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Frederick Soddy

Frederick Soddy. Sharon Billings Spring 2012 Ecological Economics. Background. 1877-1956 Chemistry Advances Coined “isotopes ” radioactive disintegratio n Modern atomic theory and structure Nobel Peace prize 1910 Professor at McGill, Glasgow, Aberdeen, and Oxford.

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Frederick Soddy

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  1. Frederick Soddy Sharon Billings Spring 2012 Ecological Economics

  2. Background • 1877-1956 • Chemistry Advances • Coined “isotopes” • radioactive disintegration • Modern atomic theory and structure • Nobel Peace prize 1910 • Professor at McGill, Glasgow, Aberdeen, and Oxford

  3. After WW1, started looking at worlds problems • Conclusions: • Problem was not science, but scientists did have blame for contribution to society • Economics = pseudoscience • Faulty • Unsafe with science advances • Good and evil • Must change economics

  4. Action • Soddy decided to analyze and find solutions to the economy and it’s institutions • Free of paradigm of economics when he started his analysis • Contempt. Lots of Contempt. • Review of Wealth, Virtual Wealth, and Debt • Sad to see a respected chemist ruin his reputation by writing on a subject about which he was quite ignorant. (The Times Literary Supplement)

  5. EconomicFlaws • The principles and ethics of human law and convention must not run counter to those of thermodynamics(Cartesian Economics) • Soddy’s basis for critique of economics as a perpetual motion machine • “how does man live? On sunshine” • Sunshine = continuous flow of energy • Not a stock source • must obey the laws of thermodynamics

  6. Real Wealth • Not material goods • Matter and energy useful to humans • 2 dimensions • Physical: matter – energy • Theological: usefulness subject to mind and will • Wealth • Physical, subject to physics • Eventually will degrade

  7. Debt • Imaginary quantity • Subject to mathematics • Endures forever • Actually a lien against future sunshine because sunshine rates are constant and don’t grow at compound interest rates like debt • Not a 1:1 ratio = compound interest will eventually create inflation and bankruptcy • Ex nihilo: out of nothing • wealth can’t be created this way, so money (debt) shouldn’t be either

  8. Monetary Flow • Main Problem: banks create money • Becomes virtual wealth of community • National debt is money • Doesn’t obey laws of conservation • Negative wealth quantity • Money used to replace bartering and inconvenience • Virtual wealth = utility cost of holding money • Banks are counterfeiters • Have made a mockery of measurement standards • “ convert pounds of sterling to rubber yardsticks”

  9. Soddy’s Reform • Banks must have 100% reserves • Could no longer create money • Virtual wealth ownership restored to state • Maintain a constant price-index • Falls: government prints money, lowers taxes, redeems interest on national debt • Deflation corrected by money-creating gov’t deficit • Raises: government raises taxes and doesn’t spend revenue • Inflation corrected by money-destroying gov’t surplus

  10. Freely fluctuating exchange rates internationally • World payment maintained in equilibrium • Purchasing powers among currencies • Eliminate inflation and deflation pressure between economies • Free trade regulation, such as tariffs, would disappear

  11. Morals • Let us have an end of the pretence that economics should not be concerned with morals. (Role of Money) • Economics should have honest weights and measures under exchange • Current system gives false accounting

  12. References • Daly, H. E. 1980. The economic thought of Frederick Soddy. History of Political Economy. 12 (4): 469-488 • Daly, H. E. & Farley, J. 2004. Ecological Economics: Principles and Applications. Washington:Island Press. • Soddy, F. 1921. Money versus Man. England: Purnell and Sons. • Soddy. F. 1933. Wealth, Virtual Wealth, And Debt. USA: E.P. Dutton & CO. Inc.

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