Economics – Jan 9

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Many more articles are available through the Energy Bulletin homepage

When It Comes to Cash, A Thai Village Says, ‘Baht, Humbug!’
Jaems Hookway, Wall Street Journal
SANTI SUK, Thailand — One way to beat the world’s credit crisis: Start printing your own money.

The villagers of Santi Suk began creating their own cash here on the sun-bleached plains of northern Thailand following Asia’s financial crisis a decade ago.

Decorating their money with children’s sketches of water buffaloes and Buddhist temples, the villagers conceived it as a do-it-yourself attempt to protect themselves from the whiplash of vast outflows of speculative money which undermined local currencies and threw Thailand — and much of Asia — into recession in 1997-98.

At the time, some villagers faced questioning before Thailand’s central bank and were accused by local government officials of plotting a secessionist revolt.

Now, with Thailand’s economy slowing sharply, the DIY cash is beginning to flow freely again.

… Homemade currencies, sometimes known as community or complementary currencies, have a habit of popping up during economic crises. Some towns in the U.S., Canada and Germany introduced their own scrip during the Great Depression. Similar schemes have emerged more recently in Japan, Argentina and Britain.
(7 January 2009)
Local currency covered favorably by the Wall Street Journal? What’s the world coming to?

Suggested by Jim Barton. -BA

Local Currencies Grow During Economic Recession
Ben Block, World Changing
… Today, the Berkshires is giving rise to a new wave of free thinking. The region’s alternative to the U.S. dollar, Berkshares, is among the most successful of the country’s local currencies.

Since the currency’s launch two years ago, five local banks have printed more than 2 million paper notes. About 185,000 are currently in circulation, according to Susan Witt, a Berkshare co-founder.

The Berkshires is not alone. More communities are creating their own “complementary” currencies during the current economic crisis in an effort to keep wealth in their region.

Witt is now fielding calls from around the world, she said, especially from the United States and United Kingdom.

“In the last four years, there has been a renewed interest in local economy, local production,” said Witt, executive director of the E. F. Schumacher Society, a Massachusetts-based think tank focused on local production. “It just skyrocketed with the collapse of the global economy.”

Complementary forms of currency are nothing new, and they frequently appear when mainstream financial systems are in distress. Examples include Greenbacks during the American Civil War, and the British Bradbury “Treasury Notes” and German Kriegsgeld during the First World War.

Alternative currencies, in theory, encourage consumers to make purchases within their communities rather than elsewhere in the country or abroad. “Buying local” circulates wealth in the region, reduces unnecessary imports, and helps avoid higher unemployment levels, supporters say.
(8 January 2009)

The Crisis Of ’08 Reading List
John B. Judis, The New Republic
Every few years, someone urges me to do a Christmas book list, and while protesting my ignorance and incompetence, I gladly comply. This year’s subject is the current global recession, which threatens to become a global depression. This is a layman’s list, because I am strictly a layman on the subject of economics. You don’t have to know anything about string theory to read any of the books I recommend.

I learned most (or what little I know) of economics from reading on my own or from study groups we used to hold in the fading days of the new left. I read all three volumes of Capital in a study group organized by the late Harry Chang, a Korean immigrant to the Bay Area who was a computer programmer by day (in the keypunch era) and a Marxist scholar by night. I read Keynes under sporadic supervision of economist Jim O’Connor, the author of The Fiscal Crisis of the State, and a fellow member of the collective that published Socialist Revolution (which in 1978 became Socialist Review). And I got my introduction to economic history from historian Marty Sklar, who was also a member of that collective.

A decade ago, I might have been embarrassed to admit that I was raised on Marx and Marxism, but I am convinced that the left is coming back. Friedrich Hayek is going to be out; Friedrich Engels in. Larry Kudlow out; Larry Mishel in. And why is that? Because a severe global recession like this puts in relief the transient, fragile, and corruptible nature of capitalism, and the looming contradiction between what Marx called the forces and relations of production evidenced in unemployed engineers and boarded up factories and growing poverty amidst a potential for abundance. As capitalism itself–or at the least the vaunted miracle of the free market–becomes problematic, the left is poised for an intellectual comeback. So here are four topics and some books to read about them, plus a few articles, from someone who learned economics by reading and rereading Paul Baran and Paul Sweezy’s Monopoly Capital.

1. The current crisis. I was warning my colleagues of an encroaching disaster a year ago, because I was reading the columns and articles of Paul Krugman, Nouriel Roubini, Larry Summers, and Dean Baker. They were on top of this when Hank Paulson and Ben Bernanke were still telling everyone not to worry.

… 2. John Maynard Keynes.

… 3. The Great Depression.

… 4. Marx and Marxism. Marx, like Keynes, is best read in his own words. There are a lot of brilliant shorter works, but I’d put the first volume of Capital up there with The Origin of Species, The Interpretation of Dreams, and The Philosophical Investigations on my list of great books of the last two hundred years. It’s not a guide to starting your own business and really doesn’t have a theory of crises. Some of that is in the other unfinished volumes. What volume one does is establish capitalism as a phase, and perhaps a passing phase, in world history whose very nature has consisted in disguising that fact from worker and capitalist alike. You read Capital to understand the historical underpinnings, not the mechanics of capitalism. Marx’s theory of history has obvious deficiencies–he didn’t foresee, certainly, the rise of corporate capitalism and of corporate liberalism. His trademark theory of the falling rate of profit, which you can find in volume three, is also unpersuasive. But these failings pale beside his portrayal of capitalism as mode of production based upon labor power as a commodity and on the accumulation of capital.

John B. Judis is a senior editor at The New Republic.
(24 December 2008)
Color me surprised to see this article on The New Republic site, a publication whose politics have been hawkish centrist Democrat, and not leftist at all.

I agree on Mike Davis (though I think he does belabor the jargon of academia sometimes, which if anything is even worse).