Comments on: The Demand Crisis http://dissidentvoice.org/2009/07/the-demand-crisis/ a radical newsletter in the struggle for peace and social justice Thu, 08 Dec 2011 15:07:30 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Greg Moses http://dissidentvoice.org/2009/07/the-demand-crisis/#comment-50829 Greg Moses Tue, 28 Jul 2009 03:42:27 +0000 http://dissidentvoice.org/?p=9201#comment-50829 I had in mind the penultimate paragraph of PP Bk 3, Ch. 3 on "Interest and the Cause of Interest": "Thus interest springs from the power of increase which the reproductive forces of nature, and the in effect analogous capacity for exchange, give to capital. It is not an arbitrary, but a natural thing; it is not the result of a particular social organization, but of laws of the universe which underlie society. It is, therefore, just" (188). I had in mind the penultimate paragraph of PP Bk 3, Ch. 3 on “Interest and the Cause of Interest”: “Thus interest springs from the power of increase which the reproductive forces of nature, and the in effect analogous capacity for exchange, give to capital. It is not an arbitrary, but a natural thing; it is not the result of a particular social organization, but of laws of the universe which underlie society. It is, therefore, just” (188).

]]> By: Edward J. Dodson http://dissidentvoice.org/2009/07/the-demand-crisis/#comment-50804 Edward J. Dodson Mon, 27 Jul 2009 20:09:17 +0000 http://dissidentvoice.org/?p=9201#comment-50804 Your wrote: "The great San Francisco economist Henry George said interest payments are legitimate social demands because the wealth we put back into tools needs to grow like anything else. Of course any living thing can demand disgusting amounts of fodder and grow to obscene proportions on that basis, but it should not use the words of Henry George as an excuse for that." What Henry George actually argued is that of the material goods we produce with our labor and tools (i.e., capital goods), some portion thereof is the excess above that which can be produced by labor alone. This portion is the legitimate return to the user of these capital goods. If one owns the capital goods, the return is direct. If one borrows or leases the tools from another party, then a negotiation is appropriate over what portion of the added production is to be retained by the person who labors and what portion is handed over to the owner of the capital good (who must be compensated for the time the capital good is not available for direct use and for any depreciation that results from its use). Competitive markets have a way of working out the right distribution of wealth in such cases. Because political economists had long used the term "interest" to describe the wealth produced by capital goods, Henry George did so as well. Our difficulty is that in every day language we think of an 'interest payment" as the conveyance of currency or its electronic equivalent from one party to another as compensation for the temporary transfer of purchasing power. The two uses are not descriptive of the same processes. Your wrote: “The great San Francisco economist Henry George said interest payments are legitimate social demands because the wealth we put back into tools needs to grow like anything else. Of course any living thing can demand disgusting amounts of fodder and grow to obscene proportions on that basis, but it should not use the words of Henry George as an excuse for that.”

What Henry George actually argued is that of the material goods we produce with our labor and tools (i.e., capital goods), some portion thereof is the excess above that which can be produced by labor alone. This portion is the legitimate return to the user of these capital goods. If one owns the capital goods, the return is direct. If one borrows or leases the tools from another party, then a negotiation is appropriate over what portion of the added production is to be retained by the person who labors and what portion is handed over to the owner of the capital good (who must be compensated for the time the capital good is not available for direct use and for any depreciation that results from its use). Competitive markets have a way of working out the right distribution of wealth in such cases. Because political economists had long used the term “interest” to describe the wealth produced by capital goods, Henry George did so as well. Our difficulty is that in every day language we think of an ‘interest payment” as the conveyance of currency or its electronic equivalent from one party to another as compensation for the temporary transfer of purchasing power. The two uses are not descriptive of the same processes.

]]>