, citizens vote every two, four, or six years for no more than a minute or two in the voting booth. How democratic is that?

**Four: plutocracy.** Elections are expensive, so people with money to spare influence who runs for office and who wins more than people with no money to spare. Political democracy in practice is rule by the rich.

**Five: oligarchy.** As Robert Michels (1876-1936) found and published under the title, _Political Parties_ , incumbents have more experience than challengers, so the same people tend to be reelected repeatedly. Socialist parties proclaim themselves democratic but Michels argues that they inevitably come to be governed by a small group. Michels was so convinced that this was an inevitable consequence of political democracy that he called it the iron law of oligarchy.

**Six: inefficiency.** Promoting policies and candidates for office takes huge effort over a long period of time. In legislative sessions, parliamentary rules require that everyone have ample opportunity to be heard. Parliamentary procedure takes time, the larger the parliament, the more time required to process opinions and legislation.

**Seven: information overload.** Voters and representatives are overwhelmed with material to read and people to interview. Members of the United States Congress, for example, receive rooms full of material pertaining to proposed bills. They often, if not always, vote without reading the bills on which they vote.

**Eight: public ignorance.** Political democracy requires that voters be fully informed about candidates for office, their voting records, and legislation, past, present, and proposed. Being fully informed is impossible. Representatives are chosen precisely because the general public does not have the time and access to information needed to make intelligent legislative decisions. We complain that some people vote for someone simply because of name recognition, but who of us has the time and resources to keep up with the tons of information that even our fulltime elected representatives find overwhelming?

**Nine: partisanship.** Representatives are expected to support policies favorable to the people who elect them. The rhetoric may say that representatives should vote for the common good, but reelection requires that they vote for policies that favor their part of the electorate, hence, partisanship.

**Ten: gerrymandering.** Voting district boundaries are drawn to make districts politically homogeneous, ensuring the reelection of persons of a particular political party. As Barack Obama notes in his book, _The Audacity of Hope_ , gerrymandering means that representatives choose their voters rather than the other way around (Obama, 2008). Gerrymandering makes it difficult to replace incumbents.

**Eleven: winner-take-all.** Elections produce winners and losers. Winners take advantage of their win by doing as much as possible to their own advantage before the next election when they could become losers.

**Twelve: mediocrity.** To gain votes, policies gravitate toward middle positions – mediocrity. Enacting a wisely correct policy is difficult when it differs from prevailing opinions.

**Thirteen: endless growth**. Political democracy grows and grows. Laws multiply; problems mushroom; taxes increase. Should we not expect good government to lead to less government? If a government makes wise decisions, additional decisions in the future should become less necessary. Yet, today, every action of political democracy seems to require more legislation, not less.

We live with these anomalies because, as Winston Churchill famously said, democracy is the worst form of government except for all the others. The best we can hope for, it seems, is to find better people to be our representatives. We are surprised when better people are unable to produce better results. We then become cynical about human nature itself, failing to see that the anomalies are inherent in the collective nature of political democracy; many votes, one outcome.

Is political democracy with all its anomalies the best form of democracy that we can hope for, or is there a natural next step in the evolution of democracy?

When I read in economist Paul Samuelson's economics textbook that "John D. Rockefeller's dog may receive the milk that a poor man's child needs to avoid rickets," I was so angered that I failed for a while to see there the germ of economic democracy. He wrote that goods go to people "who have the most money votes." Ah hah, when we spend money, we are voting. It follows that we are also voting when we choose to do a certain job to earn money. Samuelson intoned "voting" to rationalize his example, but he glossed over the fact that those votes were very unequally distributed.

Political democracy is based on the principle, one person one vote. What principle would make economics democratic? If every employment and every purchase were a democratic vote, democracy would be daily and direct, efficient and effective. Then we could expect the need for political democracy to diminish. It would never vanish entirely because there would always be decisions that would need to be made collectively. But, if people were able to make most decisions wisely and autonomously, political democracy would have less to do. I believe that the metric system exemplifies the kind of principle we need for economic democracy.

The Metric System

The metric system is a sovereign government; it stands over people, compelling them to measure length with meter sticks, volume with containers calibrated in liters, and scales calibrated in kilograms. The standard units of weight and measure of the metric system are embodied in physical measuring instruments worldwide. Everyone is obliged to use those government certified instruments.

Political governments made the metric system sovereign by legislating its sovereignty beginning with France in 1795. Once enacted, the metric system made people autonomous and, therefore, sovereign. People can use it as they see fit, which is authentic self-government.

The humble stick we call a "ruler" exemplifies interpersonal self-government. We draw lines with our rulers, but we do not call them "liners." We call them rulers because when length is an issue, we do not take the case to a king or courtroom; we apply the ruler. We measure. The issue is resolved wisely, that is, correctly, efficiently, and amicably. Voting on length would be foolish. The ruler is a better judge of length than a vote. We can recognize every measurement decision as in effect a vote, an election, a choice, a decision made on site, visible to the parties directly involved. Measurement is democracy in the literal sense of personal self- government.

Money

What does the metric system have that money does not have? The metric system has observable quantities on measuring instruments that define their names. The names on currencies, for example, dollars, euros, renminbi, pesos, yen, rupees, and dinars, tell us the currency's nationality, but nowhere are we told what measuring instrument defines their value. Put another way, what is the "one" to which one rupee refers? What is "one rupee" beyond the paper it is printed on? "Meter" is defined by the length of a stick. "Rupee" is undefined.

How many national monies today have their value defined by a measuring instrument? Zero, not one. We have some sense of the value of our own domestic currency because we use it every day. We judge its value _inductively_ ; we use many specific prices to reach a general conclusion. With the metric system and all other measures like clocks and calendars, we do the reverse; we start with a general unit and apply it _deductively_ to things we need to measure. Judging the value of money inductively is why the market mechanism of supply and demand is also called an auction system of trial and error.

The reality of no objective unit for money becomes clear when we use a foreign currency. Then we must consult currency exchange rates displayed by banks and currency exchanges at such places as airports and train stations to get an initial idea of that currency's value.

Imagine what would happen if crossing national borders required consulting comparable displays to know the length of a meter or the weight of a kilogram. Imagine the values of meters, liters, and kilograms changing daily. A global economy would be impossible. The global economy functions wonderfully well with the metric system but badly with money because money units are undefined, and therefore, are unstable. Economists have reduced the debate to whether exchange rates should be "fixed" or "floating." They gave up looking for a money unit long ago, according to one author, because such a quest is "absurd" (Timberlake, 1965).

Currency exchange rates now compare undefined currencies with other undefined currencies. The US dollar and the International Monetary Fund's Standard Drawing Rights (SDR) are themselves numbers without a definition. Currency exchange rates are set like pilots judging their altitude by looking out their cockpit windows, not at the ground, but at other aircraft. If that were the situation, flying would never be safe. Altitude must be judged by instruments that precisely measure distance from the ground. No wonder currency exchange rates fluctuate with crowd psychology. Inflation and deflation also vary with crowd psychology: expectations, confidence, and invisible hands of market forces. Economics has many anomalies just like political democracy. Here I have only hinted at them.

To have economic democracy, we need a standardized measuring instrument that defines rupee, dollar, and renminbi comparable to the standardized measuring instruments that define meter, liter, and kilogram. The latter define units of length, volume, and weight. What is the actual price that money is meant to measure?

Money represents price only symbolically, the way a word represents its referent. The word "hot" is not itself hot; it refers to things that are hot. We need a standardized instrument that measures the actual price of goods and services. To find it, we need to ask, if there were no money, what price would we still have to pay for goods and services?

I was surprised to learn that the required objective quantity expressed on a standardized measuring instrument for money already exists and has been operating unnoticed for more than 50 years, just like gravity before we knew of its existence. I showed you in Chapter 2 that equal work time is the center of gravity of currency exchange rates. Work time is measured by clocks and calendars. Perhaps it should not have surprised me because every aspect of economics is organized by clocks and calendars.

People automatically associate time and money. We waste time and money. We spend time and money. We invest time and money. We save time and money. We work by the hour, the day, the month, and the year. We pay taxes, dividends, and interest at certain times. We use time to organize every aspect of economies, every aspect that is, except money. It is time to bring the discipline of time to money.

One Hour of Money for One Hour of Work

Therefore, the principle of economic democracy equivalent to the political democracy principle of one person one vote is: One hour of money for one hour of work. By that principle, every job we did every day would be a democratic vote; every purchase we made would be a democratic vote. Every economic action would be a vote – direct democracy in every action every day.

Hour money would work against the huge disparities of income that result in John D. Rockefeller's dog getting the milk that a poor man's child needs to avoid rickets (Samuelson, 1976). We would not have multimillionaires and multi-billionaires because such amounts would be recognized as thousands of centuries of income, in short, beyond reason.

Adoption

The metric system also gives us a model for how economic democracy could be instituted. Nations adopted the metric system one by one. Similarly, nations could use their GDP per hour of work as their wage, price, and currency exchange rate standard one by one. Nations could denominate their money in hours one by one. They could do so unilaterally, bilaterally, multilaterally, regionally, and globally.

The International Monetary Fund was established to stabilize exchange rates. It has failed to do so because it overlooked the prior task of identifying the common denominator money measuring instrument unit. With the evidence presented in this book, any nation can make a good case for adopting an hour of work as their money unit. I believe that it is a change that must come, better sooner than later.

The Provisional World Parliament (PWP) adopted an hour of work as the world money unit in 2004 at its Eighth Session in Lucknow, India (http://www.radford.edu/~gmartin). The PWP is charged with solving problems from a global perspective, which explains why it is ahead of the rest of the world in how money should be denominated. The Provisional World Parliament is also ahead of the world in providing that money be spent into circulation rather than borrowed and, if borrowed, should carry a small accounting fee rather than an interest rate. The PWP also provides that the ratio of the highest income should be no more than four times the lowest income.

Movement to currencies denominated in work time can be done in two steps the way Europe adopted the Euro. In that case, the economic crisis of the 1970's led to plans for a single European currency. In 1991 with the Maastricht Treaty, the 15 members of the European Union agreed to set up a single currency. First, they launched the Euro on 1 January 1999 as an electronic currency used only by banks, foreign exchange dealers, big firms and stock markets. This allowed them to "get their bearings," to decide on a reasonable exchange rate for their own currency and the new Euro. Then on 1 January 2002, three years later, they replaced the old national currencies with Euros. Unfortunately, Europe missed the opportunity to denominate the Euro in Hours, so the Euro behaves in the same unstable way as all other national currencies.

Any nation, without a treaty, can begin immediately to calculate the work time equivalent of all their prices by dividing them by their Gross Domestic Product per hour of work. Any nation can maintain prices in both its present currency and Hours, thereby, without changing anything, without risk of disruption to its existing economy, can learn the work time equivalent of all factors in its economy. It would be like pilots of aircraft seeing their correct altitudes for the first time. The ensuing conversations would prompt reasonable men and women to make adjustments to improve the equitability of goods and money flows domestically and internationally. It could mark a bright new dawn for economic relations.

It is generally recognized that we need something to replace the failed Bretton Woods regime. I am convinced not only by the evidence of currency exchange rates, but other evidence as well that money denominated in hours of work is what we need (Blain, 2010).

For World Federalists, Time Money, or Hour Money, would increase the range of subsidiarity, thereby reducing the feared intrusiveness of World Federation. The principle of subsidiarity is that decisions should be made at the lowest relevant level. Unfortunately, the Constitution for the Federation of Earth by which the Provisional World Parliament operates envisions a socialist world government with little subsidiarity. As you can infer from the anomalies of political democracy, that is not the form of government we want.

It would be far better to adopt a government in the form of a _standard_ for money similar to how units of the metric system govern us than to expect a world political democracy to be any better than national political democracies. The institutional model for world government would better be a bank owned by its member countries that issues Hour money as needed rather than a socialist political democracy trying to handle at the global level the myriad social problems that trouble us today. Let money denominated in hours guide decisions by people acting autonomously at local and national levels.

Here is a picture of what such money could look like.

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Chapter 9. Looking Backward Again

In the original _Looking Backward: 2000-1887_ by Edward Bellamy (1850-1898) published in 1888, Julian West is revived from within the chamber under his mansion that had been specially built so he could sleep undisturbed by the sounds of the encroaching city. He entered the chamber on Decoration Day evening in 1887.

Fatigued by several days without sleep, a doctor who leaves to return to Argentina the next day hypnotizes Julian to sleep, leaving instructions with the butler on how to awaken him. During the night, the mansion burns down leaving Julian West undiscovered in the underground chamber. In 2000 excavating for a new building, Dr. Leete and his daughter, Edith, discover and revive him. He has lain in the chamber 113 years to find himself now in the strange new world of the year 2000.

He soon wants to know how conditions became so idyllic. The air is clean. There are no chimneys spewing coal smoke into the air.

Miles of broad streets, shaded by trees and lined with fine buildings, for the most part not in continuous blocks but set in larger or smaller enclosures, stretched in every direction. Every quarter contained large open squares filled with trees, among which statues glistened and fountains flashed in the late afternoon sun. Public buildings of a colossal size and an architectural grandeur unparalleled in my day raised their stately piles on every side. Surely I had never seen this city nor one comparable to it before. Raising my eyes at last towards the horizon, I looked westward. That blue ribbon winding away to the sunset, was it not the sinuous Charles? I looked east; Boston harbor stretched before me within its headlands, not one of its green islets missing.

I knew then that I had been told the truth concerning the prodigious thing which had befallen me (Bellamy, 1888:24-25).

Julian notices other changes that we know actually happened although the details may differ slightly. People eat out most of the time. They can hear any kind of music live 24 hours a day by turning some valves on the walls of their homes. They shop where the streets are roof-covered and every kind of commodity is available. When they shop, clerks are there not to sell products but to help customers pick what they want. They pay with credit cards that clerks punch to register the deduction from customers' annual income. The goods are delivered by pneumatic tubes from the store to customers' homes before they arrive home themselves. Education is free as long as students maintain good grades. Schools help students find occupations that best suit their talents and interests. Everyone begins work at age 21 and retires at age 45.

The most important change has not happened. In Bellamy's utopia, there are no wages. The total product of the society, what we call today Gross Domestic Product, is simply divided by total population and that amount is given to every man, woman, and child as their annual income. In the United States today, that would be about $50,000. Each member of a family of four receiving that amount would give the family total income of $200,000. Everyone is happy and secure.

As anxious as Julian is to understand how this all happened, Dr. Leete, his daughter, Edith, and everyone who hears of this extraordinary event are even more anxious to have him explain why people tolerated the terrible conditions that existed in 1887. Bellamy's character, Julian West, describes and tries to explain conditions in 1887 with what became to readers of _Looking Backward_ , the famous stagecoach analogy. Its details are not much different than now.

By way of attempting to give the reader some general impression of the way people lived together in those days, and especially of the relations of the rich and poor to one another, perhaps I cannot do better than to compare society as it then was to a prodigious coach which the masses of humanity were harnessed to and dragged toilsomely along a very hilly and sandy road.

The driver was hunger, and permitted no lagging, though the pace was necessarily very slow. Despite the difficulty of drawing the coach at all along so hard a road, the top was covered with passengers who never got down, even at the steepest ascents. These seats on top were very breezy and comfortable. Well up out of the dust, their occupants could enjoy the scenery at their leisure, or critically discuss the merits of the straining team.

Naturally such places were in great demand and the competition for them was keen, every one seeking as the first end in life to secure a seat on the coach for himself and to leave it to his child after him. By the rule of the coach a man could leave his seat to whomever he wished, but on the other hand there were many accidents by which it might at any time be wholly lost.

For all that they were so easy, the seats were very insecure, and at every sudden jolt of the coach persons were slipping out of them and falling to the ground, where they were instantly compelled to take hold of the rope and help to drag the coach on which they had before ridden so pleasantly. It was naturally regarded as a terrible misfortune to lose one's seat, and the apprehension that this might happen to them or their friends was a constant cloud upon the happiness of those who rode.

But did they think only of themselves? you ask. Was not their very luxury rendered intolerable to them by comparison with the lot of their brothers and sisters in the harness, and the knowledge that their own weight added to their toil? Had they no compassion for fellow beings from whom fortune only distinguished them?

Oh, yes; commiseration was frequently expressed by those who rode for those who had to pull the coach, especially when the vehicle came to a bad place in the road, as it was constantly doing, or to a particularly steep hill. At such times, the desperate straining of the team, their agonized leaping and plunging under the pitiless lashing of hunger, the many who fainted at the rope and were trampled in the mire, made a very distressing spectacle, which often called forth highly creditable displays of feeling on the top of the coach.

At such times the passengers would call down encouragingly to the toilers of the rope, exhorting them to patience, and holding out hopes of possible compensation in another world for the hardness of their lot, while others contributed to buy salves and liniments for the crippled and injured.

It was agreed that it was a great pity that the coach should be so hard to pull, and there was a sense of general relief when the especially bad piece of road was gotten over. This relief was not, indeed, wholly on account of the team, for there was always some danger at these bad places of a general overturn in which all would lose their seats.

It must in truth be admitted that the main effect of the spectacle of the misery of the toilers at the rope was to enhance the passengers' sense of the value of their seats upon the coach, and to cause them to hold on to them more desperately than before. If the passengers could only have felt assured that neither they nor their friends would ever fall from the top, it is probable that, beyond contributing to the funds for liniments and bandages, they would have troubled themselves extremely little about those who dragged the coach.

I am well aware that this will appear to the men and women of the twentieth century an incredible inhumanity, but there are two facts, both very curious, which partly explain it. In the first place, it was firmly and sincerely believed that there was no other way in which Society could get along, except that the many pulled at the rope and the few rode, and not only this, but that no very radical improvement even was possible, either in the harness, the coach, the roadway, or the distribution of the toil. It had always been as it was, and it always would be so. It was a pity, but it could not be helped, and philosophy forbade wasting compassion on what was beyond remedy.

The other fact is yet more curious, consisting in a singular hallucination which those on the top of the coach generally shared, that they were not exactly like their brothers and sisters who pulled at the rope, but of finer clay, in some way belonging to a higher order of beings who might justly expect to be drawn. This seems unaccountable, but, as I once rode on this very coach and shared that very hallucination, I ought to be believed.

The strangest thing about the hallucination was that those who had but just climbed up from the ground, before they had outgrown the marks of the rope upon their hands, began to fall under its influence. As for those whose parents and grandparents before them had been so fortunate as to keep their seats on the top, the conviction they cherished of the essential difference between their sort of humanity and the common article was absolute.

The effect of such a delusion in moderating fellow feeling for the sufferings of the mass of men into a distant and philosophical compassion is obvious. To it I refer as the extenuation I can offer for the indifference which, at the period I write of, marked my own attitude toward the misery of my brothers (Bellamy, 1888:5-7).

How was this misery transformed into the idyllic conditions of the year 2000? Dr. Leete explains to Julian that it started with businesses consolidating into ever larger monopolies.

Meanwhile, without being in the smallest degree checked by the clamor against it, the absorption of business by ever larger monopolies continued. In the United States there was not, after the beginning of the last quarter of the century, any opportunity whatever for individual enterprise in any important field of industry, unless backed by a great capital....

The railroads had gone on combining till a few great syndicates controlled every rail in the land. In manufactories, every important staple was controlled by a syndicate. These syndicates, pools, trusts, or whatever their name, fixed prices and crushed all competition except which combinations as vast as themselves arose. Then a struggle, resulting in still greater consolidation, ensued. The great city bazaar crushed its country rivals with branch stores, and in the city itself absorbed its smaller rivals till the business of a whole quarter was concentrated under one roof, with a hundred former proprietors of shops serving as clerks (ibid.: 36-37).

Dr. Leete explains that the failure of popular opposition to check the consolidation of business and the growth of monopolies showed that there must have been a strong economic reason for it.

Oppressive and intolerable as was the regime of the great consolidations of capital, even its victims, while they cursed it, were forced to admit the prodigious increase of efficiency which had been imparted to the national industries, the vast economies effected by concentration of management and unity of organization, and to confess that since the new system had taken the place of the old, the wealth of the world had increased at a rate before undreamed of. To be sure this vast increase had gone chiefly to make the rich richer, increasing the gap between them and the poor; but the fact remained that, as a means merely of producing wealth, capital had been proved efficient in proportion to its consolidation.

In Bellamy's vision, it was recognized at last that rather than resist it, the process of consolidation only needed to complete its logical evolution to open a golden future to humanity. Dr. Leete explains to Julian.

Early in the last century the evolution was completed by the final consolidation of the entire capital of the nation. The industry and commerce of the country, ceasing to be conducted by a set of irresponsible corporations and syndicates of private persons at their caprice and for their profit, were entrusted to a single syndicate representing the people, to be conducted in the common interest for the common profit.

The nation, that is to say, organized as the one great business corporation in which all other corporations were absorbed; it became the one capitalist in the place of all other capitalists, the sole employer, the final monopoly in which all previous and lesser monopolies were swallowed up, a monopoly in the profits and economies of which all citizens shared. The epoch of trusts had ended in The Great Trust.

In a word, the people of the United States concluded to assume the conduct of their own business, just as one hundred-odd years before they had assumed the conduct of their own government, organizing now for industrial purposes on precisely the same ground that they had then organized for political purposes.

At last, strangely late in the world's history, the obvious fact was perceived that no business is so essentially the public business as the industry and commerce on which the people's livelihood depends, and that to entrust it to private persons to be managed for private profit is a folly similar in kind, though vastly greater in magnitude, to that of surrendering the functions of political government to kings and nobles to be conducted for their personal glorification (ibid., 38).

In Bellamy's vision, the change occurred without violence because the great private concentrations of capital were forced by their own experience with the economic advantages of consolidation to recognize that having the nation as the "sole corporation in the field would relieve the undertaking of many difficulties with which the partial monopolies had contended" (ibid. 39).

Bellamy's solution was socialism – the nation as One Great Trust, one corporation with its president the President of the United States with credit cards replacing money.

Looking backward now from 2012, we know that Bellamy's predictions are remarkably accurate in some respects, for example, covered shops in malls, music 24 hours a day, credit cards, huge monopolies like Walmart driving small shops out of business, people eating out most of the time. However, his most important predictions have not happened.

Government has not taken over all the corporations into one Great Trust. The GDP is not divided equally among all the nation's citizens. Everyone is not happy and secure. On the contrary, millions of people are currently losing their jobs and their homes. The rich are richer than ever; the poor poorer than ever. Why? Is it too soon to expect the final consolidation of business or is there a defect in Bellamy's theory?

Bellamy's error was thinking that the solution lies in socialism. He thought that credit cards eliminated money, while we know that credit cards are a technical improvement in how money transactions are processed. Karl Marx (1818-1888) made the same error at about the same time. Marx, too, saw only one alternative to capitalism, namely, socialism. He thought, like Bellamy, that collective ownership would be superior to private ownership of the means of production and distribution. Many people today who see the bias in capitalism think that socialism is the only alternative.

If only Bellamy and Marx could have simulated socialism as my students were able to do with Cooperation: The Wealth of Nations Game. They might have realized that socialism is a step backward in economic evolution, that the way forward is the evolution of money. We know from that simulation and from actual real life examples that socialism quickly becomes oligarchy with its attendant suppression of dissent and weak individual accountability. Autonomy simulates how we can adopt the good elements of both capitalism and socialism into a system that is superior to both of them.

Steve Allen had a television program where great philosophers of history were represented in an imaginary group discussion. In that spirit, I would love to have Adam Smith, Karl Marx and Edward Bellamy play Cooperation through the entire series, Barter, Majority Rule, Making Money, and Autonomy. They would see that the better solution to the problems of capitalism is the evolution of money to time _on_ money. But, as Thomas Jefferson wrote, the earth belongs to the living.

It is up to us to understand the weaknesses of Adam Smith's invisible hand of the market, Karl Marx's dictatorship of the proletariat, and Edward Bellamy's National Trust. Money denominated in work time, as simulated in Autonomy, makes our hands in the market visible and constrained within reasonable limits by clocks and calendars. Then corporations can function as they are supposed to do, to everyone's benefit, rather than as giant machines sucking up all the money to benefit a few. With time on money and clocks and calendars everywhere, we can know if we are being treated fairly or not. Time money is a free market solution because it gives each of us a standard for fair wages and fair prices. With it, we can be fair and free.

I knew nothing of Edward Bellamy and _Looking Backward_ , although I had grown up in Holyoke Massachusetts, 10 miles from his home on Church Street in Chicopee Falls, Massachusetts. Dan Flasar, a student in my Cooperation and Conflict class, first told me about it because he thought I would like the book. A year or two later Dan and I traveled to Bellamy's home. A school there was named Bellamy but students playing in the schoolyard had no idea who he was. Bellamy's daughter had died just two weeks before our visit, so we missed the opportunity to talk with her. Bellamy's son, Paul, had gone on to found the Cleveland Plain Dealer newspaper. Cleveland owns its electric power company, which Edward Bellamy had advocated. Congressman Dennis Kucinich as Mayor of Cleveland saved it from being privatized. So there is a place for collective ownership as well. However, with a proper standard of fair price, collective ownership would be less needed.

I never agreed with Bellamy's theory, although I loved the book for its sense of humanity and the common good. My wife, Mary, and I named our first son Benjamin Bellamy Blain in his honor. I hoped that Ben would grow up to read _Looking Backward_ and be inspired by it. Unfortunately, Ben died in a car accident at age 18 on October 16, 1999, just shy of the year 2000. He left us a poem that we found only in May 2005. I would like to share it with you. It is called Eternity.

ETERNITY

Benjamin Bellamy Blain

June 9, 1981 – October 16, 1999

Eternity is a secret we all hold inside.

Eternity is good, eternity is evil.

Eternity is how short or how long we make it.

Eternity is now, eternity is forever.

I am eternity, you are eternity.

We are eternity.

Thank you, Ben and thank you Edward Bellamy for looking ahead from 1887 to the possibility of a world of peace, wellbeing, and security for us all. In both your names, I continue that quest. Time on money and the good rules of Autonomy would get us there. Join me in promoting, not a socialist solution, but a free market one that Hour money would make a fair market.

Eternity is now.

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References

Bellamy, Edward, 1996, _Looking Backward: 2000 - 1887_. Dover Publications, New York. Originally published in 1888.

Blain, Bob, 2012, _The American Iceberg: Debt, Inflation and Money._ Smashwords.com ebook.

_____________, 2010, _Weaving G_ o _lden Threads: Integrating Social Theory_. Institute for Economic Democracy. Pamplin, Virginia.

_____________, 2004, _The Most Wealth for the Least Work Through Cooperation._ Authorhouse print version, 2012, Smashwords ebook version.

_____________, 1996, Defining exchange rate parity in terms of GDP per hour of work, _Applied Behavioral Science Review_ , Vol. 4, No. 1, 55-79.

_______________, 1987, United States public and private debt: 1791 to 2000, _International Social Science Journal_ , Paris, November, 577-591.

Costanza, Robert, John Cumberland, Herman Daly, Robert Good land, and Richard Norgaard, 1997, _An Introduction to Ecological Economics_ , St. Lucie Press, Boca Raton, Florida.

Gibran, Kahlil, 1923, _The Prophet_.

Gore, Al, 2006, _An Inconvenient Truth_ : _A Global Warning_. <http://www.climatecrisis.net/aboutthefilm/>

Joseph, Christopher, 2005, _A Measure of Everything._ Firefly Books, Buffalo, New York.

Marshall, Alfred, 1929, _Money, Credit and Commerce_. Macmillan, London

McLuhan, Marshall, 1964, _Understanding Media: Extensions of Man_. McGraw-Hill, New York.

Meadows, Donella, Jorgen Randers, and Dennis Meadows, 2004, _Limits to Growth: The 30-year Update._ Chelsea Green, White River Junction, Vermont.

Michels, Robert, 1915, Political _Parties: A Sociological Study of Oligarchical Tendencies of Modern Democracy_. English translation by Eden and Cedar Paul published by Hearst's International Library Co., New York.

Obama, Barack, 2008, _The Audacity of Hope._ Vintage Books, New York.

Payer, Cheryl, 1975, _The Debt Trap: The International Monetary Fund and the Third World._ Monthly Review Press.

Ruskin, John, 1879,

Samuelson, Paul A., 1976. _Economics._ Tenth Edition. McGraw Hill, New York.

Smith, J. W., 1994, _The World's Wasted Wealth 2,_ The Institute for Economic Democracy, San Luis Obispo, CA.

Taylor, John B., 2007, _Economics._ Fifth Edition. Houghton Mifflin, New York.

Timberlake, Richard H. Jr., 1965. _Money, Banking, and Central Banking_. Harper and Row, New York.

Turner, W. E., 1966, _Stable Money: A Conservative Answer to Business Cycles._ Marvin D. Evans Company, Fort Worth, Texas.

U. S. Constitutional Convention, 1787, _The Debates in the Federal Convention of 1787 Which Framed the Constitution of the United States of America._ Reported by James Madison, Gaillard Hunt and James Brown Scott, Editors, 1970, Greenwood Press, Westport, Connecticut.

Zarlenga, Stephen, 2002, _The Lost Science of Money_. American Monetary Institute, Valatie, NY.

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About the Author

Bob has a Master's degree from Harvard and a Ph.D. from the University of Massachusetts, both in sociology. He taught sociology at The Ohio State University for two years then taught for the rest of his 40+ year career at Southern Illinois University Edwardsville. He has spoken on monetary reform at the American Monetary Institute in Chicago, on month long tours of New Zealand in 1991 and Australia in 2006, and in Warsaw, Poland, Tripoli, Libya and Lucknow, India as well as at economic and sociological conferences in the United States. St. Louis Magazine in April 2007 published "A conversation with Bob Blain" about his trip to India and his work to change the world's money unit to hours.

Photo courtesy of Adam Scott Williams St. Louis Missouri

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Bob's Other Books

The American Iceberg: Debt, Inflation and Money

_The American Iceberg_ ebook explains the exponential growth in public and private debt, not just Federal debt, in the United States from 1790 to 2010. The First Congress voted to base the money supply of the new nation on Revolutionary War debt. From that seed, debt grew from $70 million in 1790 to $70 trillion by 2008. This book contains emergency instructions to the people of the United States for saving themselves from the Iceberg of debt that is already sinking them.

Google: The American Iceberg

The Most Wealth: For the Least Work through Cooperation

_The Most Wealth,_ in print and ebook formats, explains how we can achieve full employment and genuine social security with more free time to realize our natural destiny on earth, which is well-being and free time to enjoy life. The key is understanding money as a medium of communication that exists to insure that we all share the work and share the wealth.

Amazon.com for print version; Smashwords.com for ebook version

Weaving Golden Threads Integrating Social Theory

This textbook weaves central concepts from across the social sciences into a coherent fabric of relationships and tests them with data from all the countries of the world in 1986 and 2008. Going beyond concepts and data, it offers the reader two simulations to see how the variables in the fabric of golden threads influence each other. One is _Cooperation: The Wealth of Nations Game_ , for players to compare barter, capitalism, socialism, and a system that incorporates their advantages and avoids their weaknesses called autonomy. The other simulation is _Instrument Panel for Spaceship Earth_ where you select countries and try different changes to see how they affect national well-being. The combination of concepts from many social sciences, data from all the countries of the world, and two simulations is probably unique among textbooks in the social sciences.

It is available from the Institute for Economic Democracy

http://iedPress.com/

Connect with Bob Online:

Facebook: <http://facebook.com/bob.blain2/> and <http://www.facebook.com/bobnmary>

Smashwords:<http://www.smashwords.com/books/byseries/5934>

Websites: <http://hourmoney.org/> and <http://www.hourmoney.info/>

Blog: <http://timemoneypeacepartners.blogspot.com/>

The End of This Book.

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