Forum Post: The real issue is centralization vs. decentralization
Posted 12 years ago on July 7, 2012, 2:14 p.m. EST by francismjenkins
(3713)
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I think this is where the data converges, this is where we find underlying consensus. Are stock markets evil? What about a world with a stock market in every city, versus a giant, centralized and interwoven financial system? Is the concept of money necessarily a bad idea? After all, it offers immense convenience (from a mathematical perspective), and it offers reliability. Obviously a monetary system controlled by a centralized financial system is a bad idea (so much should be obvious to any reasonably intelligent observer), but what if we didn't have a centralized financial system, rather, banks were local in size and scope, community banks, credit unions, even municipal banks (and stock markets).
But I think the problem of centralization is much broader than merely our financial system (although its weaknesses are perhaps most profoundly highlighted by the cyclical chaos and corruption of our financial system).
I was in Grand Central about a week ago, read a headline in a national newspaper that said (I'm paraphrasing) ... the housing market may be rebounding. I think a few days before that I read something in another national newspaper that made the opposite claim; and it became immediately apparent, the public has been herded, like puppets on a string, our anxieties controlled by this interwoven/centralized financial, media, and political culture (add in energy giants, retail giants, etc.).
This doesn't need to be our future. The most important thing Americans can do for themselves is begin by taking control of our currency (through establishing municipal banks, owned by cities throughout the country & local cities and counties refusing to work with large financial institutions), because with control of capital, we can fund our own worker cooperatives, we can reestablish local control over retail and production and food. Our cities should also own the cable television infrastructure (as some cities in the US already do).
. . . the deregulations have led to a concentration of media ownership with fewer broadcasters competing in regional markets and the elimination of many local, independent and alternative media outlets.
http://en.wikipedia.org/wiki/Telecommunications_Act_of_1996
Moreover, there's no reason why we can't take environmental responsibility into our own hands. Cities can gasify garbage and convert it into liquid fuels (instead of dumping it in landfills), cities can own utility companies, and implement their own renewable energy strategy (maybe in cooperation with surrounding localities).
Local governments and people need to start asserting themselves (it's not impossible).
Business tends toward monopoly. They have already demonstrated many ways to operate as monopolies with cleaver disguises. With centralized financial control and decentralized regulation (weak or no regulation) what you will have is universal exploitation. When regulation was weakened under Reagan and Clinton, did the rate of concentration of wealth accelerate or decelerate? Amount of corruption? Control of the media? Wages of the middle and poor classes?
Businesses, under our current economic structure, gravitates towards monopoly. I don't mind saying we need to restore Glass Steagall (and perhaps other regulations), but I'm not calling for centralized financial control and decentralized regulation (maybe you're misconstruing my argument), rather, I'm arguing for a decentralized financial system (and economic system more broadly speaking).
The thing with centralized regulation is ... it's easier for big companies to manipulate. They only need to focus their efforts in one place. We need a system where every citizen has a voice, everyone (in a sense) becomes a regulator, etc. (and this will only happen when our economy is centered locally, and I'm speaking of every aspect of our economy, from finance, to entertainment, to media, energy, food, manufacturing, retail, and all components of our service sector). Political democracy without economic democracy is only "half democracy" ... just like the right to vote someone in, without the corresponding right to vote them out, is only "half" a right to vote. Liberty isn't merely the right to show up at a public hearing at your local town council or PTA meeting & be heard, it's also having the same voice and ability to influence things in the economic dimension of our lives.
As it stands now, considering we have a centralized financial system, yes, we need centralized regulation. Even in a more locally based system we might think uniform national regulations will still be needed, but by shifting towards a locally based economic structure, the ability (and incentive) for sectors like our financial industry to exert such a high degree of influence over our political system, is considerably lessened.
I stand by my claim that business tends toward monopoly, (increasing scale) unregulated, it is rapid, regulated slower or stable. I don't know of any relevant exceptions. Wishing otherwise to get to a solution you like won't convince me. My corollary is: Regulation must be on the same scale and position of regard as what is being regulated. If you are keeping it small, you are regulating it.
Don
Right, I agree, businesses tend toward monopoly, and even in a competitive environment, monopolies can still happen. I also agree with the need for regulation, and really my point is that regulation should be on the same scale as what's being regulated. Okay, but this is just modifying the status quo, not really changing its fundamental structure.
If economic functions like banking were local and democratic, we would have never had a 2008 financial crash. It's also true that if we never repealed Glass Steagall, we would have probably never had a banking collapse, but the way the system is arranged now, the incentive and capability to manipulate our political system (on the part of big business) will always exist.
When people wonder why we should be concerned when, for instance, new laws like the Patriot Act [and similar laws] weaken due process rights (by, for example, imposing less requirements on agencies like the NSA e.g. the requirements for FISA warrants have been weakened), we shouldn't have to expose some grand conspiracy on the part of these agencies to induce concern among the general public. The fact that the government now has the ability to transform our country into an authoritarian state, should be enough. Even if they never act on it, the fact that they have this power, is deeply problematic.
I agree with most of what you have said. Depository banking can and should be local.
Banking for international trade obviously must be larger because of the size of the deals and should be regulated on the same scale.
Investment banking is a separate business, essentially brokering buying selling and taking businesses public etc.
Trading, buying and selling of stocks, bonds, for the owners is also a separate business.
Trading of commodities and foreign exchange, the same thing. All of these should be kept separate and regulated aggressively, with full information sharing between regulators so they aren't being gamed.
Grass-Steagal was correct in principle but even it was not comprehensive enough nor did it fully cope with technology and the times.
I agree, but I get the feeling you're more of a democratic reformist type. Not a big deal, nothing wrong with that I suppose, but I hope for deeper, more fundamental--systemic changes. I support reforms, but ultimately, without decentralization, this will happen all over again (like a bad broken record). Mind you, I'm no libertarian (a/k/a Ron Paul type), in my view libertarians get it approximately half right, but on the other half, catastrophically wrong.
I was a libertarian at one time but concluded that they had one or more major blind spots. The easiest and quickest way to fix reality is to change human nature. This is an example of a blind spot. No one has ever managed to change human nature, so assuming easy and quick totally discredits this solution.
Assuming that in very large and complex societies (which aren't going away in the absence an immense tragedy that wipes out most of humanity except for small remote groups) the process of managing and regulating them at only the local level would be ignoring the way humans adapt to or avoid constraints.
Incremental changes at all levels are clearly the least risk approach to improvement and since there is a wealth of these changes that have been shown to work reliably that can be made in parallel, thereby making substantial net improvements relatively quickly. Because they are familiar to most people, (not just theoreticians) those changes cause minimal push back from the "common" citizens. Truly good ideas should get a fair hearing while things are getting better.
Creating catastrophe as a prerequisite to making a significant improvement, does not make sense to people when changes that (almost) everyone agrees will make improvements, have not yet been made. Another way to say it is, "Fix the flat tires and fill the empty gas tank before you start building a cold fusion engine to replace the one we have." The next line is, "Build the engine and try it in a few prototype cars, and if I like the results, I might consider a change, later. Right now I need to get to work."
I have lived through a few attempts to fix monopolies. They were not done perfectly and they didn't last forever. But absolutely zero of them were done at the local level (decentralized).
I largely agree with this ... but with some qualification. A city deciding to create its own municipal bank is a tangible way for localities to exert some control over their local economies. Likewise, municipalities can also own regional cable television infrastructure, utilities, etc. Worker cooperatives, employee owned companies, expanded unionization, using local banks rather than large banks (credit unions, community banks, municipal banks), this is the stuff of decentralization.
These are not experimental ideas, they work now, they're just under utilized (partly because corporate oligarchies have commandeered our government). Reform is fine if we're talking about something like restoring Glass Steagall, getting money out of politics, etc., but handing big business more money so they can entrench themselves further (in the hope of creating some new jobs i.e. fixing the flat & filling the gas tank) is not only a bad idea, it just makes everything worse.
No one is saying we need catastrophe before we can hope to improve our society, but some of us understand that we can't keep feeding the monster.
Well of course there are thousands of small financial institutions, banks, credit unions. mortgage companies and surprise, surprise even thought they weren't g]doing big bank stuff, Investment banking etc. A bunch of the failed, a bunch were bailed out and some survived on their own and it is obvious that they as well as big banks need a great deal more regulation than the watered down by the GOP, Dodd-Frank law. That said, much that is needed added to it was actually proposed in the run up to its passage. One of the major problems is the remaining stove piping to keep congressional oversight happy when it should have been consolidated so it could share information, and coordinate rules and policy.
Actually there are a number of people who seem to be saying we need to push everybody of the cliff making them desperate so we can feed them our solution and they won't have time to read the fine print. I am trully glad you are not among them.
The most urgent issue is: Corruption vs non corruption. No other decision matters if it is going to be countermanded, or subverted, by corruption.
what is corruption ?
Any diversion or departure from the highest quality of governance or business practice resulting from opportunities for personal gain or benefit.
Isn't that the point of many schools of anarchism; not to destroy government but to decentralize it and devolve it from representatives, who have no real accountability, back to individuals. Even in a representative state, which is necessary for more than isolated communities, representatives can be rotating (through eligible members of the community), subject to immediate recall, and paid no more or receive no more benefits than the median of their constituents--more or less make them not only accountable but a real part of the community they represent.
No special treatment or privileges for any public officials from the lowest-paid civil servant, to representatives, to members of the judiciary. They should all be working members of their communities.
The financial sector should also be decentralized in a way to create national or international stability, so that no institution is "too big to fail," which is nothing more than a lame excuse for trickle-up welfare. The currency system can easily be modified, since it's built on fiat.
Right, but this seems like it's often forgotten by people who (at least) say they sympathize with anarchist philosophy. I'll give an example. I just watched a PBS special, very informative journalism, and it included discussions with occupiers. So we have these occupiers sifting through legislation and administrative rules (like the Dodd Frank bill and the Volcker rule), submitting comments to the government (as any member of the public, in theory at least, is allowed to do), but to me this seems like a giant exercise in missing the point.
The Volcker rule, Dodd Frank (remember, Dodd took inappropriate loans from Countrywide, part of the reason he's no longer a Senator), all of these rules, just make minor adjustments in the system, when the real problem is ... the entire configuration of the system is dysfunctional (namely, it's a heavily centralized and concentrated system).
Restoring Glass Steagall should be the only reform proposal we lend credence to, but even that won't be enough. Every city should have its own stock market, even its own banking system--in a sense (municipal banks, community banks, credit unions, etc.). When you have the sort of concentration of power we have in our financial and political system (and other facets of our economic system), the sort of collusion, corruption, and cyclic chaos we have today is inevitable.
Yes, I've noticed many people have remarkably selective memories, like the "conservatives," who bawl for "smaller government," when what they describe (to control sexual preferences, marriage rights, conception rights, abortion rights, etc, etc, etc) requires not only a much larger government, but a more centralized government.
And the same is true of "liberals," who maintain that the same corrupt, cirrhotic system that brought us to this point will somehow miraculously lead into the promised land, full of milk and honey, except of course for the specific minorities, the homeless, the truly needy. After all, didn't Jesus say, "For ye have the poor with you always..." Naturally most people that quote Mark 14:7 leave out the rest of the verse, which is really critical to our understanding of Jesus's intention: "...and whensoever ye will ye may do them good: but me ye have not always."
Yeah, that's right, Jesus also said and whenever one of us wants to, we can (and should) help the poor. Too bad so many "conservative" Bible thumpers overlook that critical admonition.
Right, you can even see the slavishness of partisanship by the nature of the arguments put forward by partisans. If you invite a partisan to do a thought experiment, for instance, what a world look like where free, quality higher education was at least available to all people, they immediately start ranting about things like, if someone took a loan they need to pay it (which is of course a strawman, even though they don't even realize it). In other words, the question "should we forgive loans" is different from the question, does the idea of free/quality higher education have merit?
After all, nature gives humans a free ride doesn't it? We don't have to pay for air to breath (not yet anyway), nature provides us with a livable temperature range, it even gives us free water (although governments provide useful functions, like delivering that water to our homes, cleaning it, disposing of sewage waste, etc.).
I asked a conservative friend, what if we had a stock market in every city, what if this power was no longer centralized (and in the modern era, centralization is not only geographic)? The response is ... even if that's a good idea, it's too radical, and then of course conservatives grant private business a special pleading. In their eyes, it's only government that can do wrong, as if governments are not merely a collection of people (just as private businesses are).
We can see how our culture is slipping away. Look at education, the focus is on science and mathematics, important subjects to know, but if one only studies science and mathematics, and never studies philosophy or economics or sociology or history (etc. etc.), they'll wind up with plenty of technical ability, but no critical thinking skills (which is perhaps worse than abject stupidity).
Sadly true. If Mexico can give tuition-free higher education at the various UNAMs throughout the country, it is hard to believe that our "advanced" society still insists on putting many people into debt to acquire a higher education.
Technology is wonderful, and technologists for the most part are well-educated people, but the of the great thinkers and writers we remember, whose words still echo today, very few were technologists.
Yes, for the most part, the generation of working scientists we have today do have a well rounded education, but this is changing. Schools are putting less focus on liberal arts subjects, the arts are suffering, etc. (and unfortunately, education has become too much about getting a job). It's not that getting a job isn't a good thing, but we should want knowledge for much more profound reasons.
Yes specialization is a way to go after entering a field of work - but prior to that - general studies in depth is what I would recommend as it seems people are losing the ability to make connections of cause and effect. Losing the ability to see relations of how one thing connects to another.
Funny you should mention that. I was talking with an acquaintance a while back, a man, who received his MD at UA in Tucson. At any rate, you would assume such a person would at least be well-rounded enough to recognize famous quotations.
In one of our discussions, I quoted a line from Shakespeare's Richard III: "A horse, a horse! My kingdom for a horse!" The erudite doctor didn't recognize the source or the quotation, which I had used in an ironic manner. Oh, well, too bad.
Right, the problem with Christianity has never been the virtues of Jesus, it's the majority of his followers who mucked it up so much (okay, and I suppose science, logic, common sense, etc., but the same is true for all religions) :)
Modern physics has nearly supposedly tracked sub-atomic particles to the near-ultimate stage. Of course I always have my doubts about such claims, since once new discoveries really unfold, we usually find only more questions.
Higgs boson, nice work Europe, solidifies the standard model (which is pretty important stuff).
Actually, confirmation is still pending and the particle that's been found is being referred to as the Higgslike particle. If it should for some reason turn out to be Higgslike rather than Higgs, it will truly earn the designation of that 'goddamn particle' for all the trouble it will cause for the Standard Model.
haven't we already found Bosons
is Higgs a higher energy state Boson ?
Higgs is the one boson that provides the evidence of a Higgs field that provides mass for certain particles to interact with it.
I'm not a particle physicist ... but that sounds about right :)
"Pretty important" is an understatement, but we'll see how the whole thing plays out, as more information becomes available.
The more we know - the more we realize we do not know. Discoveries unveil new questions.
http://occupywallst.org/forum/damn-communists-marxists-socialists/#comment-775530
The problem with Christianity is the problem with all religions, the dishonesty of promoting speculation based beliefs as absolute truths.
Speculation is a kind way of putting it :)
I agree on Glass Steagall. I also agree on decentralization. Its why I always thought that states rights should not be a l vs r thing, but a people vs power thing.
Inevitable indeed.
Right, and this segways into the overlap and distinctions between anarchist philosophy and libertarian philosophy. We're all against crony capitalism, and we have to acknowledge the governments role in facilitating this mess. However, anarchists look at the whole picture, whereas libertarians only attack the government angle (and tend to give private business a special pleading, as if--but for government, private business would miraculously become morally purified, which is [I think] absurd per se).
But, if we did away with centralized power structures--both private and public (maybe with some exceptions, where there's no other reasonable way of performing a needed function), and we implemented participatory democracy (at least on the local level), then I think it becomes much easier for us to mitigate corruption, concentration of power, collusion, etc. I support Glass Steagall, but mainly as a stopgap measure (not an end in itself). I sympathize with those who say we should scrap our monetary system (in favor of something more democratic), but, I think the idea requires much more empirical study (and I don't want to make things worse than they are now), whereas, it's much easier to understand/quantify the benefits and merits of "going local" (so to speak).
That is a great idea and deserves more attention and discussion.
The problem is that we already were largely decentralized in the "olden days" out of necessity. In an agrarian society people are more spread out and decentralized as a lot of land is needed to support the population. But with the rise of the Industrial Revolution and corresponding rise in Big Business, things became concentrated and centralized.
And with capitalism there is always the tendancy of the large to gobble up the small...to eliminate competition through mergers and aquisitions. So even if everyone decentralized everything again, there would be this counter-force operating to tear it apart.
The system, the machine, is setup to operate this way. The machine has to be re-engineered or reprogrammed to operate without the relentless never-ending goal of bigger and bigger profits. That's what is at the heart of the problem.
It is not an intellectual battle. Intellectual activity cannot replace economic laws from functioning. However local production and consumption require more labour and less energy and irreplacable natural resources and therefore it must be more efficient. It is only that interest on money distorts the proper functioning of markets.
The usury economic system favours large scale operations. During the usury economic cycle useful capital is replaced by useless capital. This works as follows:
This cycle is repeated again and again so with usury large scale operations have the advantage. The usury economic cycle caused the division of labour to go further than it otherwise would have done. The effect of the usury economic cycle favouring large scale operations is amplified by the free flow of capital and free trade as this created a competition of everybody against everybody on a world wide scale. As a consequence dependencies have escalated and people have become less self sufficient. In this way "the system" has been created. Before the middle of the twentieth century most people lived in villages that were largely self dependent. Henceforth more and more people live in cities and societies have become more complex than they would have been without usury.
The functioning of markets is perverted by cycles of leverage and liquidation. During the boom phase useless capital is created. During the bust phase useful capital is destroyed. As less and less people can have an income from real economic output, productive jobs have been replaced by service sector jobs that produce nothing but still consume energy and natural resources. Energy and natural resources are often irreplaceable. Therefore the usury economic cycle makes the economy less efficient.
http://www.naturalmoney.org/full-theory.html#usec
"Intellectual activity cannot replace economic laws from functioning"
Ummm, can you list which economic laws you're referring to?
I've got a social reserve to pay my student loan, health and rent
For example, the economy of scale or Capitalism causing money to accumulate in the hands of a few (try a game of Monopoly if you think it doesn't need to be that way).
I think government ought to be a source of power for the people. It's been hijacked by money and special interests, but I think that's fixable. It's bad strategy for OWS to go along with the right's defamation of government - less government means fewer rights for and less accountability to the people.
What should government do? Propose and vote on policy ideas at http://the99vote.com
Sorry dude, I disagree, and my opinions are not shaped by what "the right" thinks or doesn't think (I'm not a reactionary thinker). Moreover, decentralization does not necessarily imply dismantling government (at least not completely), but yes, government is absolutely part of the problem (and in my view, BOTH our private economy and government has become overly centralized).
I didn't mean to suggest that your thoughts are shaped by the right, but I think they're probably happy enough with the anti-government / anarchist angle of OWS - it coheres effectively with their message.
I think we need an effective public sector. There are many necessary / productive projects that the private economy does not execute properly. Having a strong public sector is a stabilizing ballast.
Well, okay, I sort of agree, but I see the potential application of social democracy, happening more on the local level (compared to its current highly centralized structure). This doesn't mean I think we should dismantle federal poverty programs (I don't think we invest enough), but our current structure is arguably not even democracy, let alone participatory democracy.
I'm all for new institutions rising to fill unmet needs, but I also think existing government can / has to be more effective.
Money isn't a bad idea initially, but it is vastly outdated and grows more so by the day. In the early industrial revolution it was necessary to use money to incentivize manual labor. Assembly line jobs, for example. Thankfully, most of these boring, repetitive jobs are being automated. That increasingly leaves us with more and more occupations dependent upon creative and critical thinking. As psychology experiments have universally discovered, extrinsic incentives (money) ONLY work for manual labor. For creative, critical thinking tasks not only do extrinsic incentives not work but they actually HINDER performance. So from a purely motivational perspective, money as a motivator is becoming a hinderance, contrary to popular conception (again, this has been shown over and over and over for decades. Almost always unexpectedly even from such institutions as London School of Economics, University of Chicago and even the Federal Reserve Bank).
Another stumbling block for any monetary system is the automation I mentioned before. As we continue to automate we will begin running out of job options as computers and robotics begin to take on infinitely more human tasks. We already have cooked food vending machines, robot cooks & wait staff, automated warehouses, automated mining trucks, automated convenience stores, automated transportation, and this will continue exponentially. Yes, exponentially (see Ray Kurzweil's law of accelerating returns).
A third problem is molecular manufacturing. It is said to be a "certainty" within the next 20 years, and perhaps as soon as the next decade. This estimate from the center for responsible nanotechnology. We are talking about assembling products from the molecular level on up. Higher quality than what we currently have, but with ubiquitous input materials. In other words, no more mining. You could go out and scoop some dirty and have yourself a toaster. This isn't science fiction! It's science fact! And if we were to merge such technology with something like the self-replicating 3-D printer Rep-Rap, we begin to see how in the very near future people could have their own factories in their own homes. This would destroy profit.
Is money obsolete? I like your reasoning (I'd be interested in reviewing some of those studies pertaining to "incentives" ... and how they influence the creative class). Additionally, yes, I'm aware of the coming advances in areas like nanotech, industrial automation, and just an overall--increasing automation of all laborious tasks.
How long will it be before the average homeowner can take a scoop of dirt and output a toaster? I'd say, most likely, far more than 20 years. Not to say nanotech won't make very far reaching advances over the next two or three decades, but that sort of reconfiguration of matter (inside the space of a room in an average home) is very far in the future (assuming it ever becomes viable). But anyway, you're overall point is well taken, and I think I like the direction your reasoning takes.
I am quoting the estimates of those in the field. According to the Center for Responsible Nanotechnology, it is almost a certainty within 20 years and possibly as early as within this decade. It might sound far off, but we have already successfully tested blood cell sized devices in rats to cure diabetes. Let's also not forget the law of accelerating returns. Technological innovation follows an exponential growth curve. An example would be the Human Genome Project. The estimates early on were 15 years. Many were skeptical. By the midway point they had only completed 1% of the genome. Critics cited this as proof it would take centuries (thinking, as we are inclined to, in a linear progression model). Contrary to that criticism, the Human Genome Project finished not only on time but AHEAD of schedule. When you count exponentially, the early stages don't seem like much (2, 4, 8, 16, 32), but 30 steps out is a BILLION.
As for a taste of the studies in the science of motivation, type "the surprising science of motivation" into youtube. There is a TEDtalk and RSA Animate on the topic that just briefly glosses over the findings.
Right, I have no doubt that we'll advance tremendously, but soil into toasters?
Yes. Ubiquitous input materials like the dirt in your backyard already have the necessary molecules. They just need to be rearranged. It would be a much sturdier toaster than what we get with current manufacturing processes as well because it would have molecular precision not possible with current methods. It sounds crazy, but it's reality. In fact, you could email it as well. Open source manufacturing could become huge. You can download household appliances. This isn't some assumed technology like jet packs or flying cars, precursors exist. Trends are already measurable. Molecular components have already been built. The process is merely being refined and improved.
the real issue is property
In my first memorandum, in a frontal assault upon the established order, I said things like, Property is theft! The intention was to lodge a protest, to highlight, so to speak, the inanity of our institutions. At the time, that was my sole concern. Also, in the memorandum in which I demonstrated that startling proposition using simple arithmetic, I took care to speak out against any communist conclusion. In the System of Economic Contradictions, having recalled and confirmed my initial formula, I added another quite contrary one rooted in considerations of quite another order—a formula that could neither destroy the first proposition nor be demolished by it: Property is freedom. [...] In respect of property, as of all economic factors, harm and abuse cannot be dissevered from the good, any more than debit can from asset in double-entry book-keeping. The one necessarily spawns the other. To seek to do away with the abuses of property, is to destroy the thing itself; just as the striking of a debit from an account is tantamount to striking it from the credit record.
Confessions d'un revolutionnaire: Pierre Proudhon!
there's no reason to destroy the property
Pierre Proudhon would agree with you, and so do I.