Listen, Anarchists!

My fellow Anarchists! We have an insecurity problem. We need to get over it. We need to stop complaining about “Marxists” and build a heterodox communist movement with everybody who believes in working towards a society without classes.

Let me start with a joke.

Two men are sitting at the bar, one is forlorn about his recent divorce, the other proclaims, “If you had listened to my advice about love you would have saved your marriage!” The forlorn man, perplexed, responds, “but you’ve never had a girlfriend, much less a wife, what makes you think you know about love?” “Obviously, the fact that I know about love” the other responds, “is clearly proved by the fact that, unlike you, I’ve never been divorced!”

Anarchists, never having had their ways and means in charge of anything on any globally significant scale, and as result, never having failed on any signification scale, think they know everything there is to know about power. Like the people’s front of Judea, they militate against the Judean peoples’ front, and not the Romans. With apologies to Monty Python, you can picture the scene in an infoshop near you: “We must unite against the common enemy! Yes! The Marxists! NO NO THE CAPITALISTS!”

Some Anarchists spend so much of their time distancing themselves from so-called “Marxists” or “Leninist” or, when they really want to be scary, “Stalinists,” that you’d think that defeating capitalism is a secondary goal compared to settling the score over the transgressions of the past and winning told-you-so points in some imaginary rivalry for leadership of the working class.

Don’t get me wrong. Anarchism is right. Marx is not some infallible prophet who’s received wisdom may not be questioned. The thing is, you need to dig far into the grungy depth of obscure ideological echo chambers like the Socialist Worker’ Party to find anybody who actually thinks that way, so why bother refuting it? And yeah, Marx was not only fallible, but could be a jerk, he didn’t give due credit to the likes of Proudhon and Bakunin, and was not above using an impressively deployed array of misrepresentations and fallacies in his attacks on them. But come on, if you’re really surprised and scandalized by this, you need to read yourself some of Schopenhauer’s art of controversy. In their own time, both Proudhon and Bakunin where better known and more widely influential than Marx was, so get over it!

Ok, so Marx was a jerk sometimes. Proudhon and Bakunin where hardly sweethearts themselves, as their misogyny and antisemitism illustrates, not to mention Bakunin’s involvement with his ruthless, murderous, buddy Nachayev. It’s not like Proudhon and Bakunin never got anything wrong! Just like the contributions of Proudhon and Bakunin are in no way invalidated by their personal failings, neither are Marx’s, and they’re all dead now anyhow, so it’s a little late to rehabilitate them. Can’t we just admit that, despite their failings, they all made huge contributions to the struggle against capitalism and move on? Does the identification with “Marxist” and “Anarchist ” camps really help us? Is it about flying our gang colours, or getting on with, you know, the struggle?

Anarchists need to deal with arguments worth dealing with, and not feel like they have to respond to every single provocation, endlessly proclaiming “Look look! Some random “Marxist” said something wrong about Anarchism! Outrage!” There’s a great XKCD cartoon called “Duty Calls” where a man at a computer is being called into bed by his lover, but refuses to come, proclaiming he can’t because “Somebody is wrong on the Internet!” A similar cartoon could be made with an Anarchist being called into action in the struggle against capital, but says “Can’t come now! Somebody said something wrong about Anarchism in some totally obscure journal!”

We really need anarchist to grow up and help make the communist movement whole. The anarchist position is very important! Not their position on what Marx took from Proudhon without credit, or what mean and unfair things Marx said about Bakunin. Boo Freakin’ Hoo! Also not interesting is the burning questions of who was really at “fault” in the Spanish civil war or the Soviet experience, as if these historical outcomes were based on the personalities or opinions of Lenin, Trotsky or Stalin, and not the material facts of class struggle. These failings need to be analyzed as complex and multifaceted topics, not anarchism vs Marxism brownie points. No current involved in those events is solely responsible, or completely innocent, for what happened, we need to look beyond the sectarian blame-game and try to better understand the complex political, economic, social and geographic forces at work. It really is super pointless to try to pin it on Marx or even “Marxists,” as if that gets us anywhere.

The reason the anarchist position is important is to understand the limitations of state power. Communism can not be imposed from the top down, it must be built from the bottom up. This is very important to understand. The state is the servant of the ruling class, because the ruling class has the wealth to relentlessly push the state towards their own interests. Trying to give control of the State to an underclass is like trying to make a rock fly by throwing it into air and berating it to stay up there. An underclass, by definition, has less wealth than the ruling class, and therefore can never retain state power! Even in the extremely rare case it manages to seize it, no matter how well it manages what wealth it has, it will, inevitably, eventually, fall to the unceasing attack of the global ruling class, and it will inevitably be distorted and degraded beyond recognition by the fight for its life during the time that it does remain in power.

The only way to change the structure of wealth in society, is to change the way we produce and share, by producing and distributing wealth differently, we change the structure of society itself. The preamble of constitution of the IWW states this quite well: “The army of production must be organized, not only for everyday struggle with capitalists, but also to carry on production when capitalism shall have been overthrown. By organizing industrially we are forming the structure of the new society within the shell of the old”

However, the complete rejection of parliamentary action that many anarchists promote is also problematic. The goal of taking the state and imposing a new society is not the only possible motivation for parliamentary action! Our capacity for building the new society in the shell of the old depends on the amount of wealth and freedom that we currently have, and that level is clearly affected by the policies of the state, parliamentary action can help resist policies that degrade the conditions of workers by fighting for the maintenance of rights and benefits. Like workplace and community action, parliamentary action is another theater of struggle, and it is foolish to abdicate this struggle, simply because we understand that such activity alone can never achieve our goals! The struggle for communism must be waged on all fronts where inequality reigns, in the workplace, in the household, and in the parliament as well!

Anarchists! Stop being so childish and defensive, get over crying about “Marxists” for their transgressions against you, get over your sibling rivalry. Communists of all sorts are our brothers and sisters in the struggle! We’ve got plenty to learn from and teach each other, so lets stop bickering about long irrelevant doctrinal fights, and lets build a heterodox communist movement that can challenge the power of capitalism on all fronts!

Meanwhile, back in Berlin, Stammtisch will go on as usual at Cafe Buchhandlung, and I’ll be at Toronto Stammtisch number 5 tonight at the Embassy!

Communist Semantic Drivel, The Good Parts. w/ @schneierblog

My Telekommunisten colleague Baruch Gottlieb wrote an excellent, considered response to Bruce Schneier’s recent essay, “The Internet is a Surveillance State.” While Baruch shares Schneier’s concerns about the increasing prevalence of surveillance on the internet, the focus of Baruch’s response is to investigate the political and economic origin of this. Baruch explains that although Schneier is certainly right about this state of affairs, he misses the mark on the political aspects of it.

Acknowledging the essay, Schneier posts a somewhat unusual reply:

“This Communist commentary seems to be mostly semantic drivel, but parts of it are interesting. The author doesn’t seem to have a problem with State surveillance, but he thinks the incentives that cause businesses to use the same tools should be revisited. This seems just as wrong-headed as the Libertarians who have no problem with corporations using surveillance tools, but don’t want governments to use them.”

Now, if Baruch wishes to comment on this, he will, so I’m not going to engage to much with either Schneier’s essay, or Baruch’s response to it, rather I would like to comment on what is implied in Schneier’s response above.

First of all, it should be obvious that the second part of the comment, claiming that Gottlieb is somehow a champion of State surveillance, is very obviously a straw man argument, which Schneier enthusiastically tears down with an irrelevant dismissal of “Libertarians.” A red herring.

And yet, remarkably, these are not the only logical fallacies in this short paragraph, for Bruce also deploys a tidy out-of-hand dismissal, using the term “semantic drivel,” and while not explicit, even the label “Communist” appears to be imply a guilt by association. So, a straw man, a red herring, an out of hand dismissal and perhaps an ad hominem, all in just a few sentences!

I don’t want to single Schneier out here, Bruce is a brilliant and insightful commentator and analyst. Who among us has not blustered on occasion when we’ve felt indignation?

What’s interesting to me is the source of the indignation.

bruce1

What is causing Schneier to act-out in this fashion? I suppose the answer lies in the fact that despite the fallacious dismissals, Schneier notes that “parts of it are interesting.” This communist semantic drivel has some good parts! Something stuck a chord.

I’ve never met Bruce, but when smart people are overcome with indignation and bluster, it’s usually because they feel threatened. They feel unsure, and this feeling makes them defensive, makes them lash out.

I don’t believe that Bruce is threatened by Baruch’s response itself.  But rather, there is something in it which challenges, his world view, and his sense of place in the world.

Baruch’s essay recalls Schneier’s closing comments, as a point of departure: “Welcome to an Internet without privacy, and we’ve ended up here with hardly a fight.”

Baruch, citing EFF, The Open Rights Group, and others, notes that we certainly have fought! You can add many others to that list, including Schneier himself. We have fought! We have fought and lost.

In order to understand the reasons we have fought and lost,  you need to address the structure of wealth and power in our capitalist society, which is what Baruch tries to do, and I wont expand on that here, it’s all there in his essay.

Schneier, perhaps, is not quite as ready to admit we’ve lost, that he himself has lost. This might explain the amnesia, refusing to remember the fight at all.

I hope his indignation is a sign his amnesia is passing, and he’ll soon be ready to confront the true cause of his disappointment with what the Internet has become. Once the initial revulsion and indignation passes, he may realize that the antagonist he is searching for is capitalism, not the laziness, stupidity or apathy of “we,” the masses, who supposedly neglected to fight, or the critical “semantics” of communists.

The problems he so expertly describes result from the profit motive itself.

The Many Tentacles of Octo P7C-1 at @transmediale #BWPWAP

Though Telekommunisten has been a participant in transmediale in some capacity for several years now, this year, as a partner of the festival, was by far our largest involvement to date.

The Octo P7C-1 installation, was not only loud, active and physically huge, occupying the entire building with about a kilometer of tubing, 8 end stations and the P7C-1 central operating station, but the project was also the largest collaboration, both with the number of members of the Telekommunisten network involved, and the number of partners involved.

Kristoffer Gansing and Tatiana Bazzichelli came to us in August of 2012, since R15N was the Official Miscommunication Platform of the previous year’s festival, they wanted to work with us early, as a partner, to plan the Miscommunication Platform for the upcoming transmediale, they shared the #BWPWAP theme with us, and asked us if we could do something with a pneumatic tube theme, since we had discussed our mutual admiration for the technology and interest in Berlin’s system on previous occasions.

None of us knew yet what Octo would become.

As the latest installment in the Miscommunication Technologies series, certain components of the artwork where evident from the beginning. Octo is perhaps the most clear demonstration of a centralized topology possible, and so the idea of Octo as a global domination minded start-up seeking to capture physical delivery by offering a business model based on control of user data and interaction. Once again, Telekommunisten designer-in-chief Jonas Frankki, created the graphic identity of the work, brilliantly using a cartoon octopus with a peculiarly neutral expression to express both the topology and global domination ambitions of the start-up.

However, Octo is more than just a social fiction or electronic telecommunication system, its very physical, and actually engineering a large scale pneumatic post system was the largest undertaking Telekommunisten has attempted to date.

Fortunately, electronic artist Jeff Mann, inventor-in-chief, had some experience with this. Jeff’s work draws out tensions between notions of utopian industrialism, personal theatre, and the evocative enigma of electronic equipment.

Jeff invented what was to become the Octo P7C-1 system, suggesting that we could use plain-old vacuum cleaners and drainage pipe to build the system. We demoed Jeff’s concept at a ReSource Transmedial Culture event and it was clear that this was not only going to work as pneumatic system, but also as a wonderful sculptural and audio installation. It was everyone’s first glimpse of Octo. We where all convinced and excited.

Next, we needed to prove the concept to Raumlaborberlin, the transmediale architects, and the Haus der Kulturen der Welt.

Using one of the Shop-Vacs that was later to be installed in the central operating station, we propelled a full 500ml can of beer through 50m of drainage pipe stretched across the Podewill courtyard, up into a 3rd story window, and down the hall.

Amazingly, it worked! Not only did it work, but it looked and sounded great.

Over the next next few months, right up to the last minutes before transmediale 2013 opened it’s doors, we worked with the HKW and Raumlabor, who designed the chaotic alignment of the tubes throughout the building, and created the 8 end stations. Jeff, drawing on his research into the nature of technological life and its cultural representation, designed and built the beautiful P7C-1 central operating station, which was almost certainly photographed more that Mount Fuji during the run of the festival.

And though the physicality of the work is on a scale much larger than any previous Telekommunisten work, the performative aspect of Octo was also more prevalent.

Telekommunisten director-in-chief, Baruch Gottlieb directed the many facets of the project towards a coherent whole, bringing new emphasis to the performative fiction aspect of Telekommunisten’s work though the lens of his concept of the biographical chronicle of labour. All the transmediale volunteers that operated the central station and attended to the end-stations, and all building maintenance staff that was constantly adjusting tubes throughout the building extended the work as labour theatre. Baruch worked closely with long time member of the Telekommunisten network, Diani Barreto, to create the character of Octavia Allende Friedman, CEO of Octo Corporation, a character which Diani played to great affect, both in person at Transmediale, and online, as a social media power house, who amassed well over a thousand friends and followers in just a couple of weeks.

It was also our first time working with Julian Gough, who played the role of Octavia’s personal biographer, a role we all hope we he will reprise as the legend of Octavia goes on.

As usual, Telekommmunisten Chief Communication Officer Mike Pearce, helped make our message simple and concise, while Chief Operations Officer Rico Weise handled our administrative work.

Although you kinda had to be there to really get it, we’ve collected some pictures and videos here:

http://telekommunisten.net/octo

I can’t thank everybody enough for helping us pull this off!

We’re very interested in showing the work again, so we encourage adventurous curators to contact us.

And yup, I’ll be at Stammtisch tonight at 9pm, so come have a drink with us.

http://bit.ly/buchhandlung

Kind Regards,

Dmytri Kleiner
analyst-in-chief
Telekommunisten.

Today: Octo stakeholder debriefing /// stammtisch

Octavia Allende Friedman has left Berlin, jettsetting on, where to? Hong Kong? Milan? Havana? Perhaps only her personal biographer knows for sure.

Meanwhile, members of the Telekommunisten network will be present as usual, at Cafe Buchhandlung, to greet one and all and raise a drink to a successful launch of Octo P7C-1 at transmediale.

Many deserve a cheer for their amazing contributions to Octo.

Jeff Mann, chief inventor and head of pneumatics, creator of the P7C-1 prototype, contributed decades of research into pneumatics and art
machines to his vision for the tubular system, and his master creation, the P7C-1 central operating station.

Jonas Frankki, Chief Designer, head of graphic identity, created the powerful branding and corporate identity that so perfectly expresses the numerous layers of the project.

Baruch Gottlieb, Chief Director, head of labour dramaturgy, for tirelessly directing the many facets of the project towards a coherent whole.

Diani Barreto, Chief Executive Performer, head of social representation, who brought the project persona to life online and at the festival.

And thanks to our Chief Communication Officer, Mike Pearce, who works towards bringing our often complex, perhaps even convoluted message, to the general public by adding simplicity and concision.

Behind the scenes, Rico Weise, Chief Operations Officer, manages the ever expanding administrative flow.

Not to mention our valiant team of ‘yellow-shirts’ the OCTO central and remote station volunteers, taking the smooth running and efficient delivery of OCTO P7C-1 to heart and ensuring we made a great demo for our current and future investors!

Please come and celebrate with us, share, retweet, all are welcome!

Cafe Buchhandlung is at Tucholskystr. 32

Here is a map: http://bit.ly/buchhandlung

9pm on.

TODAY: Octo Investors Meet & Greet at Cafe Buchhandlung /// Erzatz Stammtisch

This evening we’re having a informal Meet & Greet for Octo Investors and members of the Telekommunisten Network, if you’re an Octo investor or thinking of becoming one, come by and have a drink and chat with us. psychomedia analyst DJ Podinski of XLTerestrials will provide musical entertainment along with a special performance of three Yidish Workers’ Songs by the brother of Octavia Allende Friedman, CEO Of Octo Corp.

The event will take place at

Cafe Buchhandlung
Tucholskystr 32
map: http://bit.ly/buchhandlung

Starting about 10pm.

Octavia Allende Friedman will be in attendance along with members of the Telekommunisten network.

Please join us and pass this information on. Don’t miss out on the investment opportunity of the epoch!

http//www.octopost.me

If only the hot air of its supporters where as limited in supply as Bitcoin itself.

Correction: The original article mistakingly claimed that an LA Times quote used in the article was from anarchist-capitalist economist David Friedman, son of Milton Friedman, but it is a different author, David Friedman, a Senior Fellow at the New America Foundation.

I only have a few minutes for a post today, so this will be brief, to start with, I’ll be at Stammtisch late today, probably around 11pm.

Last week I wrote about Bitcoin and the Public Function of Money

What started as a trickle, grew into a gusher of economic quackery, as Bitcoin proponents came out of the woodwork to add their 0,00002 bitcoins to the discussion.

As I mention in the previous article, Bitcoin is a very significant development, I am pro-Bitcoin. But it’s remarkable how much zombie economics lurks in the Bitcoin trenches.

The most significant response, in terms of time spent typing, at least, comes from Erik Voorhees, “a Bitcoin entrepreneur” who concludes: “There were many other fallacies in Dmytri’s article, but this one on the nature of money’s origin and purpose is crucial. Money does not originate from the State, and does not derrive its virtues from compatibility with tribute. Indeed, as Bitcoin will prove, money functions best when the State’s coercive perversions are far removed.”

Never mind that that Erik does not appear to be familiar with the meaning of the term “fallacy” (hint: it does not mean wrong), but his article depends on the idea that the origin of money and money prices is barter, Erik is quite clear: “The origin of money is barter. In fact, money derives directly and unavoidably from barter.”

So, since I’m in a bit of hurry, I’ll just repost what I added to the comments section:

@Erik, I have to admit it’s a little tedious to respond to articles that depend on long discarded nonsense like the barter origin of money. We know from anthropology, most recently written by David Graeber, that money prices do not predate taxes, and that there was no barter before money, or even commodity prices defined in other commodities. The barter origin theory of money is well know to be false. So before you call other people’s understanding of money “misguided” you should perhaps update your own scholarship on the subject.

Anthropologists gradually fanned out into the world and began directly observing how economies where money was not used (or anyway, not used for everyday transactions) actually worked. What they discovered was an at first bewildering variety of arrangements, ranging from competitive gift-giving to communal stockpiling to places where economic relations centered on neighbors trying to guess each other’s dreams. What they never found was any place, anywhere, where economic relations between members of community took the form economists predicted: “I’ll give you twenty chickens for that cow.” Hence in the definitive anthropological work on the subject, Cambridge anthropology professor Caroline Humphrey concludes, “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing”
a. Just in way of emphasis: economists thus predicted that all (100%) non-monetary economies would be barter economies. Empirical observation has revealed that the actual number of observable cases—out of thousands studied—is 0%.
b. Similarly, the number of documented marketplaces where people regularly appear to swap goods directly without any reference to a money of account is also zero. If any sociological prediction has ever been empirically refuted, this is it.
– David Graeber

Just to repeat for emphasis: Cambridge anthropology professor Caroline Humphrey concludes, “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing”

I guess just like religious fanatics that don’t stop making ridiculous claims about history from the Bible just because they are disproved by material fact, the barter origin of money crowd are likewise determined not to know that money did not emerge from barter.

But beyond Erik’s incorrect anthropology of money, he makes the claim that “money functions best when the State’s coercive perversions are far removed.” and here I agree with him compeletely. However, we must understand what function money actually performs in society.

Erik and others would like to believe that functions like financing public goods and counterbalancing financial cycles and sectors are not necessary so that a pure-specie form of money will do, but that is not the case, not even celebrated right-wing “anarcho-capitalist” economist believe it.

For instance, in the Liberation Technologies list I posted a quote from David Friedman.
In a 2002 article for The Los Angeles Times, Friedman wrote “Until U.S. economic growth is more balanced and its emerging public finance challenge more manageable, it’s likely that our economic prospects will fail to fire investors’ and consumers’ enthusiasm. An expanding public sector may be necessary at a time of global terrorism.” Ok, so he invokes Terrorism, but non-the-less, Friedman, the anarcho-capitalist economist, is admitting that fiscal stimulus is needed to counterbalance sectors.

Much like his father Milton Friedman, who did much to make Von Mises and his ilk better known in the mainstream, non-the-less also understood the need for counter-cyclical fiscal policy, as my original article explains.

The fact is, until we develop non-State ways to provide the socially necessary functions provided by State money to freely associating, networked communities, we will not move beyond the State form, because these functions are necessary and having a monopoly on them will keep the State in place. But that’s all in the original post, so even if Erik and co refuse to know this, I don’t need to repeat it here.

Now, the reason that many do refuse to believe that these functions are necessary come from two other incorrect views common among the zombie economics set, in addition to the false belief that money came from barter, they also usually believe in the quantity theory of money and the efficient market hypothesis.

The former, like the barter origin theory, is well known to be false, though there has been literally thousands of papers that prove this, a nice blog from Bill Mitchell comes to mind where he argues: “They trot out phrases like “too much money chasing too few goods” – a vision derived from the old classical Quantity Theory of Money, which via an identity (that is, an accounting statement) – MV = PQ (where M is the money stock, V is turnover or velocity of that stock in transactions per period, P is the price level and Q is real GDP) – links monetary growth to prices.

So it is a matter of accounting that the money stock (M) times the velocity of money – the turnover of the money stock per period (V) is equal to the price level (P) times real output (Q).

To render that a theory of inflation, the mainstream had to directly link M to P and they did that by assuming that V is fixed (despite empirically it moving all over the place) and claiming that Q is always at full employment as a result of free market adjustments.”

The Quantity theory of money depends on the idea that velocity in the economy is fixed, and that there is never unemployment. As both these assumptions are false, the theory is also false.

But underlining all this is a belief in the efficient market hypothesis. That is the real reason the faithful want to believe the barter origin and quantity theories so badly, because they want to deny that we need any public forms because they believe that markets are magical efficiently mechanisms that always allocate productive assets to the most productive use, and always justly reward participants according to their contributions.

This is, of course, also false. Just like bureaucratic processes, markets also have asymmetries of power and information, and the singular focus on profit fails to adequately address other issues like social and environmental justice.

Neither markets nor planning are inherently efficient, both are equally able to misallocate productive assets and result in unjust and unsustainable outcomes. And both will remain components of human society that we need to improve.

Ok, more on that later, but I need to run now, so see some of you in the wee hours at Cafe Buchhandlung.

Bitcoin and The Public Function of Money

I want to write a bit about the public function of money, especially as compared to the market function of money, in light of some of the recent discussion about Bitcoin.

Bitcoin is already a very useful technology due to the fact that it allows transactions to take place without any central authority. This alone is significant. The technology behind it is also perhaps applicable in other areas, such as the Namecoin project to replace the centralized Domain Name system.

Does Bitcoin have the potential to replace Government fiat money? No. It doesn’t. It only has the potential to be one commodity form within the money economy.

Countless books and papers have described money, money is a very complex thing which serves many functions. Keith Hart has written about the “Two Sides of the Coin,” heads on one side, tails on the other. One way to interpret this might be to contrast between the public function and the market function of money.

The origin of money is tribute. The source of money is the public, in whatever form, whether empire or democracy or something else, money is spent on public expenditure and demanded back as tribute. Whatever its commodity value, whether minted on gold, printed on paper or electrified as bits in a database, this sort of money has value because it can be used to fulfill tributary obligations, for example, it can be used to pay taxes. As the entire source of this money is government spending, the amount of this money is determined by the amount we want to provide on behalf of all as a society. This is the “Heads” side.

Not all economic activity is done for money. Much of it takes, and has historically taken, gift and kin-communal forms, where work and wealth is shared without specific prices for specific commodities, but rather on a basis of social trust and reciprocation. Markets emerge as economic activity extends beyond communal and neighbourly forms, markets extends the social to beyond the kin-communal, and along with such social distance come more transient relationships that can not rest on trust and reciprocation, and thus must be encompassed by spot transactions, and as a result specific prices for specific commodities and specific price relationships between commodities. With these transient relationships comes money. But this sort of money is different.

Commodities can also be traded directly, even if their relative worth is counted in “Heads” money, and trade can also be done on-account, by credit. The amount of which is not limited to the physical amount of “Heads” money in circulation. In the wider economy, money is endogenous, the amount of money circulating in the economy is not a function of any monetary base, but rather is a function of the amount of things we want to make and do for each other. More specifically, the amount we want to make and do for each other for money. This is the “Tails” side.

This is vertical money and horizontal money. Vertical money is created and destroyed by the public, horizontal money expands and contracts as a result of the economic activity of private individuals and their incorporated forms.

Money that has a commodity base, i.e. Gold, is not completely rooted in a particular public form, since it’s value can cross international borders.

This is where Bitcoin, a digital specie essentially, emerges as a new and rather unique form of money. It’s built-in cryptographic limits on supply make it essentially a virtual commodity form of money, fixed and “hard”, like Gold, yet digital and transferable electronically across global telecommunications networks. As such, it has attractive features as both means of exchange and store of value. Yet, while it certainly is useful on the “Tails” side of money, as one of the various kinds of assets circulating in the global market economy, it does not serve public function well. There is a reason that modern public forms of money are not commodities, why modern economies use “fiat” money, money that is not based in or guaranteed by conversion to any sort of commodity.

If the public restricts itself to commodity-money for public expenditure, this means that what it spends must be limited to what it taxes plus what it borrows, since commodities have a fixed available supply. And though many ignorant or simply disingenuous commentators, such as promoters of austerity, present this to be the case even now, in a modern monetary economy based upon fiat money issued by the public for public purpose, this is factually not the case.

The thing about public money is that we can have as much of it as we want to have. How much we spend relative to how much we tax is a public policy choice, and the right-wing dogma that the appropriate choice is for the budget to be balanced, for taxes to be equal to spending, is universally understood to be false, even among the most celebrated right-wing economists. In his 1948 article “A Monetary and Fiscal Framework for Economic Stability”, “Chicago Boys” patriarch Milton Friedman proposed a counter-cyclical policy, where government spending would be increased beyond taxation during economic downturns, similar to Abba Lerner’s “Functional Finance” which is often referred to as “Keynesian” economic policy. Whatever their ideological stripes, there is little disagreement among economists that to the degree that public budgets need to be balanced, they must be balanced relative to economic cycles and sectoral balances and not merely between annual public spending and taxation.

The balance between spending and taxes is simply the balance of the public “Heads” side of the coin, always in counter-balance with the private “Tails” side of the coin, as expressed by the activity of private interests in the global market.

It is no secret that the national State form is unsatisfactory. Not only is it burdened by its aristocratic roots, and not only is it corrupted by the fact that its modern form is largely captured by the international corporate elite, but the State is clearly unsatisfactory for modern publics as a result of the fact that static territorial forms are increasingly ineffective and inappropriate structures to serve global, distributed communities.

The public form has to evolve from the state form to the networked form, but for that to happen, new, networked public forms will need to emerge that are able to take over the socially necessary public functions. Including the management of forms of public money.

The critical feature required of public money is that we can socially determine how much of it there is, and how much of we want to apply to public purpose. We need ways to create and destroy public money so that we can can have a counter-balance to private activity, to manage cycles, to counter-balance economic sectors, and to socially pursue public objectives, such as health, education, and justice.

Thus, Bitcoin’s innovation in terms of creating a networked form of commodity money is not useful in creating networked forms of public money, and as a result it does not create a way for networked public forms to replace the current State forms.

I’ll be at Stammtisch this evening at 9pm, please come if you’re in Berlin, if not, R15N continues at Mal au Pixel in Paris, you can join the network by calling +33 181 97 97 11

R15N at Mal au Pixel in Paris

Missed stammtisch last tuesday, I’m in Paris with Baruch Gottlieb to set up R15N is Paris for Mau au Pixel.

–> http://bit.ly/XlImWa

This is the 5th R15N exhibition, after Tel Aviv, Berlin, Ljubljana and Johannesburg. Though Baruch and I are in Paris representing the project, it is a project of Telekommunisten, and was created with Jonas Frankki, Jeff Mann and Mike Pearce, along with the organizations that have supported and exhibited the project, including the Israeli Centre for Digital Art, Transmediale, Aksioma, A MAZE and Mal au Pixel.

And, of course, the international network of R15N subscribers! R15N depends on your participation and diligence! So please keep your accounts active and be attentive to messages passing through the system.

Baruch and I will also participate in the “Network Hacks” panel on Saturday, along with our friends and collegues, Alessandro Ludovico, Danja Vasiliev, Julian Oliver and Timo Toots.

There is a sense of “Network Hack” in R15N, in that it was in part inspired by the power asymmetry in the mobile phone network that results from credit avialability. In most parts of the world, including all the location R15N has been presented in, recieving calls on mobile phones is free, but making them requires credit. Thus, for those that don’t have money for phone credit, their mobile is not so much a freedom-enabling communications device that allows them top stay in touch wherever device, but largely a control-tether, that allows parents, schools and employers to keep tabs on them whereever they are.

As R15N initiates all the phone calls as it bridges subscribers together to pass on messages, it is is free to use for all the participants, so it’s a hack in the sense that it can be used without any phone credit.

However, of course, this hack is an illusion, since the calls aren’t really free, but rather paid for by Telekommunisten out of the exhibition budget it recieves from the organizers of R15N exhibitions. It is, like many of the Miscommunications Technologies, a social fiction. Imagining ways communication networks could work if the primary motivation for building them was something other that profit.

So long as investment in communications platforms comes from profit-seeking private financiers, these systems will always be mechanisms for control, and not enablers of freedom.

R15N reveals the volitilaty of information in networks, with every subscriber participating in the passing-on of the data, it becomes clear how vulnerable data is whenever it passes through an intermediary.

As each R15N subscribers knows, whenever a call is not answered, either due to technical failure or lack of diligence on the part of the subscriber, information is lost, and that even when the call is succeeds, the information is subject to the interpretation of the intermediary, who can change or ammend it, record it, and share it outside of the network.

While apparently less drastic, information is just as vulnerable when passed through intermediaries such as social media monopolies as it is when distributed by way of R15N subscribers.

The opening is tomorrow, so please join the community by calling +33 1 81 97 97 11 to sign up, or +33 1 81 97 97 22 to activate/deactivate your account if you are already a subscriber.

I will be back at Stammtisch next tuesday, however the R15N exhibition will continue at La Gaîté Lyrique until the end of the year.

Cognitive Dissonance Among Liberals and Radicals

Normal, I try to write a bit about what I’ve been thinking about over the last week with these Tuesday posts, but truth be told, I’m not goint to do that today, because what I’ve been thinking about is the further development in what I’ve been trying to understand as “The Economics of Transformation,” and writing about that today would mean continuing on from the previous posts regarding sectoral balances and inter-modal flows, which would take some time to express, and I’ve got to run in a few minutes, because Telekommunisten, transmediale and Raumlabor are meeting to do some tests for the upcoming octo system {1} seeing how well 1 shop-vac will propel a soft drink bottle through 100M of drainage pipe {2}.

So, instead I want to reflect on some interesting cognitive dissonance that came up in various conversations I’ve had recently.

One thing that I strongly agree with many liberals about it is that we can not achieve a new society by taking the state by force and imposing new social relations from the top down. I agree that this was among the problems in the soviet experience. What I find odd, is that they they believe this when it comes to organizing in our western countries, and when it comes to understanding the communist history of the 20th century, but somehow this doesn’t seem to apply to the removal of “dictators” from “totalitarian regimes” in suspicious foreign countries.

Weather Egypt, or Syria, or Lebanon, or Iran, some believe that we apparently can change society from the top down by overthrowing the regime. Yet, it seems to me that the reason that top-down-revolutions are not likely to work is that the source of the power of the elite is not simply a title or a plaque on a desk, but is rather deeply rooted in the social structures and forces that shape that society, and these are not easily change just by toppling a figure head, at least, not easy to change with a desirable outcome. It seems that it should be self-evident, that if we can’t change our own society for the better by violently overthrowing our rulers, then we also can’t change other societies for the better by overthrowing their rulers, and only by working together in solidarity with people and communities here, there and everywhere can build a new society from the ground up, despite our rulers.

On the other side, many radicals like to point out that communism is not what was practiced in the soviet sphere, this is true enough, as I’ve written previously {3}, not even the rulers of these nations would ever have claimed to have achieved communism, they only claimed that they where working towards communism. However, the trouble is the reasons given for why these nations never achieved communism too often boil down to the “bad-apple” theory of history, that a few bad apples ruined it. Whether your bad-apple is Lenin, Stalin, Trotsky, Gorbachev or whomever, the idea is if these guys where better people or could have been removed, the workers revolution would never have eventually failed and allowed capitalism to be reinstated.

This is plainly far too simple, as there must be more systemic and material reasons, not just the quality of a few men, and just like the liberal dissonance of exactly when or where a new society can be imposed from the top down, this also seems quite dissonant, since the same people would be unlikely to accept the idea that the problem of Capitalism are caused by simply a few bad-apples at the top, that if wasn’t for Bush, Reagan, Nixon, Obama, Goldman Sachs or the Elders of Zoin or whatever, Capitalism would work just fine. If we understand that the failures of capitalism are systemic and material, then we can’t take the easy way out and just point our finger at individual people for the failures to realize communism following proletarian revolutions either.

That’s all for this week, come to stammtisch if your around, I’ll be at cafe buchhandlung {4} around 9pm.

p.s.

here are some slides about miscommunication technologies I made for my presenation at #pocketconf
–> http://telekommunist.jit.su/miscom/miscom.html

use the arrow keys to change slides.

{1} http://telekommunisten.net/oct
{2} https://twitter.com/dmytri/status/250549706688700416/photo/1
{3} http://www.dmytri.info/communism/
{4} http://bit.ly/buchhandlung

What public sector surpluses really do is increase private debt and promote trade imbalances.

Lask week I noticed the “Debt Resistors Operations Manual” was released. I fliped through the version posted online and was quite impressed. In terms of a guide book on how to deal with personal debt, it seems very well researched and thought out. I certainly look forward to the chance to examine it greater depth.

One thing to keep in mind when thinking about resisting debt is that, while personal debt and the policies that cause it do need to be resited, debt at the macroeconomic level is not something that needs to be eliminated. Economies where money is used require debt, without which there could be so savings, and likely no growth as well, and the economy could also never import more than it exports.

Let’s imagine an economy with $10 in it and 10 people. Each person starts with $1, each personal also produces goods and services each month worth $1. We have a market that clears, every person spends $1 per month on the stuff that the others make.

Now, in our happy economy, one person is feeling concerned about their future, and decides to not spend the entire $1 they earn that month, but instead, they start saving 10c per month. Now our economy can’t clear. Since without that 10c, the total income is now 9.90 and therefore all 10 people can no longer earn $1 each. Because somebody is saving 10c, this means that there is 10c less to earn.

Last week’s text, and the talk I gave at the Beautiful Trouble book launch last week, was about the Sectoral Balances. Understanding the sectoral balances is tremendously helpfull in understanding current economic issues related to debt, but is also required to understand the work I am doing on intermodal value flows, so I’m tyring to get a basic understanding of this across. I’ll try again this week, starting with the example above. The example describes our starting point, our private sector balance.

So what happens now that there is not enough income for everyone to earn $1?

Well, the obvious thing is that they all reduce their spending by 1c each, and the sector remains in balance, though the economy has shrunk. Our saver’s income will also fall to 99c, like the others, if this person continues to save 10c, then total income becomes 9 people spending 99c and 1 person spending 89c, making 9,89c. Once again, this reduction in total income, will mean that each person has to reduce their spending again, so the economy will continue to shrink every month that the 10c is saved. Wich also means that productive capacity becomes underutilized, since peaple could produce more, but nobody can consume any more.

Now, perhaps this shrinking causes other peaple to become concerned about the future too, say they all start saving 10c each, resulting in even faster economic decline.

Eventually, perhaps even quickly, the level of income will not be enough to sustain spending for the necessesities of life, like housing, food, health, education, child care, etc, and so not being able to reduce spending further, people will start going into debt, perhaps even fall into poverty, not because they can not produce enough to provide for themselves, but because the desire to save is reducing the ability to consume, and reduced consumption means reduced income, reduced income eventually means debt or proverty.If nothing else happens, debt will keep rising until the debtors are no longer able to pay, they will default, and this means that the savings that financed the debt will vanish.

The private sector is just one of the three sectors used in the “Sectoral Balances Approach.” The other two being the Public Sector and the External Sector.

So, one option that our Private Sector has to avoid shrinking, and eventually colapsing, is increasing it’s exports. If it can export the same amount as it saves, then it can maintain it’s income and savings without debt. So, say each of our 10 people earns $1 and saves 10c, this means that to be in balance the Private Sector has a $1 surplus relative to the External sector, it needs to export $1 worth of good and services per month.

Exporting $1 worth of goods per month allows them to save $1, or 10c each, per month.

However, whenever you have an export surplus anywhere, you necessarily have an export deficit in some other place. So while our 10 people have balanced their economy, they have just pushed their imbalance abroad, and thus some other economy, somewhere, is being pushed toward debt and collapse instead. Once that economy colapses, they will no longer be able to import, and thus this strategy is not sustainable.

Looking at just the private sector, the only sustainable thing to do is to stop saving money.

It’s import to understand that this is true with any form of money, it doesn’t matter if we’re talking gold coins, bitcoins, or sea shells, so long as the amount is generaly fixed, and that getting some means giving up something of value in exchange. The private sector and external sectors can only be in balance if there are no savings, the existinance of savings can only mean rising debt or shrinking economy and underutilized productive capacity. Such is life in a money economy.

However, we have a third sector. The Public Sector. Yet, one of these things is not like others. Unlike the Private and External sectors, the Public Sector does not need to give up anything to get money. It creates money. There is no fixed limit on how much money it can create, it can never run out, it just creates money “by fiat,” by declaring it to exist. There is another side, it can also remove money from the economy, by taxing. All government money enters the private sector as government spending and exists the private sector as tax payments.

The diferences between what the government spends and what the government taxes is the Public Sector balance. If the public spends more that it taxes, then the sector is said to be in defecit, if it taxes more than it spends, it is said to be in surplus, if it taxes exactly what it spends, the public budget is said to be “balanced.”

So long as the other two sectors are balanced, if the government spends more that it taxes, this means that prices will rise. Government spending will add demand to already clearing markets, and thus push prices up. However, this is almost never the case. Typically economies want to save, thus the combined balance of the private sector and the external sector is not in balance, but in deficit. Inflation alarmists always look only at the public sector budget, and worship public surpluses, yet understanding sectoral balances helps you understand that it is extremely unusual for any indivudual sector to be in balance, all three sections balance each other. And that thefore the public sector can only be balanced if there are no savings, or if any savings that do exist are the result of trade imbalances.

A public surplus necessarily reduces private wealth. This is quite the opposite of the often promoted idea that public sector surpluses are needed to increase public wealth. What public sector surpluses really do is increase private debt and promote trade imballances.

This certainly leaves a lot of questions open, like the composition of debt within the private sector, between the household and business sector for example, or between the banking and non-banking sectors. These question sheds some light on exactly why some rich private sector interests are interested in promoting austerity and reducing public spending. Also, technical questions about “fractional reserve banking,” that boogey man of so many currency cranks, not to mention the potential of alternative currency, barter, mutual credit, etc, to play a role, but I’ll leaveit here for now. Understanding the sectoral balances is really key to to taking the conversation further, so roll it around in your brain, and feel free to comment, ask questions, etc.

I’ll be at Stammtisch tonight around 9pm. See you there!