if everyone went bankrupt

[lemur]

When some people go bankrupt and others don't, those who don't tend to look down on those that do, feel pity, or otherwise distance themselves from the poor. So if everyone went bankrupt at the same time, would they all feel respect for each other's poverty or would they just seek some other basis for viewing some people as having truly earned their poverty and others being unwitting victims of their situation?

[rktpro]

Interesting situation. If all went bankrupt, it would cause a sudden global poverty. In this situation, would purchasing goods and commodities wouldn't be possible.

Hey wait a second. If all went bankrupt then where will the money go?

[lemur]

Interesting situation. If all went bankrupt, it would cause a sudden global poverty. In this situation, would purchasing goods and commodities wouldn't be possible.

Hey wait a second. If all went bankrupt then where will the money go?

It would all go into my bank account and I wouldn't spend a penny.

[rktpro]

It would all go into my bank account and I wouldn't spend a penny.

 

Situation 2

If all money goes into your account, you would be made to spend money.

[lemur]

Situation 2

If all money goes into your account, you would be made to spend money.

Why? By taxes? What if I figured out a distribution scheme where I only spent it in ways that it wouldn't get spent? That way I could ensure that no one got a penny.

[rktpro]

Why? By taxes? What if I figured out a distribution scheme where I only spent it in ways that it wouldn't get spent? That way I could ensure that no one got a penny.

 

People would go bankrupt but not out of goods. You would have to buy goods from them. Though, it would be cheaper because of competition.

Edited June 1, 2011 by rktpro

[lemur]

People would go bankrupt but not out of goods. You would have to buy goods from them. Though, it would be cheaper because of competition.

So would that be enough money for them to create a viable economy? Or would they continue to be dependent on my spending?

[rktpro]

So would that be enough money for them to create a viable economy? Or would they continue to be dependent on my spending?

 

They would continue to be dependent on your spending. It is practically impossible to create an economy in such a circulation of money. It would create riots and deaths. If this happens, you should do some charity.

[lemur]

They would continue to be dependent on your spending. It is practically impossible to create an economy in such a circulation of money. It would create riots and deaths. If this happens, you should do some charity.

I would not. I would expect people not to harm each other just because they didn't have money. I would question them for rioting and starving each other, even while they were giving me the blame for hoarding currency. Who would be right and why?

Edited June 1, 2011 by lemur

[John Cuthber]

We invented money once; if it all went away then we would probably invent it again.

It's just bits of paper or metal trinkets.

 

I did once before point out that the transfer of money isn't actually important.

Imagine all the money went away but nobody cared. People still went and did their jobs. The farmers grew crops, the shopkeepers ordered goods and people came and took stuff from the shops.

Everything the same as today, but without money changing hands. (I'm not sure what the bankers would do but, to be honest, I'm not sure what they do now).

[lemur]

We invented money once; if it all went away then we would probably invent it again.

It's just bits of paper or metal trinkets.

 

I did once before point out that the transfer of money isn't actually important.

Imagine all the money went away but nobody cared. People still went and did their jobs. The farmers grew crops, the shopkeepers ordered goods and people came and took stuff from the shops.

Everything the same as today, but without money changing hands. (I'm not sure what the bankers would do but, to be honest, I'm not sure what they do now).

What you say would work if people all followed Marx's communist principle of working as much as you can and taking as little as you need. People would build tractors and give them to farmers because they wanted everyone to have food. Metallurgists would make metal and parts for the tractors because they new the tractor-builders would build the best tractors possible and give them to good farmers. The farmers would give the food to distributors who would distribute it with the least waste. Everyone would discuss how they could put their labor to work in the most effective and efficient way. The goal would not be money-making but simply maximizing good, although it would probably be debated what constituted "maximum good."

Edited June 1, 2011 by lemur

[michel123456]

We invented money once; if it all went away then we would probably invent it again.

It's just bits of paper or metal trinkets.

 

I did once before point out that the transfer of money isn't actually important.

Imagine all the money went away but nobody cared. People still went and did their jobs. The farmers grew crops, the shopkeepers ordered goods and people came and took stuff from the shops.

Everything the same as today, but without money changing hands. (I'm not sure what the bankers would do but, to be honest, I'm not sure what they do now).

 

Interesting. I personnaly would go to the best suite in the Hilton, then the next morning go for a trip upon the best available yacht, drinking champagne and eating caviar. But you would go to work of course, eat a sandwich, then go to the grocery buying a salad and 2 cans of cheap beer for the evening (I will go the Crazy Horse in Paris by helicopter).

 

When some people go bankrupt and others don't, those who don't tend to look down on those that do, feel pity, or otherwise distance themselves from the poor. So if everyone went bankrupt at the same time, would they all feel respect for each other's poverty or would they just seek some other basis for viewing some people as having truly earned their poverty and others being unwitting victims of their situation?

 

Chaos would appear. All situations possible. No respect of laws. Far West.

Usually dictatorship is the next step as a mean to bring order again.

[Marat]

I once read an internal memorandum of the Prussian government discussing the problem of inflation in the early 18th century. The King was reassured when his ministers told him that most of the population would not be affected, since the majority of people were not really part of the money economy. Thus contracts of employment usually specified tangible things you had to be given or privileges you had to collect your own resources from the environment, rather than actual monetary payments. The famous philosopher Immanual Kant, for example, was paid in part by a yearly provision of wood for heating his house rather than by the money for it, just as country doctors used to be paid in farmers' produce. I suppose we could revert to a trade and barter economy, though there would be enormous disruptions, given that speculation and borrowed wealth cannot be well represented in that system.

 

There was a situation suggestive of everyone going bankrupt at once when the Great Depression occurred in the U.S. and other Western economies. The reponse of people was to accept increased social solidarity rather than, as now happens when just a few people go bankrupt, reacting to the unfortunate with contempt.

[jackson33]

When some people go bankrupt and others don't, those who don't tend to look down on those that do, feel pity, or otherwise distance themselves from the poor. So if everyone went bankrupt at the same time, would they all feel respect for each other's poverty or would they just seek some other basis for viewing some people as having truly earned their poverty and others being unwitting victims of their situation? [/Quote]

 

lemur; Over the history of the Worlds Nations, many societies have simultaneously gone bankrupt, at least since the "Barter Economical System" has diminished, their money simply lost all value.

 

However, I believe your trying to victimize those that today file for bankruptcy by those that might not and for all practical purposes "poor people" rarely file, nor do I believe there is any stigma to most any that for whatever reason do file. Generally in today's climate, people, families, business or even Governments under estimate current or future incomes to expected incomes or revenues.

 

What you say would work if people all followed Marx's communist principle of working as much as you can and taking as little as you need. People would build tractors and give them to farmers because they wanted everyone to have food. Metallurgists would make metal and parts for the tractors because they new the tractor-builders would build the best tractors possible and give them to good farmers. The farmers would give the food to distributors who would distribute it with the least waste. Everyone would discuss how they could put their labor to work in the most effective and efficient way. The goal would not be money-making but simply maximizing good, although it would probably be debated what constituted "maximum good." [/Quote]

 

Aside from "incentive" to actually voluntarily produce products/services, where would the money for that production come from. Marx believed in a central control of all business activity through Government, but this has always failed when that Governments source for money has been exhausted. People by nature want to succeed (incentive), but once that advantage (success) has been lost, they will not produce.

[lemur]

Aside from "incentive" to actually voluntarily produce products/services, where would the money for that production come from. Marx believed in a central control of all business activity through Government, but this has always failed when that Governments source for money has been exhausted. People by nature want to succeed (incentive), but once that advantage (success) has been lost, they will not produce.

I have the idea that Marx idealistically believed that if everyone would take only what they needed and produced whatever they could to maximize goodness, that factories and farms would all supply each other with the necessary production inputs/ingredients. If they did that, there wouldn't necessarily be any need for a balance sheet, but it is of course an ideal that could easily result in mismanagement and abuse in practice. Still, people who think of money as some kind of essential ingredient to productivity can't grasp how people who have means of production and the skills and labor to use them could simply work to produce and give their products to the next factory in the supply chain to add further value.

[Edtharan]

For everyone to go bankrupt at the same time, all value would have to be eliminated and all ways of generating value would also have to cease operating (it is essentially an impossible situation).

 

The only way for this to occur, the entire world would have to stop all trading, lending, charity and any interaction. Basically we would have to become totally isolated from every other person permanently (because if, after the "event", you have anything, you are not bankrupt).

 

As rioting requires multiple people, and to get universal bankruptcy requires isolation, we can not have riots. Looting could occur, but as what you take can not detract from anyone and what they take can not detract from you, it becomes meaningless to talk about looters, as theft has to be from someone, and at this point there is effectively no one else.

 

There would also be no poverty as you would be both the riches and poorest person in the world (as there could effectively not be anyone else).

 

What you must remember is it is not money that is the fundamental unit of an economy, but is instead "Value". Money has Value, but Value doesn't have Money. Thus value is a property of money and not the other way around, which means that value is more fundamental than money.

 

In any trade there are 4 values:

A) The value I place on what I have

B) The value I place on what you have

C) The value you place on what you have

D) The value you place on what I have

 

If the value I place on what you have is greater than the value I place on what I have (if A < B), then I am willing to trade.

 

If the value you place on what I have is greater then the value you place on what you have (if C < D), then you are willing to trade.

 

If we are both willing to trade, then a trade can occur.

 

But, because I have an increase of value, and you have an increase of value (A+C < B+D thus increased value), the total value of the system has gone up. Thus trade increase total value.

 

Thus, if I have anything beyond my own needs (even time), that means I can not be completely without value or the ability to increase my value (as I can trade it for something I value more than what I have got).

 

So, what this means is that the value of money could be wiped out, it doesn't mean that there will be universal poverty. It means there will still be those that have a greater means of generating value (the wealthy), and those that don't (the poor).

 

So if interaction is possible, then you can not get your scenario. There will still be the haves and have nots, it is just not likely to be the same as the ones that are currently in those places.

[Marat]

While I generally agree that it would be impossible for all people to go bankrupt at once, given that everything naturally has some value, which would in turn induce trade, which itself would create conditions of non-bankruptcy = prosperity, there is one extreme situation in which universal valueless might occur. That might happen if the world was known to be about to come to an end, so no one would have any reason to set a value on labor or capital.

[John Cuthber]

Michael, I didn't make myself clear. When I said "and nobody cared" I meant in the sense that it affected nothing that anybody did. I'm sure you would care about the opportunity to pig out at the Hilton so you would invalidate that condition.

[lemur]

Interesting posts about the possibility of simultaneous bankruptcy of everyone, but the point of the thread is really just to examine the fact that if a minority of people go bankrupt, they are judged as having failed or otherwise deserved it in some way. Yet if a majority of people, companies, banks, etc. go bankrupt, they are viewed as victims of a systemic glitch that can be fixed by reinjecting (bailout) money into the failed businesses and people and just keep going. So presumably, if the same people who get looked down on when they go bankrupt alone would go bankrupt at the same time as everyone else, they would be seen as having failed by no fault of their own - or by "collective mistakes" that no one was expected to avoid because everyone was approaching things the same way. Even now we see the approach to energy/money conservation that no one has to change the way they do things if no one else does, so normativity is somehow believed to erase the material causalities of economic problems. The continuing belief is that as long as there is money, everyone will be able to get more of it and buy more of whatever they want with it, as if money is the only limiting condition of economic production and consumption.

[CaptainPanic]

If everyone went bankrupt there would be utter chaos and annoyingfights. Just imagine everyone suddenly turning into beggars. =shakes head=

I disagree: If everyone went bankrupt, we would still be trading goods. We would still have money to trade (there's a lot of cash in circulation, which doesn't disappear just like that). And anyway, the debt collectors would be bankrupt too, so nobody would come to collect any debts, meaning that you can spend the cash you have.

 

Undoubtedly, some people's jobs would disappear and unemployment would go up, but we would not all become beggars. And I am not even sure we'd all be so uncivilized that we would be in chaos or fights.

[rktpro]

If everyone went bankrupt there would be utter chaos and annoyingfights. Just imagine everyone suddenly turning into beggars. =shakes head=

 

 

Not beggars. From whom would they beg? Nobody because everyone is bankrupt.

[Leader Bee]

Bankruptcy is clearly a "Made up" notion, value is attached to money but as has been mentioned before almost everything has a value. Before the invention of money i'm sure people traded in livestock and crafted items - ceramics/tools etc which would be a perfectly viable economic system should all money be wiped from existence and infact has been used and continues to be used in remote areas.

 

Take for example remote indian/brazillian tribes with no access to mettalurgy or any kind of minting system; How do they buy things?

 

I imagine the reason "Money" was invented is because an agreed upon value for each different coin brought some stability to the economy, whereas one cow is not the same as another, hand crafted items will never be the same and differ in value/quality.

 

Anything can be used as currency should someone attached an agreed upon value to it and thus as USD,GBP and JPY are primary, secondary and tertiary currencies whatever we decide to use afterwards would be the reserve currency

 

for example: http://en.wikipedia.org/wiki/Shell_money