2010 On Line Technocracy Study Course project

In the foregoing lessons it has been shown that all of the events occurring on the earth's surface are events of matter and energy. Stated in another manner, and from the point of view of human beings, the social circumstances of a group of people are entirely the resultant of what that group does in the presence of the existing factors such as climate, soil, and mineral resources, that go to make up its environment...

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Lesson 15



We have pointed out that, granted our present state of technical and scientific knowledge, the industrial accomplishments that are possible to any particular group of people depend largely upon the environment and resources of the region in which that group of people happens to exist. In a region, for instance, which is largely devoid of energy and mineral resources, any human population is essentially doomed to a low-energy standard of living.

      On the North American Continent, it has been shown, occurs the most favorable combination of climate, vegetable and animal life, fossil fuels, and the essential industrial metals of all the land areas of the entire earth. In consequence of this fact an industrial civilization has arisen on the North American Continent which already far surpasses in productive output per capita that of any other land area. The resources of the North American Continent, while by no means inexhaustible, are still sufficient to maintain a high-energy state of civilization, with complete economic security to each and every inhabitant into the indefinite future, while at the same time requiring a continually diminishing amount of effort on the part of each individual.


      Such is the simple physical picture of our present situation. It cannot be too strongly emphasized here that the standard of living that men actually achieve from a given environment depends only upon the limitations of that environment, and upon themselves. If the environment is lacking in essential constituents, nothing can be done about it; if the environmental factors are ample, as in the case of the North American Continent, and if the living conditions people allow themselves are wretched under such circumstances, much can be done about it. In other words, if we starve in the midst of plenty, if we war when all the world wants peace, if we entertain all the thousand and one paradoxes that characterize our present social circumstances---our faults, to paraphrase Shakespeare, must not in our stars, but in ourselves, be sought for.

      Our existing method of social administration, as we are becoming most painfully aware, has resulted in almost all cases in unwanted circumstances. If we wish to avoid such circumstances, or worse ones in the future, it becomes necessary that we analyze critically the existing method of social administration in order that we may find wherein the trouble lies.

      So recent has been the transition from the ox-cart to the aeroplane, from a low-energy to a high-energy social mechanism, that by far the greater number of our existing social habits, institutions, and concepts, originating in the thousands of static years of our agrarian past, have survived with only minor modifications until the present time. Institutions which were evolved to fulfill the needs of a society composed of hunters, peasants, sheep-herders, warriors, priests, petty merchants, and usurers, have been retained in an age characterized by a billion horsepower of prime movers, with its consequent complex of high-speed transportation, communication and quantity production equipment requiring for its successful operation the co-operative efforts of the whole population of a continent. It is a far cry from the simple transportation system represented by grandfather and his ox-cart to that of a transcontinental railway system, yet, as will be pointed out presently, the social habits, institutions and concepts whereby we still attempt to operate a continental area, are with only slight alterations those which were evolved to meet the vastly simpler needs of this earlier time.

      Suppose we examine critically some of these basic concepts handed down to us from an agrarian antiquity.

The Concept of Property.
       One of the most deeply rooted of all these ancient concepts is that of property. So firmly fixed is this concept that ordinarily it is taken to be axiomatic; rarely does it ever occur to one to examine critically into its meaning. One speaks of `my horse,' `my dog,' `my house,' `my automobile,' with never a thought of just what constitutes the difference between a


house that belongs, say, to Jones, and the same house if it belonged to Smith. To make this even more clear, let us suppose that the house formerly belonged to Jones, and that he afterward sold it to Smith. Should a stranger, knowing neither Jones nor Smith, have observed the house from day to day, before and after the transaction, he would probably have been unaware that any such change had occurred. He might have noted that up until a certain date, Jones lived in the house, and that after that date Jones moved out and Smith moved in. The stranger would have observed only that there had been a change of occupancy of the house. Such change of occupancy, however, might have occurred with no change of ownership at all, as in the case of the change of tenants in a house that is rented. What then constitutes property in a house? A little reflection will show that ownership of, or property in, a house consists entirely in what society will allow an individual to do with regard to the house. If the property in the house is Jones', that merely means that Jones is allowed by society to live in the house, to rent the house to someone else, to leave it vacant, or to tear it down. Jones may transfer parts of these privileges to other people for a consideration, as in the case of rental, or he may dispense with the privileges altogether, by sale, by gift or by forfeiture. In these latter cases, though the house remains, the right of property in the house is transferred to some other person. The same line of reasoning applies to any other property. Thus, it becomes evident, as Lawrence T. Frank, of the Rockefeller Institute, has aptly remarked, that property consists not in a physical object, but is a mode of behavior with respect to a physical object.

      The significance of this will be, perhaps, even more clearly understood if one should consider the difference between the ownership of an automobile in the middle of a ten-acre field and the ownership of the same automobile in the middle of Fifth Avenue at 2 o'clock on a busy afternoon. It would be the same automobile in either case with the same owner, but what society would allow the owner to do with his automobile in the middle of a ten-acre field is vastly different from what it would allow the same owner to do with the same automobile on Fifth Avenue. A very similar type of thing occurs in the ownership of land. Suppose one owned a tract of land in the middle of an uninhabited wilderness. In such a case, the rights of property with regard to this land would be ,absolute, since, by hypothesis, there would be no society in such an instance to limit or curtail one's freedom of action; it follows that such freedom of action would be limited only by one's physical ability. He could cut or burn off the timber, cultivate or not as he saw fit, and build wherever it should please him. Suppose that some generations later a thriving city should spring up on this same tract of land. Then, if the original tract were large, it would doubtless be subdivided among many owners and into small tracts. Under these circumstances it becomes immediately obvi-


ous that the right of property in the same land would be totally different from the right of property when the area was a wilderness. Even though it were his own land, society would permit the owner only a very limited range of operations in this latter case; it would dictate to him that he could only build residence, industrial or business structures on his land, according to the city zone in which the land happened to be located. What is more, society would tell him within what specifications the wiring, the fire prevention equipment, the water supply and sanitation equipment must be built.

      Property then, or more strictly, the rights of property, are quite relative, and are by no means the fixed and rigid privileges that in a more agrarian society they have been, or that is still unthinkingly implied when one occasionally becomes concerned over the possible discontinuance of private property.

      In spite of this relative nature it still remains that almost every item of physical equipment that can be monopolized is at the present time considered to be the private property of individuals or groups of individuals. The land is owned, mineral resources are owned, in short, everything that is necessary for human existence and that can be so monopolized, has been taken over and monopolized by individuals or groups. The only reason that one does not pay a public utility charge on the air one breathes is that, as yet, there has not been found a way of enforcing such a monopoly.

Exchange and the Concept of Value.
      As a corollary to the concept of ownership, and to the fact that every monopolizable thing is owned by some person or other, come concepts of trade and of value. The simplest form of trade is that wherein one exchanges, say, ten sheep for one cow, a pound of butter for one dozen eggs, or in general, one kind of commodity or goods for another kind of commodity or goods. Such an exchange is called barter, and represents one of the most primitive forms of trade. While, casually, barter would be thought of purely and simply as an exchange of goods, a little consideration will show that what actually is exchanged is the property rights in these goods. If Jones trades Smith ten sheep for one cow, the property rights that society allows Jones with respect to the sheep are transferred to Smith, and vice versa with respect to the cow. Since there are numerous kinds of transfer of physical goods which are not trade, it is important that one keep this distinction in mind. For example, if one goes into a restaurant and orders himself a meal which he pays for with money, he is engaging in trade. If he has ample money he may seek a very expensive restaurant and dine in style. If he has very little money he may seek a lunch wagon and content himself with a ham sandwich and a cup of coffee. A simi-


lar circumstance holds with regard to clothing. His choice of an expensive or a cheap suit of clothing may likewise be determined by his supply of ready cash. Both of these instances are examples of trade. In an army, however, one is clothed and one is fed. In this case clothing passes from the quartermaster corps to the individual. While there is a transfer of custody of the clothing from the hands of the quartermaster corps to the hands of the soldier who is to use it, this clothing in both cases, before and after, is the property of the United States Army, and no trade is involved. What the soldier actually does is to sign an equipment sheet showing that he has received such and such equipment---this for the purpose of record. Here we have a transfer of goods from the custody of one person to the use of another without a trade having taken place in any sense of the word. A similar relation is true as regards a soldier's rations and housing.

      Trade, then, consists in those exchanges, and those only, in which there is an exchange of property rights. In the case of the army when the quartermaster corps obtains its supplies from the manufacturer, this is accomplished by means of trade; when the quartermaster corps distributes these same goods to the soldiers for use or consumption, this latter distribution can in no sense of the word be construed as trade.

      Intimately associated with the concept of trade is that of value. To consider the simple cases of trade represented by barter, as mentioned previously, it is evident that the number of sheep that would be traded for one cow would depend, among other things, upon the relative abundance in the particular locality wherein the trade 'was effected, of cows and sheep. If sheep were very abundant and cows relatively rare, this ratio might be as high as fifty sheep for one cow; if the inverse relation were true this exchange might be effected for as few as one sheep for one cow. A similar relation holds between butter and eggs, between cotton and wheat, or between any other pair of exchangeable commodities.

      It is this variable relationship between the amounts of one commodity that is exchangeable for another that is the basis of the concept of value. Value is fundamentally subjective, but is always expressed in the market place by the relative amount of one commodity that is exchangeable for another. The amount of one commodity that is exchangeable for another in different times, and in different places, varies widely. In general, the value of a product, that is to say, the amount of other products which is exchangeable for it, increases as that product becomes scarcer. Thus, the value of diamonds at the present time is high only because diamonds occur but rarely, and are monopolized by the diamond syndicate, which allows them on the market at a very limited rate. Should a process be developed whereby diamonds could be manufactured for a cent or less per carat, their value would rapidly


decline. In other words, it is only when a product is scarce that large amounts of other products need be offered in exchange for it. The value of a thing has no relation to its social importance, for example, both air and water are completely indispensable for the maintenance of life. Air is so abundant that one need not exchange any commodity for its use. It is accordingly without value. Since the relative abundance of water varies from place to place, its value varies also. In a region of heavy rainfall and abundant water supply, both for the purpose of drinking and of irrigation, water has no value; it cannot be bought or sold. In and regions, however, water both for drinking purposes and for irrigation, due to its scarcity, is bought and sold or traded in, and accordingly has value.

The Concept of Debt.
      Suppose that in an agrarian system of barter a horse is exchangeable for eight pairs of shoes. Suppose that the shoemaker wishes to buy a horse, and that a farmer who has a horse to sell needs a pair of shoes; then if the farmer should trade the shoemaker his horse and accept only one pair of shoes, the shoemaker would still owe the farmer seven pairs of shoes. These seven pairs of shoes which the shoemaker owes to the farmer are said to be the debt of the shoemaker to the farmer; the farmer is called the creditor, and the shoemaker the debtor. In such a situation as this, there are two alternatives. The debt may be discharged gradually by (a) the farmer taking the seven remaining pairs of shoes one at a time in succession over an extended period of time, or (b) the shoemaker may give to the farmer at the time of the trade a written statement to the effect that he owes, and will pay seven pairs of shoes. Such a statement constitutes a certificate of debt. The farmer may then take this certificate of debt to a merchant and trade it in exchange for other goods which he now needs. In this latter case, the shoemaker's debt of seven pairs of shoes will be owed to the farmer no longer but to the merchant instead.

      Suppose that instead of the shoemaker having given the farmer a debt certificate, stated in terms of shoes, it had been in the form of tokens, which, by common agreement of the community were acceptable, not only in payment for shoes, but also in exchange for all other goods of the community; then this latter token would constitute money. Money then constitutes a form of generalized debt certificate which is exchangeable not merely for a specific product, but for any purchasable product, which the community affords. It is expressed in denominations of value.

      Assuming monetary tokens to be already in existence in a given community, one acquires them in exchange for goods or for services rendered. They therefore represent a deferred payment. The holder thereof may exchange them with other members of the community at some future time and receive goods or services in


return. Money is, therefore, stated in denominations of value, and is exchangeable for goods or services of an equivalent value. Thus, if two different commodities are exchangeable on a barter basis for each other, the two are said to be of equivalent value, and each is exchangeable for the same amount of money.

      It cannot be too strongly emphasized that money, as such, is not a commodity, but is instead mere tokens which by common social agreement represent debt owed by the community at large to their holders. The substances used for money have varied widely from time to time, and from place to place. The North American Indians used wampum; some of the ancients used coins of copper, bronze, tin and iron. Some of the South Sea Islanders have used dog's teeth. Modern countries employ as their monetary standard chiefly the metals silver and gold.

      It is true that in the early stages of the evolution of money a particular commodity was frequently chosen as a medium of exchange for other commodities. In these early stages this commodity fulfilled a dual purpose of a usable commodity and a certificate of debt payable in terms of other commodities on demand. In more modern times, this duality has been eliminated by the process of coinage. In the United States of America, copper is both a coin commodity and the material for a certain coin. In the form of a coin, copper represents merely a certificate of debt, and is usable accordingly. The value of a copper coin as a certificate of debt is very much greater than the value of the equivalent copper as a commodity.

      It is customary among modern nations to adopt a particular metal, usually gold, as the base of the monetary system, in which case the value of gold as coin is taken to be equal to the value of an equivalent amount of gold as a commodity. That this relationship is purely arbitrary may be seen by the fact that nations have of late gone on or off the gold standard at will, and may by edict define the unit of value to be equivalent to any arbitrary amount of gold.

      In a monetary economy, the amount of money exchangeable for a given unit commodity is said to be its price. The person who exchanges the commodity for money is said to sell the commodity; the person paying the money is said to buy the commodity.

Definition of a Price System.
      The foregoing discussion forms the basis for a definition of what is meant by a Price System. The fundamentals of any Price System are the mechanics of exchange and distribution effected by the creation of debt claims or the exchange of property rights on the basis of commodity valuation irrespective of whether property in that system is individually or collectively owned. Hence any social system whatsoever that effects its distribution of goods and services by a system of trade or commerce based on commodity valuation effected either by means of


debt tokens, or money, constitutes a Price System. It may be added in passing that unless it be in some very remote and primitive community, none other than Price Systems exist at the present time.

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