Monday, May 30, 2011

On Nazinomics - The Fox Pisses

MMT then is not a theory, it has no mathematical framework. Instead it is a thesis, the structure of this thesis is that all abstract exchanges rely on an ultimate exchange, which is paying taxes to a sovereign. Therefore, it argues the sovereign can introduce tokens into circulation on the grounds that it will eventually take them in taxes. The strong form of this thesis states that this is everywhere and always so. Thus the MMT thesis rests on every exchange being predicated on an ultimate exchange, and the only ultimate exchange is sovereign power. To disprove the strong form, all that is necessary is to show a monetary system which does not rely on ultimate sovereign power. This is easy to do, because, in fact, it is rather common. However, to comprehensively understand just how dishonest, and pervasively so, MMT is, it is necessary to beat a dead horse, and grind out exactly how obvious it is, to the point where it can be asserted that noone who has examined the record can subscribe to it without willful desire to believe. That is to say, they have to be a liar, or a fanatic.

To test this thesis against the historical record, then, requires parsing the thesis and generating the narrative of money that naturally occurs from the strong form. If everywhere and always money is the creation of sovereign fiat power, that is the monopoly of violence of the state, then we would expect to see the state first, then law codes capable of demanding fiat, and then finally circulating medium tied to a standard of value which is totalizing in the law code. We would then need to find an evolution of a monetary and legal system against which to test this narrative.

There is exactly one such test: that of the ancient Sumero-Akkadian world, because only here do we have an unbroken succession of records, from tokens, to markings, to writing, to codification. Other societies undoubtedly went through all or part of this evolution, or borrowed from contact. It may well be that the Sumero-Akkadian corpus borrowed, we know they were borrowed from. However, in all of the other cases, the earliest forms have been lost, because Sumerian, alone, was written on a semi-permanent medium, in a climate friendly to its preservation. Writing on bones and rocks is time consuming, and by the time people do it in a form which lasts, they have passed through many stages of written evolution. The Chinese Oracle bones offer a good example: they have a sophisticated use of language which did not spring out of the ground, however, its earlier stages are lost to us.

Contemporary with the Sumero-Akkadian development from token, to record keeping, the Elamites also evolved similar marking systems. It is not possible to tell which was first, though likely the Elamites borrowed from the Sumerians. Crucially, they did not adopt Sumerian writing systems until later.

Nazi is a harsh word, and in the lore of the internet, the first person to make the accusation has lost the argument: this is referred to as Godwin's Law. However, it leaves open the Godwin Gambit: the way to win every argument is to just be a Nazi, or to use the methods of the Nazi government. In the case of MMT, forced backed currency. To explain why this is so, and what the problem with forced based currency is, we need to explore what the MMT thesis is, what essential assertion about truth it makes, and how it spins stories and paradigms from this essential assertion of truth.

It will require, in later stages, a more specific theory of monetary backing than is presently available to economics, orthodox or heterodox. It will require offending a number of people who think well of themselves, and use the deontological projection as proof: “I feel myself a good person, therefore I will not do ill. I like this idea, therefore it is good.” This kind of personal moralizing as truth creation is, of course, endemic in the world, but virtually everyone at every time feels themselves either to be a good person, and therefore entitled to do evil, or feels themselves a bad person, and therefore entitled to do evil to atone for it.

So it is there the inquiry starts: with Sumeria, or rather, with the development of the Sumero-Akkadian tradition.


“The fox pissed in the sea, and declared 'All of the sea is my piss'”

Why Sumeria? Because of the various forms of the development of money, law, and writing, we have the complete history of only one that did not reference pre-existing systems. While others developed independently, either they did not become the kind of system that we are examining, or we do not have their roots. What makes Sumeria unique is accident: they wrote on baked clay, in an environment where this medium lasted for millennia. We have, in effect, the detritus of commerce stored over thousands of years. Clay is both easy, fast, and cheap, the way paper is, but durable in the way that stone is. Thus in other cases we have writing on permanent surfaces, but these, being harder to make, store different kinds of utterances. We do not know their pre-history, only the moment when it became worth carving meaning on a surface that took some trouble to produce.

Hence, we begin with the dawn of agriculture in Sumeria, because, for this part, all that is necessary is to produce a clear and sharp counter-example to the strong form of the thesis that money is a debt by the government which has ultimate value in taxes.

Part of the problem is that the Victorian idea of evolution as beginning from “primitive precursors” and to a full blown end hangs on in the study of the artifacts that will be looked at. Markings before the development of writing are referred to as “proto-writing” for example, and the question asked is when they become “full blown” writing systems. This is the wrong question to ask, because the forms that would eventually be adapted to writing existed for thousands of years, they were not proto-writing, any more than the user interface to a computer is proto-writing. Instead, what they were was a functioning system of markings, which had directed ends. Only later were they adapted to the purposes of writing. They are not, then “proto-” because there is no necessity that they would ever have become writing. If the “flood,” which the people's of this region write about had, in fact, wiped out their civilization, then there would have been no “writing” but there would still have been thousands of years of “markings.”

It is easy to see the present in the past, what we see as the present, is, in fact, merely our projection of our recent past into a false continuity. America thought of the Soviety Empire in 1984, as both American and the USSR had been in 1954. And so on. As it is with the study of the economic arrangements of the fertile crescent in the distant past. Each era has seen its present, or its present past projected backwards, or has created a mythic past in this era to justify its own ideas and practices. We are at the point where one could write a fairly complex history of the histories of the economic reality of Sumeria and Akkad, and one could then write an economic analysis of that history.

In the earliest fumblings for undestanding, there was a focus on the same issues that gripped the world in the 1920's and 1930's: statism, market economics, redistribution, social insurance, law and economic arrangements generally. There were a variety of theories put forward, two of the most consequential were the “temple economy” by P. Anton Deimel, who was a German theologian as much as he was a Sumerologist. He translated and compiled word lists, and looked at the distributive power of the temples, and created a broad sweeping narrative where the temples were the engines of economic control and distribution of social good. Highly reflective of nationalist economics, he classified the distributions, that is translated the word se2-ba as “wages,” and this cast the system of the temple as a voluntary, or at least semi-voluntary wage labor economy distributed from a federalized system of temples which were knit together beneath a priest-king who owed his legitimacy to that same network of temples. That at this time one of the driving forces behind the study of the era was attempts to find concordance with the picture of a Biblical past based on literalist readings of biblical archeology connects this proto-capitalist religious system to the visions of a proto-capitalist Mosaic system, and to controversies that were very live in Germany at that moment, as well as the world.

The next generation, led by I.J. Gelb began a re-assessment of many aspects of Sumerology, the economic aspect included. The reality of clay tablet writing is that what would normally be classified as ephemera: administrative records, receipts and so on, last for a very long time. Indeed, we have piles of records which were thrown out as being no longer useful and when found in a talus of clay shards that piled up. The detritus of commerce past. In this record it was clear that administrative records stretched by hundreds of years before the temple economy's formal functioning, and that many of the loans and other debits accounted for were from private hands that temples recorded, measured, and perhaps managed. The temple economy was still a significant fraction of the whole, but it was no longer a totalizing system. What moved to the front was the ideological question of state control of the economy against the market mechanism, something that was a very live controversy, reaching a particular fever pitch in the Post-World War II environment.

The present purpose of this study makes no strong form of assertion about money, it is not necessary to have a one true explanation of how money functioned in Sumeria or why, only to show that it is not explained by the sovereign fiat theory. The first step is to prove that money, as the term is encompassed, existed in Sumeria, and pinpointing the time period where it could be said to exist. This is only slightly more than trivial to do. The next step, only slightly harder, is to show that a legal apparatus did not exist to support the sovereign fiat theory. This is very far from asserting that the rulers did not have a powerful part in the monetary order, merely that they did no exercise the fiat issuance capability which MMT asserts to be true in all cases.

On Nazinomics - Thesis

A thesis is a generator, that is, it is not only important in itself, but for what it does: it is a generator of a family of stories, or narratives, that is it is a meta-narrative generator, and it is a paradigm generator, that is a mathematical or logical framework that observations can be placed within, and related to each other. A thesis then allows people to vacuum up observations, relate them to others observations, and then take observations that have been molded by the expectations of the thesis into a story. A thesis is the parent of a theories, and of stories.

How this works is that a thesis is a way to measure theories and stories, we compare a possible paradigm, or possible family of stories, to the thesis which creates them. Evolution, in the largest sense is an idea, it allows us to relate different thoughts from different ways of thinking to each other. But Darwinianism is a thesis: all variation can dispense with the underlying means of codifying information in biological organisms, and focus solely on variation and selection. This generates statistical paradigms of fitness, and allows us to tell stories about "evolutionary strategies," talking as if organisms had intentions and ends, while denying they do.

A thesis can be very broad, or very specific, it can be profound, or it can be simple. "Nothing happens by chance," for example, is a thesis. So is "the bible is the absolute literal word of God." A thesis can generate sub-theses: we can take economic thinking and trace out economic structures. These structures, when described, become a thesis.

Let me take an example far from the world of high philosophy. There is a couple, they are unhappy. A thesis would be that the man is having an affair behind the woman's back. This thesis organizes observations, and allows the creation of a calendar of events, the moneys spent, and the meaning of the affair. It generates stories as to why. It could be true, it could be false, it could be both. He could be lusting after a woman he can't have, he could be going out and drinking, the woman might be having an affair and projecting her own guilt. The "affair thesis" however, is not disabled by any one form being falsified. It is not really a statement that can be tested, because to disprove it is a negative.

This gets to the importance of truth manifolds. Almost any statement is true, even if only in a self-fulfilling way, for some set of conditions. Every statement is false in some set of conditions, even, as it turns out, the statement that every statement is false under some set of conditions, because there are statements that are neither true nor false under all conditions. A truth manifold bounds the truth of a statement: it describes the range of conditions that the statement is true over. A statement that can not be bounded, or asserts its unbounding, is useless. This applies even to bounding of truth manifolds, because there are many statements that do not reduce to truth. What is the truth of the Moonlight Sonata? Clearly statements about truth mean nothing there. Truth manifolds then, are bounded by statements that make truth claims.

MMT asserts that where ever there is "money" there is at root a sovereign power which gives that money value by taxation. This is a strong form of a thesis, its bounding is all money, for all time, every where. The weak form of this statement is that a monetary system so constituted is meta-stable.

The counter thesis that this essay offers is that MMT is not about money, not modern, and not a theory, and that instead it is a thesis about money, and that thesis is that money is backed by future conquest. This thesis: of unlimited fiat backed by future conquest, is the monetary theory of National Socialism. MMT, is Nazinomics.