Monday, November 22, 2010

"The Right of the People of Ireland," Part I

The nails have evidently been driven into the coffin, and the story is over . . . at least as far as the Wall Street Journal and the other usual suspects are concerned. As Yogi Berra is alleged to have said, however ("alleged" because he also said, "I never said most of the things I said"), "It ain't over 'til it's over." There is no social situation so bad that it cannot be fixed through the proper application of the appropriate techniques of social justice.

Common Ground for Discussion

The problem in Ireland is that both the problem and the solution originate from within a framework based on different principles than those of the Just Third Way. That makes it difficult for the powers-that-be to understand what we're talking about. They're operating from within a different paradigm, using different principles, and even speaking a different language that uses many of the same words. Perhaps G. K. Chesterton analyzed the problem best in the commentary in his brief biography of St. Thomas Aquinas, The Dumb Ox:

Thomas Aquinas understands, what so many defenders of orthodoxy will not understand. It is no good to tell an atheist that he is an atheist; or to charge a denier of immortality with the infamy of denying it; or to imagine that one can force an opponent to admit he is wrong, by proving that he is wrong on somebody else's principles, but not on his own. After the great example of St. Thomas, the principle stands, or ought always to have stood established; that we must either not argue with a man at all, or we must argue on his grounds and not ours. We may do other things instead of arguing, according to our views of what actions are morally permissible; but if we argue we must argue "on the reasons and statements of the philosophers themselves." (pp. 95-96)

Different Understandings of Money and Credit

The main point of divergence here — the fundamental principle on which the Just Third Way differs from the framework from within which most people appear to be operating — seems to be the definition of "money," and thus of private property. As Irving Fisher explained, private property and the idea of money are inextricably linked (The Purchasing Power of Money, 1931, 4). The definition of money used in the Just Third Way is the "legal" definition of money. This is the definition of money used in the "British Banking School" of finance: anything that can be used in settlement of a debt. (Vide "Money," Black's Law Dictionary.)

Most politicians and economists — the usual experts — use a definition of money based on the principles of the "British Currency School" of finance. This is briefly summarized as "a general claim on the total wealth of the economy." To this is often added the proviso that, to be legitimate, the State or some State-authorized individual or group must issue the claims and back them with the State's full faith and credit.

Thus, before we can even communicate and discuss the proposals of the Just Third Way, particularly Capital Homesteading, we have to agree on a common set of principles and definitions, or the discussion will not make any sense within the context of Kelsonian Binary Economics. Perhaps Louis Kelso best explained the understanding of money used in the Just Third Way:

Money is not a part of the visible sector of the economy. People do not consume money. Money is not a physical factor of production, but rather a yardstick for measuring economic input, economic outtake and the relative values of the real goods and services of the economic world. Money provides a method of measuring obligations, rights, powers and privileges. It provides a means whereby certain individuals can accumulate claims against others, or against the economy as a whole, or against many economies. It is a system of symbols that many economists substitute for the visible sector and its productive enterprises, goods and services, thereby losing sight of the fact that a monetary system is a part only of the invisible sector of the economy, and that its adequacy can only be measured by its effect upon the visible sector. (Louis O. Kelso and Patricia Hetter, Two-Factor Theory: The Economics of Reality. New York: Random House, 1967, 54.)
Stated another way, we can say that, within the framework of the Just Third Way, "money" represents the present value of existing and future marketable goods and services in which the issuer has a private property stake, and is the means of conveying that private property stake between parties to a transaction. In that sense, all money constitutes a contract, just as all contracts constitute money.

Freedom of Association

Money is thus one of the exercises of the right of free association/contract (liberty). This is because money is the means by which we dispose of what we produce, and acquire that which others produce. As Jean-Baptiste Say explained,

All those who, since Adam Smith, have turned their attention to Political Economy, agree that in reality we do not buy articles of consumption with money, the circulating medium with which we pay for them. We must in the first instance have bought this money itself by the sale of our produce.

To a proprietor of a mine, the silver money is a produce with which he buys what he has occasion for. To all those through whose hands this silver afterwards passes, it is only the price of the produce which they themselves have raised by means of their property in land, their capitals, or their industry. In selling them they in the first place exchange them for money, and afterwards they exchange the money for articles of consumption. It is therefore really and absolutely with their produce that they make their purchases: therefore it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.

From these premises I have drawn a conclusion which appears to me evident, but the consequences of which appear to have alarmed you. I had said — As no one can purchase the produce of another except with his own produce, as the amount for which we can buy is equal to that which we can produce, the more we can produce the more we can purchase. From whence proceeds this other conclusion, which you refuse to admit — That if certain commodities do not sell, it is because others are not produced, and that it is the raising produce alone which opens a market for the sale of produce. (Jean-Baptiste Say, Letters to Malthus, 1821, 2)
In addition to money being an exercise of the right of free association/contract, it is also (as noted above) an exercise of the rights of private property, that is, the right to enjoy the fruits of ownership and to dispose of them as the owner wills within the confines of the common good. This is what Pope Leo XIII meant when he explained, "it is precisely in such power of disposal that ownership obtains, whether the property consist of land or chattels." (Rerum Novarum, "On Labor and Capital," 1891, § 5) By the natural rights of private property (ownership) and of free association/contract (liberty), every human being has the inherent right to create money by entering into contracts with others, as long as the matter of the contract does not harm any individual, group, or the common good as a whole, that is, interfere materially with any person's natural right to acquire and develop virtue, and thereby develop more fully as a person ("pursuit of happiness").


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