Concerning Gift Money

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In this issue we look at regulation of economic affairs. Should there be any such thing? Should businesses be left to self-regulate? Should they be hemmed in on all sides by rules imposed by politicians, and if so should those rules reflect economic or political principles?

Or should there be some form of inherent regulation, out of the nature of economic life itself when seen not in egotistical eyes – how much one can get out of it – but seen for itself? It is not wise, for example, to produce other than for a need, as unsold stocks undermine profitable production. We can manufacture need, of course, but the principle still holds: if one produces for a market that does not exist or that cannot be sustained because it is artificial, then one risks putting oneself out of business.

Recent events, of course, have drawn attention to the problems of lack of regulation in the financial economy in particular. But has there been a lack of regulation or too much turning of blind eyes? It is not true to say, as some like to, that nobody saw the global financial crisis coming. Many did and said so. But who likes to leave the table when they are on a roll? And why would governments readily forgo the tax income from an over-heated economy. (The City of London, for example, is a major source of tax revenue for the UK as a whole.)

In the lead piece, the case for inherent regulation is made by Stephen Torr, who argues that looking towards a fourth body to regulate the regulation of two individuals by a third is pushing the effectiveness of external compulsion too far.

Torr’s essay turns on highlights from a recent speech in Canada complaining about the over-regulation of the financial services industry in the wake of the global financial crisis, which also questioned the effectiveness of some regulation, wondering what unintended consequences it might have. Or maybe they are intended.

This month’s Sign of Our Time is by D’Arcy Mackenzie, our man on the ground in Canada. His piece is actually an abridging of a letter he wrote to Canadian securities administrators back in September 2011. It shows not only that the problem is on-going but also that D’Arcy’s response remains pertinent, especially as regards its focus not only on protecting the investor but encouraging the investee, especially young people.

The archive piece from Rudolf Steiner explores the question of money losing value over time, another concept that addresses the problems caused when people think this does not happen, or not to them at least. Central to associative economic thinking, Steiner’s idea of ‘gift money’ is a powerful macro-economic concept for maintaining a balance between the so-called real and financial economies. (Actually both goods and finance are real, so it would be better to speak in terms of the economics of goods and capital, meeting physical needs and unfolding capacities.)

An interesting thought is introduced by Patrick O’Meara, our man in Washington DC, who also works in the finance sector. Patrick argues that if we could identify more clearly and even calculate the timing and amounts of gift money, then give it effect, this would remove from the markets the excesses of capital that arguably cause the kind of problems that then need regulating. After all, so-called sub-prime mortgages are a clear case of over-capitalising land, the avoidance of which is another basic tenet of associative economics.

The AEX Pages include monetary commentary from Hayek that, to the surprise of many perhaps, seems to lie with the associative grain. While Victor’s View from Rare Albion brings up the rear with a consideration on the future of bookkeeping, which if understood and used aright is perhaps the tool par excellence for inherent regulation.

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