Relative Currency Value

In its most absolute form, that is on the FX market, a currency system is a measure of the quality of the relations of production inside the civilization that denominates trade with it. Because the three major currency systems, in the absence of any effective  institutional constraints on recently deified bankers, have valued the positions of creditors above all others, they are aggressively eroding all the other kinds of economic relationships.


Money is a measure, wealth is what society produces. When society becomes obsessed with the measure, the score becomes more important than the output. The importance of money to wealth is not how it scores the winners and losers, but how it facilitates the creation in the first place. The economic production of a civilization is governed by a constellation of institutions that hold various factors of productivity, from people to plant to resources in free or coerced relationships that allow the division of labor to flourish or stagnate, depending on the quality of those relationships. All production is social: it does not happen without people doing it; it does not happen if people don't want it; it does not happen for long if people can't pay for it.


That civilization that through its institutions allows the greatest economic freedom to the greatest number of its people is the one who's currency will ultimately hold the strongest relative value against those of lesser social organizations. At present the three major currency systems are competing to figure out how best to score their money with the result of devastating their real factors of production. China is robbing the savings of a billion people to indulge scions of the Party, Europe is liquidating all economic relationships in the periphery, simply starving them in a fiscal famine eventually to consume the core as well, and the United States is looking more Chinese by the day with a brittlely thin and crazing veneer of institutional legitimacy for a kleptocratic elite.


The future will be won by that society that values society as a whole more than the relative value of its money. This society will accidentally produce the most valuable money by creating a world where people want to live which will be one where people are encouraged to produce to their potential and reap the rewards of doing so: this is why they'll do it and why they'll want to live there.  This was once a description of the United States. Money will be viewed as a tool to lubricate the improvement of real material conditions for this population at large, not the measure of winners and losers we now imagine it. On current trends, as likely as not this future society will not be in Europe, the United States or China. Its time to change the trends so it can happen in all three and more.

Links

Kleptokapitalist Bourgeoisie Roaders: Keen: Craig Tindale
Monsters From the Id: Tom Crowl
Iterated Prisoner's Dilemma: Press, Dyson
Mixed Economy Manifesto Part 3: Michael Hoexter
Duties, Morality and Short Selling: John Hempton
Fed's Support Bank Criminality: Yves Smith
Albert Company Olmo + Jan Glasmeier + Line Ramstad

Links

Open Letter to a Good Friend: YanisVaroufakis
Greenspan and Godley: Michael Stephens
Letsgetitdone Says it All at Corrente Whew, it takes a double espresso to get through!
The Fed Cannot Save the Day: Ed Harrison
From Financial Crisis to Stagnation: Thomas Palley a month old, but worth reading.
Save the Euro? For Who?: Golem XIV
Bank Crime Continues to Pay: Yves Smith
Thinking Big Can Be Suicidal: NYT Robin Pogrebin

Links

3 Trillion and Rising: Kenneth Thomas
Mixed Economy Manifesto: Michael Hoexter
Mondragon Shows the Way: Richard Wolff While a well run system, it is subject to the same constraints as any other monetarily non-sovereign. If you look closely you will find Mondragon just shares the pain in Spain that falls mainly on the plain more equitably.
Ruthless Extrapolation: Tom Murphy
Why We Work too Much: Yves Smith
Kahn Structure Nears Completion: Arch Daily, Karissa Rosenfield

Aurora of Empire Part 3

Aurora of Empire, The Beekman by Frank Gehry

The buildings that pre-industrial civilizations constructed appeal to us today in part for an aesthetic coherence that is a consequence of technological limitation, a uniformity of form and material that is a direct result of scarcity. But more than that their appeal is for their human expressiveness, the craft, care and imagination embodied in the sculptural forms of their functional and decorative components. These appeal to us instinctively.  They tell us a story not of work, but of craftsmanship, the love of work, the impulse to make well that embeds physically in our creations when we care about them. Work we love inspires works of love.  

As industrialization harnessed fossil fuels to tasks that for thousands of years had worn the bones of man and beast, the productivity of technological ingenuity began to liberate people from the worst economic abuses of their fellows.  But the same labor saving innovations were applied to the world of craftsmanship, the labor that people loved to do and in its artistry had staked their identities. This began to dissociate people from the aesthetic making we are predisposed to love doing. The Fordist and Taylorist revolutions in manufacturing ensured that the greater parts of several generations would never satisfy their innate urge to craftsmanship except in hobbies even as population, and with it the need for material goods, exploded. 

Motovun Croatia

Urbanism was the last great tableau for these displacements of human craft to find expression. Because city and building sites are all unique, against epic struggles of finance to insist they're not, the specific local realities of construction have never entirely lost their footing in the arts. The uniqueness of the real and the specificity of place can never fully be eradicated from built reality: these qualities propagate out into the artifices we project for ourselves through construction never severing the final connections back to the earth, they calibrate our fantasies to the particular and never quite let them dematerialize into our dreams as we would like. 


As mechanical possibilities for making have grown in scale the results have become more frequently unsettling. We can now build such a vast array of forms the problem of choosing what kind of form has overwhelmed the art of architecture much as the spread of the automobile opened up the question of where to live overwhelming the art of city planning.  This de-centering of the building arts, by mediating through machines our once passionate engagement with these artifacts, whether cities or buildings, has emerged over the last century from the hidden techniques of infrastructure to overwhelm the surfaces of both. Most of what we see and touch day to day in our cities and our buildings has been made by machines. This quality is what distinguishes for the most part cities we don't like from those we do.

As industrialization took hold of construction, as with photography it first used mechanical reproduction to simply multiply aestheticized objects. This visible effect was primarily deployed as a distraction, however, from the exponential scale shift buildings were experiencing at the same time. Cities and buildings have experienced an exponential growth as a direct result of industrialization. By now technological economics have completely transformed the world of possibilities substituting mechanical capabilities for human ones and in the process altering our value in our own built habitat, measuring us in money rather than asking our measure of our environment. As architect Michael Benedict observed a decade ago, the design time required for each new square foot of building has declined logarithmically over the last half century.

A tour of those blocks of New York between the Manhattan pier of the Brooklyn Bridge and the the Woolworth tower, with a few glances at what's visible beyond this perimeter, tell the story of how money, and the machines it prefers to people for economic production of objects, has become the primary form giver to architecture. In examining this twentieth century phenomenon we will consider how the ethical issues discussed in Part 2 suggest for the built world a transformation back to its symbolic roots in human meaning putting people back at the center of the art of building and the habitation of cities.

...

A full block South of Woolworth is New York's only surviving pre-revolutionary and erstwhile Anglican church, Saint Paul's. It is a suburban knock off, from the point of view of contemporaneous Empire, of London's Saint Martin's-in-the-Fields. This beautiful little building is a wonderful essay in what the skilled human hand will make when asked. From the wrought iron fence and gates up to the aspirational steeple each piece of this building demonstrates after 240 years the love of making, when given the chance, that carpenters and masons naturally bring to their work. The stone is the bedrock of Manhattan, the wood is of the long extinct local forest, the building is both a piece of its place and a place for its people. Like its Imperial prototype in London, the the penultimate gesture on its steeple is a replica of the Choragic Monument of Lysicrates, itself erected by a wealthy performing arts patron of the Dionysians on the slopes to the Acropolis in Athens, the reference of which the church's original public would have been delightfully aware.

The early American Baroque of the interior is not to my taste, polished brass and crystal chandeliers, but the plaster artistry of L'Enfant's gold lief sunburst over the main alter, like Richard Lippold's gilded wire sculpture at the Vanderbilt Avenue lobby of the Pan Am Building (Met Life, now), doing things both inside and outside the building,  is enchanting if you give it the chance. And this is so much of what hand made buildings have to offer: if you give them the time they keep giving you something back. All that embedded skill, craft and artistry in the very stuff of the building as well as the formal building itself reward contemplation with insight. This is not a characteristic that has entirely disappeared from industrialized construction, but it is one under extreme financial pressure as we will chronicle in what follows. 

For our next turn the indulgent reader will be obligated to take my word for it or submit to a TSA like screening as New York's City Hall is now inside a "Green Zone" mayors Giuliani and Bloomberg have fortified against the depredations of their fellow citizens. Of course the only real danger within is from those secure to enter: councilmen have recently been known to murder one another on the job, most recently in chambers at City Hall. 

The winning entry in an 1802 competition, this excellent civic building was considered monumental in its day. It embodies, at least to my mind, an American High Renaissance style that while influenced both by Adams in England and the French Renaissance, does not feel at all like its foreign antecedents. Of course this innovation stylistically may be the simple result of the pinch of money, in this instance a serendipitous constraint.

Reduced in size when the City Council complained of price, smarting still from the costs of Revolution, the miniaturization of grander French affects on the facades lends them a modest fortitude absent in the adjacent Tweed Courthouse, itself formally inspired by its earlier neighbor. On the down side, money pressure constructed the back facades in brownstone for economy (which have subsequently been replaced). Massachusetts Marble was purchased for the main facade, already in 1810 a remote sourcing of material that will become one of the hallmarks of modernity. 

Equally well crafted and proportioned, this building has served the city well politically and artistically: beyond the architecture it contains an astonishing collection of early American paintings that citizens could browse at their leisure until imperial paranoia fenced them off.  An embodiment of civic symbolism, a venue for civic action and a hagiographic of early America's vision of itself this little monument embraced those who approached in its wings and enlightened them with experience. When new the view from the cupola gave a panorama of a growing city, but the gigantism of the street wall that emerged over the next two centuries renders what was once monumentally omniscient, now a cozy and introverted quality in its fortress park. 

Appropriately behind that elegant vestige of the early Republic, City Hall, the Tweed Courthouse forms a shoulder padded mass of Victorian Renaissance Revival facing Chambers Street. Begun before the Civil War and finished in 1878 it is a contemporary of the Brooklyn Bridge without any of the latter's ambition or vision of the future. None the less the building is a good embodiment of the historical notion of public building. Deeply embedded in the European building tradition the facades correct all the "defects" of scale and proportion of City Hall next door, eliminating everything original about it. Expensively made, it is a very good building despite its ambitions to mediocrity, with huge double hung windows through which the beautifully ornamented courtroom ceilings are visible from the sidewalk. Like City Hall there is a visible relation of the interior spaces and their civic function to the park in which they sit: classical form gives order and visual expression to public function even while raising it above and enclosing it from the park.

Before crossing Park Row to the next architectural survivor on the square, pause for a moment to consider Ben Franklin. He stands waiting for breaks in traffic to lend some meaning to what's left of his location in the American myth City Hall tries still to tell above the din of traffic and barricades. There he has stood, first waiting for the Brooklyn trolley that ran across the upper level of the great bridge when it opened shortly after his arrival, then for the postman from Alfred Mullet's now vanished 1875 Old Post Office in a colonnaded French Empire style that endured a mere thirty five years. Scaled to Paris rather than New York, it's more gangly and aggressive sibling the Old Executive Office Building in Washington DC has fared better. The Post Office attempted Mansard's subterfuge to conceal the degree to which the civic utility of post office was towering over the people's government across the park. It apparently fooled no one in New York and thus vanished leaving an expanded park in its place. 

Planted between this and the bridge in 1872, old Ben's presence more or less marks the end of living memory of the Revolution. One of a large number of post Civil War monuments around the now rapidly growing city, these statues hew stubbornly to classical notions of urbanism and will become islands of nostalgia in the passing centuries. Powerful in their representation of the iconic people woven into the mythopoeic tapestry of national identity, like the characters they represent they impose their will on the space within their gaze shielding it from the indignities of time. But poor Ben Franklin has been given peculiar challenges with a divided roadway and pedestrian barrier his eternal view. He stands there now, with both trolley and post office forgotten,  in mute testimony of the indifference of commerce to the continuity of symbolic narrative. 

To his left, the Potter Building at 38 Park Row is the first on our tour to feel the full pressure of the industrial revolution demanding the maximum reproduction of whatever topography could be fitted with foundations. In 1883, still cognizant of architecture's responsibility to its neighbors, this building struggles with what it feels it owes its public, a conscientiousness to the meaning of City Hall and its park that will survive increasingly diluted in the forms seen here until the 1930s. With interior function reduced to the mutable needs of office tenants, in this sense a modern office building, the Potter Building forgoes the visible relationships between interior space and external surface that give spacial legibility to the civic buildings across the street. By deeply articulating the ornate terra cotta facade architect Norris Starkweather compensated with surface articulation for the loss of transparency between inner use and outer expression. 

This depth of surface is expressed by a symphonic richness of ornament in three movements, from street to tower to top. Each movement develops its own theme. The first two floors, built for banking tenants were clad in cast iron with a strong horizontal rhythm and vertical progression from arch to pediment. The next two floors repeat both horizontal and vertical rhythms but increase their density with brickwork and terracotta details more intricate than the iron castings. The transition from base to tower complete, the next floors break into a horizontal repetition of windows inside a four story vertical colonnade topped by a cornice articulated across an entire floor. Above this the rhythm turns horizontal again in a denouement of alternate bays surmounted by pediments revealing an ornamental roof cresting between terracotta finials. 

City Hall Park in Potter's day was prime real estate and little expense was spared on this building. Starkwheather, from out of town and unencumbered by local prejudices, was given a free hand to envision what a high rise could be and to my eyes made the most of his opportunity. While the speculative nature of what would occur inside afforded no opportunity for exterior interior transparency, surface organization and articulation of the facades provides what compensation it can. None the less, the scale shift with City Hall is dramatic and was more so in its day as the surrounding street wall remained a product of the future. This building is a studied attempt to restrain the industrial irruptions of technology within familiar formal and decorative vocabularies. It confronts the problem of scale head on with its symphonic articulation, admitting its outlandish size but flattering its neighbors with ornament. 

Itself a product of fire, its predecessor on the site having burned with headline speed, this building is one of the earliest in Manhattan with an iron frame fireproofed in a spanning terracotta floor assembly. This technology was imported from Chicago and Boston, each having had more recent experience with epic city wide fire, but the actual manufacture was local in a company set up by Potter, the buildings developer himself. This was the moment when New York was defining its position in the world and began to rapidly co-opt imported technologies from around the world to its business purposes. As one of these, Potter's business would endure until 1953 when bankruptcy definitively punctuated its obsolescence. 

The New York of the 1880s was already an American Colossus with twice the population of any other US city, and this before the consolidation of the four outer boroughs into it. A city of opportunity, ingenuity and intensity, what Jane Jacobs in "Cities and the Wealth of Nations" dubbed "import replacement" ran rampant. As Potter was setting up his manufacture to mass produce his "borrowed" fire proof structural system, a Fourteenth Century Mediterranean technology, the timbrel vault, was being patented under the name of Rafael Guastavino. This prejudicial localism, that is to say favoritism towards local economic actors, though primarily experienced by its agents as a free for all, was a central engine of the cities rapid growth: these two opportunistic men were in many ways typical of the period.

The thousands of local manufacturers, and the opportunity to manufacture more or less whatever one could establish a market for coupled with an intellectual property regime that encouraged innovation through patent and copyright while lacking much efficiency in enforcement led to a huge proliferation of manufacturing employment. The city in this period offered returns to innovation and rewards to hard work, but mostly a tableau to the aggressive hustlers who could establish market dominance. This growth in production and employment coincided with the fitful economic constraints of a gold standard monetary system so the growing population was employed in jobs both episodic and insecure, despite the dynamism of human activity in the city, due to the deflationary nature of a hard money standard.

The city's huge growth, more than doubling the population between the end of the Civil War and the turn of the century, occurred despite the Long Depression of 1873 to 1879, recessions from 82 to 85, 87 to 88, 90 to 91, 93 to 94 and 95 to 97. The economic pattern remains, although the baseline population shifts substantially when the outer boroughs are incorporated, with fitful GDP growth right up to the Great Depression. Westward migration provided a constant relief valve for the ocean of immigrants who arrived steadily in the hundreds of thousands per year throughout this period. In the brief spurts of local growth, enormous gains were made in the city's population: recession and depression years immigrants moved on. People were just another of the inputs to the economic machine New York City had become, when needed put to work, when not put on a train out West. 

But the money men accrued astonishing wealth through this era as the inherently deflationary  effects of the gold standard, through recession after depression, bankrupted the city's entrepreneurial adventurers and concentrated ownership of their real achievements in the hands of finance. Money is a system to record, store and transport obligation through space and time. Where credit obligations are seen as sacrosanct, contracts involving compound interest become inherently favorable to creditors: the inexorable compounding of interest takes no account of the contingent events of reality. The entrepreneurial temperament is essentially optimistic and looks to make real new value from innovative aggregations of real physical plant, industrial inputs and workers wages it borrows to pay for in the form of investments. When these bets go right, the investor and everyone else involved makes money, when they go wrong, for whatever reason, fair or foul, the creditor ends up in possession of all the real property including the innovation. Creditors come to understand this property of the credit relationship and without strict oversight have uniformly abused it across the history of high finance. 

The conclusion of this essay will follow in a separate post.

Links

Demand Leakages: Warren Mosler
Philip Pilkington: NeoClassical Economics and the Foreclosing of Dissent: Yves Smith
NeoLiberalism has Failed: Bill Mitchell
Imagining the Unthinkable: Kent Willard
Linda Fried, Hope for the Future: NYT
Andrew Ross Sorkin Raising the Bar on Fraud: What're you calling Fraud? Look at this!
Not That Any Fraud Occurred Here: NYT Mary Williams Walsh
Ridge House: Bohlin Cywinski Jackson

Gail Collins on Texas

Growing up in central Texas in the roiling wake of court ordered desegregation, Madaylin Murray O'Hiar vying with hippy professors for the incandescent Left while John Connolly sharpened his precocious pre-Rovian knife to lead the avant-garde of the New South from Democratic bondage into the numinous Right, whenever I tried to see or be in a world of strong and aesthetic liberalism I was either hit on by a left that assumed I was gay, or hit by the right on the same guess.  

Links

General Theory and Special Cases of MMT: Mike Norman
Secret State: Golem XVI
And the Good Ship Greece Sails On: Yanis Varoufikis
Alternative to Blame Within the Eurozone: Kent Willard
Stabilizing Prices is Immoral: Steve Randy Waldman
Structural Pliancy: Gonzalo Lira
Breakfast in Fur: Epicurean Dealmaker
Victory: Martin Fuller (paywall)

Monetarist Malaria

This last weekend Spain was offered money from a slew of European acronyms none of which have themselves the money to give. The European Central Bank, the one entity that does, is so obsessed with the possible inflation of its singular charge that it appears willing to risk Europe itself to save the Euro. The ECB pays nothing to conjure this currency from the void yet refuses even to make a loan.  With Spain afflicted again by the cyclical fever of the ECB's monetarist malaria, one wonders at what point the keepers of the coin will concede its worthlessness in the absence of a European civilization? Will we need to see the kind of mass starvation that ended Mao's symmetrical insanity, his "Great Leap Forward"? Like the ECB he knew how the utopia to come must be, making it safe to ignore how his countrymen actually housed and fed themselves in the present. Have madmen of equal depravity seized the central levers of European power? 

Early in the last century when John Maynard Keynes called the recently expired gold standard a "barbaric relic" what he meant was that hard money was devastatingly incompatible with the urbanized, newly industrialized economies that had just abandoned it. A reversion would impose mindless barbarities on afflicted populations, precisely what we see today in Ireland, Greece and Spain, and precisely what England experienced when Churchill ignored Keynes warnings and put England back on hard money in 1925. Hard money had been abandoned because, a few decades before Keynes' comment, the industrially advanced economies of the Atlantic had for the first time in human history begun to make available the benefits of urban life to majorities of their populations: the essential corollary was the final and definitive foreclosure of rural subsistence as an economic activity available to citizens. Increasingly populous industrialized cities were inextricably yolked to industrially depopulated agricultural production and dependence of the growing urban majority on the money economy became an existential reality for the first time.