Venus project is another attempt made by people who look at a market economy from outside, and think they see numerous vestigial elements which they think are not needed anymore, or since they fail to see their utility, consider it restrictive, and then they conclude that they can do better by removing those vestigial elements from a market economy.
Karl Marx did the same, he saw the market being divided into owners and workers, so he came up with Socialism. He saw ownership of means of production has vestigial element. Keynes did the same, he saw Stock market crash and economy not recover so he came up with his ridiculous theories about Keynesianism. He saw Gold standard as vestigial element of the market. And so on Time after time people keep on coming up with theories to fix the market because they all see how Market works from outside, and are unable to figure out why many things exist in the market.
Venus project is the latest addition in this category. They see the monetary system as a vestigial or restrictive element of the market economy. They see how beautifully the market works, and how people provided each other with their labor, but they fail to see the role of money in it, so they propose removal of money from this system.
I have seen the movie ‘Zeitgeist:Addendum’, and I have hung out in Venus Project forums long enough to see what they are proposing.
Resource-Based Economy(RBE) proponents refuse to acknowledge that there is a scarcity of resources – Remember your first Economics introduction, they teach you that economics is “.. the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” RBE proponents refuse to acknowledge that we may not have enough resources.
Why do they think so? – As given as an example on Venus Project’s homepage, they observe:
At the beginning of World War II the US had a mere 600 or so first-class fighting aircraft. We rapidly overcame this short supply by turning out more than 90,000 planes a year. The question at the start of World War II was: Do we have enough funds to produce the required implements of war? The answer was No, we did not have enough money, nor did we have enough gold; but we did have more than enough resources. It was the available resources that enabled the US to achieve the high production and efficiency required to win the war. Unfortunately this is only considered in times of war.
Its obvious that RB Economists see that market sooner or later provides every individual what he or she wants(or they observe war time distortions), and conclude that if an individual could be provided with an iPhone in year 2010, that means we have enough resources even in the year 1776 that Benjamin Franklin could also be provided with an iPhone(its not like the world acquired alien resources in that time). That means there must be something restricting this feasibility, and their conclusion is if money did not restrict people of that time from constantly acquiring new resources, experimenting and developing new technologies then we would have a lot more progress in the world.
Resource Based Economy proponents do not understand law of diminishing returns – The RBE proponents attack diminishing returns as a faulty valuation system. Of course as Austrians we know that even in Eden Gardens where everything is abundant, a man still is going to have the scarcity of time, therefore even in society with no scarcity, a man will have value scales. Because men assign different values to different ends. The reason why I value another car much less than the first one, because I can’t drive two cars at the same time, I can drive only one, and once I have had a car, I would rather prefer to have some other ends achieved. Therefore I value another car as much less than the first one. Third car, even less than second one.
RBE believes that there is something inherently wrong with high values of Diamond, there is no reason why it should cost so much, and 1 oz of water should be of same value(or even more) than 1 oz of diamond. They believe that if we can get rid of these valuations(or they believe this’d happen on its own once we get rid of monetary system), we will not have to worry about diminishing returns anymore.
Resource Based Economy proponents consider scarcity of capital as just that, scarcity of capital – RBE has taken this page off the books of other schools of economics(Keynesian, Montarists) which do not have a Capital theory. A scarcity of capital according to them only represents scarcity of capital, not a scarcity of resources/goods/time. This is probably the biggest reason why they think they can get rid of monetary system and make things work. The fact that we have scarcity of capital because we have scarcity of time, goods, labor or all of these. We are in a recession because our goods have been misallocated and govt is preventing them from being reallocated to more fruitful production endeavors.
RBE proponents only see one timeframe, and one group of people – RBE proponents fail the one lesson of economics Henry Hazlitt taught, The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. They purposefully focus on a very small timeframe(such as war time production of First class fighting aircrats), and only one side of the picture(that the production rose to 90,000 aircrafts a year from only 600 aircrafts a year). When you remove this error, and look at all timeframes not just one, and all groups of people not just one, you realize that they can hardly promise more production in all aspects of economy without a monetary system even when you give them a very liberal leahway.
During oil crises of the 70s when world saw the power Saudi Arabia might have, they threatened to use Food as a weapon against Saudi, so the Saudi government started wheat subsidy program in order to be self-sufficient. Soon Saudi Arabia had so much wheat production that they were exporting wheat to other countries. The RBE proponents see it as a proof that even a desert country such as Saudi Arabia is capable enough to produce all the wheat it needs. But what it cannot see(and which is even more unseen with a lack of monetary system), is the high cost Saudi govt paid to achieve that. Massive resources were directed from other places to grow wheat. RBE proponents have a habit of looking at examples like these, and use them in their advantage.
RBE proponents do not understand economic calculation – Profits are demonized by RBE proponents, it doesn’t mean that they support a loss-making venturing or non-profit venturing(like a lot of leftists do), instead they just refuse to understand what are profits or need for economic calculation. This is actually the hill where their whole theory falls down to pieces, but you will never be able to have a discussion on this topic, because they refuse to acknowledge that scarcity exists. Since they don’t think scarcity exists, and technology can provide them with everything they want, they fail to see why anyone would need economic calculation. RBE proponents do not understand economic calculation because they don’t think we have scarcity of anything, and they don’t understand that we have massive scarcity and whatever we get we get because of economic calculations because they don’t understand economic calculations. So its a cyclical trap.
The list of anomalies and fallacies propagated by the Venus Project is endless. They rely too much on technological solutions and too little on human action or praxeological aspects of their idea. They fail to understand why Socialism doesn’t work(or at least they think it doesn’t work because of lack of human motivation).