User:Janosabel/drafts

Conventional economics compared with binary economics

A good understanding of binary economics can be obtained by contrasting various aspects with comparable aspects in conventional economics.

For example, conventional economics upholds the concept of productivity (generally labour productivity) while, in contrast, binary economics has the new concept of productiveness giving fair credit to the contributions of both labour and capital.^[12]

Then conventional economics believes that interest (as opposed to administration cost) is always necessary but binary economics, again in contrast, states that, certainly where the development and spreading of productive (and the associated consuming) capacity is concerned, interest (as opposed to administration cost) is not necessary.^[13]

The contrast continues. Thus conventional economics:-

• is largely unconcerned that the present money supply is generally not directed at productive capacity

• in practice engenders a continual inflation

• conceives of a self-centred homo economicus

• eschews ethics and belief in God

• ignores the imbalance in power relationships between people.

But binary economics views it as essential that:-

• the money supply be directed at the development and spreading of productive capacity

• the money supply be not inflationary, ^[14] indeed, should be counter-inflationary^[15]

• recognition be made that humans are capable of going beyond self-interest

• ethics and belief in God be upheld^[16]

• account be taken of the imbalance in power relationships between people.^[17]

Perhaps most fundamentally of all, binary economics rejects the claim of conventional economics that it promotes a ‘free market’ which is free, fair and efficient. Binary economics states that the present ‘free market’ is unfree, unfair and inefficient not least because the ‘free market’ thinks it does not matter who owns productive capital and how it is distributed and does not worry if people do not have independent incomes.^[18]

In a quite remarkable way the two economics differ on the subject of democracy. Conventional economics upholds the periodic political vote (as in, for example, elections to government). Binary economics does the same but then deepens democracy by insisting that productive capital and the practical everyday power its ownership gives to individuals be widely distributed as well. In binary economics freedom is only truly achieved if all individuals are able to acquire an independent economic base. In short, binary economics upholds political democracy plus economic democracy.^[19]

Perhaps most importantly of all, conventional economics is generally heedless of (or at least, not directly involved with) environmental issues but, even if it does heed them, does not have the specific mechanisms to address the environment in a large-scale way. Indeed, conventional economics generally views environmental solutions as imposing an economic cost, and a large one at that. Binary economics, however, again in complete contrast, does have the mechanisms and its solutions do not impose economic cost.^[20]

Lastly, conventional economics claims that its mathematical equilibriums are a manifestation of a world-encompassing objective science expressing universal values. But binary economics denies that claim.^[21]

Background

Although elements of binary economics can be found elsewhere,^[22] the first clear formulation of the subject was by Louis Kelso and Mortimer Adler in their book The Capitalist Manifesto (1958) which can be downloaded from www.kelsoinstitute.org The title is a Cold War reference in opposition to communism.[5]

Kelso and Adler^[23] (and, later, Patricia Hetter Kelso^[24]) continued to write, explaining how capital instruments provided an increasing percentage of the wealth and why capital is narrowly owned in the modern industrial economy. Their analysis lead to a consequence understood by market theorists – if what increasingly produces a larger percentage of the wealth (capital) is narrowly owned, then a properly balanced economy (implementing Say’s Theorem (Law) cannot come into being unless, on true free market and private property principles, capital becomes much more widely distributed.^[25] This is at the heart of the binary claim to create an efficiency which creates justice and vice versa.

Kelso and Hetter implemented their ideas by proposing new binary share holdings which (with exception for research, maintenance and depreciation) would pay out their full capital earnings, be capable of being insured and, if loss occurred, would occasion no recourse to the new binary owners. Because of the full payout provision the binary holdings could pay out more than five to nine times what is typically paid out today.^[26] This could allow a new widespread capital ownership to achieve a widespread income, and associated individual incomes which could be possessed by anybody in the population irrespective of whether or not that person is in a conventional job.

Employee Share Ownership Plans (ESOPs)

Very often the first acquaintance people have with binary economics comes through today’s Employee Share Ownership Plans (ESOPs). These stem from conversations between Louis Kelso and Senator Russell Long of Louisiana and Senator Mike Gravel of Alaska in the early 1970s. However, it is important to understand that (the original binary concept having been implemented for the purposes of the old paradigm rather than the new binary one) present ESOPs are not true binary ESOPs.^[27] Among other things, present ESOPs do not have full payout of earnings and do not make use of the key binary concept – the use of interest-free loans issued from the central bank and administered by the banking system.

It should be noted that the ESOP is only one of several techniques − e.g., Individual Share Ownership Plan, Consumer Share Ownership Plan, General Share Ownership Plan,^[28] Mutual Share Ownership Plan − which can be used to broaden capital ownership but all the techniques have at their heart the use of central bank-issued interest-free loans for the creation and spreading of productive capacity.^[29] Without those loans the primary defect in the present ESOP legislation will remain in that it requires poor and working people to acquire capital primarily with the present earnings of labor rather than primarily with the future earnings of capital.^[30]

Uses of Central Bank-issued Interest-free Loans

Binary economics proposes that central bank-issued interest-free loans should be administered by the banking system and that, while no interest would be charged, there would be an administrative cost as well as capital credit insurance if necessary. ^[31][32]

This supply of interest-free loans for the spreading of productive capacity (and the associated consuming capacity) as well as for environmental and public capital would take place in circumstances of a move (over time, on market principles) towards banks maintaining reserves equal to 100% of their deposits.^[33][34]

Thus the banking system would not be continually creating money (as happens today) but would be confined to lending (with permission) depositors’ money and the bank’s own capital. Moreover, because the loans are repaid and cancelled they cannot cause inflation.

The main uses of the central bank-issued interest-free loans are as follow:-

Public Capital Investment Interest-free loans would allow hospitals, sewage works, social housing, roads, bridges, waterworks, schools etc. to be built for one half, or one third of the present cost. However, the capital projects can still, if wished, be built, managed, even owned, by the private sector and use made of Community Investment Corporations and the like.^[35]

In the past these loans have been successfully used in Canada, New Zealand and Guernsey. Malaysia is today believed to be experimenting with them.^[36]

Moreover, a major consequence of the use of interest-free loans would be a great diminution of the National Debt.

Private Capital Investment Ownership of productive (and the associated consuming) capacity can be spread by binary economics.^[37] Interest-free loans should be allowed for private capital investment IF such investment creates new owners of capital and is part of national policy to enable all individuals, over time, on market principles, to become owners of substantial amounts of productive, income-producing capital.^[38] By using central bank-issued interest-free loans, a large company/corporation would get cheap money as long as new binary shareholders are created. The key point is that the cost, at the very least, is being halved while, at the same time, the ownership of productive capacity is being spread.

Independent incomes Even more importantly, the spreading of ownership enables the spreading of the associated incomes. Indeed, over time, on market principles, binary economics enables all individuals to obtain an independent income.

‘Green’ Environmental Capital Investment Interest-free loans should be used, in particular, for clean, renewable energy. At present, a lot of green technology projects are not financially viable. With interest-free loans, however, they would become viable and so we would be able to have clean electricity through tidal barrages, wave machines, wind turbines, solar electricity, and geothermal power stations etc.^[39]

There is now also hope that some technologies, previously thought to be physically impossible, are practical. An example is the use of magnetic interactions for clean electricity generation which does not require the input of any other energy (i.e. ‘free’ energy generation). Cars, houses, trains, factories could be powered by clean, ‘free’ magnetically-generated electricity. All of these technologies should be implemented with interest-free loans.

Small and Start-up Businesses Including Microfinance Interest-free loans should be used for micro-finance, small business and farms thereby freeing them from the huge pressure of compounding interest-bearing debt. Farm capital can be one half or less of the usual cost. The world’s poor people can be enabled to acquire some capital by the use of interest-free micro-finance being funnelled through the Grameen Bank and similar institutions.

Loans to Students Since further and higher education should be encouraged, student loans should not bear interest. If they do, students can become burdened by debt for the rest of their lives.

Children Even at the age of five, good education is expensive and most people cannot afford it. In practice, therefore, religious organisations or the state pay for most children’s schooling.

Binary Economics, however, aims to ensure that there is sufficient income for a child’s basic needs which include the provision of education. Over time, the income would increase sufficiently to pay for basic education at the older age levels. NB Upon leaving education the income would stay with the child (now an adult).

Environment

Binary economics spreads productive (and the associated consuming) capacity so that all individuals in the population - including babies, carers and those not normally in conventional employment - have at least some form of secure, independent income. A major goal of this income is to ensure that all people feel materially secure which is essential if there is to be any hope of changing people’s attitudes towards excessive consumption.^[40]

The world’s rapid growth in population is inimical to hopes of preserving the environment and natural resources. The growth must be moderated. However, it happens that populations do stabilise when there is a reasonable standard of living, good education and health and at least some status for women. Binary economics provides these things and is essential if the present growth of the world’s population is to be lessened.^[41]

There is also now an extraordinary range of ‘alternative’ green technologies capable of generating clean electricity but which cannot be used because, in the present system of interest-bearing money, they are not financially viable. With interest-free loans, however, they will become viable.

It should be noted that Tarek el-Diwany states that the present financial system encourages excessive consumption by creating sufficient money for the principal of interest-bearing loans to be repaid but insufficient money for the repayment of interest. The result is that more interest-bearing money has to be created (with more inflation and more people going into debt) and more activity in the endeavor to try to make repayment. This favours the short term destruction of natural wealth rather than its long term maintenance.^[42]

Productiveness

Binary productiveness and conventional productivity are distinct concepts.^[43] Conventional productivity, is the ratio of labor as input to the overall output.^[44] In contrast, binary productiveness is the percentage of total input that labor and capital each contributes to the output.^[45] Capital contributes an increasing percentage as even Marx understood.^[46] Consider the example of a man digging a hole. Using his hands this takes him four hours. But, by using a form of capital − a shovel − he can dig the hole in one hour or dig four holes in the same amount of time it took him to dig one hole with his hands. The productiveness of the human labor is 25% while the productiveness of the capital shovel is 75%. Together, of course, man and shovel − labour and capital − produce much more than they would produce separately.^[47]

Where binary productiveness is concerned, it is also useful to consider the examples of an automated factory or a huge dam producing electricity and fresh water. In the case of the automated factory there is minimal or no human input (the work involved in design and building is over and has received its payment, and maintenance and repair are only maintenance and repair rather than a direct contribution to production).

In the case of the dam, with relatively little human input although it is critical, the physical output of the capital is huge and binary economics views the sun, weather and gravity as greatly contributing to the production. The latter are co-operating capital assets even if they are ones which cannot be owned. Binary economics views both humans and capital assets as production factors having an independent productiveness which does not stop their co-operating with other independent production factors but which does mean that their contribution to production requires individual recognition.^[48]

A criticism of the hole and shovel example has been made by Timothy D. Terrell^[49] summarizing a critique given by Timothy Roth.^[50] The criticism states that: a) somebody invented the shovel; b) the shovel cannot be independent. Roth argues that someone with human capital had to invent the shovel before it could be used, so the presence of the shovel is not independent of human capital. Also, Roth notes the presumption that the human hole digger has no role in the productiveness of the shovel.

However, binary economics states that the fact that somebody invented the shovel has nothing to do with its present use for digging a hole and the shovel is viewed as an independent contributor which co-operates with the man just as the man co-operates with the shovel. Moreover, just as two humans can, and do, co-operate, so the man and the shovel co-operate to dig the hole and produce far more holes than either the man or shovel could do by themselves. Binary economics does not say the human digger has no role in the shovel’s productiveness − both binary economics^[51] and Roth^[52] agree that man and shovel together produce far more than man or shovel separately.

Selected External Links

• Binary Economics now
• Center for Economic and Social Justice
• Global Justice Movement Net
• Global Justice Movement Org
• Integrating Islamic Finance into Mainstream
• Binary Economics - An Overview by Professor Robert Ashford
• The Binary Alternative & The Future of Capitalism
• The Binary Economics of Louis Kelso
• http://ssrn.com/abstract=277508
• http://www.cesj.org/binaryeconomics/price-money.html
• http://cog.kent.edu/lib/TurnbullBook/TurnbullBook.htm
• Capital Democratization

Selected Texts

• Ashford, Robert The Binary Economics of Louis Kelso (Rutgers Law Journal, vol. 22. 1990).

• Ashford, Robert Louis Kelso’s Binary Economy (The Journal of Socio-Economics, vol. 25, 1996).

• Ashford, Robert & Shakespeare, Rodney (1999) Binary Economics - the new paradigm.

• Choudhury, Masudul Alam (2007) The Universal Paradigm and Islamic World-system - Economy, Society, Ethics and Science. Preface by Rodney Shakespeare.

• el-Diwany, Tarek (2003) The Problem With Interest.

• Gates, Jeff (1999) The Ownership Solution.

• Gates, Jeff (2000) Democracy At Risk.

• Gauche, Jerry Binary Modes for the Privatization of Public Assets (The Journal of Socio-Economics. Vol. 27, 1998).

• Greenfield, Sidney M. Making Another World Possible: the Torah, Louis Kelso and the Problem of Poverty (paper given at conference, Colombia University, May, 2006).

• Kelso, Louis & Kelso, Patricia Hetter (1986 & 1991), Democracy and Economic Power.

• Kelso, Louis & Adler, Mortimer (1958), The Capitalist Manifesto.

• Kelso, Louis & Adler, Mortimer (1961), The New Capitalists.

• Kelso, Louis & Hetter, Patricia (1967), Two-Factor Theory: the Economics of Reality.

• Kelso, Louis (1957), Karl Marx: The Almost Capitalist (American Bar Association Journal, March, 1957).

• Kurland, Norman The Federal Reserve Discount Window (Winter 1998, Journal of Employee Ownership Law and Finance).

• Kurland, Norman A New Look at Prices and Money: The Kelsonian Binary Model for Achieving Rapid Growth Without Inflation.

• Kurland, Norman; Brohawn, Dawn & Michael Greaney (2004) Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security.

• Miller, J.H. ed., (1994), Curing World Poverty: The New Role of Property.

• Reiners, Mark Douglas, The Binary Alternative and Future of Capitalism.

• Shakespeare, Rodney & Challen, Peter (2002) Seven Steps to Justice.

• Shakespeare, Rodney, Integrating Islamic Finance into the Mainstream (paper delivered at Harvard, April, 2006).

• Shakespeare, Rodney (2007) The Modern Universal Paradigm.

• Shakespeare, Rodney & Proudfoot, Wilf (1976) The Two-factor Nation.

• Turnbull, Shann (2001) The Use of Central Banks to Spread Ownership.

• Turnbull, Shann (1975/2000), Democratising the Wealth of Nations.

References

Previous comments

The discussion below refers to previous versions of the article and the points raised in it are dealt with in this current version

Janosabel 14:38, 23 May 2007 (UTC)

As the original article on Binary Economics was considered inadequate, I asked Rodney Shakespeare who leads the ongoing development of Binary Economics to provide a proper, informative, substantial article on the present situation. (Information about Rodney Shakespeare can be found below.)

The new article is an extended statement on Binary Economics and brings its development up to date.

A period of seven days was given for discussion before posting this new article on Thursday, 21st September. During the period an article was posted (it is reproduced below). It attracted no discussion or comment or compaison of the texts in article and in discussion.

Janosabel 11:04, 21 September 2006 (UTC)

About Rodney Shakespeare

Rodney's first book on binary economics (The Two-factor Nation) was published in 1976. Rodney is co-author of the standard textbook on binary economics ─ Binary Economics – the new paradigm (University Press of America, 1999). He is also co-author of the subsequent text ─ Seven Steps to Justice (New European Publications, 2003) ─ which furthers develops binary economics, and also author of The Modern Universal Paradigm, containing later developments, being published later in 2006 by Trisakti University, Jakarta and elsewhere.

Trisakti University (where Rodney is Visiting Professor teaching on the international postgraduate Islamic Economics and Finance program) is the largest private university in Indonesia, the second in prestige, and the birthplace of the Indonesian reformasi revolution. Rodney has also been offered, and has accepted, a Professorship at the Asian University of Bangladesh, the largest private university in Bangladesh. He is a Cambridge MA, a qualified UK Barrister and a well-known paper presenter and lecturer particularly at Islamic conferences dealing with money, the real economy, binary economics, and social and economic justice. In these fields, the leading Islamic academic is Professor Masudul Alam Choudhury with whom Rodney is at present co-authoring a major work ─ The Universal Paradigm and the Islamic World-system (to be published in 2007) ─ which is permeated throughout by binary economics particularly as it has developed over the last four years.

Comment on criticism

(emphasis added):

"Roth has effectively pointed out some of the salient problems with this view of productivity (Roth 1996, pp. 58–59). Referring to Ashford's hole digger example, Roth argues that someone with human capital had to invent the shovel before it could be used, so the presence of the shovel is not independent of human capital..."

The phrase, human capital is conflating two traditional factors of production and leads to confusion. It is better to keep the concept of "indirect human inputs" bundled with labour. The competence of a lawyer, for example, resulting from six years of study and training is an inalienable part of his present skill but should not be called his capital.--Janosabel 13:08, 9 May 2007 (UTC)

"...Also, Roth notes the presumption that the hole digger has no role in the "productiveness" of the shovel..."

I need to read Roth's article to discover why he "notes" that Binary Economics presumes that the user of a piece of capital equimpment has no role in the deployment of that equipment.--Janosabel 13:08, 9 May 2007 (UTC)

This misunderstanding of binary economics is likely to arise from a statement in Ashford and Shakespeare (1999, pp 129-30):

...we have observed that there are two broad, and mutually exclusive categories of independent producers:- human beings, and captal...

The authors, however, are here referring to two of the abstract categories in classical economic. It is nowhere asserted in binary economics that labour and capital do not collaborate to produce what nither could produce without the other.

Janosabel 22:48, 16 May 2007 (UTC)

"...Thus, it is not at all clear that "capital productiveness" replaces "labor productiveness."..."

Does binary economics say this? It may say that "capital productiveness greatly enhances

labour productivity", and that does not mean that labour has nor role to play.--Janosabel 18:01, 9 May 2007 (UTC)

"...It seems clear that the stocks of human and nonhuman capital are — even in this simplified example — mutually interdependent; that the use of the shovel increases the value of the hole digger's human capital; and that use of the shovel by the hole digger enhances the shovel's value (Roth 1996, p. 60)".

This seems to me an over complicated argument. The point is, is it not?, that a man without a shovel will not be able to make a living in the presence of a competitor with a shovel. And the contention of BE is that the current un-free market conditions make it very difficult for the majority of workers to acquire income generating capital.--Janosabel 18:01, 9 May 2007 (UTC)

Janos writes: In my endeavour to improve the present wikipedia article on binary Economics I made comments as follows which are set out below for the sake of historical record.

This statement (from the article above) may be helpful

"[Binary Economics] makes a distinction between productivity and productiveness. Productivity, in the classical and neo-classical sense, is the ratio of labor as input to the overall output. In contrast, productiveness is the percentage of labor or capital that contributes to the output. Labor and capital are of a different nature, and therefore must be seen as separate inputs that both create output."

In the case of an automated factory, labour's intput is pressing the start button plus some maintenance, no? But this does not mean that labour's share of the output can be evaluated according to the time and effort need to push the button.

The labour that went into the design and construction of the factory is in an entirely different realm of discourse, no?

Edited by

Janosabel 09:45, 14 September 2006 (UTC)

Re-write

Okay, I re-wrote the heck out of this article. Some general points:

1. There were not "82" references; there were 25 - most were improperly done, and failed to use the reference tag. I'm also pretty sure these are bad references, and don't support the facts they're referencing. However, I'm tired, and am going to give this article the benefit of a doubt.
2. I added lots of "uncited" tags, for facts which are asserted, but never verified.
3. Pictures are not needed to make an article "pretty" - they should show what the article is about, not just to look nice.
4. There was a lot of editorializing in this piece. Like, tons. I got most of it, but it's still sticking around.
5. This article reeks of conflict of interest - given that a number of the editors of this article are also primary sources for it, and intimately involved in it. I suggest they back off.
6. Almost all of the references are bad; we need more information to verify them. Add it, or remove them.
7. It is incredibly inappropriate to cite unpublished material in a piece like this.
8. There was also a lot of redundant, or just plain odd material thrown in. This is an article about Binary Economics; not a puff piece to put forward its ideals.

Anyways, happy editing! --Haemo 07:44, 24 May 2007 (UTC)

This whole article reads like a press release. It is not encyclopedic.radek 22:08, 24 May 2007 (UTC)

You should have seen it before I re-wrote it. --Haemo 00:27, 25 May 2007 (UTC)

With all due respects, the encyclopedic style is a special way of writing. Normally we are trained, in this competitive world, to put our convictions in the most persuasive way possible.

Give the article a chance to evolve and don't throw out the baby in the bathwater. Orthodox (market fundamentalist) economic theories are driving the world to perdition (Guy Routh, The origin of Economic Ideas; Paul Ormerod, The Death of Economics; etc., etc.,).

... I want to see a good entry on this topic. The theoretical challenge to neo-classical and Keynesian economics may be muted, but its practical implications are important. In particular, wealth distribution as a key component in the functioning of capitalist economies is neglected in the classical literature. In my view, this problem is becoming increasingly visible across the world and may yet lead to new theoretical positions in mainstream economics. We have not yet reached that point, however. (Martin Baldwin-Edwards)

Janosabel 09:28, 25 May 2007 (UTC)

I just wanted to note that the big image isn't really needed - I mean, we explain all of this in the page; it's just big and ugly the way it is right now. --Haemo 01:30, 27 May 2007 (UTC)

OK I am willing to learn wikistyle but not without questioning. What are bad references, apart from citing the same (published) work in different contexts? As to the "citation needed" tag, in some instances you removed the citation (like end of para two) in others the assertion is noting a common notable fact (like interest at least doubles the cost of capital purchase -- if one is buying a house, for instance, the payments are mostly interest for the first fifteen or so years).

I suspect that, being trained in numeric disciplines and mainstream economics, you are too severe in judging writings aimed at lesser educated people.

Regards to your cat (no hard feelings :-). -- Janosabel 21:57, 27 May 2007 (UTC)

Okay, well, when I was calling some of the references "bad", I typically means something like "does not back up the fact they reference". For instance, the article says "Although elements of binary economics can be found elsewhere,[9]" - and then you cite a book...where those elements can be found elsewhere. However, that source does not actually say anything about Binary Economics. Or, "Over the last few years binary economics has been developing[15][5][6][2][7][1]" - and then cite some new books and papers. These sources don't verify that statement - you have to do some original research to get there. In addition, most of the "citation needed" statements refer to material which the reference wasn't pointed at. In addition, it's also not sufficient to call something a "notable common fact", since (for example) the cost of interest payments as a percentage of total payments can vary dramatically between payment plans. --Haemo 23:57, 27 May 2007 (UTC)

Thank you. Am I getting the hang of it? If I make the statement, Neoclassical economics has gutted political economy by making the most important factor of production -- land -- disappear under "the skirt of capital", and just refer to a book, The Corruption of Economics, Gaffney and Harrison (1994), instead of "chapter and verse", is that a poor reference because the reader himself has to search for specific supporting statements in the cited book? -- Janosabel 10:45, 29 May 2007 (UTC)

Yes, that's one point - you need to specifically point out where that's said. However, the book also has to make that assertion - especially when it's contentious (such as that assertion), we should not write "Neoclassical economics has gutted political economy..." since that makes it appear that the statement is an undisputed fact, but rather something like "Proponents of binary economics argue that neoclassical economics has gutted political economy...", or something to that effect. If you look at this page (WP:CITET), you can see that it has citation templates for references - try to fill them out as much as possible. For example, if you're citing a book, cite the author, publisher, date, pages, etc. --Haemo 00:23, 31 May 2007 (UTC)

Reversing my latest good faith edit: My reference highlights a shameful condition in the richest country in the world, claiming to operate the most successful market economy. Surely, the fact that there are many poor people in spite of being a market economy supports the assertion that markets do fail. Anyway, in your studies of economics you must have come across many economists, yourself, who admit that markets do fail. Do I really need to find those same statemens again? -- Janosabel 22:58, 30 May 2007 (UTC)

See, there's your problem - the fact that there are many poor people is supported by your reference. That's good. However, the inference that it's a "failure of capitalism" or "shameful" is your personal opinion about the matter - it's also my personal opinion, but as an encyclopedia, we have to strive for neutral point of view; and that means not inserting moral, or editorial, judgments into our article. We can point out facts, and let people make their own decisions, or we can quote other authorities stating their opinions - but we can't make opinions of our own. In addition, the term market failure is a technical one, and doesn't specifically apply to what you've cited there. --Haemo 00:23, 31 May 2007 (UTC)

weird

This article sounds like it is describing one of those pseudosciences. __earth ^(Talk) 12:39, 26 May 2007 (UTC)

I replied to __Earth. Still waiting for a comment. -- Janosabel 10:52, 29 May 2007 (UTC)

So, Earth, you find it weird. Four universities have made agreements to teach the subject and about ten are likely to want to in the immediate future. Are they weird as well?

Rodney Shakespeare. 12.05 30th May, 2007

Retrieved from "http://en.wikipedia.org/wiki/User_talk:Earth"

I'm going to second the complaints about this not appearing encylopaedic. To those of us with sceptical dispositions, it really does come off as promoting a pseudo-science. I tracked here from Milton Friedman's assessment of it and I think it must have been presented very differently to him than it is here. He'd have given it short shrift if it'd started waxing lyrical about man's relationship with God. It is unclear whether it is an economics discipline, a political philosophy, a theology or all of the above. I'm not sure if this article has been taken over by someone who is expanding it beyond the subject's typical remit. I cannot judge because I do not know about binary economics and this article has unfortunately not helped me correct that. --Panlane 19:57, 30 May 2007 (UTC)

Panlane, you may find it of interest to look at one of the origingal expositions of binary economics. It is available onlne. The article here attempts to present this economic model in the context of current grave concerns which mainstream economics seems unable to address. -- Janosabel 18:18, 31 May 2007 (UTC)

Panlane, The article is written clearly and the diagram is clear (or was -- it has been vandalised)-- a supply of interest-free loans comes from the central bank (via the banking system) for the development and spreading of productive capacity. Actually, the principle has been used at various times in the past (Canada, New Zealand) and possibly is being used in the present (Malaysia and Guernsey -- though both are cagey about revealing detail). I am surprised to see you challenging this new subject when you have read nothing and apparently would find the information that four universities, and Trisakti in particular, have made agreements to teach the subject as irrelevant. As regards the relationship with God and the implications thereof you may not like that but it is an integral part of the thinking and its practical implementation -- people are not to be left to starve etc. It is also a historical fact that Pravda saw b.e. (as it was at the time) as extreme right-wing and Friedman as extreme left-wing. One of them must be wrong but I think the significance of that is eluding you. Rodney Shakespeare 17.39 31st May, 2007

Just a point, but that diagram has not been "vandalism" - large, unlinked images like that violated the Wikipedia manual of style, and (in addition) the mechanism is explained in the text of the article. If someone wants to see it more, they can click the image. --Haemo 20:32, 31 May 2007 (UTC)

Okay, it is clear to me what is happening. I criticised the style in which the article is written, not the subject content. As stated, I don't know enough about it to do that latter. Surely as an educated lay-person unfamiliar with the discipline, i.e. Wikipedia's assumed audience, I am a better judge of how accessible it is than a professional binary economist such as Rodney Shakespeare. I am not criticising you, I am asking that you as a person that knows the subject express it in clear concise terms to someone like me, that does not. Your reply above was a better distillation of binary economics than this article --Panlane 09:53, 1 June 2007 (UTC)

Further re-write

I have rewritten the introduction to focus on the core that you outlined in your response. It is now easier to follow, more concise and - in the honest opinion of a sceptic - far more persuasive. Obviously this discipline (or at least its authors) appears to be heavily tied with Islam at present so I would recommend that this is broached in a separate later section. The assumption that binary economics is about man's connection with god or relates at all to it is not necessarily so. Rather it frequently is mentioned in an environmental (perhaps also worth a mention) rather than religious context. --Panlane 10:26, 1 June 2007 (UTC)

I have now rewritten the whole article. I have added mention of why binary economics appeals to certain religious viewpoints in the introduction. This should be elaborated on later in the article n a new section but from a secular NPOV perspective. I have removed the picture of the vet students as it added nothing to the article. I have improved the overall grammar and clarity in parts. I have removed the entire section of Binary Economics Today because this was entirely POV and the only NPOV information gave nothing except binary economists are publishing papers on X, Y and Z. No further details about the findings or conclusions of those papers. If and when this is filled out and rewritten in NPOV it should be reinstated. I have also eliminated all mentions of cost-savings, e.g. hospital builds would be less than half price. These were extremely contentious statements which had no references. Until they are explained and referenced, they should not be included.

Much of the article is fine, it just needed slimming. Perhaps now we can muscle it up. --Panlane 17:54, 1 June 2007 (UTC)

Do we need a list of conferences? What does this add? Other disciplines don't list the often too numerous to mention meetings of their representatives. I vote for its removal but it isn't POV so I'll leave it up to others. --Panlane 18:05, 1 June 2007 (UTC)

Good work on the re-write! I second your removal of the list of conferences - not necessary, and not really encyclopedic, given that it privileges the views of those giving the conferences as being more important to the topic. --Haemo 22:17, 1 June 2007 (UTC)

I assert that the factual and neutrality of this excellent article on Binary Economics is NOT disputed. I also assert that claims in this article are verifiable. See among other websites and excellent writings: www.cesj.org www.kelsoinstitute.org | www.www.binaryeconomics.net | www.globaljusticemovement.org | www.globaljusticemovement.net

I vote a STRONG KEEP regarding the importance of this article staying on Wikipedia.

We are watching a significant paradigm shift in economics, one that empowers all humans on the Earth from the grassroots upwards to the heavens. This does not happen every day, and it is dramatic to watch it unfold.

How could any knowledgable person argue against a fundamental right of ALL humans to a stipend income from their pro-rata share of consuming production? (to start at just one point). Without consumption there can be only limited production. They are intertwined like a hand in a glove.

Binary Economics is also very organic. It recognizes how people automatically enter into natural economic relationships in order to sustain their lives.

Regards, Steve Nieman President, the Ownership Union®, a binary stakeholders union | Interim CEO, the Downwind Corp, a binary economics corporation Capt. Nemo 01:36, 11 July 2007 (UTC)

Creating money

Okasy I realize that I'm probably about the most hated person here right now but in good faith let me try to clarify what I believe to be a factual error.

According to the article money creation would not be possible since loans would be tunneled through private banks at 0% interest. This is all perfectly fine, nothing new about this. Kelso did not invent this idea. What troubles me is that the article says that deposits and bank capital (vague term but okay) could be used to lend out money in addition to the interest free loans. First of all this contradicts Friedman's original proposal which was based on the idea that deposits are private property that should not be used by the bank to generate revenue in the form of interest. To make the idea that banks would still be able to lend out deposits fit within the over all framework of this model you need to explain to the reader how these deposits, which per assumption do not originate from the 0% tunneled loans, are generated. Where could this money come from if the 0% interest loans are used for investment?

One explanation might be that they originate from say student loans, tunneled through the banks at 0% interest. which in turn are used in the real economy to facilitate efficient trading. Thus if we alter the assumption that all 0% loans are used to finance productive capital this may work. This money is then deposited in the bank and then used gradually. If this indeed is the theory then given that there is no interest then theoretically the model would work and the central bank would not be generating inflation because the loans simly cancel out once repaid at 0% interest. Inflation may still exist because of international trade with countries not implementing this regime but at least the model would work and be logically consistent. I really do believe that you need to rewrite this to explain what I just said. One question: how is the supply and demand for money equilibrated when the interest rate equals 0? Should this be understood as rationing of money?

I realize that you will be probably be telling me that that this is all perfectly obvious but trust me on this... when reading the article as it is now from a purely economic point of view(forget politics) then it simply doies not add up. You need to explain this better and I have now given you a good faith example of how this could be done. MartinDK 13:08, 11 July 2007 (UTC)

I have edited the section in question to clarify what I believe you actually mean. MartinDK 13:47, 11 July 2007 (UTC)

Martin, thank you for the good faith help to make something positive out of this dispute. I am interested in two things here. One is to clear up some misunderstanding that may or may not be due to the way the original article was written. The second is the more tricky one of talking across paradigmic boundaries.

Let me broach this second issue with the help of a metaphor. If one has never seen a cow, it will be difficult to understand someone trying to convince us that we should exchange our horse for a cow if we want lots of milk. The advocates of binary economics seem to be talking gibberish because it is a different animal from orthodox economics.

The issue of money creation is also complicated by the fact that terms can mean different things to different people and in different contexts. I understand 100% reserve as the practice of lending out no more money than taken in as deposits (advisably less, say, 90% of deposits). In normal times this precaution can be (and is) suspended because deposits will tend to regularly exceed withdrawals. (Friedman, I believe, is talking about something else.)

If banks lend multiples of deposits (ten pounds, say, for every pound deposited (current practice), they are creating credit-money out of nothing. It is this practice that binary economics seeks to harness (with proper anti-inflationary safeguards) as a service to benefit the whole of the national (and world?) community (without imposing a private tax called "interest" on credit creation, as at present).--Janosabel 18:06, 15 July 2007 (UTC)

I think we are getting closer to an understanding here. The way money creation is usually understood is that banks create money not because they lend out more money than is being deposited or held in reserves from other sources but because loans and deposists are included individually when keeping track of how much money exists in the economy. So, if I deposit 100 pounds and the bank then lends out 80 pounds of those a total of 180 pounds now exist. Thus the bank has created 80 pounds that it is now generating revenue from because the interest rate on loans exceeds the interest rate on deposits. Friedman believed that this was wrong because the deposits are private property. Supporters of binary economics seem to approach this fundamentally differently which is causing confusion. Regardless of whether one supports binary economics or not I think the article should be understandable for the far majority of economics interested people who come here.

The practise of lending out more than is being deposited or kept as reserves from other sources (high-powered money) is considered extremely risky and is not allowed in most countries with an efficient supervision of the financial sector. It has been known to happen in less developed economies causing catastrophical collapse of the financial sector with huge human costs (unemployment, poverty) as a result from this hazardous practice. Perhaps the article should contain a small section explaining the difference between how binary economists and mainstream economists understand money creation and how the total amount of money in an economy is calculated? MartinDK 09:53, 16 July 2007 (UTC)

criticism of article

See also Wikipedia:Articles for deletion/Binary economics. Archived, please do not modify it

Highlights from four critics from the above page:

• this article is nonsense
• this is not a mainstream economics theory
• incoherent blatant nonsense that no economist with respect for himself would ever waste a second on (an economist with a master's degree)
• no respecting economist would take binary economics seriously.
• bad science
• a fringe theory with no acceptance amongst professional economists.
• it reads as POV gibberish
• this article isn't economics, it's a thinly veiled rationalisation of the Islamic prohibition on lending money for interest
• I will be removing the links to your website as spam
• little more than political propaganda in disguise
• the Kelso Institute is not the reliable source that it sounds like. It is a website run by Patricia Kelso, the wife of the originator of this theory

by way of belated explanation:
I extracted these bullet points to illustrate the kind of reactions 
unfamiliar ideas can provoke--Janosabel 22:48, 1 August 2007 (UTC)

Thanks to those voting to "keep" the article in spite of these negative comments (springing from prejudice or ignorance) and to the editors for withdrawing the "delete" note.

People familiar with the history of economic thought* may find some of these criticisms familiar. They are reminscent of the comments traded among economists, over the centuries, when colleagues strayed outside the accepted norms of their discipline.--Janosabel 22:21, 30 July 2007 (UTC)

• See The Origin of Economic Ideas, Guy Routh (1989)

Now, where is the article, critique of neoclassical economics?

Actually the article on Economics contains a long critique of economics and neo-classical economics in particular. MartinDK 10:21, 16 July 2007 (UTC)

What next? Mooting another rewrite

It is time get the article properly up to standard and remove the tags. But it is common sense that anybody wanting to write on binary economics should at least have read and understood the standard text book, Binary Economics -- The New Paradigm, Ashford & Shakespeare, on the subject.

Rodney Shakespeare offered a free copy of The Modern Universal Paradigm to a person who has been acting in good faith and who can be relied on in future to convey the facts accurately. This latest book presents binary economics in the larger context of a paradigm shift, since economics is not just about economics because an economy is an organic part of a societal whole. However, a more professional article needs the scholarly resources of the full textbook by Ashford & Shakespeare.

In the meanwhile I intend doing the sensible thing by asking Rodney Shakespeare to re-write the article taking account of the good faith alterations made so far.--Janosabel 21:34, 26 July 2007 (UTC) {{helpme}}

I don't think I should just replace the current article since a whole lot of discussion goes with it. How do I create a "redirect" page to a proposed improved version?--Janosabel 21:12, 29 July 2007 (UTC)

If I understand your question correctly, I'll suggest that you create the new version of the article in a sandbox. Then you can just put a link here to that "development version". Once it is ready, it can me moved here and the page histories can be merged. You may want to get consensus to have the current article protected, to keep from having 2 versions worked on at once. --After Midnight ⁰⁰⁰¹ 23:42, 29 July 2007 (UTC)

Thank you for replying so propmptly. The new version of the article in response to the more positive comments here is now ready. As suggested above this current version should be protected from further edits and I hereby ask for a consensus to that effect.--Janosabel 20:48, 30 July 2007 (UTC)

The latest books must be studied

Janos, It is true that anybody wanting to write on binary economics should at least have read and understood Binary Economics - the new paradigm (1999). However, since 1999, binary economics has made, and is making, further development and to get properly up to date it is necessary to read The Modern Universal Paradigm (2007) – which is why I have offered a free copy to a person acting in good faith and capable of conveying the facts accurately. Good faith, of course, really does require a willingness to read the key books particularly when it is being openly and consistently stated that a new paradigm is involved and new paradigms cannot be understood from within the old paradigm (Kuhn).

Moreover, there is a binary development within Islam lead by Masudul Alam Choudhury. A Google search on him and his extensive works will quickly establish that he is of the highest authority and explain why he is considered by many to be the leading Islamic economist. I mention this because The Universal Paradigm and Islamic World-system is being published on 31st July, 2007 and anybody who is genuinely concerned with understanding what is happening has to read that book as well. Rodney Shakespeare, 27th July, 2007, rodney.shakespeare1@btopenworld.com

The new article is of high standard. The full diagram is essential. David Soori sooriuk@yahoo.com 31st July, 2007