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  • Origins and Adaptations Part II Peter Joseph, ZDay 2014, Toronto

  • Good evening, and thank you all for coming.

  • I very much appreciate you all being here,

  • and of course thanks to the Toronto team for a tremendous and diverse

  • presentation order; I was really happy to see the diversity.

  • This is 'Origins and Adaptations - Part II'

  • I tested it out at about 4:30 in the morning, found out it was about

  • 15 minutes too long so I've been trimming this thing down

  • in the midst of everyone else speaking (sorry to be rude).

  • But, I want to state up front that this is not my normal type of talk,

  • and if in the course of this, if you can't figure out what it is I'm getting at

  • just bear with me, because I will get back to the main point

  • as I go through this.

  • In 2012, I gave the first half of this presentation,

  • talking about the kind of toxic evolution of the market mindset,

  • a mindset which was quite innocuous many centuries ago,

  • but has continued to evolve in ever-problematic ways,

  • including the resulting consequence of growing environmental and social imbalance

  • as we all know.

  • And sadly, the market's internal incentive structure and its general mechanics

  • literally doesn't have the vocabulary to solve these problems,

  • as others have alluded to today,

  • which is one of the reasons, perhaps, that there are more activist groups

  • and NGOs, and socially concerned nonprofits in the world

  • than ever before, in absolute and in percentage terms.

  • And if that's not a barometer of societal health, I'm not quite sure what is;

  • it's a very telling sign.

  • The implication, is that not only is the market as we know it inadequate

  • (as the market is supposed to solve all problems), so is the government,

  • as we know it, and both of them have been failing for a such very long time

  • when it comes to problem resolution, people are going way outside

  • of the traditional frameworks, as best they can, to try and help.

  • Too bad- not to be cynical- the vast majority are not going far enough

  • in their thinking about true root problems,

  • some of which I will try and cover today.

  • In Part I 'Emergence of the Arbitrary' I will use the stock market

  • as an example of how the system of market capitalism has

  • 'decoupled from itself,' gesturally speaking, highlighting what I think

  • are very interesting features of crowd behavior

  • in this type of incentive structure, along with revealing what are I think

  • the 'true colors' of the market mechanism and the mindset it creates-

  • the true, naked colors of what this system actually is

  • when you remove everything that glamorizes it,

  • and covers it up, and ornaments it, in the wrong way.

  • In Part II 'Rational Imbalance,' I'm going to attempt to show,

  • in the most simplistic and accessible relationships possible,

  • how the market organizes itself 'rationally' amongst competing players.

  • For those that have ever studied game theory, or utilitarian models

  • regarding behavioral economics (kind of obscure)

  • you've probably come across something called 'Rational choice theory.'

  • Rational choice theory means that an individual acts 'as if'

  • they are balancing costs against benefits, to arrive at actions

  • that maximize personal advantage. In this context

  • the term 'rational' has little to do with the commonly accepted definition,

  • most would consider synonymous with say, 'sane' behavior.

  • Rather, it assumes that individuals make logical decisions

  • based upon their perception of obtaining the greatest satisfaction,

  • oriented by only the game they are focusing on.

  • My goal is to show not only how there is a lack of equilibrium

  • constant in the market, perpetuating economic imbalance, wage imbalance,

  • general inefficiency, and hence the resulting creation of desperation,

  • it's also to show that this thing is so locked in, we can't even avoid the issues

  • because these 'rational' defenses are formed by pressures that are external

  • to the vocabulary of the market economy.

  • An externality- as I will touch upon, as I get into it-

  • is something that the market doesn't understand and account for.

  • Examples include: technological unemployment, poverty, over-consumption,

  • realized scarcity, growing inequality, climate destabilization,

  • and other such issues that we have talked about at length today.

  • This realization stands in stark contrast to the spectrum of equilibrium,

  • theorists who argue that a properly tuned, free market would naturally produce,

  • such as full employment, wage stability, equitable distribution, etc.

  • This section with also imply that the idea of a 'green' or humane capitalist economy-

  • given the general consensus of what those value terms mean-

  • is actually structurally impossible as a natural state,

  • showing that no matter how ethical, caring, and environmentally conscious

  • you think you are being, virtually everything in the market moves against

  • these sustainable interests, as evidenced in its total system behavior.

  • Now this doesn't mean improvement and influence can't be made and we shouldn't

  • try and be helpful and active, but you're walking against the current greatly

  • and, as I will show, the system's design has some very,

  • very powerful mechanisms that keep it in place,

  • without anyone really understanding what these mechanisms are.

  • Everyone thinks about power; we're talking about a structure.

  • And to be clear, system behavior- this is what it's about- is by definition

  • behavior that is unpredicted by the behavior of its apparent parts.

  • It isn't to say the behavior cannot be understood,

  • but it has to be analyzed as a whole, as much as technically possible,

  • to gain a more accurate picture.

  • This is why the only type of social analysis viable,

  • must fall in the context of global statistics, and large scale trends over time.

  • It is very, very easy for classical economists today, to defend the market

  • by anecdotal scenarios, narrow reductionist proofs, and examples of

  • short term improvements that basically ignore broader, negative trends.

  • In about 15 years there will be another billion people

  • trying to survive on this planet.

  • Yet, as of now, all life support systems are in decline,

  • and general social destabilization is statistically on the rise.

  • These system results trump all other perspectives as qualifying measures.

  • For example:

  • Numerous corraborating studies show that we need a 60 to a 110% increase

  • in food production by 2050, and of course this stat is not accounting for the fact

  • that 1 billion people today are already are already not getting enough food

  • to meet basic nutritional needs.

  • Potable water is worse, with the UN finding that over 65% of the world

  • will experience water stress in just 10 years, with 1.8 billion

  • already living today with true scarcity problems.

  • Pollution- both land, water and atmospheric- which is already epidemic,

  • has been estimated to continue to rise overall,

  • especially in the countries desperately trying to pull themselves out of

  • third world economic conditions.

  • And as much as we all would like to see the world

  • come up to a higher standard of living, the industrial methods used

  • by these strapped nations are horribly inefficient, and essentially ecocidal.

  • China is a perfect example: 16 out of 20 of the world's most polluted cities

  • are in China, and I see China's development as the path

  • that most other nations are taking, preferring economic growth

  • over environmental sustainability, through dirty, cheap industrial methods,

  • with no regard; they're just trying to get it done, looking the other way.

  • As far as energy, despite the green rhetoric and the earth stickers

  • stuck to everything being put out by the oil industry,

  • they are spending billions in development of conventional and

  • unconventional hydrocarbons, and substantially less on renewables still.

  • Tar sands, fracking, oil shale [are] horribly polluting, destructive,

  • and have very weak net energy conversion, as compared to conventionals.

  • And it is estimated that we need a 56% increase in world energy by 2040.

  • And guess what? If that increase is going to come from hydrocarbons,

  • it's gonna be a CO2 pollution disaster

  • because we've already hit the 400 ppm benchmark.

  • So, if were going to try to meet this demand with the oil industry,

  • we're in a lot of trouble.

  • As far as resource consumption and loss of biodiversity,

  • a 2011 study found that we need 27 more Earths to keep current rates going by 2050,

  • with losses of 50 to 150 species daily, a level 10,000 times greater

  • than the natural [rate] of species extinction in the fossil record.

  • As far as public health, the WHO has recently stated that cancer rates

  • are expected to surge 57% in the next 20 years,

  • while depression and anxiety disorders continue to also rise.

  • Heart disease, the general global killer, at least in the West mostly,

  • while decreasing in global mortality a bit in the last few decades,

  • is actually increasing in diagnosis;

  • people are just living longer due to medical servicing.

  • And closely tied to such public health is income inequality,

  • which is at its highest rates by some estimates, than anytime in human history,

  • with poverty, overall, on the rise in the first world nations,

  • with extreme poverty, as it's called, in the third world,

  • staying more or less the same in the long term.

  • Please note that income inequality is not some mere inconvenience.

  • It's a silent killer and social destabilizer.

  • Heart disease, for example, has a direct correlation to inequality both

  • in terms of absolute deprivation, and relative or psychosocial stress pressures.

  • And the last socioeconomic result is the ever-growing unemployment crisis.

  • The flow of reasoning within the market, coupled with the exponential increase

  • in information-based technology

  • and resulting cost decreases of applied technology,

  • will incentivize all businesses to automate over time- just watch!

  • How can we expect to keep humans meaningfully employed in this climate,

  • when keeping cyclical consumption and growth will become more and more elusive,

  • as time moves forward, and this market logic prevails?

  • Bottom line: Anyone who tells you that the market and its underlying mechanisms

  • and incentive structure is exempt from blame regarding these causes,

  • they are either completely and utterly dishonest with themselves...

  • or they're incredibly poorly informed with respect to the

  • etiology of market synergy, the causality.

  • Overall, poverty and inequality together, are perhaps the most embracing

  • as a result of these pressures, both of which, as TZM knows well,

  • are technically unnecessary,

  • given the state of our capacity to actually meet human needs,

  • and keep ecological balance at the same time.

  • The structural violence we endure today is an assault,

  • and in form, a civil/human rights violation.

  • And you know we've watched over the many years increased race equality,

  • gender equality, creed equality, and to a limited affect -

  • legal equality emerge on this planet.

  • Yet, most everyone has been conditioned- have you noticed- to stop short

  • of demanding economic equality, in the truest sense of the idea.

  • It appears the idea of economic equality is seen as utopian,

  • that is the way people think about it, unattainable.

  • And in the past, this was probably true.

  • But no more, provably. With the phenomenon of ephemeralizaton-

  • more with less- we can do it!

  • And I hope that the civil/human rights groups out there can really realize

  • the merit of this, and how the result of this equality through, of course,

  • the installation of a Natural Law Resource-Based Economy-

  • something that I'm not talking about today as I have at length in other prior lectures-

  • is the only logical means to do so, based on assuring the proper

  • behavior reinforcers to assure balance, abundance, and sustainability.

  • And to conclude this tangent,

  • when you really trace the etiological unfolding of the most damaging problems

  • and fatality in society, logic will lead you to one conclusion:

  • Capitalism is the leading cause of death on the planet Earth,

  • and it's time to change!

  • [Applause]

  • Then in Part III, 'Revolution by Design,'

  • I will quickly address the critical importance of educational design projects

  • and think tanks, which can essentially mockup this vision

  • and prove its efficacy to the general public in a very tangible way.

  • And by the way, this is not to override any other activist ideas- boycotts, etc.-

  • but it's about getting down to what will make the world realize

  • what is actually possible in the most direct, applicable, educational sense.

  • However before I begin all of that, as if this intro couldn't be any longer,

  • a personal note.

  • As mentioned, I don't like to repeat myself too much when it comes

  • to prepared talks. I do my best to always look for new content and angles.

  • And today we live in a digital age where we have access to vast

  • historical media online. So repetition in presentations just isn't needed,

  • if those intent on understanding this stuff put forward the proper research,

  • into the Movement.

  • And for those new- say finding this video archived online later-

  • here's a list of all the main talks I have contributed to the Movement since 2009.

  • And if anything I say here today-

  • which this is an advanced and rather abstract presentation I'm going to give-

  • if it's not understood, please go back and review these talks.

  • Some are a bit outdated in hindsight but they have a lot of merit

  • as far as I'm concerned.

  • I've also done hundreds of hours of radio shows, interviews,

  • third party podcasts, Q & As, and the like, and to be frank,

  • I have pretty much burnt myself out entirely, [laughter]

  • which is part of the reason I bring all of this up,

  • as after this event I'm going to be shifting gears a bit,

  • moving away from public speaking, focusing on back end TZM projects,

  • along with returning to my most important and neglected activist strength,

  • which is socially conscious feature film production.

  • [Applause, cheers]

  • And finally, with the creation of the new book that-

  • I think about 200 or so were donated to this event,

  • that I assume have been passed out, which is also free to download-

  • coupled with the numerous other talks by prominent and great speakers

  • that we have, there is no shortage, no deficiency of thoughtful research,

  • data sourcing, and details regarding

  • the train of thought that comprises the aims of TZM.

  • Anyone out there that says the observations are vague or ambiguous,

  • have simply failed to properly research.

  • And by the way, there will be a workbook for those interested in furthering this

  • and being able to learn the talk as our expanding lecture and communications team,

  • a workbook will accompany this to help engage the person to think even more

  • critically, with Q&A ideas and common objections, and things like that

  • to help them.

  • So all that said, let's jump into what will likely be

  • my last formal lecture for a good while.

  • Part One - Emergence of the Arbitrary

  • As some may know I spent about six years of my life

  • actively interfacing [with] the equity markets,

  • mainly short-term trading of high volume stocks: day trading.

  • I did this mainly because I didn't want to be a part of the dictatorial business model,

  • and even in my early 20's I accepted that the economic system had a

  • very distorted incentive system. So I went along with the ride.

  • I was a dedicated classical musician at that time and the obscurity

  • of my interests and passions just - they weren't economically viable

  • and I really had no interest to be a paid professional in my field.

  • It just polluted it.

  • So I examined the landscape and the only occupation I found,

  • which did not have a boss, clients or any entity that was to decide my fate

  • or impose control, was equity trading.

  • I read numerous books, took mentorships with accomplished traders

  • and specialized in what is called 'pattern trading.'

  • It was also in this environment I began to realize just how absolutely insane

  • the market economy and the concept of market capitalism really is,

  • as the stock market is basically- you could call a 'proxy market,'

  • is a better term for it because it's just really just a representative thing

  • that's been made out of nothing-

  • it really shows the dark truth of what underlies this model,

  • the lowest common denominator of orientation and intention.

  • Let me try and explain by giving a brief tutorial

  • about what this type of trading actually is- what people are doing-

  • and why it is sociologically interesting on a few levels.

  • Pattern trading is the art of simply recognizing crowd behavior through

  • charted visual price patterns, over time. These price patterns,

  • once recognized, have a probabilistic resolution in the way they move.

  • In other words, the trade happens when a trader sees the formation

  • of a price pattern, visually, and can intelligently bet

  • on which direction it's going to resolve.

  • This is an odds game and just like a professional poker player,

  • you have to know when the odds are in your favor and when the are not.

  • And when it comes to pattern trading, a disciplined trader is looking

  • for a clean pattern, as I'm showing here with what we would consider

  • a quality 'ascending triangle' on a 15 minute chart,

  • meaning that each one of these little candle bars represent the opening

  • and closing price in 15 min blocks, for a particular share of stock.

  • This pattern suggests a breakout to the upside,

  • however it isn't that good of an odds play in and of itself,

  • even though it's a very nice pattern.

  • The trader also needs to assure that the pattern is occurring in

  • the proper climate, and is supported in what are called multiple time frames.

  • The proper climate is assessed by assuring the broader 'aggregate market'

  • is supporting your bias.

  • It's like a weather system, you want to go with the flow.

  • Generally speaking you want the movement of the related Exchange

  • to support your anticipated move, along with the stock's sector,

  • which is orientation of what kind of stock it is, as far as classification.

  • In other words, if you're trading a technology stock, you want the technology

  • tracking index- meaning the aggregate movement of all other related tech stocks-

  • to support your anticipated pattern resolution- the move-

  • along with the Nasdaq Exchange, as a whole,

  • to make sure that the weather pattern, the tide, is going in your favor.

  • Here on the left we see a 'bottoming climax' pattern,

  • which presents an extended deviation, you would call it, from an average range,

  • in the stock's Exchange.

  • This means we can expect a short term reversal to the upside

  • to gain equilibrium in this time frame, like a rubber band snapping back.

  • On the right, XYZ, the stock that had the ascending triangle,

  • this is its sector, the technology sector we'll say hypothetically.

  • It's showing resilience, as they would say, against that huge bearish down move

  • you saw in the Nasdaq Exchange, and it's consolidated a channel,

  • meaning it doesn't want to go down, which implies upsided bias,

  • which means that there are buyers supporting it, waiting for the tide to shift,

  • so they buy it and send the stock up which is what you want.

  • Or the sector up, is what you want.

  • And the ideal would be for it to break out of that channel to the upside,

  • with the XYZ stock you are trading, at the same time.

  • Now what does all this mean, psychologically? It is crowd behavior,

  • and people move in droves based on what everyone else is doing.

  • If you are a day trader and the Nasdaq Exchange starts to tank,

  • the crowd is predictably going to start bailing on their long positions

  • (meaning they're buying them) and they're going to get out of it out of fear.

  • However the really interesting part- I'm sorry to bore you with all of that

  • but I think it's important to get a sense of this-

  • the really interesting part is this 'multiple time frame analysis' concept

  • in the stock in question. Market behavior is what you would call 'fractalic.'

  • A fractal is a mathematical result, so to speak,

  • that displays what are called 'self-similar' patterns,

  • characteristic of a fractal, we've all seen fractals-...

  • you see them in nature, the snowflake is a common example.

  • While a tree, the branches, they branch off into smaller and smaller trees.

  • It's self-similar, it's repeating itself, in different ways.

  • Mass human behavior, especially in the arena of the stock market,

  • does the exact same thing. The patient traders are not only looking for

  • A) a quality price pattern as we've seen,

  • B) assuring that the supportive overall market climate (the weather) is good,

  • and they also want to see their position supported in multiple time frames

  • which means, in reality, multiple groups of people focusing on

  • different holding periods, in the same bias,

  • hence the creation of self-similar fractal patterns.

  • In other words, time frame doesn't matter when you're looking at these patterns

  • just like, you can look at a part of a tree and it still looks like a tree,

  • if you zoomed in on it you wouldn't know how big it actually was,

  • even if it was a branch.

  • So you can have any time frame in an active stock from a one minute chart

  • to a yearly chart, and they all look the same.

  • It's actually quite fascinating and interesting.

  • Now clearly I'm not here to teach you how to trade,

  • but I want to make sure you have a basic understanding of what's happening

  • under the surface and why, and what people are doing,

  • as it will become more relevant in a moment.

  • Returning to our example, the 15-minute ascending triangle,

  • So some trader, they find this pattern,

  • they jump to a daily time frame (each bar represents a day),

  • they see what's called a 'Inverse head and shoulders' (it's just a pattern)

  • broke out in late October, with a first pullback occurring close the neckline

  • (a very positive thing the trader is looking for to buy).

  • So then we jump to the 120-minute chart (each bar representing 120 min),

  • which is a close up of what is shown in that red circle,

  • shows a smaller channel breakout from the first pullback,

  • with its own tiny consolidation flag- another bullish thing you want to see,

  • another signpost of upward bias (that's on the far right of that 120-min chart)

  • and that's what you're actually seeing in that 15-minute chart,

  • with the ascending triangle.

  • Now we could even go down a timeframe in this fractal geometry

  • to see if there's a supporting bias in crowd behavior, say the 3min chart.

  • If the bias is supported, then that's great,

  • not that it's that particularly relevant because it's a smaller timeframe.

  • And yet we find a nice little mini-continuation flag it's called-

  • you can see the flag pattern- positive bias.

  • Most traders would look at this and they say "Hey this is great!

  • We have climate support; we have multiple timeframe support,"

  • and we buy this 15-minute breakout, as it

  • moves out of the ascending triangle and the probability gods

  • give you a profitable move in your favor.

  • 'Wow!'

  • That is what people are doing,

  • in the world, to make money!

  • A lot of them!

  • Now, the point here,

  • I like this concept, I want to get into the fractal element too

  • because I think philosophically and scientifically if you're kind of

  • a sociological science geek like me, you might find this interesting.

  • In fractal geometry, a mathematical equation is set up

  • which creates the fractal, it basically feeds the result of that equation

  • back into the equation, over and over and over again;

  • that's why it produces that crazy fractal pattern.

  • These are called iterations;

  • the feedback loop is what's the result of the iterations,

  • and that creates the pattern. So the iteration, every time it keeps moving

  • it generates a larger feedback loop that continues.

  • So what is iterating to create the mass-decision feedback loops

  • that are creating these price patterns?

  • What is the input and output, so to speak?

  • The answer is fear and greed-

  • fear of loss, and excitement for gain-

  • which are perhaps the most psychologically predictive of all human emotions,

  • going back to Rachel's talk.

  • If you want to see someone behave predictively,

  • get them really greedy or get them really afraid, and odds are

  • you're gonna see something repeat over and over and over again.

  • The patterns are self-similar in various time degrees because again,

  • different groups of traders have different holding periods,

  • and each are focusing on different time frames at once,

  • engaging this fear and greed mechanism.

  • So the feedback loop is driven by people seeking to gain,

  • creating this mass interwoven iteration cycle through fear and greed -

  • predictable chaos if you ever study chaos theory,

  • which is basically what this is all about.

  • And the real reason I'm bringing all of this up is because sociologically,

  • economically, and historically, this whole thing has to do

  • with a notion called 'utility.'

  • I'm using the term utility in the economic and game theory context,

  • not the broad philosophical idea of utilitarianism,

  • which is much more vague and rather convoluted.

  • Utility just means usefulness,

  • the ability of something to satisfy needs or wants,

  • and the stock market as a adaptation or variation

  • of the buying and selling premise of capitalism, for the exact goal of profit,

  • presents perhaps the most raw, stripped away,

  • utilitarian behavior you can possibly find.

  • These proxy markets exhibit no input variation outside of the game's focus,

  • and hence they represent a kind of purified microcosm

  • of the idealized market incentive, the behavior that's anticipated,

  • behavior that's wanted, the behavior that's expected,

  • when it comes to our preference choices,

  • not to mention embodying the idealized intent- the pursuit of profit, right?-

  • which, as many classical theorists still believe,

  • creates social progress and improves public health by proxy,

  • meaning progress is actually, in this model, a mere byproduct

  • of the true motivation of seeking simply income and gain:

  • the driving incentive.

  • It's a proxy system; everything we have is auxiliary.

  • The system is not designed to create.

  • Even more interesting is how this 'naked' version of the market

  • has revealed itself over time.

  • It is perhaps the most profitable institution on the planet,

  • meaning the financial sector overall,

  • which has nothing to do with anything

  • that actually helps people again in a direct sense.

  • I would use the word 'decoupled' here, as I have before,

  • but it's not really accurate.

  • The market is actually just becoming more minimized and concise,

  • more efficient with respect to the true intention of market logic as a whole,

  • its driving true driven premise; the abstraction becomes reality.

  • And just to assure this adaptation is very very clear,

  • let's walk through this crudely, as far as the evolution.

  • We came out of the Neolithic revolution,

  • moving from simple hunting and gathering, to processing agriculture,

  • and controlling nature to increasing degrees.

  • We begin to make better tools,

  • noticing some people have superior abilities than others for certain functions,

  • so labor specialization naturally evolved, through talents

  • if you want to use that term.

  • Mediums of exchange naturally developed to bridge trade between these specialists,

  • who would prefer to focus on their craft, and not worry about anything else.

  • This led to the use of merchants to bring their goods to public market centers

  • and help distribute items through trade,

  • hence creating a new class of middlemen, who made profit

  • off of helping the process of distribution.

  • This new merchant class begins to see that they make money from just trade itself,

  • the trade issue- whatever they're actually trading, the good-

  • really becomes secondary.

  • The purpose of trade utility becomes decoupled in this light.

  • The new value sought is the medium of exchange,

  • not the purpose of any good or service.

  • By the late 19th century, companies routinely go public,

  • listed on exchanges (stock market),

  • dividing representative certificates or shares, of the company,

  • usually providing dividends or percentage payments to those who own them,

  • coming out of their actual income, coupled of course with that

  • speculative value generated by those do who wish to trade the shares.

  • That was considered secondary in the early stages.

  • But over time, dividends and other direct payments based on true company income

  • take a back seat to the speculative aspect,

  • which grossly overshadows everything.

  • At the same time, what do we see? We see raw commodity cultivation-

  • true production- get turned into these things called derivative futures,

  • where the value of raw materials can also be gambled upon now,

  • with the true value of those resources being manipulated, completely,

  • and decoupled from everything you that would consider economic

  • and supply and demand in a tangible, classical sense,

  • lost to the whim of the madness of crowds in speculation,

  • along with most recently the floating currencies now

  • that have taken over everything, which draw value, in part,

  • simply by comparing the power of trade occurring

  • in different currencies across the world.

  • And of course, by the modern day, now,

  • trillions- hundreds of trillions!- in speculative derivatives of all kinds,

  • investment vehicles made up out of thin air by investment bankers,

  • dominate the world economy,

  • utterly and completely ignoring everything that actually has any true relevance

  • to public health and human progress.

  • And the trend of this 'financialization' as it's being called,

  • is only getting worse.

  • Why?

  • Because the real 'goods' market-

  • meaning the actual assisting, life-support tangible creations-

  • is running out of steam, to keep money moving.

  • Things are getting too technically efficient,

  • and the traditional market is slowly dying.

  • Wages are lowering, and the stock market is soaring.

  • The financialization of the global economy, in part,

  • is a consequential result, believe it or not, of technological development,

  • and technological unemployment, which has been changing society,

  • since the beginning that you could consider anything to be technological.

  • That's how our values and structures continue to change

  • by the impression of technology.

  • And the market today has no idea what to do,

  • to keep this economic growth going.

  • So now? What's happening? It's broken down.

  • It's being reduced into its core utility, its core function,

  • the narrow game based on the pursuit of profit,

  • no matter what the means of obtaining that profit really are.

  • And this tendency was always there- that's one of my main points-

  • it was always under the surface of this system.

  • It's not a crude deviation that we can pull back the reins.

  • It just took this time- this much time- to mature.

  • Part Two- Rational Imbalance

  • Now with that in mind, let's now shift gears a bit,

  • and consider what's left of our traditional market:

  • the actual buying and selling of raw materials, consumer goods, labor,

  • the seeking of cost efficiency, and essentially the overall interplay inherent

  • in the competitive system, theorized of course as the free market,

  • still considering this theme of behavior though.

  • As a brief aside, I'm well aware that there's a huge subculture that would complain

  • that the world today does not operate at all with respect to true free-market principles,

  • as per the lassez-faire ideal of a completely unregulated market.

  • 'Free market' is defined as an economic system in which prices and wages

  • are determined by unrestricted competition between businesses,

  • without government regulation of fear of monopolies.

  • And in the context of this accepted definition, they are correct,

  • this theory holds true. But let's be realistic, shall we?

  • Saying the free market is unrestricted competition between businesses,

  • without government regulation or fear of monopolies,

  • is like saying ultimate fighting is defined as unrestricted fighting techniques,

  • except for biting, eye poking, and groin kicking.

  • [Laughter]

  • The truth of the matter is that there has never been,

  • and there never will be, a free market by this idealized definition,

  • because it is underscored by one massive continuum fallacy,

  • drawing lines that don't actually exist, morally,

  • which make it functionally impossible.

  • A continuum fallacy is the acknowledgment that two states or conditions

  • cannot be considered distinct because between them there exists

  • a continuum of states. And as per my usage,

  • the continuum is linked to the principle of open, free competition,

  • and any lines drawn with respect to where competition starts and ends

  • in 'free exchange' is absolutely arbitrary.

  • While it is perfectly acceptable to create a car, advertise it,

  • price it competitively against other producers in the interest to

  • strategically take market share from your competitors, in your genre,

  • through differential advantage and the like,

  • apparently, according to free-market purists, to create a car,

  • create a political lobby to finance the favoring of that manufacturer

  • in the international arena by some means,

  • enabling differential advantage through a government-sanctioned export monopoly

  • that restricts other producers- is not okay.

  • But wait!-... If the free market says that we should be free to

  • buy, sell and compete without regulation, then why can't I buy legislation

  • to assist my purpose of competitive advantage?!

  • [Laughter, Applause]

  • And if you're one of those people that says the problem

  • is simply because the state exists at all,

  • well I have one word for you: Mafia!

  • [Chuckles]

  • We have had many many centuries of so-called criminal muscle,

  • forcing their commercial will through violence and coercion.

  • How do we resolve such a clear and present propensity?

  • Well, I guess we could make rules or laws that deter such behavior

  • through punishment, right? But who's going to enforce those laws... the state?

  • And of course you could be like Milton Friedman and declare

  • "Government should be a referee, not an active player."

  • But again, aren't we forgetting that government actually is a business?

  • And since the very start of its inception, it has derived its membership

  • from the pecuniary or business culture, almost explicitly?

  • Saying government is simply not to get involved when the underlying ethos

  • and overall interaction is exactly the same as a company,

  • as the interests of those that comprise the government come from that same genre -

  • it's like telling a hungry dog not to eat your food when you leave the room

  • even though it's sitting directly in front of him.

  • So I really hope- and I hate to drill this in- but many well meaning activists out there

  • (I know it's not in this culture, but those who watch this, that still believe this)

  • they begin to get past this idea.

  • And what I want to do further in this section is show that even if you had

  • a theorized, pure free market, with such high moral integrity

  • of the population- meaning that they really did stop collusion,

  • they wouldn't allow state interference,

  • they wouldn't use the state for any purposes as such-

  • and they forced a total market arena of pure competition

  • in a strict game board structure,

  • the idea that the system would actually result in ethical results,

  • as per our most commonly, again, assumed assumptions of ethics,

  • or any form of equilibrium, meaning...

  • eliminating inequity, or full employment, or fair and balanced wage spectrums,

  • this is also provably false.

  • And the reason for this, as I will explain,

  • [is] no matter how ethical, or humane, or eco-friendly you think you are being,

  • the market's central behavioral reinforcers- its core game mechanisms,

  • going back to the stock market, and what it rewards-

  • will always create a larger order climate of deprivation,

  • the desperation of it the effect that, we cannot be stable

  • because it's always moving things around,

  • in the sense of moving poverty around, moving this imbalance

  • of suffering around in different ways, as I'm going to explain.

  • And the forces predictably bend the threshold of the idea of ethical greatly

  • by traditional standards. So ... the problem isn't ethics at all,

  • the problem is this rational choice mechanism

  • that dictates the necessary gaming strategy,

  • something that I'm going to reduce to the term 'Competitive self-regulation.'

  • I define Competitive self-regulation as the causal,

  • resulting, and adaptive mechanism that guides and shifts ... rational decisions,

  • based upon the logic of seeking and maintaining success in the marketplace.

  • It is the same mechanism praised by the Chicago, Austrian schools,

  • the Ayn Rand acolytes, and many other market schools who also claim,

  • that a pure free market will simply not allow monopoly,

  • cartel, and power consolidation.

  • As I will explain, this mechanism- competitive self-regulation- is inherently myopic,

  • too truncated in what it is capable of facilitating, to create

  • any type of true social balance - it can't see it.

  • It just keeps moving the problems around in a massive chain reaction

  • as the game unfolds.

  • So I want to begin this explanation with a very generalized example...

  • Meet Jeff. He owns a T-shirt store.

  • He also has great faith in the free market.

  • He orients his actions based around the mechanisms of this

  • 'competitive self-regulation,' meaning again,

  • as per the theory of a true free market, this regulation

  • is not legislated by some power, it is considered built into

  • the market's defining logic, coming from the mutual, competitive interest inherent,

  • in the entire aspect; everyone fighting at once.

  • Jeff needs inventory, so he purchases his shirts at bulk rates,

  • with his decision on what to buy, price-wise,

  • based on the price competition coming from other T-shirt stores in his region,

  • assuring of course his customer satisfaction as best he can,

  • via competitive association.

  • Likewise, he has about 5 employees, which he honestly cares about.

  • He hangs out with their families, he wants nothing more than to see them be well.

  • He derives their pay, competitively of course,

  • to assure that they do not find a better wage at another store and leave,

  • while also knowing he has to keep a viable margin to support his business overall.

  • Jeff is also socially conscious in the traditional sense.

  • He is aware of problems with pollution, resource overshoot,

  • and common environmental issues on the planet,

  • and considers himself eco-friendly, doing his best to be earth friendly;

  • he recycles religiously, he even rides his bike to work everyday

  • to help try and reduce CO2 pollution.

  • Now let's assume everyone in the world had Jeff's mindset,

  • 7.3 billion Jeffs,

  • which believed again, in the market as the director,

  • the orienter of proper societal action, through the free system,

  • through free enterprise and competition, through the pursuit of profit.

  • They're not being greedy, they're not being corrupt in any traditional sense

  • that we tend to define it.

  • In this case, would it work out? What would the end result be?

  • Would the global market achieve full employment,

  • humane working conditions, a relatively high standard of living

  • and a generally balanced and equitable society?

  • Well, a logician would tell you that you have to model it axiomatically,

  • setting the market parameters in motion to see how the equation finds results.

  • And I'm sure there are plenty of utilitarian, game theory equations out there

  • that have tried to do this - to prove, in effect,

  • how the invisible hand of Adam Smith would actually unfold.

  • However, as I will explain, this isn't actually needed,

  • in order to infer a highly probable expected result.

  • All you need to understand is that the market's vocabulary, again,

  • is simply too limited to account for the vast range of offsetting "externalities"

  • that result as either a natural byproduct of the mechanistic logic inherent,

  • or as a result of something completely unrelated, or unforeseen.

  • And those results invariably create a survival deficiency in some way,

  • A deficiency which puts pressure on the individual, desperation,

  • or on a company, to rationally reduce their ethical and moral standards,

  • in order to overcome the deficiency at hand.

  • Deprivation, natural disasters, resource overshoot, scarcity,

  • pollution, homelessness, disability, species extinction, climate destabilization -

  • I think we all know what externalities are.

  • And they are simply unrecognized. Why? Because the market

  • cannot rationalize anything that can't be turned over through money.

  • And it certainly can't rationalize anything that has an interest to slow consumption.

  • The result is an ever-mutating chain reaction each time one of these issues arises,

  • interfering with the so-called market efficiency,

  • as it sends a shock wave through the system, altering behavior,

  • if you can visualize this.

  • This is why when you back any market economist into a corner on the issue,

  • all they can resort to is one solution:

  • charity and volunteering to solve external problems.

  • They have no other 'rational' option, as the market game can only service things

  • that enable financial exchange; again, if that isn't available, it won't happen.

  • The best way to demonstrate this is to continue my example.

  • As stated, Jeff purchases his shirt inventory at bulk rates based upon

  • staying price competitive with other shirt stores in town,

  • assuring satisfaction by competitive association.

  • So two questions arise:

  • A) What is the ethical integrity of his labor?

  • or the labor of the shirts, I should say,

  • and B) What is the ethical integrity of the materials?

  • With respect to labor, it just so happens that a few years back,

  • a typhoon hit the coast of Thailand, damaging its industries.

  • Now with limited means to keep money flowing in the local economy,

  • and with little to no help from any financial establishment since, again,

  • state intervention is deemed an interference in this world,

  • a Western company which, consequentially,

  • has had massive losses ... due to a lawsuit, losing lots of money,

  • they decide to offer contracts to this vulnerable society to manufacture clothes.

  • And the only way this company can stay afloat

  • is to offer 12 cents an hour for a 10-hour work day.

  • This community in Thailand,

  • of course, has no other recourse due to their misfortune,

  • so they voluntarily agree to accept these low wages.

  • Again there's no internal state intervention or regulations to assure

  • healthy conditions of the factory, and the market, in its most pure form,

  • only sees 'competitive cost efficiency' in that scenario.

  • The results are of course poor conditions, poor health for the workers,

  • and the community who are barely able to survive on the wages in general.

  • Back to the hiring company again, we don't want to demonize them-

  • are they being exploitative? Actually no, it's not an issue of greed.

  • They are trying to recover from a major lawsuit, an externality once again,

  • like the typhoon, and they're short on funds, and they're backed into a corner;

  • they have 500 employees to feed.

  • Then there are the shirt's materials, and let's assume assume cotton.

  • As some may know, in reality, the US today still dominates the cotton market globally,

  • and any of you who have clothes say, made in China,

  • odds are that cotton actually came from the United States.

  • So as it turns out, the shirts from Jeff's store are not only being made

  • by sweatshop labor in Thailand,

  • by desperate people who have no recourse but to submit, voluntarily,

  • to work for very poor wages,

  • the cotton they are using was brought in on a shipping container

  • coming from the US traveling over 9000 miles,

  • one way, by combustion power.

  • As it turns out, in reality, one of those shipping containers, on average,

  • has been found to pollute as much as 50 million oil-powered cars in one year.

  • Why aren't US companies just making these shirts themselves,

  • if they have the cotton, perhaps even alleviating

  • the growing unemployment epidemic?

  • Well because again, as for the laws of market efficiency,

  • the competitive self-regulation, the same mechanism that generates

  • the savings appreciated by Jeff's ... T-shirt consumers,

  • it is cheaper to ship cotton 9000 miles away,

  • burning an enormous amount of fuel and damaging the environment greatly,

  • have it made by slave labor, essentially,

  • [then] sent all the way back to Jeff in the United States.

  • And the logic perfectly follows the standards set by free market principles.

  • Then there are Jeff's employees.

  • It just so happens that Jeff lives in a town where unemployment has been growing,

  • mainly due to the automotive manufacturing that used to be there,

  • once the pillar of employment in his region.

  • And it has been either moved overseas, or it's been replaced by

  • machines through mechanization,

  • the factory dropped from 500 people to say 30 people;

  • the intention of that circumstance equally follows the laws of the market,

  • because of cost efficiency: exporting the labor or using automation is cheaper.

  • In this climate, the cost of labor,

  • it has been dropping, and now there's a labor surplus in town, in Jeff's town.

  • This translates into a loss of purchasing power as well,

  • with fewer people in his town buying things, and consequently,

  • Jeff then starts to notice his competitors reducing their paid wages,

  • and reducing their T-shirt costs as a result as well,

  • forcing- guess what?- him to do the same in order to survive and keep up.

  • Since people will work for less and less, workers also have no recourse

  • but to submit to these lower wages to feed their families,

  • if they can at all. Suddenly,

  • Jeff finds that he's paying base wages to his employees which he cares about.

  • Some of these people have college debt, some have medical costs,

  • they're taking care of sick parents... Jeff's doing the best he can,

  • even though the quality of life of his employees have dropped to subsistence.

  • Now as you can imagine, in this broad hypothetical,

  • I could continue this example in many many causal directions,

  • but I think you get the point. At no time is anything in play

  • except the dynamics of the market, as it is theorized by its proponents.

  • And what disturbs this balance is anything

  • that begins the trend, essentially, of deprivation:

  • the externalities that it doesn't recognize.

  • So I ask you, can we seriously consider Jeff as being ethical

  • when sweatshop labor is making his shirts?

  • Can we seriously consider Jeff as being eco-friendly,

  • when the materials of his shirts are being carted around the world

  • 18,000m round trip on one of the most polluting transport mediums in existence?

  • Can we seriously consider Jeff as being humane

  • when he is a proprietor of a store that pays his employees

  • the most base wage and they're barely able to meet their needs?

  • Obviously, it's a trick question.

  • Because it assumes isolated behavior and free-will decisions,

  • absent external forces and pressures that inhibit and alter our behavior.

  • This is also why the idea of 'voluntary trade' is an empirical absurdity.

  • Can Jeff decide not to buy those shirts made by the sweatshops?

  • Let's assume he tried. He bought American-made shirts,

  • and it resulted in a 30 percent markup.

  • This would mean that the consumer would have to

  • have the same ethics as Jeff; they'd have to have the green ethic

  • and say "Oh, I'm not gonna buy this cheap shirt because

  • I know how it's made and where it came from,

  • I'm gonna go to this store over here." So it assumes they're willing to pay up.

  • Yet, in America today,

  • still deemed the highest standard-of-living first world nation,

  • 50% of all Americans don't have enough in savings to go three months

  • without employment. While another study found that the average household debt

  • is about $225,000 now, and many having less than $500 in savings.

  • Do you think the first concern of most of these people is sweatshop slavery?

  • No. Personal survival comes first, needless to say.

  • You see, caring is an inconvenience.

  • If you want to care about the world, you have to have the freedom

  • and the ability to move around in a certain way:

  • the luxury of caring, in this system.

  • And have you also noticed, on that note,

  • that all of the 'green' products you see in stores-

  • everything that's supposed to actually help health and be sustainable

  • in the environment- are usually 2 to 3 times the price of normal goods?

  • Apparently you have to be wealthy to be a socially conscious consumer.

  • The bottom line- and I'm sorry to run this abstraction into the ground-

  • is that an "ethical equilibrium" [is] mathematically impossible,

  • state interference or not.

  • The market simply cannot see or resolve the externalities

  • that occur outside the board game,

  • or even as a result of its own creation.

  • Hence the idea of a clockwork market oriented

  • competitive self-regulation,

  • finding equilibrium in wages, employment, and ethical standards,

  • is structurally impossible.

  • Part Three- Revolution by Design

  • I've had to shorten this due to time, but I think I get to the point.

  • TZM Activism and Projects, I want to address very briefly.

  • The role of chapters.

  • What are quality projects and how do we think about

  • what has true merit and what doesn't?

  • Being here today, it seems there's different ideas about what a project is,

  • so let me define a project based on my own terms.

  • A project is basically anything that your doing that

  • is viable to support the interests of the Movement.

  • Now, that's a gray area to a certain degree but it's also

  • a matter of focus and a matter of how dedicated you really are

  • to the mission of the Movement.

  • In the past six years there's been plenty of discussion

  • regarding what it means to promote this work,

  • as far as day to day activism, both globally-

  • meaning what the Movement is defined as, as a single unit-

  • and what activism means in the context of regional or local chapters.

  • The first thing I'd like to state is that the thesis of TZM hasn't changed since day 1,

  • regardless of its original association with The Venus Project upon startup.

  • We are an educational movement, working to show the world

  • what is possible for the future, working to get humanity on the same page

  • through a common ground relationship of needs and sustainability,

  • and to help facilitate developments towards the implementation and transition

  • into a Natural Law Resource-Based Economy (NLRBE).

  • The chapters, in truth, are agents of this message,

  • sharing the common view globally, and it's very important to keep this focus.

  • It's natural for chapters to grow, and to forget sometimes,

  • that they are a part of something, and TZM's structure was based really on

  • the Civil Rights Movement orientation, where everything is moving

  • in the same direction, but they're just in different locations,

  • so they can affect people in their local community and inspire change,

  • in their own ways, locally. We are the transition, in other words,

  • whether we're one unit or we're the entire planet.

  • And I don't mean that poetically... half a million people are subscribed

  • to our newsletter, and the millions of quiet supporters

  • that watch the Movement from afar,

  • and believe me there are a lot of them hiding in the woodwork!

  • They're all engaged in this value shift one way or another,

  • and this is really the first step.

  • And the bottom line is that we need global unification towards a single,

  • clear, and obvious direction for human progress.

  • And when you think about projects, you have to think about

  • what it actually means to move forward:

  • projects in the sense of anything that has to do with activating

  • the train of thought and engaging others.

  • Are we working together in the proper synergy? is the question

  • I think about when I look at chapter activity.

  • Do we sense that all the chapters are really sharing the same view?

  • Are we unified in the common goal?

  • And of course, we all know activism is about communication,

  • and who are most prone to this message?

  • Other activists, naturally, right?

  • I would never put down any chapter that decides to say,

  • do soup kitchen help, put up the flag of TZM while helping others,

  • sharing this worldview with the staff, and other activists that are helping,

  • to help others.

  • This is a brilliant way to actually bridge communication between

  • this other large massive community around the world

  • to say that "We are also here, we also want to help,

  • our ideas might seem radical to you but give us a moment,

  • and you might begin to see the error of your ways,"

  • and see that we have to begin to look at this in a root change orientation.

  • We can't keep the patchwork going.

  • And I think the other activist communities are

  • really the central hub of how this Movement can spread.

  • [Applause]

  • But in the end, if you're going to use the term 'projects'

  • the only real projects at hand are educational and awareness projects,

  • and that's not all talk, either.

  • The next logical stage, in my view- and I've been pushing this

  • for a little while because I think it's extremely applicable-

  • are 'virtual design initiatives' :

  • models and programming that embrace the intention and dynamics

  • of the sustainable revision proposed, as best we can, in reduced form.

  • (there's not a lot of resources, people are volunteers, what have you)

  • But we need to create this world artificially, show its potential, test it,

  • and I am going to address two important ones that I think can be very helpful.

  • The first one as I mentioned in other talks is called the Global Redesign Institute.

  • The Global Redesign Institute is a macro-industrial design initiative,

  • which virtually removes all topographical, infrastructural attributes of society,

  • digitally- an interface that people can engage-

  • and works to replace them, with actual optimized means.

  • It's macro-economic in the sense that we're not talking about how to build 'this,'

  • we're talking about how to construct a really efficient layout

  • that actually serves the population, where energy is, and so forth.

  • It's a systems-theory approach, and it does not, of course,

  • observe human contrivances such as countries, property rights,

  • and other artificial inhibiting factors that exist today.

  • To do this, we need to create a programming project

  • that can slowly layer it out. There are a number of data services already out there,

  • so my goal is to try and get people into a good developers team

  • and begin to construct this thing. And the hope is to have something

  • refined and online for public contribution say in the next year or two.

  • It's not an easy project to do, to do it right, with the proper programming.

  • So anyone listening this you can contact media@thezeitgeistmovement.com

  • if you think you can contribute, to this type of approach.

  • (API understandings, things like that)

  • And the next, very briefly, is the Collaborative Design System interface.

  • This was initially presented in the Berlin talk,

  • 'Economic Calculation in a Natural Law Resource-Based Economy'

  • I did in November, it's also detailed in the book.

  • It's this mechanism creation, that is not easy for the general public to understand-

  • it needs to be literally programmed algorithmically-

  • but it's a filter, an AI regulatory filter that takes into account the

  • efficiency and sustainability protocols that we have talked about at length,

  • things that the economic structure needs to understand directly.

  • The goal is to create code for this in a reduced form.

  • This can be done in an open source setting, once again,

  • if you have an interest to be a part of this, please email us,

  • again at the same email.

  • A realtime interface would be created in a minimized form;

  • we'd go to conferences like this or you go to other activist conferences,

  • you stand up at a conference and say "Boom! Look at what we've created!"

  • Here's a regulatory filter that can assure efficiency and ecological balance,

  • taking into account all of the issues that are happening in the economy using

  • technology that we know works today,

  • bypassing the market, the price mechanism with amazing precision

  • in a democratic design and contributive environment.

  • And finally,

  • there's a new iOS- eventually Android- app that will be done in a few weeks,

  • and I have the beta on my phone and it's very nice.

  • And apart from embracing the basic website, RSS feed, network and push notifications,

  • it will allow all users who have it, to contact anyone else who has it,

  • globally, hopefully in about in 15 languages, further unifying the Movement

  • in your pocket. It will be free, of course,

  • and that's it for me, thank you very much.

  • [Applause]

Origins and Adaptations Part II Peter Joseph, ZDay 2014, Toronto

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