[m-ee]

It never did.

In debt the first 5000 years Geaeber makes the case that pure “free market” trade has never really existed in “the west”. The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.

[gruez]

>The closest to this ideal that’s ever happened was during the Islamic golden age enabled by religious prescriptions against usury.

How does are bans against consensual financial exchanges close to the "ideal" of the free market? It just sounds like you have an axe to grind about the financial system rather than describing free markets.

[asdf88990]

Usury and debt based economy creates a dynamic where being competitive in production is secondary to financialistion.

In short, instead of market being driven by demand and productivity, it is driven by financier curving out monopolies.

Peak Examples are Uber and AirBnB.

[gruez]

What makes this view more correct than say, "economies with marketing creates a dynamic where being competitive in production is secondary to marketing" and concluding that nothings a free market until we ban all advertising? After all, you can make a vaguely plausible argument about how marketing isn't really about the merits of the product, and therefore allowing it is antithetical to the free market or whatever

[majormajor]

> What makes this view more correct than say, "economies with marketing creates a dynamic where being competitive in production is secondary to marketing" and concluding that nothings a free market until we ban all advertising? After all, you can make a vaguely plausible argument about how marketing isn't really about the merits of the product, and therefore allowing it is antithetical to the free market or whatever

Wait, so your pitch in favor of a debt-fueled market economy is that advertising is awesome and that we wouldn't want to "lose" being smothered in ads all the time?

Cause... sign me up for the non-financialized, non-mass-media-advertising-driven economy please and thank you. I'd even be ok with just nuking billboards and mass-media forms of ads and still allowing more direct forms of marketing, if we must compromise! Likely we could find some compromises around just how much of the debt world we regulate too (this should be obvious?).

(I thought the disconnect between the efficiency of competition and the market as realized in modern economies was pretty well understood and taken for granted, but I guess we all find ways to justify the system we're profiting from... even if that means we have to claim we love the ad breaks)

[gruez]

>Wait, so your pitch in favor of a debt-fueled market economy is that advertising is awesome and that we wouldn't want to "lose" being smothered in ads all the time?

The point is that if add random caveats to what counts as free market, it won't be "free market", only "market I like".

[asdf88990]

Marketing isn’t free for starters.

Second, marketing can take you only so far compared to the subsidies possible with financialisation.

The West is in a state of psychosis with Debt and Monopolies under the illusion of free market.

The Chinese markets are more free than West, you can just look at the Auto and AI industry.

[SR2Z]

I'm flabbergasted that you look at the Chinese property crisis and say "only the West does irresponsible loans." No, 60% of China's economy is state-run companies and the remaining 40% need political officers. China is just as capable of making shortsighted decisions as the US, and they have already made several devastating ones.

[majormajor]

>I'm flabbergasted that you look at the Chinese property crisis and say "only the West does irresponsible loans." No, 60% of China's economy is state-run companies and the remaining 40% need political officers. China is just as capable of making shortsighted decisions as the US, and they have already made several devastating ones.

While these are hardly shy claims, I don't see anything in them to say "only the West does irresponsible loans"?

> The West is in a state of psychosis with Debt and Monopolies under the illusion of free market.

> The Chinese markets are more free than West, you can just look at the Auto and AI industry.

or the prior post

>Usury and debt based economy creates a dynamic where being competitive in production is secondary to financialistion.

> In short, instead of market being driven by demand and productivity, it is driven by financier curving out monopolies.

> Peak Examples are Uber and AirBnB.

You can throw a rock these days and find a category where the products coming out of China are miles ahead of those coming out of the rest of the world, from a bunch of companies nobody had heard of a few years earlier. And the list is growing pretty steadily.

I would assume plenty of shortsighted decisions are also being made. But I would have a hard time characterizing the state of competition in the west as healthier or more productive when looking at the number of players and the quality of goods being produced in China.

[likeclockwork]

state-run corporation are bad but corporate-run state is good?

[wqaatwt]

No access to capital can and does constrain supply to a very high degree.

[asdf88990]

Capital will not be hoarded and stuffed in pillows without Usury. People are happy to take bets for profit and loses, I mean, that is like the entire stock market schtick.

[wqaatwt]

I don’t exactly see how the modern stock market is superior based on the (moral not economic) criteria being discussed in this thread?

It’s even more speculative and detached from productive behaviors.

[SR2Z]

...except Uber STILL faces competition, and I went back to hotels after finding AirBnB too pricy.

It is good and proper that people aim to create monopolies, as long as they want to do that in a productive and legal way! Monopolies are inherently dangerous, but the truth is that acquiring and maintaining one is not straightforward unless you can get the government to ban your competitors.

[bigfudge]

Even if these companies monopoly falters after IPO the disruption and distraction to a focus on producing can be a problem.

[digitaltrees]

Expand. I am typically against hard money gold bug libertarian arguments but your description seems interesting and I am open to being persuaded.

[m-ee]

Debt creates debt crises. Throughout history it’s been a major function of any government to resolve these. Notably this function predates any concept of a market in the modern sense. For the most part markets were created by fiat by the government for its own purpose (usually supporting its armies) rather than springing from the ground organically only to later be regulated.

I’m not advocating for Islamic finance, it’s just a funny artifact of history that the closest thing to a “free market” unfettered by government interest, did not happen in the “western” world most of its advocates come from.

[MarsIronPI]

Usury (i.e. taking interest) sounds like free market to me. If you don't like my interest rates, borrow somewhere else.

[UltraSane]

Without interest why would anyone loan money? Even the Islamic banking alternatives all just hide the interest charges.

[gowld]

That's not true. Islamic finance forbids indefinitely growing interest. Sharia finance agreements involve fixed fees or equity shares. Late penalties can be collected but must be donated, not profit. In all cases, the borrower never owes to the lender for the lender to keep more an a fixed amount determined at the strat.

[asdf88990]

Shares and Goodwill. You loan money for good well or share of an enterprise which comes with benefits and risks.

[wahnfrieden]

Usury is so delicious to many that it’s unfathomable to consider any other incentive comparing to it

[UltraSane]

What is unfathomable is how you have a functioning economy without easy access to loans at reasonable interest rates.

[wahnfrieden]

Try reading Graeber/Wengrow

[asdf88990]

The same way Stock Market works. Really, Debt benefits a tiny fraction of people involved in the market.

[munksbeer]

Isn't it just the same thing? You loan the company money and in return they give you a note that says you get a portion of the company and dividends?

Different mechanics, but stripping everything away, roughly the same.

[jimbokun]

So equity instead of debt.

[subsistence234]

a stranger is asking you to risk $100k on his half-baked plan in exchange for nothing, and you say "sure go ahead take my money!"? no. it doesn't work like that in the islamic world.

as a borrower who's not allowed to compensate for your lenders' risk monetarily, your access to loans is severely restricted. Essentially you have to rely on your extended family. and instead of paying for the risk with interest payments, you have to pay with loyalty and subservience.

it restricts social mobility far more than the western model. it incentivizes clan structures. which incentivize cousin marriage.

power concentrates in the patriarchs of a million little family kingdoms. which causes all kinds of economic inefficiencies.

in the US, even if you're born without any family connections, as a healthy 20 year old you can find a job (hard work) that allows you to save $70k per year and invest it. when you're 30 you have $1M and a good credit history, you can easily leverage that to get a $2M loan at low interest rates, which allows you to start any kind of productive venture you want.

and you can do all this without owing your clan's patriarch access to e.g. your most profitable clients, or your daughters hand in marriage to his retarded son, or anything else he wants in exchange for his generosity.

[asdf88990]

“a stranger is asking you to risk $100k on his half-baked plan” is more less what YC is. And no debt involved.

You can correct yourself from there.

[UltraSane]

And in exchange YC demands a large percentage of ownership of the company. Completely different than a loan for 5% interest.

[gnabgib]

What are you basing this on? The current $.5M up front for 7% ownership deal?

https://www.ycombinator.com/deal/

[za3faran]

Loaning money as per Islamic Law is a charitable act, not one of exploitation.

[avadodin]

Nice to get a callback to previously acquired knowledge with what I assume is an arabizi (sp?) handle.

Islamic trade is certainly one of the best models out there but I think in many cases in practice it is still applied subversively.

It is not enough to ban mechanisms like usury, designed and intended to exploit.

One has to go after the very subversion of legitimate practices for illegitimate goals.

[UltraSane]

reasonable interest rates aren't exploitation. Business Loans serve a critical role in economic activity by putting free cash to more productive use.

[za3faran]

All interest is usury in Islamic Law (and the laws before it such as Christianity and Judaism). There are ways to to put free cash into productive use without exploitation.

[UltraSane]

I understand and I disagree. Interest isn't always "exploitation". A 5% loan isn't exploitation and it is very stupid to ban such things.

[za3faran]

I think it's easy to look around us to see why it makes complete sense to prohibit it.

[gaiagraphia]

>religious prescriptions against usury.

[jujube3]

Graeber was a confabulator with a very loose grasp of the facts, though.

[vasco]

You can read Adam Smith if you're looking for definitions, there's no need to read charlatans.

[m-ee]

If I wanted moral philosophy I’d read a better moral philosopher