Financial Markets are one of several defining traits of life under Liberal Capitalism. They are financial institutions designed specifically to facilitate transactions pertaining to the purchase and sale of Kapital. This form of Kapital refers to the assets of Securities such as Stocks, Bonds, Futures, Commodities, Derivatives, and so forth. Financial Markets are also responsible for overseeing the Forex (‘Foreign Exchange’) of Currencies and more recently Cryptocurrencies. Understanding how they operate is crucial in understanding why they should be replaced with more suitable alternatives during the implementation of the Work-Standard.

Contrary to popular belief, Financial Markets are not reliable gauges for determining what shall be the overall health of any economy. They are at best representations of what ought to be the overall health of any economy. In a sense, this difference is but a well-known example of David Hume’s Is-Ought Problem from the Enlightenment. The Financial Market is driven by the opinionated conclusions of what a select few investors would like any economy to be, rather than demonstrating an understanding of what the state of any economy is and where it is heading. If the Financial Markets claim that the economy is ‘doing well’, then that is their opinion and not a credible representation of actual fact.

There are several types of Financial Markets that currently exist. Each one operates on the dialectics of Kapital Lending/Borrowing. Transactions can be conducted by actual human investors or else automated on the investors’ behalf by special software programs.

• Stock Markets specialize in Stocks pertaining to a stake in the ownership of firms or businesses. To ‘buy’ a Stock is to borrow ownership of firms and businesses for Kapital; to ‘sell’ a Stock is to lend that same ownership of firms and businesses for Kapital.
• Bond Markets specialize in Bonds. To issue a Bond is to lend Schuld (Debt/Guilt) for Kapital; Speculative-grade Bonds are ‘Junk’ while those issued by the nation-state’s Financial Régime are considered ‘Investment Grade’ because the government was guaranteed to pay it back.
• Commodities Markets and their associated Real Estate Markets sell ownership of valuable natural resources and land. They specialize in the outright lending of ‘Assets’ or else the borrowing of Certificates for Kapital. Actual Kapital is lent as actual Schuld for shorter-term financing and investments, reserving the Bonds for longer-term financing and investments.
• Derivatives Markets are the byproduct of technological innovations within the emerging field of financial engineering after the death of Bretton Woods. Derivatives are a form of Kapital whose Value depended on ‘Underlying Statistical Correlations’ in an Asset or a basket of Assets, Interest, another Derivative, or an Index. While Derivatives include all forms of Insurance, Collateralized Schuld Obligations and Credit Default Swaps according to the Timing of their payment: Over-the-Counter (‘Now’), Spots (‘Imminent’), Swaps (‘Soon’), Options (‘Eventual’), Futures (‘Later’), and Forwards (‘Someday’).
• Interbank Lending Markets offer more of the same borrowing and lending, but between privatized commercial banks and the Central Banks of Financial Régimes. This is where the Central Bank will oversee its operations ranging from setting Interest Rates to conducting Quantitative Easing (QE).  
• Cryptocurrency Markets represent the latest development in the growing abstractness of Kapital. Operating on parameters comparable to the Forex Market, they consume copious amounts of electrical power and computer power to facilitate the Blockchain required for the production and distribution of cryptocurrencies. They are often unstable and prone to fluctuations in terms of Currency Depreciation/Appreciation due to lacking the stability of actual Currencies.  
• Forex Markets are arguably the simplest and most fundamental of the Financial Markets. They are responsible for overseeing the exchanges of Currencies according to the Incentives of Supply and Demand. They determine the Value of any traded Currency based on its given Price. The Price of the Currency, due to the widespread prevalence of Floating Exchange Rates after Bretton Woods, is beholden to the whims of the Forex Markets.

As stated earlier, almost everything about the Financial Markets revolves around the borrowing and lending of Kapital, with or without Interest. It is true attempts have been made in the past by the Planned and Command Economies of the 20^th century to forgo Financial Markets. Basically, this was done as a result of having the State itself set and enforce the Pricing of everyday goods and services by governmental bodies of economic planners. The problem with that arrangement is identical to the same problem with Financial Markets: they too are driven by opinionated conclusions that are not only reflective of actual economic conditions.

Rather than try to play into the follies of Financial Markets by operating within their own framework, what the Work-Standard truly needs is a viable alternative to them. It would entail the creation of two different financial instructions attuned to the specifications of the Work-Standard, where the dialectic of lending and borrowing and its Incentives of Supply and Demand are predominantly supplanted by the gifting and receiving of Arbeit and Geld under the Intents of Command and Obedience. In essence, Arbeit can be exchanged into Geld and Geld exchanged back into Arbeit. Such financial institutions would then be owned and operated by the State, tasked with relaying information to and from all sectors of economic activity. Another would also be assigned to help the Council State determine the pricing of goods and services.

I have explored those two financial institutions in earlier Entries insofar as they are both part of the Reciprocal-Reserve Banking System. I am of course referring to the State Commissariats and the Kontore. What deserves to be mentioned here is that those two play important roles in the conduct of Mission-Type Economic Planning.

Historically, the term ‘Kontor’ originates from the trading posts historically associated with the Hanseatic League or ‘Hansa’. The original Kontore facilitated international trade between member-states affiliated with Hansa, which was in many respects a military and economic pact comparable to the Eastern Bloc’s CMEA (Council for Mutual Economic Assistance) and Warsaw Pact. Those two Soviet-era institutions are appropriate analogies for understanding Hansa because the Hanseatic League was neither a nation-state nor a confederation of nation-states. Rather, it was an alliance of small German states united under the Holy Roman Emperor of the German Reich. Their semi-autonomous nature, as evidenced by their activities from London to Novgorod, is highly suggestive of the fact that while they governed themselves within their own transactions, they were still subordinate to the legal jurisprudence of their hosts.

The Kontore intended to operate under the Work-Standard is designed specifically to facilitate the Synchronicity between the State’s fiscal and monetary policies and the national economic and financial structures. By achieving this arrangement, a Vocational Civil Service Economy is capable of enhancing the benefits of the Planned or Command Economy while at the same time mitigate the inherent flaws as well. Thus, rather than the Lending/Borrowing of Kapital and Schuld, each ‘Kontor’ relies on the dialectic of “Sending/Receiving” of Arbeit and Geld. In the most fundamental form of their dialectics, somebody ‘sends’ their Arbeit to the State as part of pursuing their Vocations as civil servants and they in turn ‘receive’ Geld from the State.

The Kontore of the Work-Standard are also responsible for the issuances of National Socialized Financial Instruments (NSFIs). NSFIs employ some variation of the Sending/Receiving of Arbeit and Geld, which is what separates them from the LCFIs (Liberal Capitalist Financial Instruments) commonly associated with Financial Markets. The goal of relying on NSFIs as an economic plan in its own right is to provide the flexibility and versatility that is lacking in Four-Year and Five-Year Plans. A further study into the details of NSFIs will require a subsequent entry.

Serving alongside the Kontore are the State Commissariats of Wages and Prices. The Commissariats, as their name implies, are responsible for helping the Council State set the official rates for the Paygrades of the Socialist Nation and the Prices of all goods and services. These institutions operate under the Regional Governments, tasked with striking the right balance between the Quality of goods and services and the Frequency for those same goods and services. They additionally share the secondary task of overseeing any and all disputes among Civil Servants and Administrators of individual Enterprises and Industries.

Categories: Compendium

Tags: Economics, Finance, Philosophy, Politics, Psychology, Socialist Finance, Third Place, Work-Standard