Letter to the Editor: Income Riots

Letter to the Editor: Income Riots In any economy there are two flows of money, concomitant with new goods and services. They are distinguishable and measurable, but this is not done effectively in contemporary economics. One flow buys into society what are called consumer goods; the other flow buys what are called capitalgoods. The success of the economy requires that the measurements of these be built, systematically and statistically, into economic practice, so that credit is intelligently given to factors in the economy, especially to innovative factors. This is not at present possible, since the measurements are not done. Further, the original meaning of 'ocredit" - "giving credit for insightful contributions to well-being" - has been battered to death in the past fifty years. Institutions of financial operations have emerged which separate the flow and creation of money from its fundamental meanings of promise and credit. The result is a commoditization of money which, detached from needed industrial flows, has a massively destructive effect on production, purchases, and well-being. In particular the related secondhand traAe, symbolized by Wall St. not part of the productive process - has been taken nevertheless to be an indicator of economic success. So, we are mainly in the hands of detached gamblers in our efforts to bring forth the good society. What might be done? In the short-term there are the processes of protesting pointing to these economic follies, sensing their effects but without understanding their nature. These demonstrations could and should lead to an effective re-assessment of financial operations as well as a displacement of secondhand trading from center-stage. Under this public pressure, govemment and somewhat enlightened economists and bankers must merge in a push against those living, and living financially obscenely well, off the gross error of the commoditization of money. In the long-term somewhat enlightened economists etc. just won't do. The problem here is an absence of historical sense. A science of economics has as yet to emerge: what is present now is equivalent to alchemy and phlogiston-theory chemistry. Establishment economics just cannot accept or believe that. At its root there is the simple error of not facing the empirical significance of the two flows, or making an effort to arrive at their measures and related measures of two flows of taxes, of imports and exports etc.. Without that scientific effort governments - again not intrinsic to the two flows - continue to intervene in haphazard fashions related to party politics and elections. Patchwork solutions will be put in place but only appear to work, and establishment economics and gamesters of finance will continue to feast on our hearts. Philip Mcshane: Professor Emeritus Mount [email protected] vancouver, S-t. Vincent University, Halifax NS BC 0'1" 7{l'; /'^ ' Supporting Signatories: Lowell Cochrane, Robert Henman, Terrence Quinn, Hugh Williams