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>> The countervailing argument to "voluntary exchange" is that many trades are highly unequal If an exchange is genuinely voluntary, it leaves both parties bet

>> The countervailing argument to "voluntary exchange" is that many trades are highly unequal If an exchange is genuinely voluntary, it leaves both parties better off by definition. You value whatever you're giving up lower than what you're getting in exchange, because otherwise you just wouldn't go through the trade. >> On top of that, trades that involve large quantities of capital must still rely upon law and violence to guard ownership, and therefore at least somewhat subject to public jurisdiction Everyone naturally has the right to defend his property, through whatever means necessary. Not only that, but we all intuitively agree on what property is. An apple in your hand is automatically assumed to be your property, and so is the apartment you live in, or the factory everyone has always known you to own and run. If you see a car on the street, you don't assume it's no one's property even if there's no one in it. >> For better or worse, we should take responsibility for the relationship between private capital and the social contract, even if it is for the purpose of maintaining private ownership. I can't tell what that's supposed to mean. But again, your property is your property, and you have the right to defend it regardless of whether a State exists. >> capitalism is the worst system, except for all the others Capitalism is not a "system". It's not something that's imposed on anyone, but instead, it's just all the things people do in their pursuit of personal gain - exchanges, commerce, investments, and contracts etc. If you see problems with "Capitalism", they're actually problems with Crony-Capitalism, and caused by the State. Those evil corporations buy political power, and then use it to prevent competition, to rape nature, pass their losses on to us, and so on. All the nasty stuff.

jaekwon 13y ago
We should also be careful to distinguish an exchange in a positive-currency, vs one in a debt-currency, which by definition is a trade of indebtedness. Can you really have a "voluntary" exchange of indebtedness? No, no, no. We do not agree intuitively on what property is. What about a factory that you built with your own hands that becomes a utility for a community? At some point, your private property and private creations become integral to a community, and that's where things become muddy. I want to add, lastly, that if we have a true competition of non-debt currency, we may have part of a solution. I have some thoughts written on my blog post, but it's not well thought out and perhaps somebody can build upon it. http://jaekwon.wordpress.com/2013/12/02/the-supernova-theory-of-deflationary-currency/ http://jaekwon.wordpress.com/2013/12/02/the-supernova-theory...
- lukifer 13y ago
  I agree with your core thesis about the role of alt-coins in a deflationary spiral. There's one thing I haven't drunk the kool-aid on, though, and I'd like you to tell me if you see a hole in my logic: I don't see how a deflationary spiral is a problem at all. It's true that if a currency appreciates in value, buyers are disincentivized to spend. However, sellers also have the same knowledge, that the currency will gain value over time. Wouldn't that incentivize them to lower their prices in order to acquire the currency-as-investment, until the two meet in the middle? (Many of the merchants who accept BitCoin offer a BTC discount for this very reason.) One practical way that we see this happen is in technology, where goods rapidly decrease in value. While a dollar might lose 5% of its value over the course of a year, that's nothing compared to buying a new computer. And so the onus is on computer makers to offer a compelling enough value and price to convince the user to upgrade, as opposed to living with an old machine, or waiting for a better one. At any given point in time, to buy a computer is micro-economically foolish, and yet transactions still manage to take place, because buyers and sellers eventually meet in the middle. The trick to this, of course, is that this model only works if the currency deflates at a stable rate. BitCoin still has yet to establish itself in this regard; time will tell.
  - jaekwon 13y ago
    Good point on technology. I also doubt that the deflationary spiral is a big issue as it's made out to be. To prove it, I assumed that it is a big issue, and then proved that it isn't -- proof by contradiction. I think ultimately it all depends on how well a currency is designed or managed. An inflationary currency could outcompete an autonomous cryptocurrency in theory if it could introduce price stability as well as manage the macro economy. In practice this seems like an exercise in futility. Time will tell what happens with the current QE practices.
lukifer 13y ago
> If an exchange is genuinely voluntary, it leaves both parties better off by definition. Libertarians often compare taxation to theft (and believe me, I'm sympathetic). But by that yardstick, taxation is voluntary: I have a choice between the costs and benefits of government, versus the transaction cost of leaving for another country, versus the risk of being thrown into a cage. I make my "choice", and both I and the government "benefit". Meanwhile, if I need a certain drug to survive, and the provider of that drug charges $1000/month, we both benefit through that exchange, but it's hardly a choice on my part. Even if that drug could not have existed without the incentive of future rent-seeking on their part, I still have effectively zero negotiating leverage in that business relationship, and I would say it's exactly as "voluntary" as the taxation example above. Look at it in terms of the Ultimatum Game [1]. If the 2nd party is offered only $1 from the 1st party's $20, they can choose to defect and spoil the benefit for both, which gives them bargaining power. But if the 2nd party is in deep poverty, this will effectively never happen, and if the 1st party knows this, they will always offer $1. Better than nothing? Sure, I guess. But realities of biology and survival render any lofty ideals of free will moot. [1] http://en.wikipedia.org/wiki/Ultimatum_game http://en.wikipedia.org/wiki/Ultimatum_game > But again, your property is your property, and you have the right to defend it regardless of whether a State exists. In practice, no one defends their own property. If the only force preserving your land is you and your shotgun, ten of your neighbors might use their shotguns to disagree. It is through some combination of explicit law and implicit social contract for them to not do so, either soft-enforced in culture or hard-enforced by violence, that makes it possible for you to own and successfully defend your land. Possession might be 9/10ths of the law, but that last 1/10th makes a big difference. > Capitalism is not a "system". First, agreed on crony capitalism. That's a shit sandwich for everyone. However, just because a system is emergent rather than engineered, does not mean it is not a system. Is the rainforest not a system? Or the orbital mechanics of the earth, the sun and the moon? Moreover, in reality, markets are always affected by issues of public policy (and not deciding or doing nothing is still a decision): - How are disputes managed, and what are the costs? Are you on your own for legal fees, or must the loser pay for the winner's costs? If not, do you tolerate SLAPP suits? [2] - Where are the exact lines drawn around property? Can I prevent airplanes from flying over my land, if so, how high up? Can I give my cows as many antibiotics as I want, even if that weakens their effectiveness in the greater microbial ecosystem? Can I dump radioactive waste, which does not touch my neighbor's land, but which will gradually leak radiation for millions of years after my death? - Intellectual property: how is it defined and enforced? (Good luck defending a copyright with a shotgun.) How long do copyrights last? Are there patents, and who decides what's patent-worthy? There is obviously a high moral hazard for crony capitalism here, but it is difficult to capitalize on intellectual and creative output without rules governing IP. You probably have answers for these issues. They might be very good answers. But the point is that capitalism does not emerge perfectly formed from nature: while it is powered by emergent and distributed forces, it is always going to be shaped by culture and law and history, and there are a plethora of potential capitalist systems. To re-iterate, I'm not arguing against capitalism; I do not dispute that markets create wealth. I'm saying that, at best, "pure" libertarian capitalism is an implementation of negative rights [3], and that this is a far cry from the narrative of calling all transactions "voluntary". Even if all forms of state solutions are worse (they might be), people under immediate pressures of life and death do not effectively have any choice, any more than they do against direct state violence. [2] http://en.wikipedia.org/wiki/Strategic_lawsuit_against_public_participation http://en.wikipedia.org/wiki/Strategic_lawsuit_against_publi... [3] http://en.wikipedia.org/wiki/Negative_and_positive_rights http://en.wikipedia.org/wiki/Negative_and_positive_rights

jaekwon 13y ago

We should also be careful to distinguish an exchange in a positive-currency, vs one in a debt-currency, which by definition is a trade of indebtedness. Can you really have a "voluntary" exchange of indebtedness? No, no, no. We do not agree intuitively on what property is. What about a factory that you built with your own hands that becomes a utility for a community? At some point, your private property and private creations become integral to a community, and that's where things become muddy. I want to add, lastly, that if we have a true competition of non-debt currency, we may have part of a solution. I have some thoughts written on my blog post, but it's not well thought out and perhaps somebody can build upon it. http://jaekwon.wordpress.com/2013/12/02/the-supernova-theory-of-deflationary-currency/ http://jaekwon.wordpress.com/2013/12/02/the-supernova-theory...

lukifer 13y ago
I agree with your core thesis about the role of alt-coins in a deflationary spiral. There's one thing I haven't drunk the kool-aid on, though, and I'd like you to tell me if you see a hole in my logic: I don't see how a deflationary spiral is a problem at all. It's true that if a currency appreciates in value, buyers are disincentivized to spend. However, sellers also have the same knowledge, that the currency will gain value over time. Wouldn't that incentivize them to lower their prices in order to acquire the currency-as-investment, until the two meet in the middle? (Many of the merchants who accept BitCoin offer a BTC discount for this very reason.) One practical way that we see this happen is in technology, where goods rapidly decrease in value. While a dollar might lose 5% of its value over the course of a year, that's nothing compared to buying a new computer. And so the onus is on computer makers to offer a compelling enough value and price to convince the user to upgrade, as opposed to living with an old machine, or waiting for a better one. At any given point in time, to buy a computer is micro-economically foolish, and yet transactions still manage to take place, because buyers and sellers eventually meet in the middle. The trick to this, of course, is that this model only works if the currency deflates at a stable rate. BitCoin still has yet to establish itself in this regard; time will tell.
- jaekwon 13y ago
  Good point on technology. I also doubt that the deflationary spiral is a big issue as it's made out to be. To prove it, I assumed that it is a big issue, and then proved that it isn't -- proof by contradiction. I think ultimately it all depends on how well a currency is designed or managed. An inflationary currency could outcompete an autonomous cryptocurrency in theory if it could introduce price stability as well as manage the macro economy. In practice this seems like an exercise in futility. Time will tell what happens with the current QE practices.

lukifer 13y ago

> If an exchange is genuinely voluntary, it leaves both parties better off by definition. Libertarians often compare taxation to theft (and believe me, I'm sympathetic). But by that yardstick, taxation is voluntary: I have a choice between the costs and benefits of government, versus the transaction cost of leaving for another country, versus the risk of being thrown into a cage. I make my "choice", and both I and the government "benefit". Meanwhile, if I need a certain drug to survive, and the provider of that drug charges $1000/month, we both benefit through that exchange, but it's hardly a choice on my part. Even if that drug could not have existed without the incentive of future rent-seeking on their part, I still have effectively zero negotiating leverage in that business relationship, and I would say it's exactly as "voluntary" as the taxation example above. Look at it in terms of the Ultimatum Game [1]. If the 2nd party is offered only $1 from the 1st party's $20, they can choose to defect and spoil the benefit for both, which gives them bargaining power. But if the 2nd party is in deep poverty, this will effectively never happen, and if the 1st party knows this, they will always offer $1. Better than nothing? Sure, I guess. But realities of biology and survival render any lofty ideals of free will moot. [1] http://en.wikipedia.org/wiki/Ultimatum_game http://en.wikipedia.org/wiki/Ultimatum_game > But again, your property is your property, and you have the right to defend it regardless of whether a State exists. In practice, no one defends their own property. If the only force preserving your land is you and your shotgun, ten of your neighbors might use their shotguns to disagree. It is through some combination of explicit law and implicit social contract for them to not do so, either soft-enforced in culture or hard-enforced by violence, that makes it possible for you to own and successfully defend your land. Possession might be 9/10ths of the law, but that last 1/10th makes a big difference. > Capitalism is not a "system". First, agreed on crony capitalism. That's a shit sandwich for everyone. However, just because a system is emergent rather than engineered, does not mean it is not a system. Is the rainforest not a system? Or the orbital mechanics of the earth, the sun and the moon? Moreover, in reality, markets are always affected by issues of public policy (and not deciding or doing nothing is still a decision): - How are disputes managed, and what are the costs? Are you on your own for legal fees, or must the loser pay for the winner's costs? If not, do you tolerate SLAPP suits? [2] - Where are the exact lines drawn around property? Can I prevent airplanes from flying over my land, if so, how high up? Can I give my cows as many antibiotics as I want, even if that weakens their effectiveness in the greater microbial ecosystem? Can I dump radioactive waste, which does not touch my neighbor's land, but which will gradually leak radiation for millions of years after my death? - Intellectual property: how is it defined and enforced? (Good luck defending a copyright with a shotgun.) How long do copyrights last? Are there patents, and who decides what's patent-worthy? There is obviously a high moral hazard for crony capitalism here, but it is difficult to capitalize on intellectual and creative output without rules governing IP. You probably have answers for these issues. They might be very good answers. But the point is that capitalism does not emerge perfectly formed from nature: while it is powered by emergent and distributed forces, it is always going to be shaped by culture and law and history, and there are a plethora of potential capitalist systems. To re-iterate, I'm not arguing against capitalism; I do not dispute that markets create wealth. I'm saying that, at best, "pure" libertarian capitalism is an implementation of negative rights [3], and that this is a far cry from the narrative of calling all transactions "voluntary". Even if all forms of state solutions are worse (they might be), people under immediate pressures of life and death do not effectively have any choice, any more than they do against direct state violence. [2] http://en.wikipedia.org/wiki/Strategic_lawsuit_against_public_participation http://en.wikipedia.org/wiki/Strategic_lawsuit_against_publi... [3] http://en.wikipedia.org/wiki/Negative_and_positive_rights http://en.wikipedia.org/wiki/Negative_and_positive_rights