Catallactic Theory of Money, a brief review

While a vast number of readers watched as election commission employees in neighboring Belarus performed dangerous pirouettes on step ladders and other feats for the glory of the current dictator, a truly important event took place in this country. Alexei “Kamendant” Tereshchuk published an essay Catallactic Theory of Money. By internet standards, it is, of course, a long-read, but overall the text is quite concise, and despite the roughness of the presentation, the work deserves to be read by anyone who is even slightly interested in economics. Although, of course, those unfamiliar with Mises’s monetary theory will find the essay quite difficult to read, as it is a direct development of it, using Mises’s own conceptual framework.

For Mises, money is a special category of goods used as a medium of indirect exchange. This good acquires its value through a historical process that can be mentally traced back to the time when money was an ordinary consumer good (the so-called regression theorem).

Kamendant generalizes the concepts of indirect exchange and money. He defines indirect exchange as interpersonal exchange in which goods are acquired for their exchange value. Thus, money becomes just one of the possible goods used for indirect exchange. What is its fundamental characteristic that distinguishes it from other goods? Or put this way: what properties allow a certain good to become money?

Kamendant provides a definition of money that contains the answer to this question. Money consists of goods used to reduce costs in indirect exchange. It is precisely about the reduction of costs. If the exchange of one good for another is carried out directly with lower costs than when using some intermediary commodity, then the need for money does not arise.

Mises derived indirect exchange strictly from direct exchange. However, there is rich anthropological material showing that in primitive societies that do not use money, the economy is nonetheless not barter-based. Instead, there are usually various forms of mutual obligations, which gave rise to the debt theory of the origin of money. Kamendant points out that the only condition under which the demand for money as such could disappear is the equality of costs when exchanging any goods for each other. However, it is quite difficult to imagine such a society; that is exactly why societies with a pure barter economy do not exist.

Also quite interesting is the part of the essay dedicated to the so-called functions of money: scarcity, durability, divisibility, and so on. Kamendant indicates the role of these functions. From his point of view, these are simply different aspects of saving when using money. At the same time, only part of the saved costs relates to exchange itself. But beyond that, there are savings on storage costs, change, and so on.

Perhaps I will not try to briefly summarize Kamendant’s entire essay in one post; it turns out muddled and unclear. Read it yourselves.

My only complaint about the text is that it is written in rather poor language and needs editing. The author claims that this is only part of a future treatise on economic theory, and I hope that before the publication of the treatise, it will be proofread a bit better.

Nevertheless, I am terribly glad that Austrian economic theory remains alive and evolving, rather than being reduced to a retelling of treatises from the middle of the last century.

Navalny and Leviathan

When I read about Navalny’s poisoning, I felt completely hopeless. This year, ruling regimes all over the world have finally gone off the rails and have already managed to cause an unimaginable amount of damage to people. And it’s only August! And there is no reason to believe that 2020 is just an anomaly and that things will settle down later. In short, I wanted to fully retreat into internal emigration. To a place where there are no political news, where you have no idea what new orders the disposers of other people’s lives are giving, where there is only a market around—peaceful, cozy, and benevolent. To the place where all decent people actually belong.

I beg you: please, do not feed yourselves to the Leviathan. Stop with these pickets of yours, for which you will be fined—one; jailed for a day—two; given a criminal case—three. Stop the performances with Putin dolls and other risky nonsense. This will not shame the bandits in power. This does not help the victims of the bandits. It simply forces the security forces to turn their extremely unfriendly attention toward you, with a predictable result. You cannot be proud of being a victim of the regime. You should be proud of causing damage to the regime with impunity. But be proud in silence, otherwise, the impunity will turn into a failure.

One should act openly only when backed by power. Until then, we are partisans in this war declared upon us by the state. We must not be visible. Only grotesque rumors should be known about us—that we are everywhere, that 90% of the country’s economy is in the shadows, that no one follows the regime’s orders except for completely naive weirdos, that only suckers keep their money in fiat while the right people keep it exclusively in crypto, that official employment for a normal person is just a smokescreen for shadow earnings, that a normal person has contacts for every occasion, and it is thanks to them, not the state, that he peacefully prospers.

Of course, it is not like that now. But such rumors and beliefs have the power of a self-fulfilling prophecy, which is why it is useful for us to broadcast them. This is a far more effective struggle against the regime than rallies or, Lord forgive me, anti-corruption investigations. Against any regime, not necessarily Putin’s. Against the phenomenon of political power as such.

If ancap happens, how will land sales in the state take place, and to whom will the money go? To previous rulers?

Ilidzhin

I have already answered a related question in a post about the continuity of pension payments during the transition to a stateless society. There, I noted that the transition mechanism will vary depending on exactly how ancap comes about.

The most peaceful and calm way to transition to ancap, from the perspective of state functionaries, is through minarchism, which is precisely why it is attractive. As a result of liberal reforms, the state’s share in the economy shrinks, taxes decrease, state property is gradually privatized, and all of this is replaced by private institutions. Over time, only the name of the state remains, and eventually, the last newly dismissed government official, leaving the last government office rented from a private company, turns off the light. The money received from privatization during minarchist reforms is spent on the bankruptcy procedure of the state pension system, the repayment of the national debt, and so on. And if, due to favorable market conditions, some unspent money remains after privatization, it is simply distributed equally among the citizens.

If the transition to ancap occurs through the formation of extraterritorial contractual jurisdictions, then after some time the state will simply become one of such jurisdictions, losing its right to legitimate aggressive violence and its tie to a territory due to the shift to contractual relations with clients. In this case, that state property which is found unnecessary for carrying out the functions of a contractual jurisdiction will simply be sold, as non-core assets are usually sold. The privatization of the state itself will most likely happen through a shareholding mechanism: each citizen receives one share, and then some hold, some sell, and some buy up shares, thereby gaining control over the ECJ. This mechanism is prone to corruption (see voucher privatization), so it is unlikely to happen without scandals.

Finally, ancap may emerge as a result of agorist practices bleeding the state dry until it collapses on its own. But in the process of being bled dry, it will sell off those assets that still hold some value, and by the time of liquidation, all liquid state property will already be in the hands of enterprising agorists, including former government employees who privatized it into their own pockets. Those who find this unfair can simply try to do it before others. Agorist logic is harshest here: state property has already been declared ownerless property, effectively controlled by a gang of accidental heirs to the great robbers of the past. Whoever manages to seize a piece of this property non-violently is a success. Whoever manages to seize it violently is not a success, and property claims may be made against them later.

What Belarusians and Tsikhanouskaya Need to Do, Part 2

Since I wasn’t far off the mark with the first part of my advice, and events unfolded quite closely to the proposed scenario (instead of arresting the entire headquarters — only the deportation of the president-elect; instead of diaspora activity — a nationwide strike), I will venture to suggest a tactic for ending the confrontation.

The essence of the tactic: no one allows any doubt that the president-elect is indeed Tikhanovskaya, and she continues to act precisely in this capacity. And what does the legitimate president-elect do? Of course, she schedules her inauguration.

There is no need to wait long. The inauguration is scheduled for the nearest Sunday, at the largest open venue in Minsk. Foreign leaders are officially invited to it. The Poles, Lithuanians, and Ukrainians will certainly agree, and another dozen leaders will announce that they are sending their representatives. Then begins a bombardment of the Belarusian Ministry of Foreign Affairs with notifications that the president of, say, Croatia gratefully accepts the invitation of the Belarusian side, arrives for the inauguration at such-and-such a time, and requests that a meeting be organized.

In the same way, the inauguration organizing committee with a straight face issues instructions to heads of agencies: organize traffic closures, provide security, set up a stage, seating for invited guests — and so on. If an official sends a refusal, an announcement of their removal from office follows, and a request is sent to the deputy.

In short, the winning side simply begins to give orders, and representatives of the losing side are faced with a choice: either they play by the new rules, or they personally drop out of the process, and tomorrow new faces occupy their offices. Orders are also given to the OMON squads — they are given a week’s leave; after all, they have just worked very hard.

Additionally, the defense side appeals to the investigative authorities with a proposal to close the cases of Tikhanovsky and Babarika in connection with newly discovered circumstances. The circumstances, in the form of a crowd of thousands speaking actively under the windows at that time, speak for themselves.

I will not elaborate on further details; I think the line of thought is more or less clear. Fake it until you make it.

*After the first two acts of the play, only the final one remains to be played: we shall overcome*

The Stability of Panarchy

Is the long-term stable coexistence of different political-economic systems in different (or even the same) territories possible, provided that the state monopoly ceases to exist?

For example, a large ancap city neighboring a network of anarcho-eco-communes, and nearby, indigenous rainforest dwellers with their own variation of a stateless arrangement. What are the prerequisites and what are the obstacles to stability in a global sense?

meta-anarchist

Ever since progress (interpreted primarily as scientific and technical, but inevitably affecting social relations as well) became a significant value for a certain critical mass of people, the stability of any political-economic systems has been under constant threat. Liberal regimes of the mid-19th and mid-20th centuries differ from each other so much that their own mothers wouldn’t recognize them.

Therefore, in the long run, no current configuration of communities will, of course, be preserved. More stable societies (like the selva aborigines mentioned in your example) will be eroded by less stable ones. Less stable ones will borrow certain practices from more stable ones. Different societies will have slightly different dynamics in population change—both through natural growth and through co-optation into neighboring societies.

One thing can be said with reasonable confidence: if concepts of property in neighboring communities prove to be compatible, then, at the very least, conflicts between them will be minor and episodic, without any nonsense like wars of extermination. How property is defined within a community is not that important; the main thing is that when interacting with neighbors, the peculiarities of their worldview are taken into account.

For instance, if raids for brides are launched from the forest, if people from the fields visit suburban gas stations to get fuel for free, and if city dwellers place new residential quarters in the fields and turn a piece of the forest into a park—then irritated dialogues with the general message of “what exactly did you have in mind?” are inevitable. After some time, a mutual adjustment is inevitable: raids will become ritualized and turn into a folklore festival for the city dwellers; fuel will be gifted to the communists in exchange for their eco-products; suburban housing will adopt some features of communal living; and the park on the border of the selva will be used for raids once a year, and for peaceful walks and picnics the rest of the time.

As scientific development progresses, humans tend to decrease, rather than increase, their impact on nature. If food can be grown in a test tube in a cupboard, it is much more convenient than growing it in manured fields. If metals are extracted from seawater, it is far more pleasant than digging up mountains in search of ore. If additional space can be packed into a fourth dimension and put in a pocket, then the wild and untouched selva will begin right at the doorstep—there will be no need to clear-cut it.

Thus, there are long-term factors that will promote the outward expansion of the city, and there are factors of the opposite direction. There are factors promoting the expansion of ancap culture as the culture of a wealthier society, and there are factors promoting the expansion of communist and primitive relations (the abundance of goods makes such downshifting attractive to many). There will be no stability for us. Let us weep!

The Publication of “Mechanisms of Freedom”

When I mentioned that the competition is not sleeping, and that an alternative translation of Friedman’s book is already undergoing pre-press preparation, I forgot to provide a link to the fundraiser for its printing. Those who would like to participate in the project, send a donation there.

At the time of this publication, 59,350 out of 80,000 rubles have been collected.

Also, as far as can be judged by David Friedman’s website, he wants to post Russian translations of his poems (most likely including mine), but the link does not work yet.

Defining freedom from the position of ancapism?

анонимный вопрос

I really like the definition of freedom given by the writer Alexander Rozov:

Freedom is the opportunity to openly do what someone else dislikes
A. Rozov, Deportation

For clarity, I would perhaps add one more word to it: “openly and with impunity”, but this is, in essence, simply a clarification of the term “opportunity”.

But this is a general definition that allows one to understand the degree of a person’s freedom in any society, even a totalitarian one. However, the question concerned ancap specifically. And in ancap, there is an important limitation on freedom called the non-aggression principle:

No one has the right to initiate violence with impunity
NAP formulation by Ancap-chan

Thus, the definition of freedom for ancap can be reformulated as follows:

Freedom within ancap is the opportunity to openly and with impunity do whatever one wants, except for the initiation of violence, even if someone else dislikes it.

It remains to clarify that from the perspective of ancap, violence is interpreted as unauthorized damage to property.

Of course, property boundaries, as well as the boundaries of acceptable property damage, can only be defined with some finite precision in any society. Therefore, interpretations and discrepancies are possible regarding specific manifestations of freedom under ancap. For example, the freedom to listen to music, starting from a certain volume level, turns into the freedom to cause damage to third parties, meaning it goes beyond the scope of freedom under ancap. At the same time, determining a threshold volume level in advance is pointless; the clarification of the current boundaries of freedom occurs through the resolution of emerging conflicts.

*The boundaries of the acceptable are the fruit of long conflicts*

Mechanics of Freedom, Chapter 58

Chapter 58, Welfare and Immigration: The Second Part of the Argument, concludes the fifth part, The Mechanics of Freedom. While in Chapter 14, Friedman argued that labor immigration benefits both the migrants and the citizens, he now focuses on the fact that migrants may pursue the simple goal of living on welfare. He asserts that free migration is precisely what gives the government an incentive to reduce benefits, whereas high immigration barriers allow the level of redistribution to remain high. Thus, for proponents of a small state, it is entirely justified to either start by reducing benefits and then open the gates, or start by easing migration, and then the demand for reducing benefits will inevitably emerge.

It seems to me that Friedman relies too heavily on economics here, failing to consider the factor of populism in democratic countries.

And so, having finished the fifth part, I dove straight into the sixth, and first translated the poetic introduction, so the poems in this book are now seemingly dealt with.

How will the issue of preventing the degeneration of the Race be solved under ancap?

Genes that contribute to obtaining a higher education are weeded out by natural selection. Without intellectually developed people, it is impossible to maintain a technically complex economy. What is to be done?

анонимный вопрос

In the article you refer to, Alexander Markov already provides an answer to the question of what needs to be done. I quote:

…it makes sense to think about the development of high-tech, efficient, and humane methods for correcting unfavorable evolutionary trends. This includes methods related to genetic engineering, gene therapy, and the selection of gametes or early embryos.

By the way, these are exactly the methods I fantasized about when discussing ways to get rid of pathological aggression.

It remains to be understood how ancap can help in the development of the aforementioned methods. And here the answer is quite obvious. The main thing holding back the development of human genome correction methods today is government bans. No state — no bans.

But ancap is not just the abolition of the bioethics factor that puts a spoke in the wheels of progress. It is also the abolition of social taxes that the middle class pays for child benefits for the lumpen. In the absence of forced redistribution, the rich and educated have more economic incentives to have children, and the poor and uneducated have fewer.

Finally, in the absence of a mandatory state educational standard, people will not need to spend time studying various garbage subjects, such as patriotism lessons. Fewer costs for education (whether measured in time or money) means more is freed up for children.

Thus, in a stateless capitalist society, several factors emerge that weaken the effect mentioned in the article, and in the long run, abolish it entirely. There you have it, gentlemen proponents of racial superiority, an additional argument for ancap.

What should Belarusians and Tsikhanouskaya do?

Bogdan Fokin

I’ll say right away that in this instance, I most want to play the Shulman: curl up in a hole and scream from there that I am not an expert, go to the experts. But let me just stipulate that I am not insisting on being right in this matter, and am merely expressing a modest opinion.

I am proceeding from a simple comparison of the tactics of the Ukrainian Maidan and the Armenian revolution. The Armenian tactic ensured victory at the cost of less bitterness between the parties, as a result of which the conflict quickly quieted down, and reforms are now proceeding without as many problems.

So, Tikhanovskaya’s headquarters should formulate the simplest possible decentralized tactic of wearing down the security forces through peaceful urban guerrilla warfare, with coordinated street closures in geographically dispersed districts, strong moral pressure on election commission employees—so that they publish materials showing falsifications—and strong moral pressure on the relatives of security personnel to force their helmet-wearing kin into unobtrusive sabotage, and so on.

After this tactic is announced, there is a high probability that the headquarters will be crushed and its leadership imprisoned in its entirety. But a decentralized tactic will allow things to proceed without a headquarters thereafter.

The diaspora worked well in Armenia. Belarusians have one too; it should be utilized. This means pressure on foreign leaders so that they do not recognize Lukashenko’s victory, but rather recognize Tikhanovskaya’s victory.

Unlike in Venezuela, high-ranking Belarusian security officials do not seem to be as heavily involved in business, but are simple government employees, so it will be easier to win them over to the side of the legitimate lady president.