I'm a bit perplexed by the Tuckerite/Mutualist/Communist take on "usury", especially since as I see it, anyone who lays valid claim to capital (and this is as true under usufrucht communism/mutualism as it would be under any Lockean property-rights system) has either produced it of his own labor (in which case he's entitled to it), or voluntarily exchanged with someone who has (presupposing production, QED), both of which seem to meet Tucker's requirements for exchange.
I posted a hypothetical which concludes with three questions:
Question 1: What justification is there, if any, for denouncing the initial grant of loan (two fish to be repaid plus one)? Question 2: The question of usury hinges upon some sort of exploitation. How precisely has Jones (or Smith) been exploited by the other, under the above scenario? Question 3: At what price would the loan from Smith to Jones not be considered “usury”?
Question 1: What justification is there, if any, for denouncing the initial grant of loan (two fish to be repaid plus one)?
Question 2: The question of usury hinges upon some sort of exploitation. How precisely has Jones (or Smith) been exploited by the other, under the above scenario?
Question 3: At what price would the loan from Smith to Jones not be considered “usury”?
If anyone's interested, I'd appreciate some feedback.
============================
David Z
"The issue is always the same, the government or the market. There is no third solution."
Exploitation is just rhetoric. When applied in a context free exchange it is used to signify that we still shouldn't accept the outcome of a trade even though it is by definition win-win. In short, commies think that kapitalists routinely win more than the workers win, and thus accumulate kapital. Their solution is that its time for the extortionists to lose and share some of their accumulation with everyone else. I'm sure you know this already.So maybe communists will answer your question 3 by saying that it is not exploitation if the loaner does not accumulate excessive capital. Obviously this depends what you think excessive is. Communists might think that if the loaner and borrower profit equally from the loan, it is okay. The problem of usery can be turned on its head however; we actually have a problem in our system now with really low interest rates where firms engage in aggressive borrowing of capital. In this case the loaner isn't winning nearly as much as the borrower. This may even be the case under regular interest rates too, if for example I had a great idea for a company that would take off after I borrowed my start up capital. So I don't think that it can be said that loaners always come out on top. In this way there is no inherent problem of usery. It really just depends on the conditions of the loan. Communists are just remembering back to the bad old days when losing your job meant you would have to borrow money just to put food on the table. It is obviously possible for this system to be avoided with competitive lenders. In general, I think you always have to answer "extortion!" with "competition...".Even communists agree that competition keeps prices low! Just look at the proletariat working for pennies on the dollar! Kaak.
"It has always been the prerogative of children and half-wits to point out that the emperor has no clothes. But the half-wit remains a half-wit and the emperor remains an emperor." ~Dream
I'll try.
David Z: Question 1: What justification is there, if any, for denouncing the initial grant of loan (two fish to be repaid plus one)? Question 2: The question of usury hinges upon some sort of exploitation. How precisely has Jones (or Smith) been exploited by the other, under the above scenario? Question 3: At what price would the loan from Smith to Jones not be considered “usury”?
1. The loan (with the interest) can be denounced on the grounds that capital qua capital is nothing. Capital alone does nothing, it is only useful when used by an individual. Therefore the lender is basically demanding something for nothing.
2. With resources being limited, by demanding interest on nothing, while the lendee does the actual labour he has been financially exploited.
3. $0.
There are a lot of religious arguments against usury, in general, the more modern ones say the same thing just without referencing god.
Laissez faire et laissez passer, le monde va de lui même
Angurse:1. The loan (with the interest) can be denounced on the grounds that capital qua capital is nothing. Capital alone does nothing, it is only useful when used by an individual. Therefore the lender is basically demanding something for nothing.
but in this instance, we're not talking about loaning "capital" whatsoever. We're talking about loaning someone food, which someone is perfectly capable of procuring for himself. Now, via the use of that food, he's been able to produce capital, but the capital itself was never lent. Perhaps the case of loaning capital qua capital is different, but I'm not presently concerned with it.
Angurse:2. With resources being limited, by demanding interest on nothing, while the lendee does the actual labour he has been financially exploited.
But the grantor has done the "actual labor" in the past, now embodied by the goods he is offering on loan.
Angurse:3. $0.
I understand that this is the standard reply to the question. So Smith should put the product of his labor at risk (by lending it to Jones) which he could use any number of ways which suit his needs (i.e., security, consumptoin, sustenance during his own period of invention, etc.) to Jones, who uses it to become himself more productive, and nothing is due Smith for the opportunity cost or risk premium of having lent?
In this manner, it seems to me then that the borrower is advantaged at the expense of the lender. The borrower is then able to "accumulate" goods or capital (Marxist code for "exploitation").
The nearest attempt to circumvent this proposition, I think was from Tucker (but I can't find it). He essentially says, "Look, you can sell your capital, or you can use it. If you're not happy with the price you can sell it for, then use it yourself. Otherwise, tough luck." This strikes me as a strangely subjective preferential statement, essentially like snowflake said, "I disagree with the terms of agreement that doesn't impact me in the least bit, but nevertheless I seek to suppress this arrangement and others like it, via a propaganda campaign in which I'll hereafter refer to them as 'evil' and 'exploitative'..."
Angurse:There are a lot of religious arguments against usury, in general, the more modern ones say the same thing just without referencing god.
I believe that Aquinas (or some other scholastic) defended the practice of charging interest on loaned money, basically on grounds of opportunity cost.
Well, there is a distinction between Marxist and mutualist conceptions of usury. Marxists (at least of the vulgar variety, there may be some with more refined views) see all interest as being usury. Tucker's position is that usury is the difference between the natural rate of interest, and the full interest that a lender (generally a bank) recieves. He saw this extra amount as being a result of the state's cartelization of banking, driving up interest rates. He didn't have any problem with interest per se, although he did think that it would approach zero in a free society (something that is definitely debatable, but beside the point in this case).
Incidentally, the same argument applies to left-libertarian/mutualist cricisms of "wage slavery" and "landlordism" as systems, as opposed to Marxist and other leftist conceptions.
Market anarchist, Linux geek, aspiring Perl hacker, and student of the neo-Aristotelians, the classical individualist anarchists, and the Austrian school.
wombatron:Tucker's position is that usury is the difference between the natural rate of interest, and the full interest that a lender (generally a bank) recieves. He saw this extra amount as being a result of the state's cartelization of banking, driving up interest rates.
Do you have a citation for this by any chance? I'm not suggesting that you're mistaken (it's far more likely that I'm mistaken!), but what little Tucker I've had opportunity to read seems to be at odds with this assessment.
David Z:Do you have a citation for this by any chance? I'm not suggesting that you're mistaken (it's far more likely that I'm mistaken!), but what little Tucker I've had opportunity to read seems to be at odds with this assessment.
Tucker actually does go and say that "interest is usury", and oppose all "interest". However, digging deeper, he isn't opposing the idea of credit having a price (the Austrian conception of interest); he simply defines interest as being usury (as I described it above). He recognizes that credit will have a price (although he thinks that it will just be the labor cost of paperwork, etc.), but he doesn't call it interest. Confusing, I know; the difference in terminology is one of the biggest gaps between the liberty movement of the 19th and early 20th centuries and the modern libertarian movement. Also, Kevin Carson goes into more detail in various places, and he almost certainly explains it better than I.
EDIT: and I'll try and find a citation for you.
wombatron:Tucker actually does go and say that "interest is usury", and oppose all "interest". However, digging deeper, he isn't opposing the idea of credit having a price (the Austrian conception of interest); he simply defines interest as being usury (as I described it above). He recognizes that credit will have a price (although he thinks that it will just be the labor cost of paperwork, etc.), but he doesn't call it interest. Confusing, I know;
Yeah, my brain hurts. Typical leftist economics? So confusing, no one can explain it....
If you find something evil that wobbles, push it. - Gary North
There's this from Tucker's Anarchopedia entry:
Anarchopedia:Following Proudhon, Tucker argued that if any group of people could legally form a "mutual bank" and issue credit based on any form of collateral they saw fit to accept, the price of credit would fall to the labour cost of the paperwork involved in issuing and keeping track of it. He claimed that banking statistics show this cost to be less than one percent of principal, and hence, that a one-time service fee which covers this cost and no more is the only non-usurious charge a bank can make for extending credit. This charge should not be called "interest," since, as it represented the labour-cost in providing, it is non-exploitative. (italics added)
wombatron:the price of credit would fall to the labour cost of the paperwork involved in issuing and keeping track of it.
liberty student: wombatron:the price of credit would fall to the labour cost of the paperwork involved in issuing and keeping track of it. Don't worry comrade, there is no risk in issuing credit!
Haha I agree with you here; I think that any labor theory of value ultimately fails to take the agent-relativity of value into account. That's why I an agorist, rather than a mutualist.
liberty student: wombatron:Tucker actually does go and say that "interest is usury", and oppose all "interest". However, digging deeper, he isn't opposing the idea of credit having a price (the Austrian conception of interest); he simply defines interest as being usury (as I described it above). He recognizes that credit will have a price (although he thinks that it will just be the labor cost of paperwork, etc.), but he doesn't call it interest. Confusing, I know; Yeah, my brain hurts. Typical leftist economics? So confusing, no one can explain it.... Just trust us comrade!
Comes with the territory of dealing with two bodies of thought that use the same words to mean different things.
wombatron: There's this from Tucker's Anarchopedia entry: Anarchopedia:Following Proudhon, Tucker argued that if any group of people could legally form a "mutual bank" and issue credit based on any form of collateral they saw fit to accept, the price of credit would fall to the labour cost of the paperwork involved in issuing and keeping track of it.
Anarchopedia:Following Proudhon, Tucker argued that if any group of people could legally form a "mutual bank" and issue credit based on any form of collateral they saw fit to accept, the price of credit would fall to the labour cost of the paperwork involved in issuing and keeping track of it.
That's interesting. He's simply expressing a preference, viz., in favor of collateralized loans over unsecured loans? What distinguishes the case of "exploitation" is the fact that loans are being granted on no collateral whatsoever, and it is for this reason that the "price" is higher for this sort of loan.
When you are in the business of extending money/capital/credit/etc. to people who have nothing, can guarantee nothing, and are unable to secure the loan with collateral, your "cost" of doing business changes radically.
David Z:When you are in the business of extending money/capital/credit/etc. to people who have nothing, can guarantee nothing, and are unable to secure the loan with collateral, your "cost" of doing business changes radically.
David Z:but in this instance, we're not talking about loaning "capital" whatsoever. We're talking about loaning someone food, which someone is perfectly capable of procuring for himself. Now, via the use of that food, he's been able to produce capital, but the capital itself was never lent. Perhaps the case of loaning capital qua capital is different, but I'm not presently concerned with it.
My apology, I misread you.
I don't know why someone perfectly able to acquire food for himself would even opt to borrow. However, fundamentally, I don't think there is a difference. Fish is only productive when its in use (being eaten in this case) otherwise it just sits and rots. Thomas Aquinas even spoke about this problem, essentially the lender is charging for the fish and the use of the fish. The lender (in either case) is demanding something for nothing.
David Z:But the grantor has done the "actual labor" in the past, now embodied by the goods he is offering on loan.
And? Doing labour in the past only entitles him to the money he earned. If he lends it out hes still only entitled to the money he earned (just at a date in the future). In loaning out his money, hes only entitled to the amount lent at the end, as he put no more work forth. Something for nothing.
David Z:I understand that this is the standard reply to the question. So Smith should put the product of his labor at risk (by lending it to Jones) which he could use any number of ways which suit his needs (i.e., security, consumptoin, sustenance during his own period of invention, etc.) to Jones, who uses it to become himself more productive, and nothing is due Smith for the opportunity cost or risk premium of having lent?
Risk certainly does deserve some reward. However, there isn't anything particular about evaluating risk and it doesn't require usury to be rewarded. It, like all other forms of work, should be rewarded by wages proportional to the amount of time spent on it. Kind of similar to a risk manager at an insurance company. Further, economic terms like, opportunity cost, are nothing but by-products of the current capitalist system.
David Z:In this manner, it seems to me then that the borrower is advantaged at the expense of the lender. The borrower is then able to "accumulate" goods or capital (Marxist code for "exploitation").
No, no, no. The borrower has been elevated to a mutual level.
David Z: I believe that Aquinas (or some other scholastic) defended the practice of charging interest on loaned money, basically on grounds of opportunity cost.
I know the Scholastic Henry of Segusio didn't consider it to be immoral, basically citing opportunity cost. Aquinas however, condemned as being against the Natural Moral Law in Summa Theologica.
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