January 17th, 2012

Brandon Smith: Decentralization Is The Only Plausible Economic Solution Left


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Straight To It The USMC Way

Straight To It The USMC Way

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Decentralization Is The Only Plausible Economic Solution Left

Tuesday, 17 January 2012

http://www.alt-market.com/articles/521-decentralization-is-the-only-plausible-economic-solution-left

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When I first began the process of launching the Alternative Market Project, the idea and scope were rooted in analytical papers I had written years before on aspects of centralization versus decentralization, and globalization versus localization.  Back then, I saw these conflicting economic systems as mutually generative.  That is to say, the further we as a society are pushed towards collectivist or feudalist economic structures, the more we naturally or unconsciously gravitate towards independent and open markets.  The problem today is that independent markets have been artificially and quite deliberately removed from the public view.  As I have said in the past, centralization is a powerful tool for elitists, because it allows them to remove all choice from a system until the only options left to the people are those that the establishment desires.  Though we deeply long for free and vibrant trade unhindered by corporate oligarchy, we are told that such a thing does not exist, and that we must make due with the corrupt ramshackle economy we have been given.  I say, this is simply not so…

The great lie that drives the fiat global financial locomotive forward is the assumption that there is no other way of doing things.  Many in America believe that the U.S. dollar (a paper time-bomb ready to explode) is the only currency we have at our disposal.  Many believe that the corporate trickle down dynamic is the only practical method for creating jobs.  Numerous others have adopted the notion that global interdependency is a natural extension of “progress”, and that anyone who dares to contradict this fallacy is an “isolationist” or “extremist”.  Much of our culture has been conditioned to support and defend centralization as necessary and inevitable primarily because they have never lived under any other system.  Globalism has not made the world smaller; it has made our minds smaller.

By limiting choice, we limit ingenuity and imagination.  By narrowing focus, we lose sight of the much bigger picture.  This is the very purpose of the feudal framework; to erase individual and sovereign strength, stifle all new or honorable philosophies, and ensure the masses remain completely reliant on the establishment for their survival, forever tied to the rotting umbilical cord of a parasitic parent government.

Perhaps the only ray of sunshine to be seen through the storm clouds of the current economic crisis is the exposure of globalism as an inherently flawed methodology.  The ongoing implosion in the EU has reached a tipping point, as far as I am concerned, and the parade of absurdity involved in the unionization and “harmonization” of Europe is now center stage; its full frontal economic nudity under the hot white lights of the unforgiving financial microscope.

With the latest S&P downgrade of multiple EU nations, including France, Italy, Austria, and Spain, there can be no doubt that interdependency has led to ruin.  Despite French president Nicholas Sarkozy’s insistence that the S&P downgrade “changes nothing”, the fact is, the EU has just been dealt a death blow.  Higher borrowing costs tend to spark a violent cycle of credit decay in countries with extreme debt to GDP ratios.  Even if France slides through the barrage relatively unscathed, smaller peripheral countries orbiting the EU will not.  Greece, for instance, has just announced that talks surrounding the repayment of treasury bonds held by starry eyed investors have fallen apart:

http://www.usatoday.com/money/world/story/2012-01-13/greek-debt-talks/52530542/1

This means that instead of the 50% “haircut” which buyers of Greek debt were already facing, markets may instead be saddled with a full-on 100% default.

Other smaller EU nations that have been propped up by the flow of funds from the European Financial Stability Facility (EFSF) may soon be in for a surprise as well.  S&P has also announced a downgrade of the EFSF itself:

http://www.rferl.org/content/standard_poors_downgrades_eu_bailout_fund/24453842.html

Only AAA rated countries have the ability to support the fund and its guarantees.  After the downgrades of France and Austria, the number of AAA rated countries in the EU has dwindled to four, led by Germany.  To be clear, Germany does not have the capacity to carry the EFSF and the bailouts of multiple nations upon its shoulders, leaving the fund to flounder, and eventually, self destruct.

The EU experiment is over.  It may take some time for the world to recognize it, but it has indeed failed.

Across the ocean, the situation has not improved.  The news of the European downgrade came right on the heals of an announcement by Barack Obama that the government must raise the U.S. national debt limit yet again, by no less than $1.2 Trillion!   Sadly, the negative effects of America’s own recent credit troubles have only been subdued by the more immediate turmoil in Europe.  It is simply a matter of time before attentions turn back to the frail American debt issue:

http://www.reuters.com/article/2012/01/13/us-usa-debt-obama-idUSTRE80B20P20120113

This debt limit increase should be viewed with quite a bit of vitriol by the American public, especially when one understands that a considerable amount of taxpayer dollars (the precise amount is still not fully known) went into bailout funds for the EU which are now in jeopardy of being derailed.  If American taxpayers are going to foot the bill for the corruption of banks and governments, then we might as well foot the bill here at home, however, because of the sick rationale of globalism and interdependency, we are instead paying for the corruption of banks and governments across the Atlantic while our traitorous president demands even more money to be swiftly misallocated.

Madness?  No.  This is not madness.  This is hardcore fraud, and economic subjugation.  This, my friends, is financial warfare, and right now, we are losing…

While some may applaud the fall of the EU as a victory, I would recommend looking a few moves ahead of the game to see where we are really headed.  Yes, the EU is a perfect example of the feebleness of centralization, but it is also an expendable piece on the grand globalist chess board, just like the U.S. dollar.  Already, IMF mascots like Christine Lagarde and MSM pundits have begun suggesting that the EU is failing not because of centralization, but because the union is not centralized ENOUGH!  Only a few months ago, Angela Merkel of Germany obstructed the institution of EU Bonds because the move would collectivize the debts of EU members and remove elements of sovereign control.  I guarantee that policies of national sovereignty like those in Germany will soon become the scapegoat for collapse of Europe in the near future.

The purpose behind a European disaster is not to break up the EU, but to consolidate power even further.  Indeed, plans have already been suggested by centralists which involve a “reformation” of more powerful European nations into a tighter and more totalitarian framework.  The Council On Foreign Relations, a globalist think tank and political puppeteer group, of course agrees with this plan, and has promoted the concept on numerous occasions:

The Financial Times’ Wolfgang Münchau argues that the split of the eurozone from the larger EU was inevitable and essential. The summit demonstrated that a “monetary union cannot coexist with a group of permanent non-members in a unified legal framework,” he writes. For the eurozone to survive, the greater EU must be reconstituted or destroyed, Münchau explains. Indeed, Britain’s decision not to take part in the fiscal union is paving the way for a new Europe unhindered by half-hearted British engagement, says Der Spiegel’s Roland Nelles. He contends that Europe is “on the path towards becoming a federal country.”


http://www.cfr.org/eu/new-fiscal-union-europe/p26731

As we have discussed many times over the years, the subversive and sometimes subtle debasement of the dollar is in fact a deliberate program designed by international financiers to force the American public to accept loss of sovereignty and centralize economic authority into the hands of an elite few.  The situation in Europe is no different in this regard.  Both cultures are being strong-armed through the removal of options and funneled into a waiting net like so much oblivious trout.  So, the question must be asked; how do we fight back?

Could a political groundswell be used to supplant corrupt leadership and stall the coming avalanche?  No.  Even with a clean sweep of all branches of government and the election of a presidential candidate with considerable economic insight (like Ron Paul), the damage has already been done.  Would a complete shutdown of the Federal Reserve and a repudiation of all debts accrued through its underhanded financial practices make a dent?  A good start, but still not enough.  What about a complete reversal of current spend and borrow practices by our government and a fast track plan for the reconstruction of America’s industrial base?  That would be great, but American industry took decades to dismantle, and it will take decades to rebuild, so again, no dice in the short to medium term.

The fact is, the U.S. is going to see some very hard economic years ahead, regardless of any top down political solution.  Those who are waiting and hoping for a knight in shining armor to ride into Washington D.C. and save them are going to be sorely disappointed.  Those who shrug off the threat of fiscal breakdown as a “long term” affair will likely find time quickly slipping away while they clamor for bureaucracy to finally work in their favor.  As a movement keenly aware of the threat at hand and the culprits behind it, the Liberty Movement should be doing far more than it is now to stem the tide, and that work begins with decentralization.

Decentralization is an activist strategy which does not rely on top down intervention, but instead, focuses on concrete bottom up community building and organization without the hindrances of traditional power structures.  In terms of economics, it means a complete break with the corrupt system and the institution of our own free markets.  This process is only as difficult as we make it for ourselves.

The essentials of an independent life are food, water, shelter, property, trade, and safety.  The means to attain these essentials have been relegated to instruments which central banks and other elitist entities administer and control.  However, that control is and always has been an illusion, an illusion we could walk away from anytime we wish.  This is done through localizing the production of essentials.  Changing the way we look at trade is the key.  A few simple rules, if followed in a determined fashion, make this change a reality:

1)  Provide Essentials For Yourself Whenever Possible: Some essentials can be covered even when you are alone.  If you have access to property, can grow your own food, and have water collection capability, then you are far ahead of the average American in many respects.  With modern technology, including space and energy saving methods, self sustainability is possible even in urban surroundings.  The goal here is to do for yourself whatever you can, whenever you can, making you less vulnerable to mainstream economic chaos.  The more insulated you are, the better equipped you will be to help build or participate in an alternative market.

2)  Network Or Die: Some essentials cannot be provided by one’s self.  Organization and networking in order to construct mutually beneficial trade groups is not only necessary, but inevitable in the face of economic collapse.  One way or another, every American who wishes to survive will one day have to get up off their couches, leave their houses, and begin working with other people.  Either they will see the wisdom in preempting collapse and start networking now, or, they will start networking after collapse out of desperation.  Better to start now, and save ourselves the heartache…

3)  Trade Skills, Not Dollars: Use paper currency while it still has some value, but simultaneously, wean yourself off of it through barter of goods and services.  See how many essentials you can fully provide without the use of dollars and without purchases through corporate chains.  Think of this as going financially “off-grid”.  What systems do you depend on that ultimately harm you?  How many of those systems can you decouple from now?  Private trade makes independent living attainable by localizing your means of procurement to your own two hands, instead of to a paycheck doled out by a corporation.

4)  Use Commodities, Dump Dollars: Precious metals are the only practical currency exchange available for broad use in a decentralized market.  Fiat coupons, digital currencies, sticks and shells, etc., will not work.  The inherent rarity of PM’s, combined with their tangibility, and inability to be artificially reproduced, makes them the ideal currency alternative to fiat.  Digital currencies, reliant on an internet which may not exist in the manner we know it today, are a tremendous waste of time.  Any trade dependent on a system outside of local control is not free trade.  Metals place true free trade, at a local level, within reach.  Even in a highly developed barter market, currency will play an important role, and PM’s should not be discounted.

5)  Become Your Own Industry: As decentralization takes root in a local economy, the need for jobs and for goods will not disappear.  In fact, it will become a priority.  Entrepreneurship will be the engine that drives any legitimate resurgence of the U.S. economy, but this business mindset will have to take on a localized focus.  I have heard it argued that America will never be able to rebuild if trade and industry are reduced to local efforts.  On the contrary, thousands of cities and counties acting at a local level to reintroduce micro-industrial economies would far surpass the limited and centralized bumblings of the corporate industrial framework.  The more insulated and self contained each community becomes, the stronger the whole of the country will be in the long term.  The next industrial revolution, if there ever is another, will come about through city, county, and state centric industries designed to feed the prosperity of the residents within those communities, instead of siphoning away wealth and diminishing available essentials as the modern corporate system is engineered to do.

6)  Internalize State Commerce: When enough citizens within each state finally wake up to the dangers of municipal default, federal encroachment on state lands and resources, and the weakness of interdependency on federal subsidies, they will begin to look for ways to plug the fiscal leaks they have ignored for so long.  Decentralization truly finds its home within the structure of the states, and the powers afforded them through the 10th Amendment.  At bottom, states have the ability legally as well as economically to become the ultimate decentralized systems, being that they are Constitutionally mandated to take such measures anyway.  Resource rich states will likely be the first to undertake decentralization in the midst of economic collapse.  Oil, minerals, farm capacity, timber, coal, etc, should be the solid ground upon which states and their citizens set foundation, and states should utilize these resources with the intent to enrich their citizens FIRST, through increased employment and local independent business incentives.  This would be a far cry from the corporate pirate ship plundering that goes on in states today, and far more financially sound.

While there are numerous concerns and great tribulations to be confronted and solved in our age of bedlam, from the rise of police states, to political treason, to expanding wars abroad, first and foremost, we must surmount the problem of economic collapse, or all else will be lost.  Economic collapse is the trigger by which all other tyranny is made viable.  It is the rationalization that will be used to convince the public that the loss of freedom is a “crucial tradeoff” for increased safety.  The more centralized we as a nation become, the more centralized the world becomes, the less likely we will be to weather the tidal wave of collapse.  The more decentralized we become, the more localized and independent our communities, the less we will be affected by destabilization, the more successful we will be as a people, the less rationalization the government will have to diminish our freedoms, and the greater leverage we will have if they try to diminish them anyway.

The path is clear; we decentralize, we localize, and we do it now, or, we lose our country, our cultural identity, and our legacy.  If all other options have been stolen away from us, then we must have the courage to create our own…

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You can contact Brandon Smith atbrandon@alt-market.com

Alt-Market is an organization designed to help you find like-minded activists and preppers in your local area so that you can network and construct communities for mutual aid and defense.  Join Alt-Market.com today and learn what it means to step away from the system and build something better.

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12 Responses to “Brandon Smith: Decentralization Is The Only Plausible Economic Solution Left”

  1. 1
    Austrian Economics is Color Blind Says:

    I agree with Brandon with regard to precious metal money, but STRONGLY disagree with him with regard to economic decentralization.

    To understand why Brandon is right about precious metals being a better currency than fiat paper, watch this video:

    Smashing Myths and Restoring Sound Money | Thomas E. Woods, Jr.
    http://www.youtube.com/watch?v=HAzExlEsIKk

    But to understand why Brandon is wrong about economic decentralization, watch this video (audio book):

    Defending the Undefendable (Chapter 23: The Importer) by Walter Block
    http://www.youtube.com/watch?v=PTT_WHyzZ54

    Brandon conflates the corporate structure with economic slavery and turmoil, when in fact neither can happen except in a fiat money system. It’s the fiat money system that causes slavery and turmoil.

    The reason corporations are able to steal wealth is because they have government protections; A corporation without government protections (which CAN exist in a free market) would have to compete with potential newcomers and alternative products – they would have to serve the consumer.

    Please review the following resources for more:

    Do Corporations Exist Because of State Privilege?
    http://www.tomwoods.com/blog/do-corporations-exist-because-of-state-privilege/

    Anti-Trust and Monopoly (with Ron Paul)
    http://www.youtube.com/watch?v=8C4gRRk2i-M

    Anti-trust, Anti-truth
    http://mises.org/daily/436

  2. 2
    Lee Says:

    Awesome Job Brandon!!!

  3. 3
    Goldwing Says:

    Outstanding article and insight Brandon. I have become reenergized lately in light of the fact that many people I know are finally waking up. I was once seen the fool three years ago and now considered the go to source for information within my circle of friends, associates and family. I’m no genious I only chose to research as see what others chose to ignore. The constitution, Second amendment, preperations, NDAA, SOPA are all daily subjects now.

    I hope you will continue to keep us informed as the world economic machine continues to unwind.

    Robert Trate

  4. 4
    Brandon Smith Says:

    @Austrian

    You seem to be confused as to what I mean by “decentralization”. Decentralization is the exact process of decoupling the economic sector, from the corporate sector, from the government sector, that you called for in your response to this article. Therefore, we also agree on that particular point.

    However, what you need to understand is that this decoupling is NEVER going to happen using top down political methods. Decentralization at the grassroots level is the only strategy which carries any viable weight. Also, corporations do not need to exist in order for industry to thrive. In fact, Adam Smith abhorred the concept of corporations, or “Joint Stock Companies”, as they were called in his day. Partnerships work perfectly well in driving a larger business landscape without the abusive limited liability protections afforded corporations as legal “persons”; and yes, they ARE considered legal persons. American industry has been dismantled by the corporate legal framework, and even if governments were not in bed with these entities, they would still be a centralist threat to economic prosperity. They are unnecessary, and must one day be removed if we are to have true free markets as envisioned by Adam Smith.

  5. 5
    Austrian Economics is Color Blind Says:

    Brandon Smith @ comment #4,

    Hello, sir. I’m working on my response.

    In the meantime, let me say that I appreciate a lot of what you’re doing to help people prepare for the collapse, from what I’ve seen over at Alt-Market.com. Your promotion of barter networks/non-fiat money networks will be crucial for specialization and the division of labor.

    Thank you, for that.

  6. 6
    Shorty Dawkins Says:

    Brandon,
    I have, for a number of years, considered Limited Liability Corporations and Partnerships ( those with limited liability) to be merely the means to concentrate economic power in the hands of the few. This concentration of economic power leads to concentration of political power, which we have seen happen in this country since the late 1800’s. If we eliminate these limited liability entities, we create a more level playing field. Newcomers to a given segment of industry therefore have a chance. Competition becomes real.

    Shorty Dawkins

  7. 7
    Austrian Economics is Color Blind Says:

    Brandon Smith @ comment #4,

    As you suppose, I believe that the government has no place in the economy, and that it is impossible for it to presume such a place without doing more damage than good, and even the “good” it does is at the expense of the ones that aren’t benefited.

    What I see as economically detrimental is the belief that corporations, per se, or, more broadly speaking, as I understand your position to be, that huge specialized businesses, such as agribusiness, are sources of theft and economic crises.

    I haven’t read “Wealth of Nations” (full disclusure), but since I knew that free market corporations are simply people voluntarily contracting with each other, and that there are therefore no government protections for them from competition, and people are free to buy their products or not; that if Adam Smith really believed that joint-stock companies, PER SE, were economically destructive, then he would be wrong to oppose them on this ground, since everything would be done voluntarily.

    Gary North quotes Murray Rothbard, who in my opinion makes a compelling case, in defense of this position:

    Rothbard’s Defense of Contractual Limited Liability
    http://www.lewrockwell.com/north/north408.html

    -Begin excerpt-

    Rothbard denied that limited liability is a grant of privilege by the State. He wrote the following in Power and Market (1970), which had originally been in the original manuscript of Man, Economy, and State.

    ["]Finally, the question may be raised: Are corporations themselves mere grants of monopoly privilege? Some advocates of the free market were persuaded to accept this view by Walter Lippmann’s The Good Society. It should be clear from previous discussion, however, that corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will transact business with it. If they do, then they proceed at their own risk. Thus, the government does not grant corporations a privilege of limited liability; anything announced and freely contracted for in advance is a right of a free individual, not a special privilege. It is not necessary that governments grant charters to corporations.["]

    -End excerpt-

    I decided to check whether or not Adam Smith was opposed to joint-stocks, per se, and it turns out that he was only opposed to joint-stocks with government protections (Royal Charters).

    For example, the following source claims that Adam Smith approved of the Bank of England, which was a joint-stock company:

    Adam Smith Was Not Opposed to Competitive Joint -Stock Companies
    http://adamsmithslostlegacy.blogspot.com/2008/02/adam-smith-was-not-opposed-to.html

    That the Bank of England was a joint-stock company is confirmed by Encyclopedia Britannica:

    Bank of England
    http://www.britannica.com/EBchecked/topic/187805/Bank-of-England

    That Adam Smith was not opposed to all joint-stock companies, and approved of the Bank of England (though, according to Smith it had what he considered to be minimal government protections), is confirmed by Smith, himself:

    An Inquiry into the Nature and Causes of the Wealth of Nations
    http://www.econlib.org/library/Smith/smWN20.html

    -Begin excerpt-

    V.1.121 The only trades which it seems possible for a joint stock company to carry on successfully without an exclusive privilege are those of which all the operations are capable of being reduced to what is called a routine, or to such a uniformity of method as admits of little or no variation. Of this kind is, first, the banking trade; secondly, the trade of insurance from fire, and from sea risk and capture in time of war; thirdly, the trade of making and maintaining a navigable cut or canal; and, fourthly, the similar trade of bringing water for the supply of a great city.

    V.1.122 Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal, to the banking company which attempts it. But the constitution of joint stock companies renders them in general more tenacious of established rules than any private copartnery. Such companies, therefore, seem extremely well fitted for this trade. The principal banking companies in Europe, accordingly, are joint stock companies, many of which manage their trade very successfully without any exclusive privilege. The Bank of England has no other exclusive privilege except that no other banking company in England shall consist of more than six persons.*102 The two banks of Edinburgh are joint stock companies without any exclusive privilege.

    -End Excerpt-

    As to the effect of limited liability status on the rights of others, the following source notes that this is often misunderstood to confer protections on tortfeasors:

    Corporate Personhood, Limited Liability, and Double Taxation
    http://www.libertarianstandard.com/2011/10/18/corporate-personhood-limited-liability-and-double-taxation/

    -Begin excerpt-

    Limited Liability

    The big objection to corporations is usually limited liability for shareholders. Now first let me mention that many non-attorney critics of this notion seem confused about what it means (and many attorneys also misapprehend it). They think the doctrine insulates a tortfeasor from liability even if he was negligent, so long as he is a shareholder. Or that the doctrine exempts managers and officers of the corporation from liability for torts of others. They are wrong. The doctrine merely says that shareholders are not jointly and severally liable for all the debts of the company that they have a share in.

    -Skip-

    Second, we have to distinguish here between contractual debts, and debts arising from torts (or even intentional crimes). As for the former, this is easy to dispatch: someone loaning money to, extending credit to, or engaging in a contract with a corporation is implicitly agreeing to pursue only the assets of the corporation itself in case of a claim, not the personal assets of shareholders (unless it insists on some shareholders personally guaranteeing a loan or contract, as if often the case for smaller companies).

    So what about torts? The typical example is a truck driver for a company who negligently harms an innocent third party. The third party has no contract with the firm, unlike in the case of contractual debts noted above. The opponent of corporations maintains that the victim should be able to sue not only the employee-tortfeasor, and the corporation itself (to go after its assets and deep pockets, including its insurance policies), but shareholders themselves.

    -Skip-

    The problem with this theory is the assumption that in a private law society, “shareholders” should be vicariously liable for the negligence of others.

    -End excerpt-

    It should be noted that the purpose of this resource is to make the case that Entity Status, Perpetual Duration, and Limited Liability, could all exist in a free market; so it’s worth reading.

    Having established that corporate structure could exist in a free market, I want to address the idea that corporations are treated as persons.

    The heart of this objection seems to be that with so much wealth, corporations (or free market monopolies) necessarily steal something from the less well-off in that they have access to resources (capital, various media) that others do not, and are therefore able to have a greater “voice” or “influence”, especially political influence.

    But this is true of anyone who has more than any given person. The only way to keep people from having such influence is to promote an equal distribution of wealth; Which is why I maintain that an objection to the corporate structure, per se, is a Marxist idea.

    Surely, you aren’t opposed to people freely trading their labor and capital amongst themselves? Income inequality, therefore, is not only normal, but it also does not necessarily (or even usually) come at the expense of others. Some people are just better at trading than others, and sometimes people happen to find themselves in the right place and time such that many people want what they are trading; There’s nothing wrong with that.

    Of course, it helps when the citizens are armed, so that when the government tries to confer protections on business, they can be pursuaded to apply the law equally, as per the Constitution.

    The reason that your position on the corporate structure concerns me so much, such that I often have something to say in response to some of your articles, is as follows.

    The seeming prevailing theme of Alt-Market.com – apart from the appreciated warnings of threats to our liberties, calls to preparations for the coming collapse, the establishing of barter networks, and the provision of survival-type resources – is the promotion of a largely agrarian economy.

    But to do so is to seek to restrict the increase in capital production which is necessary for increasing the standard of living for everyone. No doubt you fear enclosures. But the more capital-intensive is the economy, the more wealth is created and the more employment opportunities become available – this is why many people opt to sell their farm land and to take up better paying jobs, elsewhere, not because capitalists stole their land from them.

    An agrarian economy, or more generally, a “self-sufficient” lifestyle, is necessarily a lifestyle of poverty. I hope to disuade you from this goal.

    Your position on sharecropping is especially concerning to me because it was sharecropping that almost killed of the Pilgrims. It was only after their property rights were respected that they had so much food that they could then share it with the Native Americans:

    The Real Story of Thanksgiving
    George Mason University economist Russ Roberts on how the Pilgrims were hurt by sharing.
    http://video.foxbusiness.com/v/4439390/the-real-story-of-thanksgiving/

    The common misunderstanding that unchecked growth in capital-intensive production leads to economic collapses, such as the growth in such production during the Roaring Twenties, before the Stock Market Crash of 1929; has already been addressed by the Austrian Economists: The Roaring Twenties were malinvestments created by the Federal Reserve’s artificial credit expansion. The same was true of our recent Housing Bubble which was destined to collapse.

    Such bubbles are impossible in a free market, because fiat money would be disfavored; and bank runs would limit the effect of the damage caused by those banks which engaged in fractional reserve banking.

    That’s right: economic crashes are made possible by allowing fractional reserve banking (or artificial credit expansion, more broadly speaking) to continue, and the bank runs that the Fed was ostensibly created to limit were actually beneficial signals that told people to stop relying on those banks.

    Another thing that concerns me a great deal, is your prior stated position on money.

    I agreed with your position on money in this article because you favored a precious metal currency; whereas in prior articles, you favored a precious metal BACKED currency, such that fiat money would be allowed to circulate so long as banks retained a 100% reserve.

    But the incentive is far too great for the creators of fiat money to expand the fiat supply. And if you’re going to have a 100% reserve, why not just use the gold and silver, itself?

    By the way, here is a helpful article on how interest would work with a pure commodity currency:

    Interest Rates in a Gold Coin Standard
    http://lewrockwell.com/north/north1075.html

    This article talks a lot about Greenbackers. I bring it up because two primary positions of Greenbackers are the preference for an agrarian economy and the belief in a nationally managed currency. I suspect that you’re a Greenbacker.

    As alluded to, another position of yours, on money, is that the Constitution permits the government to manage the supply and value of money via the Treasury. This, together with a preference for an agrarian economy, are primary positions of Greenbackers.

    But not only is this not constitutional, the central planning of the money supply – whether in the hands of a private company, or of government – GREATLY increases the incentive to engage in fractional reserve banking, either by printing fiat money, or by devaluing coins with alloys.

    This is what allows government to grow at the expense of others, and is how many militaristic adventures have been paid for throughout history – including our present military industrial complex.

    In Federalist No. 44, our Founders said that a “paper medium in place of coin” had “pestilent effects”. This is why they sought to prevent its circulation with gold and silver currency standard for interstate commerce.

    As far as the “regulation” of the value of coin, what our Founders meant by the word “regulation” is not that the government could arbitrarily command that gold and silver was worth such and such amount. Rather, it meant that the government was supposed to base their valuation of the coins they minted on the knowledge of what the market determined their value to be. This would be useful for knowing what to collect in constitutionally approved duties and what-not, besides guaranteeing a commodity currency.

    For more on constitutional money, there are these resources:

    Is Ron Paul Wrong on Money and the Constitution?
    http://www.youtube.com/watch?v=40MBdt1BQgE

    “What is Constitutional Money?” with Edwin Vieira — Ron Paul Money Lecture Series, Pt 2/3
    http://www.youtube.com/watch?v=k6gMkKmQSW4

    And for more on the economic dangers of the Greenbacker philosophy, there are these resources:

    Ellen Brown’s Web of Debt Is an Anti-Gold Currency, Pro-Fiat Money, Greenback, Keynesian Tract. Here, I Take It Apart, Error by Error.
    http://www.garynorth.com/public/department141.cfm

    Government Money Masters: Anti-Gold Videos that Thousands of Tea Party Voters Think Are Conservative
    http://www.garynorth.com/public/8574.cfm

    I hope this was helpful. Thank you again for the warnings and resources – you are great help to all of us.

    Feel free to critique.

  8. 8
    Brandon Smith Says:

    @Austrian

    I think you are reading too much into my criticism of the corporate structure. Adam Smith opposed the monopoly that joint stock companies tend to foster, not just the government protections they attract through corruption and manipulation. Corporations are able to drive monopoly and deny competition not just through government aid but through their ability to deny options and squash new ideas and developments. They are able to do this because their legal framework, namely through limited liability, allows them to function outside the inherent rules of free markets without substantial punishment. They are designed to destroy free markets. This is the bottom line.

    Partnerships could easily serve the same industrial functions as corporations without the insulation from law, forcing them to play fair, as it were.

    You also misinterpret the mission of Alt-Market. We are not a “Agrarian” project out to reverse industrialization. You seem to be assuming that industrial competitiveness demands centralization. If this is what you believe, then I humbly disagree. Decentralization of production into micro-industry is a much more effective model for economic survival, because it allows each minor economy to adapt to its own unique environment and circumstances, instead of conforming to a “one size fits all” model that does not function correctly, like globalization.

    I feel that the evidence behind centralization, regardless of government cooperation, shows a system rife with weakness. The only other answer I see available is localized markets which ultimately work together indirectly to form a thriving macro-economy. Doing away with government accessory to the crime is not enough. We have to change the way we do business entirely, or our centralized systems will continue to fail over and over again. History has proven this. Its time to attempt what Adam Smith truly envisioned; free markets without centralized control, by government, or by corporate oligarchy. Frankly, there is no difference between the two.

  9. 9
    Austrian Economics is Color Blind Says:

    Brandon Smith @ comment #8,

    I maintain that I am spot on as to your criticism of the corporate structure, per se.

    What you’re not seeing is that government is the source of monopolies and oligopolies due to anti-trust legislation – not the free market.

    As Ron Paul notes in the following video, if a free market results in one company supplying 90% of a good, how come it has a market price to it? How come history has shown [like with Alcoa before it was broken up] that their prices are competitive? It’s because they aren’t protected from newcomers or from companies who produce alternative goods.

    Anti-Trust and Monopoly (with Ron Paul)
    http://www.youtube.com/watch?v=8C4gRRk2i-M

    The main flaw in your assessment of the corporate structure, as I correctly ascertained before, is that you (and a lot of people; I used to be one of them) have a Marxist understanding of the word “competition”: That there must be many sellers, otherwise the consumers are harmed by high prices, or that businesses are somehow relieved of having to compete with other businesses.

    But if one, or a few, companies, in a free market without protections for businesses, can supply the demand of consumers at increasingly lower prices [as was the case with Alcoa], then not only are these the companies you want producing those goods, but also, far from this being a non-compatitive environment, what’s actually happening is that others do not possess the skill to compete.

    That some companies are better at competing in a free market is not the absense of competition; A winner is crowned by the consumers who voluntarily trade with them. Other companies lose to the competition and bow out.

    Consider this, assessment of the break-up of Alcoa by Thomas J. DiLorenzo:

    Anti-trust, Anti-truth
    http://mises.org/daily/436

    -Begin excerpt-

    In what is perhaps the best example of nonsensical double-talk in antitrust history, in 1944 Judge Learned Hand found Alcoa guilty of “monopolizing” the virgin ingot aluminum market by employing “superior skill and foresight” which the judge feared had “forestalled” competition by those businesses with less skill and foresight. He condemned Alcoa for being extremely adept at correctly anticipating market demand for its product and then supplying that demand, to the “exclusion” of its less efficient competitors.

    Alcoa “embraced every new opportunity” with a “great” organization, said the judge, and manned the organization with “elite business personnel.” It was obvious to the confused and befuddled Judge Hand that gaining market share through entrepreneurial excellence should be illegal.

    -End excerpt-

    In a free market, companies that have become big have done so because they are able to best serve the consumer; To break them up in order to protect other companies from having to fail at competing with a better business results in higher costs and increased scarcity, resulting in more poverty.

    Protectionism always hurts the consumer.

    We see this with housing prices, when homeowners are prevented from growing food in their front yard because it would “depress” the value of other properties in the neighborhood. The problem with this is that prices come from potential buyers’ assessments of the property; and the assessments that others make do not belong to sellers, such that they are entitled to command a higher price than would otherwise result in a free market.

    The links above are really good at explaining why anti-trust legislation is not only unnecessary and damaging, but also was always designed to foster corporatism.

    The following links are related, and useful for reaching those who think they are helping America by trying to make it more Socialist. Good stuff, I promise:

    How to Reach the Left | Roderick T. Long
    http://www.youtube.com/watch?v=t4hjO1ak4_M

    Defending the Undefendable (Chapter 23: The Importer) by Walter Block
    http://www.youtube.com/watch?v=PTT_WHyzZ54

    And here’s something on housing prices:

    Defending the Undefendable (Chapter 20: The Slumlord) by Walter Block
    http://www.youtube.com/watch?v=RhURIycWHRI

  10. 10
    Austrian Economics is Color Blind Says:

    Brandon Smith @ comment #8,

    Also, economies don’t crash because of big business – they crash because of malinvestments caused by artificial credit expansion due to an expansion of the money supply, artificially low interest rates, and/or government protections/regulations.

    All of these things distort interest rates, which coordinate production between short and long term projects.

    The reason capital markets have crashes is because they were misled by artificially low interest rates to borrow money to finance their long-term projects, just as they would were the rates not artificial.

    In a free market, low interest rates reflect a general preference to save, which means that people are choosing to refrain from consuming existing resources, whch are now available for use in long-term production.

    But when the interest rates are artificially forced down (by the central bank [either government owned or privately owned], or by fractional reserve banking in the absense of a central bank), long term investors are trying to consume resources which investors in short term projects are currently consuming, and this bids up the prices of those resources, resulting in long term projects which are unsustainable and MUST result in a correction.

    And the longer it takes for investors in capital goods to realize that their investments were based on artifically low interest rates, the greater the crash will be. And when government prints money to prop up these malinvestments – such as what happened with the recent housing bubble – they are prolonging the inevitable, and making the correction that MUST occur that much worse.

    Capitalism in a free market NEVER results in economic crashes, because you can’t artificially expand the supply of money by very much under a precious metal currency standard.

    I am begging you: Please, watch the following video:

    Smashing Myths and Restoring Sound Money | Thomas E. Woods, Jr.
    http://www.youtube.com/watch?v=HAzExlEsIKk

  11. 11
    Austrian Economics is Color Blind Says:

    Brandon Smith @ comment #8,

    I should have linked to the following article, earlier. I’m kicking myself for not having done so.

    The Truth About the “Robber Barons”
    http://mises.org/daily/2317

    -Begin excerpt-

    The late nineteenth and early twentieth centuries are often referred to as the time of the “robber barons.”

    It is a staple of history books to attach this derogatory phrase to such figures as John D. Rockefeller, Cornelius Vanderbilt, and the great nineteenth-century railroad operators — Grenville Dodge, Leland Stanford, Henry Villard, James J. Hill, and others. To most historians writing on this period, these entrepreneurs committed thinly veiled acts of larceny to enrich themselves at the expense of their customers. Once again we see the image of the greedy, exploitative capitalist, but in many cases this is a distortion of the truth.

    As common as it is to speak of “robber barons,” most who use that term are confused about the role of capitalism in the American economy and fail to make an important distinction — the distinction between what might be called a market entrepreneur and a political entrepreneur. A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots. By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.

    -Skip-

    The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators.

    -Skip-

    In some cases, of course, the entrepreneurs commonly labeled “robber barons” did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad,[1] and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism.

    -End excerpt-

  12. 12
    Jeffrey of Troy Says:

    Capitalism and the Free Market are inherently in conflict.

    The Capitalists erect barriers to entry to prevent entrepeneurs – people who see a better way of doing things – from coming in from out of nowhere and disrupting the (often massive) profits of the established players. (The Capitalists erection of barriers to entry does NOT require the government.) So, keeping the free market free requires constant government intervention, to prevent the Capitalists from closing the market.

    Therefore, “decentralization” is NOT the answer, because centralization is not the problem. PSYCHOPATHS – people whose brain defect, usually inherited, makes them unable to feel they have done anything wrong – are the problem. They do not feel fear, shame, or compassion. They cannot be reasoned with. They do not negotiate in good faith. They are at the top of business, government, religion, science, etc. If you don’t learn about the great science that’s been done on the subject of psychopaths – psychology and heritability – you cannot act in favor of the good future.

    Hervey Cleckley, Robert Hare, Martha Stout, Adrian Raine (fMRI proves their brains are different).

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