I was curious if anybody had more insight on the economic theory presented in this novel. Somebody was trying to discuss it with me the other day, but their grasp on the theory was weak, thus I couldn't understand it in the slightest.
Thanks
Didn't read the book either but wiki has it that it's similar to the "social credit" system; hence, quite left-leaning and very different from Heinlein's later right-libertarian works.
http://en.wikipedia.org/wiki/Social_credit
I'm having a hard time getting any detail on it, short of buying the book.
This is funny. I came here, among several sites, precisely because I *have* been reading this book and was trying to see if there was any legitimate economics behind it, only to find this fresh discussion thread. And yes, the book's economics seem quite similar to your Wiki entry. Heinlein describes a system of "heritage checks" -- sounds like welfare -- that the government sends out to its citizens, enabling them to live fairly comfortably whether they work or not. People choose to work in this utopia, but they only do things they are interested in, so they tend to do those things very well. Secondary consequence is that drudge work tends to be fairly well paying; that's the only way to get people to do drudge work in this environment.
The wacky part is that the banking system is largely nationalized in "For Us, the Living"; there is a private banking system, but in Heinlein's Shangri-La, most citizens use the Bank of the United States, which needs charge only a service fee for loans to the public along with enough additional charges to pay off defaults. Bob also did away with fractional-reserve banking; a private bank can only lend money it actually has in its vault. This part is Banking 101, that bank lending drives the expansion -- and contraction -- of the money supply. The fact that he got this right was what got me me to wondering if the rest of it might be for real. The point Heinlein is making, him being this big gold bug, is that it's all fiat money anyway, whether the banks or the government drives the money supply, so the government might as well do it directly, for the public weal, rather than the greedy bankers, who tend to drive booms and busts for their own personal profit.
He also goes through an elaborate exercise with poker chips, playing cards and chess pieces to demonstrate that a private banking system always leads to overproduction and inevitably leaves the producer in ever-increasing debt, to the benefit of the banker and the detriment of the producer and the consumer. I can't describe it in detail, but our author encourages us, in a footnote, in a novel, to pull out the playing pieces and walk through the exercise with him. He also devotes an appendix to it, with additional scenarios.
So I'm on this airplane, reading these ideas, and it struck me that this might be an opportune time to air out some of these issues, since we're nationalizing the banks anyway. It sounded like a provocative concept that thoughtful people might profitably wrestle with.
BTW, maudite, I don't necessarily agree with your "right-libertarian" characterization of RAH; he was this big militarist, yes, and all around macho man, but his extensive advocacy of social nudism and free love aren't what you ordinarily associate with conservative thought.
boulddenwyldde: BTW, maudite, I don't necessarily agree with your "right-libertarian" characterization of RAH; he was this big militarist, yes, and all around macho man, but his extensive advocacy of social nudism and free love aren't what you ordinarily associate with conservative thought.
By right-libertarian (by opposition to left-libertarian), i mean anarcho-capitalist (or the minarchist version of it); i.e., proponents of free economics and free social / cultural values - this doesn't contradict social nudism and free love, on the contrary -;) I'd never think Heinlein were a conservative, and i particularly like his pick on free families, etc.
This being said, sorry for not being clear enough and having misled you...
And just when it looked like this discussion thread was going to die on the vine, this was on the Sunday Op-Ed page yesterday, an ecological approach to economics:
http://www.nytimes.com/2009/04/12/opinion/12zencey.html?_r=1&scp=26&sq=april+12+2009&st=nyt
The subject was Frederick Soddy, described as "a little-regarded British chemist-turned-economist" and "individualist who bowed to few conventions." He apparently was full of ideas that sounded radical when he was writing in the 1920s -- abandoning the gold standard, letting foreign exchange rates float, that sort of thing. But as the writer Eric Zency observes, only one of his five policy prescriptions remains unadopted today: The abolition of fractional-reserve banking and the establishment of a 100-percent reserve requirement on demand deposits.
This, coincidentally, was a central feature of RAH's utopian economy in "For Us, the Living." The idea was to prevent the pyramiding out of endless paper debt on top of the real world of goods and services -- which is exactly the problem we have today, with credit default swaps and other exotic financial derivatives that are threatening to crush the economy.
Nobody wants to take up this banner?
boulddenwyldde:The subject was Frederick Soddy, described as "a little-regarded British chemist-turned-economist" and "individualist who bowed to few conventions." He apparently was full of ideas that sounded radical when he was writing in the 1920s -- abandoning the gold standard, letting foreign exchange rates float, that sort of thing. But as the writer Eric Zency observes, only one of his five policy prescriptions remains unadopted today: The abolition of fractional-reserve banking and the establishment of a 100-percent reserve requirement on demand deposits.
Abandoning the gold standard was a horrendous idea! Talk about "pyramiding out of endless paper", abolishing the gold standard allowed the government much more free reign in inflating the money supply. And what happens when you give a government free reign? Well it's like giving a fifteen year old a mazarati and a handle of wiskey: he's going to use it, by George! This creates the same pyramid-creating more debt/money without creating more goods- that you rightfully decried when discussing bank credit.
I agreed with everything you said about bank credit but you really ought to dig around on this site for more information on the importance of abolishing fiat currency and returning to a gold standard or preferably establishing a free market in the production of currency.
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