Friday, March 16, 2012
Sushi Island Savers Saga - Part 2
Great comments in the last thread! I wrote the following as a comment replying to a few questions that had come up relating to how the act of saving or net production contributes to the Superorganism's drive toward sustainable growth. But I really wanted as many people as possible to watch the video below, so I thought it would be more prominent in a post. So here you go!
The term "Superorganism" refers first and foremost to "distributed intelligence" or "market intelligence" as opposed to "centralized planning". If ever you feel the urge to make life better by changing some rule or adding a new one in order to control, cause or stop someone else's actions, you fall under the category of central planners. If, however, you are driven to personal actions to better your life (rather than the all too common obsession with changing the actions of others you deem to be wrong) you are part of the Superorganism. Central planners are, of course, also part of the Superoganism, but they are a retarding influence on that which would be far more intelligent without them.
Both distributed intelligence and central planning are capable of organizing the means of production. It's just that one does it infinitely better than the other so there's really no comparison. Somewhere along the way, probably in the 20s and 30s, governments switched from assisting the Superorganism to central planning, or retarding the Superorganism. I believe the singular factor that enabled this switch—made it even possible—was that the savers began entrusting their surplus production to the government as a fundamental function of changes to the monetary system that occurred in 1922.
Not everyone is capable of being a world-changing entrepreneur. But everyone is capable of consuming less than they produce and, therefore, saving. And it is the choices made by billions of average people that leads to the Superorganism's superior intelligence. As the video below explains, markets are processes of learning and mutual discovery through individual choices like entrepreneurship (individuals taking a creative stab at the future in the face of uncertainty) and the spread of knowledge (individuals building upon—expanding upon—the past contributions of others).
The chain of settlement amongst savers which I described in this comment is like a battery system for the storage of economic power. It gains its power and its storage ability from its perpetual nature. Economic power can be deployed or discharged at any time by any saver because there are always new net producers working to join the chain. Without this system of reserves, the surplus production of savers simply gets distributed and used up by whatever activity the debtors are up to at that time, or wherever the central planners want to allocate it. With the Freegold system, the allocation of stored purchasing power becomes a matter of the individual decisions of billions of savers with no reason to hurry.
I do realize that most scholarly Austrian economists probably ignore this blog because it seems somehow not up to their standards. Likewise, my readers tend to look down on modern Austrians because they are, for the most part, "Hard Money Socialists" as Ari and FOA dubbed them more than a decade ago. The Socialist part is because, even while they talk about limited government, they want the government to control the production of money "by locking gold into any official currency system to act as a gauge and controlling factor against socialist tendencies in government" (to quote FOA). Socialism is about non-market prices and any official gold standard is a Socialist standard.
But I want to caution you against dismissing the Austrian School simply because most modern practitioners are misguided with respect to their monetary prescriptions. The Austrian School is primarily a school of Economics (focused on subjectivism and a deductive approach to economics called praxeology), not money, and this is where it is truly great. From my limited time spent in the Austrian space, I am probably most impressed with Israel Kirzner among the living Austrians. His focus is more on the period of Austrian Economics before 1974 than it is on the activities of modern practitioners.
And I think you'll find that this video below, a lecture given by Kirzner this past summer, is so spot-on with regard to the discussion in the last thread that I want to say it is a must-watch for anyone following the discussion. Even if you've seen it before, or the older, longer and more complete version, you may want to watch it again:
And just for fun, here's the story of an intelligent super-sized organism named Nellie who finally had enough of the circus telling her what to do: