Consider, for example, the simple fact that it took a quarter of a century for the stock market to recover to previous levels after the Crash of 1929. We had in the interim the full employment of the Second World War and the economic prosperity of the halcyon days of the 1950s. No, a sudden rise in the stock market is not an indication of economic recovery. It is, rather, a sign that, when your losses are made good by the State, you can continue to engage in the same self-destructive and counterproductive behavior, and still be assured of enormous profits.
The drastic plunge in the stock market over the past week, caused by a serious reality check on the part of policymakers, economists, speculators, and gamblers, thus causes antinomous feelings. On the one hand we've got all the people who invested their hard-earned retirement savings into the stock market, either directly or, more commonly, indirectly through rights in defined benefit pension plans. On the other, the values of equity shares and debt issues on Wall Street are clearly overblown and inflated, kept artificially high to give the illusion of economic growth.
As Robert Walpole tried to explain to people during the South Sea Bubble in the early 18th century, all this emphasis on gambling on the stock market diverts attention and effort away from the two areas that are, as Moulton pointed out, of utmost importance in an economic recovery — or at any other time, for that matter: employment and production.
To try and refocus people's attention away from gambling, then, this is what we've been doing this week:
• On Monday of this week, Norman Kurland attended a seminar presented by the Committee for Responsible Federal Spending. The seminar was presented on Capitol Hill and included such anti-deficit figures as David Walker, former Comptroller General of the United States. Norm met with Walker a year and a half ago, but it is not clear whether the Just Third Way approach that includes fostering widespread participation in production of marketable goods and services through direct ownership of both labor and capital has been given adequate consideration. Responsible spending is only half the answer — and the lesser half. There must first be something to spend responsibly; money creation for non-productive government and consumer spending must stop. There must 1) be increased production of marketable goods and services, 2) the money and credit system must be reformed to encourage new money creation only for financing of new capital formation, and 3) all new capital must be broadly and directly owned. Norm spoke with some of the participants afterwards, including an economist with the IMF, but it is not clear whether anyone grasped the real significance of rejecting "Keynesian" assumptions about the necessity of existing accumulations of savings, and, instead, giving serious consideration to Say's Law of Markets and the real bills doctrine.Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we'll see that it gets into the next "issue." If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated anyway, so we'll see it before it goes up.
• CESJ's edition of Harold G. Moulton's 1935 classic, The Formation of Capital, is very close to being submitted to the printer. With our new foreword that ties together Moulton's work and Binary Economics, policymakers and academic economists serious about finding a viable solution to the seemingly endless economic crisis (whether you call it a single-dip or double dip recession, or finally face reality and call it a depression) can finally jettison outmoded ideas of money and credit found in all the major schools of economics, and target the underlying cause of economic disruption and injustice: lack of widespread direct ownership in the means of production, both labor and capital. Moulton's work showed Louis Kelso how people who currently own nothing except their labor can finance the acquisition of capital on credit, collateralized with capital credit insurance and reinsurance, and pay for the capital with profits generated by the capital itself — "future savings." The Formation of Capital is not a "popular" book nor, realistically speaking, a "good read" for those lazy days at the beach. Neither is the repair manual for your car — but if you're sitting in the middle of nowhere with a broken-down car and a blizzard on the way, would you rather have the auto repair manual, or Stephen King's latest? For "car" read "economy," and for "blizzard" read "anything the government has been doing lately." In any event, The Formation of Capital was a primary source for Kelso and Adler in The New Capitalists (1961), that has the startling subtitle, "A Proposal to Free Economic Growth from the Slavery of Savings."
• Speaking of books being almost ready for the printer, we are equally close to getting Supporting Life: The Case for an Economic Agenda for the Pro-Life Movement submitted. A more "targeted" piece than The Formation of Capital, Supporting Life is short and to the point, and can easily be read in a single sitting. Rev. Edward Krause, a member of CESJ's Board of Counselors, has written the foreword. We anticipate that the cover price will be $10, but (of course) CESJ members will get their 20% member discount, as will purchasers of wholesale copies in bulk (10 or more copies). To get the discount, the books must be purchased from CESJ and include shipping. Regular retail purchasers must go to Amazon or Barnes and Noble on the internet, or order CESJ publications from a local bookstore that takes special orders. CESJ does not make retail sales to the public (it's a tax thing).
• Yes, the member discount applies to ALL CESJ publications, such as The Formation of Capital, although the actual discount is sometimes adjusted to greater than 20% for convenience — it's easier, for example, to charge $14 for an $18 member discounted book than $14.40. We're not (primarily) in this for the money, although the money comes in very handy when trying to spread the word about the Just Third Way. No one receives a salary from CESJ, so most of the work is all-volunteer. Proceeds from publication sales go first to meeting direct expenses associated with publishing (such as set up, review and complimentary copies, and so on), then to author royalties (if any — obviously no royalties need be paid on a public domain work such as William Cobbett's The Emigrant's Guide), then into a designated fund to expand the publishing program, and finally into general revenues for program services. (That's the plan, anyway. So far the program has successfully covered expenses and paid required royalties. It is self-sustaining at this point, but nothing more.)
• As long as we're on the subject of books, Lydia Fisher's Cinderella of Wall Street was featured on the "Pious Ladies Bookmobile Newsletter." Despite the name, the "Pious Ladies" feature a rather large and reasonably priced selection of books for all tastes. There are even books about religion.
• Today we had a very interesting meeting, arranged through Joseph Recinos, with someone from the former Soviet Union who is interested in presenting the Just Third Way to the new president of one of the former Soviet Republics. The individual was very interested, and the meeting ended with plans for . . . more meetings (what else?).
• As of this morning, we have had visitors from 44 different countries and 42 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the UK, Brazil, Canada, and Poland. People in Argentina, Venezuela, the United States, Poland and the Czech Republic spent the most average time on the blog. The most popular posting is still the piece on "Le Armée Catholique et Royale" from the "Out of the Depths" series on French financial experiments. This is followed by the weekly "News from the Network," the posting on General McChrystal, the "Production is the Key" posting from the "Out of the Depths" series, and the short posting on the renewed interest in Friedrich von Hayek.