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Questions for the Zeitgeist Movement: Economics

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This is part of a series describing questions I have for the supporters of the Venus Project that were raised in the discussion following my review of Zeitgeist: Moving Forward.

Utopia

Venus Project supporters deny that what they propose is Utopian. Fresco writes, “We do not believe in the erroneous notion of a Utopian society. There is no such thing.” Ok, let’s start there. I’ll let you know what sounds Utopian to me about your project you can let me know what I have wrong.

As I showed in the previous section, the Venus Project proposes a voluntary monopoly. Fresco writes, “It is doubtful that people play any significant role in decision-making.” The central computer governs all natural resources, all automated production and all distribution centers, so it is a monopoly. And everyone has claimed that the society is completely voluntary.

When I have asked if I was free to import unique resources, or grow my own vegetables, or trade with people off the grid I was told that this would be unnecessary or systemically impossible, because if the system is working properly it should fulfil all demand. If the assertion of the Venus Project is that this system will be able to satisfy 100% of demand for 100% of the population 100% of the time, then you are talking about a Utopia by definition. However, if the system is imperfect, as some have admitted, then there is going to be some percentage of demand that is not satisfied by the system, and that has some economic ramifications.

Most monopolies are maintained through coercion. Either the state prohibits competition, as in most municipal services, or large providers establish partial monopolies by lobbying the state to increase regulations on their own industries to push smaller providers out of the market.

A voluntary monopoly is a much more difficult thing to sustain. It can really only exist if the value of unmet demand stays below the economic barriers to starting a competing service. Otherwise competitors will self-organize spontaneously. But you’re talking about a system where there are no economic barriers. There is no money. Production is autmated. So, if even 1% of demand goes unsatisfied that creates an incentive for people to explore decentralized methods to meet demand.

So which is it? Are you describing a Utopia where all demand is satisfied by a voluntary monopoly, or will some coercion be utilized to prevent competition? Or, as I suspect, will there always and forever be barter trying to supply whatever demand is not met by the system?

Communism

The film and the FAQ expend considerable effort trying to distance the Resource-Based Economy from Communism, but Fresco seems unclear about the distinction between historical attempts to transition to Communism, and what Pure Communism actually proposed.

He writes that the Resource-Based Economy is different because, “Communism used money and labor, had social stratification, and elected officials.” But that’s not entirely accurate. Pure Communism called for a classless, stateless society without currency or private property. In Marxist theory the advancement of production capabilities leads to a “superabundance” of goods and free access to all consumables.

This is virtually identical to what Fresco proposes, with the exception perhaps that Fresco is able to imagine grander technology than Marx. But even Fresco admits that some amount of human maintenance will be necessary.

The currency and the state were only part of the transitional stage on the way to Pure Communism. But Fresco also proposes that a currency and interim government are necessary during the transition. We’ll talk more about the transition in a future segment.

Bottom line, we don’t have to call it Communism if you don’t want to call it Communism. But for Fresco to praise Communism, Socialism and Marx specifically, with out any reference to their historic failures makes him appear economically illiterate. To attempt to achieve nearly identical goals, by nearly identical means, without discussing why they failed and how he intends to succeed is irresponsible.

Scarcity and Abundance
Fresco rightly points out that Communism did not eliminate scarcity, but neither will the Venus Project. Here’s why.

Our current system occasionally produces an abundance of something. For example ballpoint pens. There’s a profit motive. There’s a price tag. But for all intents and purposes the production of your basic ballpoint pen is entirely mechanized, and as a result they are essentially abundant. I have never known anyone from any socioeconomic status who could not find access to a ballpoint pen. I have, on more than one occasion, found a pen faster than I could buy a pen.

I have a favorite pen. It’s the blue Paper Mate ballpoint pen. To me, it’s the perfect pen. I don’t know why, but I’ve always loved them. I found a 12 pack of them listed at OfficeMax.com for $1.79. That’s about 15 cents per pen. Today I was shipping something and filed out the forms with a pen I brought from home. I handed it to the clerk who used it to fill out his portion of the form. He handed it back to me to sign the receipt. And as I prepared to leave he said to me, “I think that is our pen.” So, we had a disagreement about ownership. But you know what I did. I handed it back to him without a word spoken. Because from my perspective ballpoint pens are abundant. The cost-benefit of keeping another blue pen is less than even disputing his claim. So I left without a pen.

If I understand correctly, this is how you imagine dispute resolution occurring in the Resource-Based Economy. And you are absolutely correct. As technology advances and mechanization reduces the cost of production the market value of many products will approach zero. This phenomena will only increase as automation increases. Stephan Molyneux has already proved that it is profitable to give away books for free in the market system. Radiohead has already shown that it is more profitable to release an album with no retails price. Panera Bread has already proved that it is more profitable to let the customer decide what they want to pay for bread. Abundance is already enevitable under the market paradigm, but that still doesn’t eliminate scarcity.

After I left the office I went to the ATM to make a deposit. Unfortunately the bank had already closed, and this particular ATM did not have a tethered pen. I searched my pockets. I searched my car. I searched the ground. Instant scarcity, and no computer could have prevented it.

Here’s another example. In addition to my ballpoint pens, I also possess one classic dip pen. I use this for calligraphy. It was difficult for me to find because there is almost no demand for such a tool. Most calligraphers prefer the slightly more advanced fountain pen, because of the internal reservoir, but I like using an inefficient inkwell. It is a very fragile instrument, and I take meticulous care of it. I would not even lend it to a person if I could not trust that they would use it responsibly. This one is hand crafted, but there would never be enough demand in one city to warrent automated production. That means shipping. That means time. That means scarcity.

Even in an environment of abundance, scarcity will always exist because fundamentally resources are finite and time is scarce.

Automation

Fresco imagines that technological unemployment is going to collapse the system. The only thing that is going to collapse a fiat monetary system is insurmountable national debt. Increased automation will only produce increased demand for hand crafted items. The ballpoint pen is cheap, but the handcrafted pen with all the accoutrements earned one worthy entrepreneur over $60. The Internet makes the economic barriers to starting an entrepreneurial endeavor virtually nothing. If you want to solve the unemployment problem just abolish the education model that was designed by industrialists to pump out factory workers and start teaching people valuable skills.

If mechanized farming produced an abundance of food similar to our abundance of ballpoint pens the price would approach zero. If automated production of electric cars, GPS systems, and iPhones illiminated the cost of production the market value of those items would also approach zero. That's how supply and demand works.

I guess I just don't see this whole paradigm shift as necessary to your overall goal. If the technology currently exists to produce this kind of abundance, just do it. You'd corner the market. If it is possible to dramatically increase access to resources in a radically more efficient way than anything currently available that would not only be affordable to the consumer it would be outrageously profitable in the current system. So, what’s stopping you? Why isn’t your movement focused on applying this technology, even on a small scale, to bank roll your project?

Instead of fund raising for Peter Joseph's next movie, and Fresco’s amusement park why aren’t you calculating the carrying capacity of the 22 acres of land the Venus Project already has? If you can show, scientifically, that you know a more efficient way to utilize that land I'm sure Fresco would graciously reliquish ownership of it for the greater good.

Further Discussion

Comments

  • Profile picture of Zoobilee
    Zoobilee 3 years ago

    It seems to me that you may be using the term demand where the term desire or need might be more appropriate. I will now define these terms as I understand them for clarification: Demand is an economic term referring to the willingness of a group of people to spend money/resources in order to obtain a desired object. Desire is a biopsychosocial term referring to person’s conscious impulse towards something. Human desires can be grouped into one of two categories: basic needs (e.g. food, water, shelter…etc.), wants (e.g. personal computers, stereos, ball point pens…etc.). You made the statement: “If the assertion of the Venus Project is that this system will be able to satisfy 100% of demand for 100% of the population 100% of the time, then you are talking about a Utopia by definition.” I am not sure that any proponent of the Venus Project has made this claim. My understanding of the Venus Project is that it is intended to satisfy 100% of human’s basic needs and also some of human’s wants, to the extent that they are universal. In such a system (i.e. the Venus Project), there may be wants that are not universal and are therefore not accounted for (e.g. I want my own personal stereo). Cont…

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    Joseph defines "demand" in the film as "what people need to be healthy and have a high quality of life” which is different than the economic definition you've given. But that's ok, "demand" "desire" "need" etc are all just terms describing the same spectrum of human want. You can delineate them for clarity if you like. I think Mazlo's heirarchy of need is a good model. But they are all essentially synonymous in describing human action. If you eliminate money you won't eliminate demand.

    If you're not claiming the Venus Project is going to satisfy 100% of demand/desire/need/want that's awesome. Than we're not talking about a Utopia. But it means that people will allocate their free time to satisfying their next demand/desire/need/want on the hierarchy of needs that is not satisfied by the system in decentralized ways.

    There is an incentive to grow my own vegetables. It fulfills a NEED to feel a sense of autonomy that is not fulfilled by the distribution centers.

    If the system is not going to satisfy the less necessary "human wants" part of the hierarchy, there will forever and always be barter in those industries.

    But I'm going to discuss money and barter in it's own section soon.

  • Profile picture of Zoobilee
    Zoobilee 3 years ago

    My understanding is that certain wants (such as stereos, PC’s, GPS systems, etc.) would be provided through a socialized system similar to a library system in which a person is able to check out the wanted item for a certain amount of time and return it when through. Let’s imagine that this is not enough time for me to use the stereo. I want my own personal stereo to use whenever I want it. I do not believe that the system would thwart any efforts for me to construct/find and use my own personal stereo. This want (i.e. the stereo) will simply not be provided for by the system. This calls into question the priorities of our current system. Continuing with the hypothetical stereo situation, let’s imagine that I am unable to obtain my own personal stereo: the resource-based economy makes it difficult or next to impossible for me to obtain my own personal stereo system. Does this mean that a free market, capitalistic system is preferable? The current free market system allows me to easily obtain my own personal stereo. I can go to a store and exchange money for the stereo of my choice. But, the ability to obtain a few of my wants seems secondary to others’ ability to obtain their basic needs.

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    "socialized system similar to a library system"
    Did the library system eliminate the need for book ownership? Is the retail book market now obsolete?

    "I do not believe that the system would thwart any efforts for me to construct/find and use my own personal stereo."
    How is that empirically different from ownership?

    "The resource-based economy makes it difficult or next to impossible for me to obtain my own personal stereo system. Does this mean that a free market, capitalistic system is preferable?"
    No, it means that it is inevitable. Even if the vast majority of goods and services were offered by a single provider for free... you can't overcome barter. These systems socialism/capitalism are not mutually exclusive. It's a false dichotomy. Voluntary socialism always works, and coercive socialism always fails. Voluntary capitalism always works, and coercive capitalism always fails. Our current system, which I will not defend, contains traits of all four.

    If you say that your system is entirely voluntary it will inevitably contain traits of both socialist and capitalist systems. They will each be preferable to different people for different reasons in different situations. And that's ok.

  • Profile picture of Zoobilee
    Zoobilee 3 years ago

    In reference to your comment, "If the system is not going to satisfy the less necessary "human wants" part of the hierarchy, there will forever and always be barter in those industries." I think we can agree that stereos and personal computers are not considered needs in Maslow's hierarchy. Above basic survival needs in the hierarchy, there are needs such as love, friendship, self-esteem, creativity, and self-actualization. These things cannot be “bartered for” in the economic sense. Hence, these needs will be met in other ways. Furthermore, do you think it's possible that people might, after time, begin to consider certain items (i.e. personal computer, personal home stereo, personal GPS... etc.) unnecessary luxuries? I am reminded of the first segment of ZMF, in which nature vs. nurture is discussed. Experts agree that about 50% of behavior is determined by environment aka nurture. It seems to me that, over time, in an environment in which all basic needs are provided for humans might begin to see certain personal items as superfluous possibly eliminating the barter system altogether. I have read studies that suggest this (i.e. that increased social relatedness and elimination of human needs correlate with decreased materialism and increased subjective well-being). I can provide links to these studies if you are interested.

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    Right. In the same way that apples and bread and ground beef are not "needs" in Maslow's hierarchy. They are means to fulfill a need. If the stereo didn't fulfill some need for socializing, creativity or recreation... than it's just paper weight. There's no demand for it.

    So lets say you provide all basic needs. Survival and Safety. Next you've got psychological needs. If your system isn't going to provide individual stereos, and I think for some reason that an individual stereo is going to be a means for me to fulfill my next higher function needs, I am absolutely going to barter for an individual stereo. If people begin to consider things unnecessary luxuries all that means is they recognize they don't fulfill any needs, and the demand disappears.

    The higher up you go into psychological needs the harder it is for a computer to calculate. If anything was demonstrated by the first part of the movie it is that psychological needs are not unnecessary luxuries. That means allowing people to experiment with decentralized methods... and fundamentally to barter for the means the system will not provide.

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    To be perfect clear, I am not saying "Don't Feed People" For God's Sake FEED PEOPLE! I regularly engage in direct food to mouth, and clothes to hand charity. In the past I have taken homeless people into my home, and been a homeless person taken into a strangers home. I'm saying satisfying basic needs doesn't prevent barter.

    I'm happy to read any studies you'd like to link provided you abide by the reciprocity agreement in the first section and are willing to read material of equal length that I link.

  • Profile picture of Danielson
    Danielson 3 years ago

    I agree that it is possible to solve social and environmental issues in a monetary system but it still requires a lot of people looking beyond money.
    For Instance the former CEO of Shell admitted that he was concerned about the environment too, but when he tried to implement technologies that would reduce the environmental impact his company was responsible for, Shell stock dropped. And investors could not be convinced to see it through. He had no choice but to scratch the project. So, are the investors to blame for trying to play the market for their benefit? After all they are just looking out for their own financial well being. What choice does that leave us? We could get voters to make the government mandate the use of the technology, but that might require a tax increase or a rise in gas prices and we need every penny to get ahead in this economy. Until you can convince people that money is not everything, it looks like we are stuck.

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    Money is an illusion anyway. I'm with you there. Even a resource-based currency is only as valuable as the utility of the commodity it represents. Fiat currency, for example, is only as intrinsically valuable as the entertainment of watching people panic when you burn it. (Seriously. It's hilarious, and worth every dollar.) But you can't get beyond the intrinsic value of commodities. Even the central computer will have to calculate based upon some ranking of intrinsic values that are arbitrarily set by programmers.

    That's sad about Shell. If he had defied the market and implemented the program he would have proved their utility, lured new investors, and sent those stock market cowards licking their wounds and questioning their premises. The true market is thirsty for it, but we are talking about two societies, and the people of means don't receive the same market signals. It's a pickle.

    I can't support state coercion because fundamentally it doesn't solve the problem. The corporations will either wage their lobbyists against you, or relocate out of your jurisdiction.

    If you want the peaceful solution its going to be dirty. Just stop subsidizing oil interests with the military. If you offload the cost of security onto the oil industry itself you skyrocket the price of oil forcing them to respond to the true market with local alternatives. What we have now is not a market price for oil.

  • Profile picture of Diegor
    Diegor 3 years ago

    @DAVI ABOVE COMMENT

    The problem with shell "defying" the market is that not only will they lose money in the process due to a drop in stock, also the alternative (let's say wind farms, or geothermal) generates very low profits because of their abundance they generate. If people were paying 100 dollars per unit of energy with oil, they will now be paying 10 dollars for the same unit - so if shell was making 1billion a year they will be now making 1/10th of their original profits, or 100,000,000. It's a lose-lose situation for the consumers when you factor in what you said (and I agreed) about state coercion not working in the current system.

  • Profile picture of Davi Barker
    Davi Barker 3 years ago

    If successful the stock drop is temporary. Any investment involves an initial risk. I don't know the details on those production methods, but that's not how economics works.

    If we're paying $100/oil unit now that's not all profit. Alot of that is cost of production. If you could produce such abundance that the market price of energy dropped to $10/geothermal unit that would be because the method was so efficient that the cost of production dropped that much. Selling more for less is often very profitable.

    If you could produce an abundance of energy efficiently your starting price would be todays market, and that price would drop relative to the abundance produced. But you're profiting the whole time it reaches an equilibrium, and the resulting market price of geothermal energy would still be profitable relative to the cost of production.

    If economic projections tell oil companies that the profits aren't as high as they are currently making, that doesn't change the incentive for a new company to act upon that opportunity and corner that untapped market.

    If an abundance can be produced more efficiently than current methods there are only really two reasons why it wouldn't happen. Either the initial investment is too high a barrier (which is temporary), or state regulations prevents competitors from entering the industry.

  • Profile picture of Diegor
    Diegor 3 years ago

    @DAVI
    I would like to state again (I mentioned this on a previous article comment) the central computer system doesn't dictate what people should or should not have or want, it all does is it makes sure that production of the essential for our survival are met, which consists of primarily, but not limited to, energy and food output - and it also monitors resource (PLEASE SEE MY COMMENT ON YOUR GOV'T ARTICLE) .

    As far as your “favorite” hand made pen. I completely understand where you are coming from, however. Please consider this: What would stop the people that currently make those pen from making them and supplying it to people? I doubt most of them do it primarily for the money because hand crafted items are typically a sort of artistic expression. If you were someone who loved making those pens, than I am sure if you were supplied with all the necessary resources (even more advance ones to save you time), you would continue to make them and share them with the few people in the world who demand them. OR a small operation can be established, by the same people that were making it in the first place, to automate the production of the pens and make it so that the production of the pen is on-demand - given that there is a steady but small demand for it. The pen maker is then free to express his skills by making whatever custom pens he chooses for his own pleasure - and possibly the pleasure of others if he gifts them to someone.

    ,,,con't below...

  • Profile picture of Diegor
    Diegor 3 years ago

    ....This same process can be applied to many “custom” things made today, assuming they are relevant.

    On a side note, there will still be people making and shooting guns recreationally for a long time after the transition, I my self never owned a gun but I would love to practice shooting targets at a distance just for pleasure (probably because I always play gun games lol). The same goes for racing, if enough tracks are built and accessible to the public to meet peoples demand for it, there isn’t going to be people racing on the streets like they do today.

  • Profile picture of Diegor
    Diegor 3 years ago

    @DAVI "If successful the stock drop is temporary..." Comment:

    I never said it's not profitable. I said it's less profitable. They are still making a profit for geothermal BUT 10% (an example) profit from a much lower revenue because of the decrease in cost of production, means a you make less money.

    How can you convince the oil industry to: 1. lose money while developing and implementing geothermal. 2. Eventually start making a profit again but the profit won't be as large because of the energy abundance and low cost of production has decreased the amount they earn.

    The other option they have is to ride the profit wave all the way to the top until oil prices is so expensive that it just crashes the economy.Then after you buy your family a a jet and a private airport for your mansion, you decide to change things up and start using geothermal among other methods of energy production.

  • kmarinas86 3 years ago

    Whatever the product or service, whether it creates abundance or creates problems and bureaucracy, there are people out there smart enough to make it profitable. As a result of that, the monetary success of capitalism, profit, is not directly proportional to the material profits (abundance) it generates. It is a function of what people choose to profit from.

    If on a cash accounting basis, the sum of all business in the economy nets a profit, this means that their quantity of cash has increased. If the profit of the sum all business exceeds that of the growth rate of the total quantity of cash, then the percentage share of cash outside the business world decreased. The amount of cash that we have in regular checking and savings accounts is counted as both asset and LIABILITY of the bank, and thus it is simultaneously inside and outside the business world.

    FYI:Assets=Liability+Equity.

    The long run average rate of profit of the entire banking sector (on a cash basis) comes solely from its rate of increasing the quantity of cash. Most cash in the world is introduced as credit. While bank equity is not "debt", it owes its existence almost entirely to credit. Therefore, no equity whatsoever could be accumulated by the banking sector without charging interest and repossessing assets.

    In general, IF just one sector/country/individual *consistently* profits more than the rest, THEN it is impossible to pay all debts, and the rest are thus enslaved, forever. But it can't be.

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