Wednesday, February 8, 2017

From Industrialization in Production to Industrialization in Paper Money

By the time of the Industrial Revolution, new technologies industrialized the economy and money just as it industrialized society as a whole. Money could now be printed en masse through the production of numerous paper bills. The economy also grew exponentially as never before. Thus it became beneficial instead of merely inflationary to grow the monetary supply as became easier than ever before.

Still gold was the basis of money at the start of the Industrial Revolution. At first, the Industrial Revolution and for that matter, the Age of Exploration before, led to gold rushes ballooning the amount of gold in circulation. The paper bill was merely a bank note that entitled its owner to obtain gold and other hard currency from the issuing bank. Yet limits in the growth of the gold supply and the ease and utility of growing the paper money supply led to a detachment of the backing of gold to paper money.

At first, it became more cumbersome to redeem a banknote for its gold. It became necessary to go to a national capital wherein the currency was issued, then only national governments retained the right to redeem their banknotes and finally in its final form the gold-backed paper currency of the Industrial Revolution became a fiat currency when President Richard Nixon declared that foreign nations could no longer trade their money for its set amounts of gold as Bretton Woods had determined (with the American dollar as the standard measurement unit to which foreign currencies were pegged).

While Nixon refused to redeem the bank notes of foreign governments as early as 1971, he did not immediately declare the conversion of gold-backed currency to fait currency. Instead he said that the redemption of currency was suspended and then over the next four years the United States Federal Government shifted to a petrodollar system. The petrodollar system was that the United States Armed Forces would protect the oil wealth of oil exporters, in return the oil exporters would accept only dollars for their oil and would invest their surplus dollars into financial investments in the United States.

Thereupon the peg of foreign paper currency to American paper currency was secured, as foreign corporations depended at least two currencies—their own to do business in their native land and American currency to buy the oil that fueled their industrial technologies. In fact, the main exceptions to this dependency on two currencies were in those minor nations that abolished their national currency in favor of accepting the American dollar as legal tender!

From Ancient Storehouse Ledger Symbols to Coinage

What a society considers money depends on how it constructs symbols since money is a symbolic measure of the value of goods and services that assumes real value because it is a symbol that is treated as if it has real value. However symbols are not just as an unnecessary burden but are important since they allow for abstract intelligence. The symbols used for human life are the symbols used for rites of passage, birth, marriage and death. Such symbols can also have value as a form of compensation for that which cannot be otherwise compensated for. These symbols as used in the sort of simple societies that existed for tens of thousands of years of world history were the first form of money. Money was thus the symbol of life.

When the first cities were organized around the first temples, the concept of money changed into the concept of credit ledgers for the gold, silver and other metals offered to the temple god for his or her glorification. Such glorification won the god’s favor which life itself depended on. Thus the temple’s credit ledgers of gold gained importance because a sacred connotation emerged around them. Parallel to these temple complexes were the palace complexes that formed around the generals who became kings as the ancient cities turned to the military to defend their power and wealth from enemies foreign and domestic.

In the popular mind, the collapse of civilization is associated with the Dark Ages and the Dark Ages are associated with the Dark Ages that occurred after the collapse of the Roman Empire. Yet the Dark Ages that occurred after the collapse of the Roman Empire were actually less harsh than the Dark Ages that occurred between the Bronze Age and the Iron Age. This Bronze Dark Ages collapsed a stable international system of states that had existed for centuries.

As new authorities took the place of old authorities, the financing of the military became an important issue. In the Kingdom of Lydia, there were deposits of electrum, an alloy of gold and silver. The king found that if he had it molded into coinage, he could give mercenaries a commonly accepted form of value for their services that could be taken elsewhere. The value of these coins was enhanced by demanding that his subjects pay their taxes with these coins, forcing his subjects to sell their goods and services to his mercenaries. This was such an effective solution to the financing of the military that it became the standard for city-states throughout the Iron Age Hellenistic world. This enhanced the desirability of coinage for mercenaries which enhanced the interest of city-states in issuing coinage/demanding tax in coin which enhancing the desirability of coinage for mercenaries which extended the coin-based system of markets, militaries and taxes.

As the shape of society changed, the form of the change was shaped by how the form of circulation of goods and services was affected by the form of economy. The circulation of goods and services through the storehouses of palaces and temples was thus replaced by the circulation of goods and services through the circulation of currency. The storehouses of palaces and temples were controlled by high priests and kings. The circulation of currency favored the elites favored by the states issuing the currency and disfavored the subject populations forced to pay taxes to the state. The subjects were forced into debt and then forced to sell their land and even their very selves to the cash-rich favorites of the state. These elites rich in cash and land then controlled their debt-bound clients through credit ledgers used as an alternative to hard currency, especially as the Iron Age civilizations headed to their own Dark Ages.

However, there was a limit to this trend which was at its greatest extreme in the peripheries. In the urban centers, cash was still important. In the core of ancient civilizations, more of society was organized around urban centers and thus cash was more important in general. Since more people handled more cash, enterprising warlords could build armies to establish new states under the aegis of their rising dynasties to replace old states unable to manage societal cash flows.

Saturday, February 4, 2017

Does Federalization Equal Centralization?

To Understand, First Define

First, a series of definitions. A unitary government is sovereign over all regions. A confederacy/confederation also known as a confederal government vests sovereignty in the regions aside from the functions the regions willingly delegate to the confederal government. A federation also known as a federal government places sovereignty over the regions into both the regional and federal governments, with policy-setting powers split between them based on a joint understanding.

The Power Grab At the Beginning

In the United States of America, the States existed before the Federal Government and jointly established the Federal Government. Indeed the first form of the Federal Government of the United States was technically a Confederation, due to its founding document, the Articles of Confederation. The trick, then, for the established American nationalist elite was to centralize American government in the teeth of opposition by the masses, who were backed by dissidents within the American elite themselves.

When the Articles of Confederation were replaced by the drafting of a Constitution that went into effect when ratified by the original Thirteen States, the first steps to centralization were taken. The new Constitution established a free trade zone. This allowed the wealthy elites to invest beyond their home states without hindrance. The pinnacle of such investment was through banks which were soon bound into a cartel through their supervision by the Bank of the United States. This brought the power of the purse into the hands of the federal government and into the hands of the private interests able to control the federal government.

At the same time, the ambiguity of the Constitution gave the federal government whatever power it was politically expedient to grab. On the one hand, the Bill of Rights reserved whatever powers were not explicitly in the Constitution to the States and to the People. On the other hand, the fact that the original Articles of the Constitution granted Congress the power to do whatever was necessary and proper meant that it could do whatever it could enforce.

Sectional and Populist Rights

Ironically the assertion of sectional and popular rights rendered much of the Constitution’s broad grant of federal power moot, at least for the first decades. The Bank of the United States eventually went down in flames due to populist and popular opposition though the federal government did maintain a Mint to shape gold and silver into coinage.

At the same time, rival sectional interests between the free-state, industrial North and the slave-state, agrarian South meant that politicians, in order to align the established laws with their state’s sectional interests, advocated “states’ rights” over the exercise of power by the federal government. It is true that the conventional wisdom holds that the Civil War transferred power from the state governments to the Federal Government. But even the shift in power caused by the Civil War was far from smooth, occurring in fits and starts.

In the American historical era of Reconstruction, occurring during the Civil War and in its immediate aftermath, placed state governments in the defeated and dissolved Confederacy under the control of the federal military. But the low-level insurgency in those states combined by a collapse of unity in the political coalition of the occupying authority, both in the Reconstructed state governments and in the Federal Government above them, meant that power over state governments returned to unrepentant “former” Confederates.

This in turn further broke the victorious political coalition in control of the Federal Government. Thus the “former” Confederates put in power state governments under the Democrat Party and in league with Northerners put the Democrat Party into power at the federal level as well for many of the decades after Reconstruction. Naturally then, the Federal Government became less assertive in the face of politics advocating for states’ rights.

Industrialization Brings a Renewed Push for Centralization

Although states’ rights replaced centralization as the organizing principle of American sovereignty in the immediate aftermath of Reconstruction, it came to pass that the Progressive Era, spanning the decades from the 1890s to the 1920s, was the start of a renewed push for centralization. This was due, in no small part, to the prior economic centralization was enabled by the free trade zone and “internal improvements”—roads, railroads & canals—financed by the tariff revenue accumulated by the federal government due to Civil War legislative reform. This was brought to fruition by two reactions to economic centralization.

On the one hand, Big Business was unstable, due to how its reliance on the demand of distant markets. This exacerbated the boom and bust cycle. To fix the boom and bust cycle, authority figures in finance and government sought to transfer the production of money to the Federal Reserve Bank, a central bank whose shares were owned by the other banks of the nation and whose top officials would be appointed by the Federal Government. The Federal Reserve Bank would issue paper currency whose backing in gold and silver would then be increasingly undermined by federal policy seeking to build the power of the purse for the Federal Government and for the private interests exercising influence over the policies of the Federal Government.

On the other hand, the Progressive Era was the signal for a paradigm shift in the minds of Americans. Big Business outcompeted small business through superior market efficiency; likewise Big Labor and Big Philanthropy came together to handle Big Business. Big Government in turn would be a regulatory force managing Big Business, Big Labor and Big Philanthropy and it would by necessary be ensconced in the Federal Government wherein Constitutional authority existed to regulate interstate commerce.

To make this possible, the Progressives in Federal Government, as explained above, established the Federal Reserve Bank but also instituted the progressive income tax to further enhance the gargantuan wealth to be placed within the Federal Treasury. Subsequent expansions of Federal Government authority flowed from the establishment of the Federal Reserve and the progressive income tax, spurred on by international wars and economic crises.

Again: Does Federalization Equal Centralization?

It is true that the faction(s) in American politics advocating centralization speak of federalism and describe themselves as Federalists. Still this self-description provokes skepticism on the part of opponents, due to how the ultimate conclusion of centralization is a unitary rather than federal government. And yet in the United States, centralization occurs without a unitary government in the traditional sense of the word. The States possessed more bureaucratic and police personnel and powers than the Federal Government when they created it and they still do. Legal and regulatory authority is imposed on land and people through bureaucratic and police personnel so this places direct authority over the land and the people in the hands of the state governments within the United States of America.

On the other hand, these bureaucratic and police personnel within the state governments are financed through the Federal Government which then exercises the power of the purse over the state governments. Furthermore such joint authority over the regions contained by state boundaries has been built up methodically over the centuries from the original condition of the United States in which the Union was a confederation rather than a federation. Therefore in terms of American politics if not the politics of other times and places federalization and centralization often amount to the same thing.

Why the Left is a Feature of World Society

  1. Some things need to be done communally.
    There are things that can exist only at the scale of society as a whole. The mass society with its mass production and mass distribution goes beyond the individual. This comes into play in regions of all scales with the region in question having people and goods circulating through it on roadways and waterways. On the privately used plots of land, the inhabitants therein must all use the roadways and waterways to go to and fro and acquire goods and services. Such all must use the roadways and waterways and the roadways and waterways must be maintained and since they are intertwined in a grid through the region, they form a monopoly. Either this monopoly is owned by a private party rendering the region’s people into a captive market or the region’s people must own the roadways and waterways collectively.

  2. The Left draws on the need of the individual, as a vulnerable entity, for strong support institutions.
    For the individual in all his littleness, his dependence on the mass society with its mass production and distribution renders him vulnerable. The time between the acquisition of one job and the acquisition of another job is a time in which the unemployed individual is unable to support himself, especially if he had not acquired much money for his last job in the same time. Sometimes unemployment becomes extended because of an individual’s lack of skill for available jobs. It is also the case that acquiring another home can be difficult without an income. Furthermore medical bills can be overwhelming again when the patient has little to no income. All this can be exacerbated by the economic devastation brought about the boom and bust cycle, by outsourcing or by shifts in market demand due to changing tastes and technology.

  3. Inequality is frustrating. It is both imposed and inherent. In particular, it is striking for the detached observer how much inequality is inherent.
    People are inherently unequal but they like to think they should be equal. There are many ways in which people are unequal. Important facets of who people are—their strength, their hard work, their courage, their honesty, their loyalty, their intelligence, their talent, their skills in various tasks—all these are distributed unequally.

  4. Yet an admission that people are unequal will not be forthcoming considering how bad the imposition of officially declared inequality can be—to the point that the lower-class people are subject to extreme poverty and abuse, sometimes to the point of death itself.
    The deciding point of whether a society will have its elite opposed to by a vigorous Left is the point of crisis. With disillusionment in the existence of justice in the formation of society’s social hierarchy firmly entrenched, the common people know, as if by instinct, that if they do not object to abuses, more will be forthcoming. They know that if the oppression goes on, they will be starved out and abused in other ways based on the capricious whims of authorities that know and care nothing of them. Thus, they realize that at some point, it is necessary to resist and the organizing cry of the resistance will be it is only fair to treat all equally and henceforth all will be treated equally because all truly are equal.

  5. Yet if people want to fight inequality, they must be organized.
    The common citizenry now find that the injustice of the hierarchical society—their vulnerability to unemployment, sickness, injury, even the undignified treatment of their corpses, when they dies, can only be addressed by a new society within the shell of the old one based on the solidarity of equals. Thus, it is so that if they want support when unemployed, it is best to lean on friends and family. As people go in and out of unemployment, the workers being friends and family network. An institution—a craft/trade union—forms to organize the network, building funds for insurance—life insurance, medical insurance and unemployment insurance. With solidarity a given, the next step was often militant class struggle—the aggressive use of numbers in strikes, pickets, boycotts and media campaigns to force the boss to provide a decent wage to his workers. This class consciousness was tapped into by socialist parties whose cadres, often middle-class radical intellectuals, recruited the militant union workers as a base.

  6. For those seeking to finance the goals of their organization and its personnel, the accumulation of State power—sovereignty—can be an idée fixe and raison d'être for a support organization.
    The State is the great creature of the modern age. It has gargantuan wealth and gargantuan power. The socialist vision: a well-funded authoritative collectivized society that is constructed by working-class militancy demands that the Left seek to absorb the State—thereafter anyone posing obstacles to the cause would be ruthlessly mopped up, especially when the Left was firmly entrenched as the master of the State.

  7. Internationally, national governments coalesce into “revolutionary” and “counter-revolutionary/reactionary” alliances/coalitions.
    Once the socialist revolution captures one nation and spreads out beyond that one nation, an international revolutionary socialist fraternity forms with the socialists in power seeking to empower the socialists out of power. The established powers banded together in a counter-revolutionary/reactionary self-defense. This threat then tightly binds the international revolutionary socialist fraternity to fend off reprisals.

  8. People fear being dragged down into the backwardness of a primitive past.
    The promise of socialist revolution is that the ignorance, prejudice, repression and poverty of a corrupt, unenlightened old order would be swept away. All that the Left’s supporters despise is amplified when facing an enemy that they seek to defeat and that they associate with everyone and everything despicable about the targeted old order. This then ties in the war between the revolutionary coalition and the counter-revolutionary/reactionary coalition.

  9. The Left is embedded in official institutions.
    After centuries of class struggle, now the Left is the Establishment. Controlling state monies, corporate monies and non-profit monies, it feeds much of these monies into organizations of protestors, rioters, propagandists and politicians supporting the cause of a collectivized, Left-controlled society.

  10. The Left provides a good pretext to centralize society.
    Quite frankly, Leftists in power like others in power tend to wish to remain in power. If they can convince the people that it is necessary to hold things in common, to organize the people around a common cause and that deviation from the common cause and hoarding of private property are selfish, greedy and unethical, then the hoarding of power, prestige and wealth by the State the Left controls is then guaranteed.

Introduction to My Blog

Competition is a constant.

Organization to win group competitions is constant.

Who will win? How will they win? What can make even a seeming loser be surprisingly resilient?

American vs. foreigner? Right vs. left? Big government vs. small? Which big government are we talking about? Who's in control? Who will remain in control? Who will seize power? How do they maintain their power? Is religion the guiding power? Or ideology as religion's 21st century equivalent? Race? Class? Citizenship? Settlement patterns? Or does the real secret lie in tracing the resource flows? All of which tie back to organization as the tool to win competitions...