Monday, April 8, 2019

Socialist Monetary Policy

Consider a command economy that doesn't fully dispense with money but rather pays wages to the workers in all of the nationalized industries and charges them prices for the consumer goods they buy in the various government owned and operated shops and stores.   In other words, they are not quite ready to have people show up for work according to their perceived abilities and take away consumer goods and services as they need them.   Those who fail to show up to work don't get paid, and those who don't get paid cannot buy consumer goods and services in the shops.

In capitalist economies, monetary policy is typically managed by adjusting policy interest rates.  For there to be interest rates there must be lenders and borrowers.   The lenders earn interest income from the money they have accumulated and lent.   They are earning income from property and not labor.   This is exploitation and inconsistent with socialist principles.

However, in a socialist economy money can simply be printed up and paid out as wages and then retired when it is spent on consumer goods and services.  If money is credited and debited to deposit accounts of workers as they are paid and spend their incomes, then the creation and destruction of money would be literal.   If wages are paid in currency and then paid over to government shops, it would be silly to shred currency when received and print it anew.   Currency would need to be collected from the retailers and then distributed to the various agencies and departments employing workers.    Worn bills would be shredded and new currency printed as needed.

Would this system result in inflation?   It would only create inflation if the government chose to raise the prices it sets for consumer goods and services in its shops.   Inflation would be a choice by the government.

What could happen is shortages of consumer goods and services at the prices set by the government.  This depends on how many consumer goods and services are produced but also by the workers as they choose what and how much they buy.

It would be possible to correct a shortage by raising prices resulting in inflation.   However, those shortages could also be corrected by reducing the wages workers are paid.   And finally, it would be possible to expand the production of consumer goods and services, perhaps by shifting resources from the production of additional capital goods, consumer services provided without charge like medical care or education or still other goods like domestic security or military preparedness. 

A socialist system would have no role for a "monetary policy" based upon the manipulation of interest rates.   And while there is a quantity of money outstanding at any time and a demand to hold it by workers, it is doubtful that the quantity theory really applies.   There is noting like gold mining or even trade surpluses resulting in additions to a stock of gold.   Further, the usual vision of "velocity" of money being spent, received, and then spent again would play little role in a system where for the most part money is created to pay workers' wages and then received by government shops and extinguished.

Now, the socialist system described above does allow workers to save.   They can simply accumulate currency or else balances in deposit accounts.   To the degree there is saving, the money created by the payment of wages will exceed the money absorbed by the sale of consumer goods and services.   Saving would involve lower demand for consumer good and services than if there were no saving.  That would allow resources to be devoted to the production of capital goods, expansion of products distributed at no charge like healthcare or education, or the military or security services.

If deposit balances are used, it would be possible to pay interest on those balances.   This would mean, of course, that workers who saved would earn income on their property, which is contrary to socialist principles.   Leaving that aside, such interest might encourage saving and so free up resources from the production of consumer goods and services to allow the production of additional capital goods or perhaps expand "free" social services or even military or policing.    Interestingly, if additional capital goods are produced, this could allow for an increase in the production of consumer goods in the future, providing additional goods and services for the workers who saved and earned interest to buy. 

Further, if a shortage of consumer goods and services were to develop, paying higher interest on deposits would encourage saving and correct the shortage without the need to raise prices or lower wages.    Inflation would be controlled by higher interest rates to the degree it encourages saving.

Collecting taxes on wages, of course, is just another way of describing a decrease in wages.   Collecting some kind of sales tax on purchases is simply another way of increasing prices.  In fact, aren't the prices paid for consumer goods and services really just a tax for taking the various consumer goods and services?

Perhaps these principles can be applied to understanding the monetary system of a capitalist system?   Or, more to the point, the transition of a capitalist system to the new socialist order! 

8 comments:

  1. Hello,

    Do you need Financing ?
    Business or Personal loan ?
    Do you want to Refinance your business?

    We are a reputable Financial Institution that can assist you in reducing monthly installment so our customers have affordable repayment options as well as room to breathe when it comes to the end of the month. Contact Mail: Howardfinancialaid@yahoo.com

    Our loans are well insured for maximum security is our priority. Are you losing sleep at nights worrying how to get a legit loan lender ? we can help with low interest rate of 4%. We are credible and details are strictly confidential. We offer loan at 4% interest rate only.

    If interested, contact us today for more details on how to get started with your desired loan amount.

    Contact Mail: Howardfinancialaid@yahoo.com
    Whatsapp: +1 (573) 279-4038
    Company Address: West Ave, Hawthorne, CA.

    Best Wishes.

    ReplyDelete


  2. Dear Customers,

    We invite you all to participate in our new business and project funding program, We are currently funding for Business start-up Business developments, Business acquisition Business expansion, Project funding and Working capital etc.

    This Funding program allows a client to enjoy 3% low interest rate and payback period of 1 to 15 years. We can approve a loan/funding for up to a Million Dollars, Euros, Pounds or more depending on the nature of business we are currently funding for and we satisfy our customers’ financial needs and help them succeed

    Application Available
    Apply via E-mail: challotloan@gmail.com
    Regards,

    ReplyDelete
  3. I’m a new reader of your blog and I’m impressed how interestingly the complex question is described, how easy the information is. Thank you, your work is priceless!

    ReplyDelete


  4. Are you a business man or woman? Are you in a financial mess or do You need funds to start your own business? Need to pay loans Their Debt or pay off your bills or start a nice business? Do you have a low credit score and you will find it hard to get Capital loan from local banks / other financial institutions? You need one Loan or funding for any reason such as:Email: inforamzanloan@gmail.com

    ReplyDelete
  5. Hello All ▲▲▲ I am Dianna Kent and I live in Nevada, U.S .I am a full member of the Illuminati brotherhood, and am among the 1252 lodge. ▲▲▲ Iwas ordained by the Grand-master to go out to the world and bringmore members to the Illuminati, ▲ so I was requested to get 400Recruits for the brotherhood, I have 210 new recruits already. I amlooking for only 190 more to go,▲I am sure you want to be amongthe 190 people that will be earning $500,000 monthly and a brandnew car, ▲so add me up now so we can achieve this great chanceof being rich ▲. You get to live your dream life on earth filled with luxury. so i urge you not to miss thisGreat opportunity becoming what you long wished for life email: illuminatitemple6634@gmail.com‬ or Whats-app +1(854) 220-5771 for guidance






    Hello All ▲▲▲ I am Dianna Kent and I live in Nevada, U.S .I am a full member of the Illuminati brotherhood, and am among the 1252 lodge. ▲▲▲ Iwas ordained by the Grand-master to go out to the world and bringmore members to the Illuminati, ▲ so I was requested to get 400Recruits for the brotherhood, I have 210 new recruits already. I amlooking for only 190 more to go,▲I am sure you want to be amongthe 190 people that will be earning $500,000 monthly and a brandnew car, ▲so add me up now so we can achieve this great chanceof being rich ▲. You get to live your dream life on earth filled with luxury. so i urge you not to miss thisGreat opportunity becoming what you long wished for life email: illuminatitemple6634@gmail.com‬ or Whats-app +1(854) 220-5771 for guidance

    ReplyDelete
  6. TESTIMONY ON HOW I GOT MY LOAN FROM A GENUINE FINANCE COMPANY LAST WEEK. Email for immediate response: drbenjaminfinance@gmail.com

    I am Mrs,Leores Jazbel by name, I live in United State Of America, who have been a scam victim to so many fake lenders online between November last year till July this year but i thank my creator so much that he has finally smiled on me by directing me to this new lender who put a smile on my face this year 2020 and he did not scam me and also by not deceiving or lying to me and my friends but however this lending firm is BENJAMIN LOAN INVESTMENTS FINANCE (drbenjaminfinance@gmail.com) gave me 2% loan which amount is $900,000.00 united states dollars after my agreement to their company terms and conditions and one significant thing i love about this loan company is that they are fast and unique. {Dr.Benjamin Scarlet Owen} can also help you with a legit loan offer. He Has also helped some other colleagues of mine. If you need a genuine loan without cost/stress he his the right loan lender to wipe away your financial problems and crisis today. BENJAMIN LOAN INVESTMENTS FINANCE holds all of the information about how to obtain money quickly and painlessly via Call/Text: +1(415)630-7138 Email: drbenjaminfinance@gmail.com

    When it comes to financial crisis and loan then BENJAMIN LOAN INVESTMENTS FINANCE is the place to go please just tell him I Mrs. Leores Jazbel direct you Good Luck.......................

    ReplyDelete

  7. Hi everyone, I am Jesus Mckinney from Texas and I just want to say a very resounding thank you to Financial loan services from Benjamin Lee for their sincerity, Openness, Transparency, Truthfulness, Love and support during and after getting loan funds from them. I have been through a lot and time won’t permit me to say all that I went through online in the guest or getting a loan funds to get a home here in USA but God answered my prayers through the support and love from Benjamin Lee who embraced me and understood me despite my initial doubt and unseriousness and with his good heart and love I am now a home owner through his 2% interest rate loan funds and I have vow to spread this news and also tell the world that there are still genuine and few good online loan firms out there that can assist and also revive a dry bone.

    Don’t fail to listen and read this testimony because this is a true life changing experience and anyone that needs this kind of turn around should not hesitate or doubt this because I have proven and I swear to God in Heaven that this story is real and also the story of my experience with them .


    Contact them today.

    WhatsApp Text : (+1 989-394-3740)

    Email: 247officedept@gmail.com

    ReplyDelete