Do you remember the old television comedy/satire The Munsters (1964-1966)? If so, you might recall that "Eddie Munster" (played by Butch Patrick) was seen sometimes clutching a werewolf doll. I doubt that I could duplicate the train of thought that led to the sudden realization while grazing on tortilla chips and grapes that "Eddie" was carrying, not the traditional teddy bear, but a teddy were.
As a revelation, this is no doubt earthshaking, and will appear on CNN at the earliest possible date. Not. It does, however, serve to segue into a serious problem faced by all binary economists sooner or later — usually sooner. That is the fact that binary economics uses a different understanding of private property than is found in any of the three "mainstream" schools of economics, and most of the rivulets as well.
This may seem like a minor thing, but reflect. "Property" (which, as Dorothy Day liked to quote, "is proper to man") is a "natural right," along with life, liberty (freedom of association/contract), and the pursuit of happiness (the acquisition and development of virtue). If we misunderstand property — without which, as Aristotle pointed out, neither the "good life" (the pursuit of virtue) nor life itself is possible — the chances are extremely good that we will not understand any of the other natural rights, nor even the framework — a just social order — within which natural rights assume overriding importance.
But wait! It gets worse! (Much worse, actually.) Private property, as Irving Fisher explained in The Purchasing Power of Money (1911), is the basis of this thing we call "money." Dr. Fisher did not develop this line of thought adequately or consistently, but that doesn't change the basic fact. "Money," best understood as "anything that can be used in settlement of a debt," is a derivative of the present value of existing and future marketable goods and services in which the issuer of "money" has a private property stake, or "owns." Without that ownership stake, someone or some thing may have the coercive power to issue claims against the property of others and mandate its use, but that is simply a complicated form of theft, a violation of private property.
"Currency" or "current money," is also a derivative of the present value of existing and future marketable goods and services, although currency (as with all other forms of money) may be based on other money, and so on in a chain as Henry Thornton pointed out, ad infinitum, as long as the ultimate underlying (as the asset behind the derivative is known) has a definable present value and is not "overtraded." (Vide Thornton, An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, 1802.)
References in historical financial literature to "overtrading" baffle many of today's economists. It only means drawing more bills (issuing more claims) against the present value of an asset than the asset can support, e.g., making contracts to deliver 2 million bushels of wheat when the expected harvest is only 1 million bushels. This is called issuing "fictitious bills" as opposed to "real bills" backed by the present value of existing or future assets. As all money is a contract (and all contracts are money), overtrading is thus another term for inflating the money supply, a form of theft.
This "real bills doctrine" leads directly into the formulation of Say's Law of Markets, the principle that "money" is only the medium through which we exchange what we produce for what others produce, regardless of the form it takes. Thus, "production equals income, therefore, supply generates its own demand, and demand, its own supply." The definition of money as anything that can be used in settlement of a debt (contract), Say's Law of Markets, and the real bills doctrine are the principles of the "British Banking School" of finance, under which we classify binary economics.
Unfortunately, mainstream economics reformulates Say's Law into a mere tautology, and rejects the real bills doctrine outright, restricting the meaning of "money" to currency and demand deposits, ignoring all other contracts. "Money" is further construed as a general claim on the present value of the existing wealth in the economy, rather than, in the case of currency, a fungible claim (non-currency forms of money may require "specific performance" on maturity and are thus not fungible) on specific wealth consisting of the present value of both existing and future inventories of marketable goods and services tied to the issuance of the currency by private property.
The restatement of Say's Law, rejection of the real bills doctrine, and the redefinition of money are the principles of the "British Currency School" of finance. The principles of the Currency School are the basis for all three mainstream schools of economics, the Keynesian, Monetarist/Chicago, and Austrian. (Some authorities classify Keynesian economics as "Banking School," but that results from confusion between the bullionist-metalist/anti-bullionist-metalist factions that split both the Currency School and the Banking School in the late 18th and early 19th centuries.) Currency School principles lead inevitably to the unquestioned assumption that the only source of financing for new capital formation is existing money savings, narrowly defined as accumulations of currency, achieved by cutting consumption — the "supply of loanable funds."
So commonsense are the principles of the Banking School, and so contrary to experience and the natural law are the principles of the Currency School that, on the whole, binary economists did not realize until recently that mainstream economics rejects Banking School principles! It seems obvious in retrospect, of course, but imagine our confusion when even eminent economists such as Milton Friedman and Paul Samuelson could not explain their opposition to binary economics, or why they believed it to be in error. Such deliberate obtuseness seems the height of intellectual dishonesty.
And, in a sense, it is. By refusing to debate the merits of the basic principles of binary economics, mainstream economists are, in fact, being dishonest. By rejecting the basic principles of the natural moral law (usually by redefinition) that underpin binary economics, and then applying their reformulated principles to binary economics, mainstream economists commit what, to G. K. Chesterton, was the supreme intellectual "crime": judging others by our principles, not by theirs. As Chesterton explained,
"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." (The Dumb Ox, p. 95.)Dr. Norman G. Kurland, president of the Center for Economic and Social Justice ("CESJ"), has developed a simple technique for dealing with people who claim that there are things wrong with binary economics, the Just Third Way, Capital Homesteading, and so on. It's straightforward, and therefore possibly completely baffling to the modern academic or political mind. It's to demand, "Tell me what's wrong with it."
The problem with this technique is that most critics have, by their lights, already told us what is "wrong" with binary economics, etc.: it's different from what they believe to be true, and, therefore, by that fact alone, wrong. It's "obvious" to them what's wrong with binary economics . . . so obvious, in fact, that they can't see it, and are unable to articulate any specifics because it's outside their frame of reference; they go by their principles, not ours.
It's unnecessary in any event, according to their principles. Telling us again would, as far as they are concerned, be beating a dead horse. "How many times," they lament, "do we have to tell you you're wrong before you realize it? You're just being dishonest or a liar." This justifies making claims that, while having nothing to do with the truth or falsity of binary economics, allegedly "prove" that we are stubbornly resisting the truth . . . as they see it.
The solution? Tell us what's wrong. No, really. Define basic terms and, more important, come to an agreement on what those terms mean, and agree to abide by basic rules of common sense, especially the "law of contradiction," i.e., that nothing can both "be" and "not be" at the same time. We cannot "agree to disagree" when it comes to the crux of the problem. Before there can be any intelligent (or intelligible) discussion of binary economics, we must come to a common understanding of what we mean by such things as private property, money, natural law, rights, justice and charity, and — most important of all — what it means to be human.
Without that, all is "a tale / Told by an idiot, full of sound and fury, / Signifying nothing."