The Road to Serfdom, Directions from a Blind Man. ( I would not start from here?) Krugman, De-Long, Keen , Varafoukis.) Lietaer and Kreutz, Who He?

rogerglewis July 22, 2017 11 Comments

Looking at Serfdom there is a link to the excellent Wikipedia article to Brad De Longs Blog, he is I see from Wikipedia reckoned to be the 754th most influential economist in the World, He is a Professor at Berkely, where no less than two of my Former Business Partners are also Tenured Professors, also in The Economics Priesthood.
According to Wikipedia, he is a self-proclaimed Neo Liberal?
( https://en.wikipedia.org/wiki/J._Bradford_DeLong ) , served under Clintons Economics chief Summers and whilst he seems a thoroughly nice and well meaning chap he has no Clue, certainly no wish to draw any attention to having any clue as to Money Creation, more precisely endogenous money creation. He recommends this following article as a must read. I have to say it is dire and I have also commented as such in a Reddit discussion put up on the article here.

https://www.reddit.com/r/CanadaPolitics/comments/6mput0/making_monetary_policy_great_again/

http://democracyjournal.org/magazine/45/making-monetary-policy-great-again/
FEATURES

Making Monetary Policy Great Again

The Great Recession exposed the weaknesses of orthodox central banking. Time for a regime change.

BY RYAN AVENT

FROM SUMMER 2017, NO. 45 – 29 MIN READ

TAGGED DONALD TRUMP ECONOMICS MONETARY POLICY

This essay was published with the support of the Washington Center for Equitable Growth.

When Franklin Delano Roosevelt was elected President in 1932, America had been in depression for three full years. Roosevelt was a man with a mandate to fix the economy by any means necessary. Barack Obama was elected in the midst of the worst economic crisis since the Depression, yet his campaigns, against both Hillary Clinton and John McCain, were defined by other issues. Obama’s pitch to voters was not chiefly a promise to save and remake the economy.

This article is also on Brad De Longs Blog. I have to say it is completely illiterate of Money Creation and as such commits the Error of all the Main Stream Economist, in short, its best quality is in demonstrating how the blind are leading the Blind:

I Made these interactive Quizzes based upon the Positive Money Quiz By David Faraday https://www.quiz-maker.com/QYMG3AR and the money creation Survey of MP´s

https://www.quiz-maker.com/Q4FBT85 The degree of ignorance paraded constantly since the General Election and during by Both Tory and Labour MP´s is staggering.
What are we to do with the Wilful ignorance of the political, Media and Economics So called Elites.

http://letthemconfectsweeterlies.blogspot.se/2016/08/neo-liberalism-billy-no-mates-or-just.html

The Question of Money and how it is most definitely not neutral is the subject on my New Novel, The Conquest of Dough.
http://theconquestofdough.weebly.com/the-ingredients-of-political-economy.html

For Bradford De Long this from his Blog in 2003 is a re-deeming Jem if he would Take Leitaers Advice and look at the money question, one which Krugman warned the great Currency expert about See Video.

http://www.j-bradford-delong.net/movable_type/2003_archives/001447.html

May 10, 2003
The Causes of Slavery or Serfdom: A Hypothesis
Paul Krugman’s post, Serfs Up!, reminds me of one of my major sins this spring (for which I must atone): my cutting Evsey Domar (1970), “The Causes of Slavery or Serfdom: A Hypothesis,” Economic History Review 30:1 (March), pp. 18-32, from my spring 2003 Economics 210a reading list.
As Krugman summarizes Domar’s main point:
Domar was motivated by his knowledge of Russian history. Serfdom in Russia, he knew, wasn’t an institution that dated back to the Dark Ages. Instead, it was mainly a 16th-century creation, contemporaneous with the beginning of the great Russian expansion into the steppes. Why? He came up with a simple yet powerful insight: there’s no point in enslaving or enserfing a man unless the wage you would have to pay him if he was free is substantially above the cost of feeding, housing, and clothing him.
Imagine a pre-industrial society where population is pressing on limited land supplies, and the marginal product of labor – and hence the real wage rate under competitive conditions – is barely at subsistence. In that case, why bother establishing property rights in human beings? It costs no more to hire a free worker than to feed an indentured laborer. Indeed, by 1300 – with Europe very much a Malthusian society – serfdom had withered away from lack of interest. But now suppose that for some reason land becomes abundant, and labor scarce. Then competition among landowners will tend to push up wages of free workers, and the ruling class will try, if it can, to pin peasants down and prevent them from bargaining for a higher standard of living. In Russia, it was all about gunpowder: suddenly steppe nomads were no longer so formidable, and the rich lands of the Ukraine were open for settlement. Serfdom was an effort to keep peasants from taking advantage of this situation. (And if I’ve got it right, those who were venturesome enough to run away and set up outside the system became Cossacks.)
Meanwhile, the New World opened in the west. Sure enough, the colonizing powers tried various forms of indentured servitude – making serfs of the Indians in Spanish territories, bringing over indentured servants in Virginia. But eventually they hit on a better solution, from their point of view: importing slaves from Africa…
Domar’s contribution is truly one of the most effective and powerful pieces of synthetic social science I have ever read. It isn’t perfect. He has more predecessors than he realizes (Marx, for example, especially Marx’s observations on the Swan River Colony in Australia, and the whole section on primitive accumulation and the creation of agrarian capitalism in Britain). And Domar misses one big cause of serfdom and slavery. During the formation of the Roman Empire, in Poland at the end of the Middle Ages, and in the Caribbean islands during the early modern period, slavery and serfdom did not emerge because a high land-labor ratio meant that the ruling elite could not afford to bid for labor in a free labor market. Slavery and serfdom emerged, instead, because high demand for staple products (grain, sugar, tobacco…) greatly lowered the gap between the productivity of free and the productivity of bound workers. Staple production is easier for gang-bosses to monitor than more diversified farming. Staple production also has lower skill requirements for workers. When demand for staple products is very high–to feed the proletariat of imperial Rome, to feed the growing cities of late-Medieval Flanders, or to supply the cheap luxuries demanded by early modern England–slavery or serfdom can emerge even without an extraordinarily high land/labor ratio.

Serfdom is the status of many peasants under feudalism, specifically relating to manorialism. It was a condition of bondage, which developed primarily during the High Middle Ages in Europe and lasted in some countries until the mid-19th century.

Serfs who occupied a plot of land were required to work for the lord of the manor who owned that land. In return they were entitled to protection, justice, and the right to cultivate certain fields within the manor to maintain their own subsistence. Serfs were often required not only to work on the lord’s fields, but also in his mines and forests and to labor to maintain roads. The manor formed the basic unit of feudal society, and the lord of the manor and the villeins, and to a certain extent serfs, were bound legally: by taxation in the case of the former, and economically and socially in the latter.

The decline of serfdom in Western Europe has sometimes been attributed to the widespread plague epidemic of the Black Death, which reached Europe in 1347 and caused massive fatalities, disrupting society.^[1] The decline had begun before that date. Serfdom became increasingly rare in most of Western Europe after the Renaissance. But, conversely it grew stronger in Central and Eastern Europe, where it had previously been less common (this phenomenon was known as “later serfdom”).

In Eastern Europe the institution persisted until the mid-19th century. In the Austrian Empire serfdom was abolished by the 1781 Serfdom Patent; corvée continued to exist until 1848. Serfdom was abolished in Russia in the 1860s.^[2] In Finland, Norway and Sweden, feudalism was never fully established, and serfdom did not exist; however, serfdom-like institutions did exist in both Denmark (the stavnsbånd, from 1733 to 1788) and its vassal Iceland (the more restrictive vistarband, from 1490 until 1894).

According to Joseph R. Strayer, the concept of feudalism can also be applied to the societies of ancient Persia, ancient Mesopotamia, Egypt (Sixth to Twelfth dynasty), Muslim India, China (Zhou dynasty and end of Han dynasty) and Japan during the Shogunate. James Lee and Cameron Campbell describe the Chinese Qing dynasty (1644–1912) as also maintaining a form of serfdom.^[3]

Melvyn Goldstein described Tibet as having had serfdom until 1959,^[4]^[5] but whether or not the Tibetan form of peasant tenancy that qualified as serfdom was widespread is contested by other scholars.^[6]^[7] Bhutan is described by Tashi Wangchuk, a Bhutanese civil servant, as having officially abolished serfdom by 1959, but he believes that less than or about 10% of poor peasants were in copyhold situations.^[8]

The United Nations 1956 Supplementary Convention on the Abolition of Slavery also prohibits serfdom as a form of slavery.

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I noticed that my Comment pointing out the same Mallady, ( Blind Leading Blind) was published after moderation here,

The secret history of the banking crisis

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for?

by Adam Tooze / July 14, 2017 / Leave a comment

Published in August 2017 issue of Prospect Magazine

It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics. Indeed, it has thrown into question who “we” are. It has triggered both a remarkable wave of nationalism and a deep questioning of social and economic inequalities. Politicians promise their voters that they will “take back control.” But the basic framework of globalisation remains intact, so far at least. And to keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before.

Roger G LewisJuly 16, 2017 at 11:15
“Banks borrow money short-term at low interest and lend long at marginally higher rates. It may sound precarious, but it is how they earn their living. In the conventional model, however, the short-term funding comes from deposits, from ordinary savers. Ordinarily, in a well-run bank, their withdrawals and deposits tend to cancel each other out. Fits of uncertainty and mass withdrawals are always possible, and perhaps even inevitable once in a while. So to prevent them turning into bank runs, governments offer guarantees up to a reasonable amount. Most of the Northern Rock depositors had little to fear. Their deposits were, like all other ordinary savers, guaranteed by then Chancellor Alistair Darling. The investors who weren’t covered by government backing were those who had provided Northern Rock with funding through a new and different channel—the wholesale money market. They had tens of billions at stake, and every reason to panic. It was the sudden withdrawal of this funding that actually killed Northern Rock.As well as taking in money from savers, banks can also borrow from other banks and other institutional investors. The money markets offer funds overnight, or for a matter of weeks or months. It is a fiercely competitive market with financial professionals on both sides of every trade. Margins are slim, but if the volumes are large there are profits to be made. For generations, this was the preserve of investment bankers—the ultimate insiders of the financial community. They didn’t bother with savers’ deposits. They borrowed in the money markets. From the 1990s commercial banks and mortgage lenders began to operate on a similar model. It was this new form of “market-based” banking combined with the famous securitisation of mortgages that enabled the huge expansion of European and US banking that began to crash in 2007.“

This aspect of the Article is completely flawed. Banks Create money by originating debt, that is by finding people who will sign debt contracts in return for offering security. The Bail Out funds Post 2008 and QE are based upon re defining the security or quality of the Security offered in support of those debt contracts. The commercial Banks moved their own goal posts with the full cooperation of the Central Banks and the Treasury departments of various Washington Consensus Governments, Chiefly The ECB, The Fed, Bank of England, Bank of Japan. with the Chinese and Russian Central Banks Going out in the cold and forming the BRICS Development Bank seeking to Head of a UNI Polar Dollar based World at the pass.The Accounting takes place after this initial money creation and the complex system of Central Bank Clearing is really a framework of Mexican standoffs where each player realises that they must not cross the others in a code of honour amongst thieves with of course Wall street and the dollar being first amongst equals?Without getting to the bottom of Bank Created Debt Based Money article such as these Let off the hook those they claim to be holding to account.

I also noticed that Varafoukis posted the review of his latest book by Tooze. It seems both Tooze and Varafoukis are similarly in need of a sharp talking to from Prof. Lietaer. Steve Keen is a Freind of Varafoukis and again has a strange aversion to talking about Usury as other priests of the Heterodox monetary school also have. I´m going back to Read some Kreutz, these elite sophists all stick together, Always Jam tomorrow, said, Alice?

https://www.yanisvaroufakis.eu/2017/07/02/adults-in-the-room-reviewed-by-adam-tooze-columbia-university/

Meanwhile, Chapter 5 of Conquest of Dough still remains a turtles head in my literary trousers, mere skid marks to show for the past weeks reading

http://theconquestofdough.weebly.com/the-ingredients-of-political-economy.html

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http://www.themoneysyndrome.org/index.php/about/