An Essay Featured In The Fate of Beauty by O.G. Rose

An Economic Indicator

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A reason economies exist is to make joy increasingly more accessible to increasingly more people, and a society that doesn’t enable its citizens to feel like life is worth living is a society that arguably fails. The easier the economy makes this realization for its citizens, the better the socioeconomic order as a whole. Though both entail emotional fluctuation (at least according to this work), joy is non-contingent fulfillment, while happiness is contingent upon externalities. Consequently, unlike internal joy, happiness is temporary. Furthermore, though such an estimation cannot be made from happiness, the actual value of an economy can be generally estimated from the joy of its participants. The higher the joy, the less likely there is a bubble in the system.

From overall joy, which can be estimated from rates of depression, suicide, and job satisfaction, it can be estimated to what degree an economy is driven by mere credit versus productivity, as it can be estimated to what degree debt is backed by productivity versus cause inflation. This is because joy is a result of intrinsic motivation, and the more intrinsically motivated a society, the less likely productivity will decline during periods of economic stability and growth.

I

The basic assumptions and outline for this paper are as follows:

1) Joy doesn’t rise as does consumption.

2) Joy rises as does intrinsic motivation.

3) Joy isn’t volatile.

4) Intrinsic motivation ultimately drives productivity, while extrinsic motivation ultimately drives credit cycles.

5) Consumption without productivity causes bubbles (or cycles of booms and busts).

6) The extrinsically motivated are more likely to consume in a manner that doesn’t drive productivity, while the intrinsically motivated are more likely to consume in a manner that drives productivity.

7) When the economy is good, the extrinsically motivated produce less, having achieved the goals of their labor (financing a home, wants, etc.). They no longer have to work (productively): they can pay for all their costs. If they do still work, they don’t have to work any harder than they already work. Yet during a boom, with credit in the system, the economy needs more productivity to finance that increase in debt. However, the extrinsically motivated have no reason to increase productivity because it doesn’t seem like they need to (because that need is hidden behind credit): they seem to be working enough.

8) When the economy is good, the intrinsically motivated continue working, because their work is not contingent upon their environment, but personal drives.

9) The higher the joy of a nation, the higher its number of intrinsically motivated people. The more intrinsically motivated people, the more likely that a boom isn’t a bubble which will eventually lead to a bust, that ‘stability doesn’t destabilize’.

10) The lower the joy, the more likely ‘stability destabilizes’ and credit outpaces productivity.

11) To the degree credit outpaces productivity is to the degree current growth is a bubble.

12) If joy is high, credit and productivity are likely close to one another. If joy is low, credit probably exceeds productivity.

13) Therefore, the higher the joy during a ‘boom’, the less likely it is a bubble, and the higher the joy during a ‘bust’, the more likely a ‘boom’ is on the horizon. In other words, the likelihood of Depression lessens as does emotional depression, but the likelihood of economic Depression rises as does the prevalence of emotional depression.

14) Whenever joy is low, an economy suffers (which can lower joy).

II

1) Joy doesn’t rise as does consumption.

This is the prime assumption of the work: if consumption does increase joy, the theory is incorrect. However, though I don’t think it can be proven, it is common knowledge that money doesn’t ultimately buy happiness. It seems to in the short-term, but not the long-term. Money, in a sense, does buy happiness, but not joy. One can estimate a nation’s joy by its levels of depression, suicide, boredom, and job dissatisfaction (which may increase as does prosperity).¹ One could perhaps also include satisfaction with family life (which might be reflected in divorce rates).

2) Joy rises as does intrinsic motivation.

This is the second most important assumption. ‘Intrinsic motivation’, or ‘non-contingent motivation’, is nearly identical with purpose, and the assumption is that joy increases as does one’s sense of purpose. This idea is reflected in the work of Victor Frankl, Daniel Pink, and others.

Additionally, it is doubtful that a person who has purpose and meaning in life wouldn’t be joyful. The person won’t necessarily be happy at a given moment, but it seems unlikely that the person wouldn’t be generally very satisfied. Therefore, the higher the lack of joy, indicated by rates of depression, suicide, boredom, job dissatisfaction, etc., the higher the lack of intrinsically motivated individuals.

3) Joy isn’t volatile.

Happiness has contingencies, but joy not so much. Once instilled within an individual, joy remains constant by definition. By claiming ‘joy isn’t volatile’ (though happiness is), I mean to claim that joy is a reliable indicator. Once a person achieves joy, it is more likely the person will keep it than lose it. The opposite is the case when it comes to happiness, since happiness relies on contingencies and externalities.

Joy, being intrinsically motivated, can resist being changed by circumstances outside an individual’s control more so than happiness, though that isn’t to say an individual can’t choose to stop being joyful. However, since it is natural for a person to seek a state of joy (though that state is often confused with a state of happiness until an individual experiences the difference), it isn’t natural for a person to choose to leave it. This isn’t to say individuals won’t make this choice, only that the majority of joyful individuals won’t and that a given individual will rarely choose against his or her own joy. Hence, joy isn’t volatile.

4) Intrinsic motivation ultimately drives productivity, while extrinsic motivation ultimately drives credit cycles.

Incentives matter, but not all incentives are equal. To be extrinsically motivated is to be a mouse that runs through a maze to get cheese, while to be intrinsically motivated is to run through that maze because you like running. Extrinsic motivation requires that someone always places the cheese at the end of the maze, while intrinsic motivation requires nothing of anyone except for the mouse to enjoy doing what the mouse does. Furthermore, the extrinsically motivated mouse, when he reaches the cheese, will stop running, while the mouse that likes running, whether given cheese or not, will run on.

The intrinsically motivated mouse can become extrinsically motivated if given cheese every time he finishes the maze: the mouse may come to like running because he likes cheese through running, rather than like running in and of itself. Furthermore, if the mouse gets used to cheese and suddenly it’s not there, the mouse may change his attitude. The very act of offering an extrinsic motivation to get the mouse to start running may be the very act that ultimately makes the mouse stop.²

The mouse that runs for cheese, and the mouse that likes running, look identical in the act of running. In the long run you can tell the difference, but not immediately. And if you could ask the mice ‘do you like running?’, both may answer ‘yes’, though one of them likes running because of the cheese he gets him while the other primarily likes the experience of running. Actions speak louder than words, but actions aren’t always easy to read. The one who likes running for running’s sake may also like winning prizes (or that same mouse may happen to win prizes): whether an extrinsically motivating factor is involved at all won’t equip us with the discernment to tell the difference between the two mice. Something more is needed.

An incentive is a kind of purpose. If I am given money for taking out the trash, the reason I take out the trash is to receive compensation. I feel happy when I receive the money, but taking out the trash probably doesn’t bring me joy (in and of itself). Extrinsic motivators are the benefactors of temporary happiness but not necessarily consistent joy: though they gratify instantly, they last momentarily. There are some things that no one wants to do but that must be done, and so extrinsic motivations have a role. However, when all of life becomes something that people don’t want to do, extrinsic motivations are responsible for too much. People are supposed to be intrinsically motivated to live and extrinsically motivated to do necessary things in life they resist because those things inhibit life. When extrinsic motivation entirely replaces intrinsic motivation, all of life is in the way (of something that doesn’t even exist). Consequently, people become reliant on transient experiences of happiness, which can cause decreases in joy and increases in depression.³

Where modern Capitalism has gone wrong is that it is now mostly motivated by money to consume, when Capitalism works best when money is used to fulfill a purpose. Purpose stabilizes a system which cannot stabilize itself.

In a way, no one wants to make money: money is that which people have to make to accomplish what they want. Money is a means to an end, even if that end is to feel good about being rich. If people could get everything they wanted or needed without others and instantly, money wouldn’t exist. The existence of money is a testament to the reality that the world isn’t perfect. Money also testifies to the fact that people have to do things they don’t want to do, and yet money is also a beacon of hope pointing to a world in which what people want is achieved. However, for money to be such a beacon, people must always want something. When that purpose and want is gone, money becomes an end in itself, which it cannot be (without being paradoxical and hence existentially unsettling). When treated as an end in itself, money becomes contradictory, and those who own it can be contradicted by it.⁴

When economic good times begin, it seems as if the world has become perfect, and the point of money seems achieved. Consequently, a euphoric period sets in and productivity drops. As people tend to look forward to the weekend, people work looking forward to the times when spending is easy. Then, they ‘let their hair down’, per se. This seems to be human nature, which, like animal nature, enjoys pleasure.⁵

When ‘living’ and ‘consuming’ become similes versus ‘living’ and ‘producing’, the economy is threatened. This is because as soon as everyone feels like they’re living, they’ll stop producing or won’t produce as much. Yet if credit is fueling this boom, production must remain high to keep inflation from outrunning debt. Capitalism’s worst enemy is probably its own success.

5) Consumption without productivity causes bubbles (or cycles of booms and busts).

Bubbles are not possible without credit: all bubbles are ultimately a result of consumption that isn’t backed by production. Consumption without productivity requires credit. Credit functions like production, for as production allows one access to capital to fund consumption, credit does the same. Spending drives the economy, so consumption is of the utmost importance, but not all consumption is equal.

Spending which is backed by credit may drive the economy, while spending backed by (actual) production does drive the economy. Whether or not credit does drive the economy depends on whether debts and loans are ultimately backed. The ability of borrowers to finance debts is ultimately tied to how productive they are, which is tied to the productivity of the overall economy.

Economists struggle with estimating how much credit is driving growth. Since credit is used both during bubbles and real growth, it’s hard to tell. Likewise, it’s hard to tell how much inflation is actually ‘reflation’ versus ‘currency devaluation’. Inflation is reflected in an increase in prices and/or the money supply, but prices can both reflect an increase in productivity or a loss of spending power; again, it’s hard to tell.⁶

To use a metaphor, growth driven by production is like increasing the volume of a singer by telling her to sing louder, while growth driven by mere credit is like increasing her volume by turning up the radio.⁷ Ultimately, only growth driven by production counts. To the degree credit and debt contribute to production is to the degree they are beneficial, while to the degree they don’t is to the degree they contribute to bubbles.⁸ However, it’s hard to tell when the singer is getting louder because someone is turning up the volume from when the singer is actually singing louder. Fortunately, joy can help identify the difference.

6) The extrinsically motivated are more likely to consume in a manner that doesn’t drive productivity, while the intrinsically motivated are more likely to consume in a manner that drives productivity.

Credit cycles overlay productivity, making it hard to tell growth as a result of production from growth as a result of mere credit. Production and credit are like two rivers that can cross in one spot and not in another. They look the same and sometimes virtually are, yet maintain distinction.⁹

Any kind of growth will satisfy the extrinsically motivated, whether it be growth through credit or growth through production. On the other hand, the intrinsically motivated will never be satisfied by growth, because they’re already satisfied by themselves. Their satisfaction comes to them through their work: they’ll keep working regardless of their prosperity.

Since growth through credit is easier and quicker, the extrinsically motivated will naturally and rationally be in favor of that form of growth than growth through production. The reason the extrinsically motivated work is to achieve growth and pleasures that result, and since credit realizes that goal quickly, growth through credit is more rational than growth through production. What is ‘rational’ is relative to one’s incentives, and if one is incentivized externally, whatever achieves that extrinsic goal quickest and easiest is most rational.

Therefore, for the market to be rational toward productivity rather than credit creation, the market must be intrinsically motivated. Otherwise, a ‘rational market’ will be one that blows itself up with credit. The market is rational, but what is rational today is not always rational in the long run.

7) When the economy is good, the extrinsically motivated produce less, having achieved the goals of their labor (financing a home, wants, etc.). They no longer have to work (productively): they can pay for all their costs. If they do still work, they don’t have to work any harder than they already work. Yet during a boom, with credit in the system, the economy needs more productivity to finance that increase in debt. However, the extrinsically motivated have no reason to increase productivity because it doesn’t seem like they need to (because that need is hidden behind credit): they seem to be working enough.

Economist Joseph Schumpeter warned that Capitalism is ruined by its success; similarly, Hyman Minsky — the main inspiration for this paper — likewise warned that ‘stability destabilizes’. During good times when the economy seems strong, consumers tend to over-leverage, over-consume, and over-spend. Consequently, the system ‘booms’ and then ‘busts’.

Furthermore, if people have become reliant on extrinsic motivators to work, as those extrinsic motivators vanish and the system dwindles downward, production rates will depress.¹⁰ They won’t rise until someone who is intrinsically motivated creates and offers ‘cheese’ or extrinsic motivators again (since the intrinsically motivated are those who ultimately make ‘cheese’ regardless the state of the market or whether someone offers them ‘cheese’ to do so). But if the society lost such individuals during the boom, when the majority became reliant on extrinsic motivators, the intrinsically motivated won’t be there when they are needed. The system will enter a Depression with little hope of recovery (especially if most savings were squeezed out on the way down, as Keynes warned likely).¹¹

It is human nature to want to borrow but not to pay back, as it is human nature to want to spend rather than save.¹² When it becomes too easy to spend, spending will likely outpace production, and a bubble will ensue. This is the risk with credit. According to Schumpeter and Minsky, something of this nature will happen whenever Capitalism is successful. Worsening the collapse, bubbles are self-feeding. As debt grows, lending increases, and the economy is further pumped up and expanded with credit: incomes increase, the stock market booms, housing prices rise, and more. This results in less people producing because these extrinsically motivated individuals achieve the ‘cheese’ they worked to acquire. Consequently, production drops, which means credit outpaces production, yet credit makes it seem as if production is high. When the debts must be addressed to stop resulting inflation, the boom busts.

Debt drives growth in the short-term but is risky in letting people live outside their means; paradoxically, if people couldn’t live outside their means, entrepreneurs would rarely be born. Yet increasing debt eventually forces people to live ‘below their means’ when debts have to be reduced to stop inflation or when production has to be increased over credit accumulation. Therefore, people should generally only incur debt when they want to increase their productivity; otherwise, people won’t survive the ‘pay back’ period. Yet because debt makes the short-term comfortable, it is likely people will stop working and lower their productivity, making it unlikely that people will survive the ‘pay back’ period.¹³

What makes or breaks Capitalism is the level of production that occurs during the ‘good times’, and when Capitalism is dependent upon extrinsic motivation, these ‘good times’ are exactly when production likely falls.¹⁴

8) When the economy is good, the intrinsically motivated continue working, because their work is not contingent upon their environment, but personal drives.

A Capitalism that’s entirely intrinsically motivated is one’s that’s ‘stability doesn’t destablize’.¹⁵ A problem with debt is that it creates a comfortable present, which makes a person who isn’t intrinsically motivated complacent. Consequently, when the debt must be addressed, the person is rarely ready (this logic applies to the whole society).

On the other hand, the productivity of the intrinsically motivated isn’t so much influenced by the environment: they continue being productive regardless. In theory, a society that is entirely intrinsically motivated would be one in which there would never be bubbles, though that isn’t to say there wouldn’t be mild or gradual price adjustments. This is because the intrinsically motivated do not often consume at the expense of production, nor do they tend to take on debt that causes inflation and fails to contribute to production. However, while the intrinsically motivated produce for the sake of production, the extrinsically motivated produce for the sake of consumption. Feeding consumption and easy to amass, debt will likely gradually replace production for the extrinsically motivated, and to the degree the extrinsically motivated make up the majority will be to the degree a bubble is inflated.

9) The higher the joy of a nation, the higher its number of intrinsically motivated people. The more intrinsically motivated people, the more likely that a boom isn’t a bubble which will lead to a bust, that ‘stability doesn’t destabilize’.

The assumption here is that joy, as defined apart from happiness, requires purpose. Purpose begets intrinsic motivation and work to realize that purpose. However, ‘purpose’ isn’t simply a ‘goal’. Goals can be realized and finished with, but purpose is always undergoing realization. A goal, for example, would be ‘to write a book’, while a purpose would be ‘to be a writer’. The first is a period of time, but the second is a way of life. The first is an extrinsic motivator, while the second, dealing with identity, is intrinsic.

The intrinsically motivated possess purpose, and with that comes a sense of identity. Having a secure identity, such an individual isn’t easily swayed by his or her environment. Whether things are good or bad, the individual generally stays constant. Therefore, the intrinsically motivated are not likely to be ‘destabilized by stability’ and so cause and reflect credit cycles.

10) The lower the joy, the more likely ‘stability destabilizes’ and credit outpaces productivity.

The less joy, the less intrinsically motivated the society, and so the higher the likelihood it is extrinsically motivated and driven by growth through credit versus production, causing inflation.

11) To the degree credit outpaces productivity is to the degree current growth is a bubble.

When credit isn’t backed by productivity, prices and earnings are not backed by real assets. Consequently, a bubble develops. When this bubbles pops, a bust occurs. Growth that vanishes during a bust is growth that was arguably ‘fake’. It’s real until it pops, but ultimately it does not stand to scrutiny.

12) If joy is high, credit and productivity are likely close to one another. If joy is low, credit probably exceeds productivity.

When joy is growing, intrinsic motivation is probably doing the same, and so productivity is probably backed by actual labor. When joy is falling, intrinsic motivation is probably plummeting, and so high growth is probably backed by credit more so than productivity.

13) Therefore, the higher the joy during a ‘boom’, the less likely it is a bubble, and the higher the joy during a ‘bust’, the more likely a ‘boom’ is on the horizon. In other words, the likelihood of Depression lessens as does emotional depression, but the likelihood of economic Depression rises as does the prevalence of emotional depression.

14) Whenever joy is low, an economy suffers (which can lower joy).

III

Credit allows growth to exceed productivity in the short run but not in the long run. Credit is dangerous when it fuels over-consumption, but good when it fuels productivity. The big question is: how do you determine, in the present, to what degree credit is directed toward over-consumption versus productivity (and thus rising prices a positive sign versus a sign of a weakening currency)? If you could estimate this, you could estimate the likelihood that current Federal policies are contributing to a bubble and that current growth reflects a bubble versus actual growth. Joy could help.

Modern Monetary Theory (MMT), pioneered by thinkers like Stephanie Kelton and Warren Mosler, stresses the need to stop asking the question ‘can we pay for it?’, whether it be national healthcare, free college education, or the like, and to instead ask if the program will be good for the country and not increase inflation. For MMT, National Debt and public deficits are not irrelevant, but ultimately what matters is inflation. If America is 30 trillion dollars in debt but inflation is low, then there’s nothing to worry about; in fact, the 30 trillion public debt is 30 trillion in private surplus. Where inflation is low, there is reason to believe debt is a sign of productive investment, not waste, and the higher the debt with low inflation, the more reason there is to believe the economy is thriving.

MMT is correct that America cannot run out of money — money is only a metric, after all, like points in a football game — but it is the case that we can run out of money that doesn’t cause inflation, meaning we could run out of workers who absorb the spending and translate the debt into productivity, thus keeping inflation down. Theoretically, in a nation where the government had the power to force everyone to work any amount of hours, the government could assure that debt never caused inflation, for whenever inflation began to rise, the government could simply force more people to work or for everyone to work more hours. This, of course, would be slavery under a totalitarian regime, and though it would be a nation in which National Debt would likely never be a serious problem, it would be a place of great misery.

MMT acknowledges that debt can cause inflation, but believes focusing on ‘debt then inflation’, as opposed to ‘inflation then debt’, muddles the conversation, confuses politicians, and ruins national initiative, and they certainly have a strong point. If there is ‘slack’ in the economy but politicians don’t want to increase National Debt because it is too high on principle, they refuse to stimulate the private sector with what would take out the ‘slack’, thus possibly causing the private sector to weaken more, which politicians may think is evidence that the National Debt needs to be lowered, causing a vicious cycle, a cycle which MMT may argue could be avoided if politicians focused on inflation first, then debt.

That said, Austrian economists may be troubled by MMT, because with Hayek in mind, Austrians may not believe we are capable of monitoring inflation well enough to raise debt without concern. They may argue that the causes of inflation are too complicated for us to fully understand and that keeping inflation down if the quality of life drops (because everyone is forced to work more) is not successful economic policy, seeing as a point of economics is to increase the quality of life for the average person. The MMT may argue that people are not happy unless they have work, and additionally claim we don’t need to fully understand the causes of inflation if we have a ‘job guarantee program’, which will assure that the government always has a mechanism at play to keep down inflation (note here the ways that ‘monetary policy’ and ‘fiscal policy’ can work together to make debt more likely an indicator of investment).

In my view, a ‘job guarantee program’ is a good idea — it will provide the unemployed with opportunity, keep people trained so that they stay employable, provide retraining, and create a new marketplace in which the private sector can shop for workers — and it’s true that people tend to be bored and unhappy if they don’t have something to do. However, the Austrian may argue that ‘work’ and ‘job’ are not necessarily similes and that jobs may keep people from the work they want to do (thus why so many people long to retire). If those people are forced to work more due to rising National Debt to keep down inflation, those people might be very upset, risking social stability and social backlash. But how do we determine to what degree people are working jobs that they consider ‘their work’ versus working jobs in which they feel enslaved? If we could determine that, we might be able to determine how much more National Debt we could increase without increasing inflation or depreciating the quality of life for average Americans (how much debt is debt-that-causes-inflation versus debt-that-is-investment).

Joy functions as a powerful indicator for making this determination. If joy is high when the economy is strong (which means there is hope, purpose, and drive), then the economy is probably actually strong. If joy is low during such a time, the economy is probably actually weak. Furthermore, if joy is high during a time when the economy is weak, then the economy is probably actually strong. If joy is low when the economy is weak, then the economy is probably actually weak. If the economy is actually strong, then inflation is low, and there is likely space to increase National Debt without decreasing the quality of life. If the economy is actually weak, then increasing National Debt will increase inflation.

If there was no National Debt, the private economy would be ruined: MMT is correct, as they are correct that National Debt which doesn’t cause inflation is good, that such supposed ‘National Debt’ is actually ‘National Investment’ (inflation is how we can determine if the ‘Schrödinger’s Cat of debt’, per se, is good or bad). Determining joy would help us determine how much inflation should concern us when deciding what new programs and policies we as a nation can enact and maintain, and perhaps the best way to assess the joy of a nation, and the most direct way to determine the probability that growth is a bubble, is through job satisfaction. The more people hate their jobs, the higher the likelihood that productivity will drop as credit is pumped into the system and that current growth reflects a bubble. On the other hand, the more people love their jobs, the higher the likelihood that growth is backed by productivity. But how do we determine what level of job satisfaction correlates with what level of debt-that-doesn’t-cause-inflation? The Austrian may argue we cannot, while the MMT may argue that we don’t need precise numbers, just a general range.

A viable gage of inflation and index for determining the presence of bubbles and severity of consequential busts, joy is a measure of real growth. In a globalized world where the viability of one economy is tied to the viability of all, for all our sakes, let there be joy to the world.

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Notes

¹This paradox is written about by a diverse range of thinkers from Durkheim to Walker Percy.

²This is a hint at why it is dangerous for an economy to become reliant on extrinsic motivations.

³Furthermore, the more rampant extrinsic motivation becomes, the more society requires someone to ‘put cheese at the end of the maze’ in order to run. But who’s providing an extrinsic motivation for the person putting down the cheese? Eventually, someone down the chain of cause and effect has to be doing something for an intrinsic reason. The less intrinsic motivation there is, the more concentrated power will be in that individual, the more reliant everyone else will be on that person, and the more responsible that individual will be for providing everyone with cheese. If that individual vanishes, everything could fall apart.

⁴If you work on Wall Street because you have to pay for food, you are indirectly or unconsciously saying that you would rather work on Wall Street than learn how to produce food on your own. Why this is the case maybe because you like working on Wall Street or because you think learning those production/farming skills would take too much time. You then work on Wall Street because you need food but you want more time than producing food on your own would allot you. What you do with that extra time is up to you. If you are intrinsically motivated to write a book, this free time will provide you space to accomplish that task. If you get paid for what you are intrinsically motivated to do, you are able to open up even more time for yourself to do that thing. However, if you have lots of time but no intrinsic motivation, boredom is going to set in. Therefore, the prevalence of boredom is a good gage for determining how intrinsically motivated a society is or isn’t.

4.1 As credit must lead to production if a society is going to prosper, extrinsic motivation must lead to intrinsic motivation, but intrinsic motivation doesn’t similarly require extrinsic motivation (though, as credit can stimulate production, that’s not to say that extrinsic motivation can’t help someone realize intrinsic motivation).

⁵However, the intrinsically motivated can be driven out of the market by pressures from the extrinsically motivated. As the boom continues, this pressure increases, making it likely that the longer the boom lasts, the higher this social pressure against the intrinsically motivated rises. This is especially likely when growth is much higher than production, for that is when it seems most like extrinsic motivation is all that is needed.

Furthermore, the intrinsically motivated have to deal with many psychological tensions like doubt, fear, and peer pressure. The person who tries to invent an airplane will be scoffed at by those dearest to him until the moment the airplane exists. Until the parts of an airplane are put together, there is no functioning airplane, so doubters have all the evidence in their favor. Five minutes before the airplane exists and takes flight, all evidence ‘proves’ the airplane doesn’t exist. (This hints at why positivism and Capitalism may not mix well.)

It is hard work to do something no one but you values. The visionary cannot show people what exactly he is going to invent before he invents it, so the visionary needs faith. This faith is necessary through both boom and bust periods. Yet those who aren’t the visionary must also have faith, but seeing that they lack the idea or ‘vision’ of the visionary, this can be difficult. It is perhaps probable that the majority of the visionless won’t, and so probable that the pressures against the visionaries will only increase.

5.1 The intrinsically motivated can be pressured by the extrinsically motivated to become extrinsically motivated, which sets up the economy for busting. The most common form of this pressure seems to be the ‘get a job’ critique, which is ironic, seeing that intrinsic motivation is ultimately behind all job creation on some level. When social pressures against the intrinsically motivated are high, it is less likely there will be many intrinsically motivated individuals. When intrinsic motivation is low, the chances of a growing economy hiding a bubble are high.

5.2 Unfortunatley, the extrinsically motivated tend to chastise the intrinsically motivated until the intrinsically motivated turn against their intrinsic motivation. This irony seems pat of human nature.

⁶‘Inflation’ might be the most confusing term in economics. When one says ‘inflation is happening’, they could mean ‘prices are going up’ or ‘currency is losing value’. ‘Inflation’ means both, yet there is a big difference between prices rising alongside production and prices rising due to currency devaluation.

6.1 It is possible economists don’t want to be able to distinguish the two types of inflation, for this could threaten market confidence.

6.2 The word ‘reflation’ should be more widely used. If ‘inflation’ clearly meant ‘devaluation of the currency (to raise prices)’ and ‘reflation’ clearly meant ‘the rising of prices thanks to production’, the society would better understand economics. Arguably, unlike many Keynesians, the hope of Keynes himself was to ‘reflate’ economies, not ‘inflate’ them.

⁷Example from Less Than Zero by George Selgin.

⁸The main concern of every Federal Reserve Chairman should be whether increasing credit lowers productivity or raises it.

⁹Realize that I am not in favor of getting rid of credit: credit enables individuals who would be productive to access otherwise inaccessible (startup) capital. Loans, debt, credit, etc. have an important function of ‘balancing the playing field’.

¹⁰The great irony of Capitalism is that in enabling everyone to earn money, it threatens to ruin the intrinsic motivation it requires to keep from destabilizing itself during times of prosperity. When employment is high, when incomes are increasing, when businesses are booming — when all the things that an economy hopes to accomplish are accomplished — a drop in intrinsic motivation is likely. Extrinsic motivation threatens intrinsic motivation (and creativity, as Daniel Pink shows in Drive). Capitalism, through the extrinsic motivators that can inspire people to pull themselves out of squalor, can render itself impotent. Considering this, the best system is a Capitalism powered by intrinsic motivation.

¹¹Isn’t it the case that as the market collapses, people with savings will emerge and buy up cheap goods? According to Keynes, by the time the market reaches ‘the bottom of the trough’, there are no savings left and so no one can take advantage of the low prices. As the market fails, incomes shrink, and savings are squeezed out. When the market Depresses, it collapses. The market doesn’t self-correct: savings are a luxury lost during the hard times. According to Keynes, if we don’t do something, our entire socioeconomic system will fail.

11.1 Capitalism is unstable because the majority of people never properly manage themselves during good times.

11.2 Capitalism is the most successful economic model in history, and the greater its success, the higher its chance of ruin.

¹²Likewise, it seems to be the nature of human societies to be extrinsically motivated (perhaps because it is easier to be told what to do and think, achieving intrinsic motivation requires introspection and overcoming difficult psychological and existential anxieties, etc.), though humans (to themselves) seem to be naturally creative and intrinsically motivated. To use a term from “The Creative Concord”, it doesn’t seem to be the nature of human societies to incubate artifexians. Capitalism, in this sense, requires humans to rise above their creations. Hence, when Capitalism works, it profitably destabilizes humanity against the nature of its societies.

¹³The existence of credit necessitates cycles of when money is borrowed and when money is paid back or packed by production. When I exchange money for a good, a transaction occurs. This too is a kind of cycle, but since it happens so immediately, it doesn’t seem like one. The period between getting a loan and paying it back, which ultimately constitutes the business cycle, is simply an immediate transaction between a buyer and seller extended over time. However, unlike immediate transactions, elongated transactions aren’t necessarily repaid.

¹⁴In the short-term, hard work doesn’t pay off, but credit and debt do. In the long run, hard work pays off, while credit and debt don’t. Since a person always exists in the present and never the future, credit and debt will often seem more rational than hard work. Furthermore, especially in an extrinsically motivated society, it seems absurd to work hard during the boom times (because the whole point of working hard is to experience booms). Such dispositions make it likely that, in an extrinsically motivated society, growth will always be more a result of credit than production.

14.1 Without credit, the economy could only grow through productivity, and ultimately, that is the only way it grows. Therefore, credit only grows the economy insomuch as it finances productivity. But without credit, many productive people wouldn’t be able to get the start they need, so credit has a good and proper role. In a way, it balances out people who are all born in different socioeconomic conditions. Credit ‘equalizes’ everyone in his or her unique starting position: it practically functions like the hypothetical ‘veil of ignorance’ proposed by John Rawls.

14.2 It is hard work and intrinsic motivation, not just hard work, the enables Capitalism to thrive. Ultimately, the intrinsically motivated will put in the most hours to drive production.

¹⁵Allusion to Hyman Minsky.

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