Finance:Cincinnati Time Store

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The Cincinnati Time Store (1827–1830) was the first in a series of retail stores created by United States individualist anarchist Josiah Warren to test his economic labor theory of value.[1] The experimental store operated from May 18, 1827, until May 1830.[2][3] He sold things at-cost plus a small markup for his time.[4] It is usually considered to be the first time alternative currency labor notes were used,[5] and as such the first experiment in what would later be called mutualism.[6] He also founded stores in New Harmony, Indiana, and at Modern Times, Long Island.[7] The store in Cincinnati closed in 1830 with Warren being satisfied he demonstrated running and managing a business without the "erection of any power over the individual".[8] His theory — replacing money with time — was turned into an actual practical demonstration project.[9] It was the first such activity, preceding similar labor notes in Europe by more than 20 years, and still has implications for other concepts of currency such as cryptocurrencies. Nonetheless, at the time it was the most popular mercantile institution in Cincinnati.[10]

History

Warren embraced the labor theory of value, which says that the value of a commodity is the amount of labor that goes into producing or acquiring it. From this he concluded that it was therefore unethical to charge more labor for a product than the labor required to produce it. Warren summed up this policy in the phrase "Cost the limit of price," with "cost" referring to the amount of labor one exerted in producing a good. Believing that labor is the foundational cost of things, he held that equal amounts of labor should, naturally, receive equal material compensation. He set out to examine if his theories could be put to practice by establishing his "labor for labor store." If his experiment proved to be successful, his plan was to establish various colonies whose participants all agreed to use "cost the limit of price" in all economic transactions, hoping that all of society would eventually adopt the tenet in all economic affairs.[10]

A 19th-century example of barter: A sample labor for labor note for the Cincinnati Time Store. Scanned from Equitable Commerce by Josiah Warren (1846)

In the store, customers could purchase goods with "labor notes" which represented an agreement to perform labor.[5] The items in the store were initially marked up 7% to account for the labor required to bring them to market with the price increasing the longer the time that a customer spent with the shopkeeper, as measured by a timer dial; later this markup was reduced to 4%. Corn was used as a standard, with 12 pounds of corn being exchangeable with one hour of labor. The result of the system was that no one was able to profit from the labor of another — every individual ostensibly received the "full produce" of his labor. Adjustments were made for the difficulty and disagreeableness of the work performed, so that time was not the only factor taken into consideration. Warren also set up boards on the wall where individuals could post what kind of services they were seeking or had to sell so that others could respond, and trade among each other using labor notes.[10]

After a rough initial period, the store proved to be very successful. Warren's goods were much cheaper than competitors', though he maintained that he was not trying to put other stores out of business. Another store in the neighborhood converted to Warren's methods. The fact that prices for goods rose the more time a customer spent with Warren resulted in very efficient transactions. Warren said that he was doing more business in one hour than normal businesses do in one day, leading him to close shop part of the day to rest. Though the store was successful, the problem of equal labor times for different difficulties of work was a concern for Warren. He was never able to reconcile the objectivity of his "labor for labor" prescription — treating all labor as essentially fungible goods — with the subjectivity employed in determining how much time used for one type labor entailed the same amount of work exerted during a different amount of time performing another type of labor. He settled to simply credit it with being a matter of individual judgment. Warren closed the store in May 1830 in order to depart to set up colonies based upon the labor-cost principle (the most successful of these being "Utopia"), convinced that the store was a successful experiment in "Cost the limit of price."[10]

In fact, the store became Cincinnati's most popular at the time. As Cincinnati librarian Steve Kemple noted:

When the advantages of the store became known and its method understood, it was the most popular mercantile institution in the city. The people called it the “Time Store,” not because it gave credit or sold goods on installments, but on account of the peculiar and original method adopted to fix and regulate the amount of the merchant’s compensation. This was determined on the principle of the equal exchange of labor, measured by the time occupied, and exchanged hour for hour with other kinds of labor.[10]

Josiah Warren credited Robert Owen with the creation of the idea for the labor-for-labor note. It was Warren, however, that actually put it into practice at the Time Store.[11] Indeed, Owen thereafter opened the National Equitable Labour Exchange, which embodied the same concept and practice.[12] The Cincinnati Time Store experiment in use of labor as a medium of exchange antedated similar European efforts by two decades.[13] [upper-alpha 1]

Reception

Betty Joy Nash noted that, to varying degrees, the time store "communities strived to eliminate discrimination by class, sex, and race, and fostered education and scientific inquiry".[17]

The documentary film Anarchism in America (1981), by Pacific Street Films and funded by the National Endowment for the Humanities, argued that Anarchism had its roots in 19th America with people like Josiah Warren and the Time Store.[13]

Although it goes back to 1827 through 1830, Josiah Warner's "Cincinnati Time Store", which sold merchandise in units of hours of work called "labour notes" which resembled paper money, this was "[p]erhaps ... the anticipator of all future" Local exchange trading systems, and was even a precursor to modern cryptocurrency.[3][18]

Economist Robert J. Shiller used the perceived failure of the Cincinnati Time Store as an analogy to suggest that cryptocurrencies (e.g., Bitcoin) are a "speculative bubble" waiting to burst.[19][20]

Related published works

See also


References

Notes

  1. ↑ However, in 1833, bringing on the Truck Acts (1831–1887) which required employees to be paid in common currency, Owen like many employers operated the truck system, using scrip to pay his employees.[14][15][16]

Citations

  1. ↑ Tyler, A.F. (1953). "Men Against the State: The Expositors of Individualist Anarchism in America, 1827-1908 by James J. Martin and Harry Elmer Barnes". Indiana Magazine of History: 2. 
  2. ↑ Welsh, John F. (2010). Max Stirner's Dialectical Egoism: A New Interpretation. Rowman & Littlefield. p. 123. ISBN 9780739141564. https://books.google.com/books?id=jujo9fJbhdoC&pg=PA123. Retrieved November 28, 2018. 
  3. ↑ 3.0 3.1 "Why It's Difficult to Crack Cryptocurrency Mysteries". Khaleej Times (Dubai, United Arab Emirates). May 22, 2018. https://www.highbeam.com/doc/1G1-539822138.html. 
  4. ↑ Wunderlich, Roger (1992). Low Living and High Thinking at Modern Times, New York. Syracuse University Press. p. 3. ISBN 9780815625544. https://books.google.com/books?id=-FV7QLVAny4C&pg=PA3. Retrieved November 28, 2018. 
  5. ↑ 5.0 5.1 Wunderlich, Roger (1992). Low Living and High Thinking at Modern Times, New York. Syracuse University Press. pp. 46–47. ISBN 9780815625544. https://books.google.com/books?id=-FV7QLVAny4C&pg=PA47. Retrieved November 28, 2018. 
  6. ↑ Heywood, Andrew (2017). Political Ideologies: An Introduction. Macmillan International Higher Education. p. 152. ISBN 9781137606044. https://books.google.com/books?id=Sy8hDgAAQBAJ&pg=PA152. Retrieved November 28, 2018. [yes|permanent dead link|dead link}}]
  7. ↑ Shook, John R., ed (2012). "Warren, Josiah". Dictionary of Early American Philosophers. Bloomsbury Publishing. p. 1089. ISBN 9781441171405. https://books.google.com/books?id=oOqoAwAAQBAJ&pg=PA1089. Retrieved November 28, 2018. 
  8. ↑ Martin, James J. (1953). Men Against the State. Ludwig von Mises Institute. p. 22. ISBN 9781610163910. https://books.google.com/books?id=ux-xAMFUY2gC&pg=PA22. Retrieved November 28, 2018. 
  9. ↑ Cánovas, Cristóbal Pagán; Teuscher, Ursina (January 2012). "Much more than money: Conceptual integration and the materialization of time in Michael Ende's Momo and the social sciences". Pragmatics & Cognition (John Benjamins Publishing Company) 20 (3): 546–569. doi:10.1075/pc.20.3.05pag. E-. ISSN 0929-0907. "This makes time be money in a very different way: money has been replaced by time. One of the earliest practical applications of this blend was the Cincinnati Time Store.". 
  10. ↑ 10.0 10.1 10.2 10.3 10.4 Kemple, Steve (March 19, 2010). "The Cincinnati Time Store As An Historical Precedent For Societal Change". Cincinnati Ohio: Cincinnati Public Library Presented at CS13. pp. 1–3. https://www.scribd.com/document/32919811/The-Cincinnati-Time-Store-As-An-Historical-Precedent-For-Societal-Change. 
  11. ↑ Wunderlich, Roger (June 1992). Low Living and High Thinking at Modern Times, New York. Paul Avrich Collection, Library of Congress. pp. 47–48. ISBN 9780815625544. https://books.google.com/books?id=-FV7QLVAny4C&pg=PA47. 
  12. ↑ Shiller, Robert J. (May 30, 2018). "Cryptocurrencies and the old allure of new money". Financial News. https://www.fnlondon.com/articles/cryptocurrencies-and-the-old-allure-of-new-money-20180530. "Cryptocurrencies create an aura of exclusivity that fills devotees with revolutionary zeal, but we have seen such experiements [sic] fail before" 
  13. ↑ 13.0 13.1 Fishbein, Leslie (1983). "Anarchism as Ideology and Impulse: Anarchism in America". Film & History 13 (1): 17–22. ISSN 0360-3695. https://muse.jhu.edu/article/400648/summary. 
  14. ↑ "Article 31 ROBERT OWEN'S LABOR EXCHANGE CURRENCY". The E-Sylum 20 (1). January 2, 2017. https://www.coinbooks.org/v20/esylum_v20n01a31.html. Retrieved December 14, 2018. 
  15. ↑ Pingrey, Darrius H. (February 27, 1902). "The Report of the Industrial Commission: Does it Solve Anything?". The National Corporation Reporter XXIV: 104. https://books.google.com/books?id=sJotAQAAMAAJ&pg=PA104. 
  16. ↑ Howell, Jerry; Chmielewski, Tom (December 1, 2009). The Complete Idiot's Guide to Barter and Trade Exchanges: Get the Things Your Business Needs Without Spending a Dime (Kindle ed.). Penguin. p. 46. ISBN 9781101152010. https://books.google.com/books?id=FwwUVyUJMfMC&pg=PT46. 
  17. ↑ Nash, Betty Joy (July 1, 2010). "Utopia, USA". Region Focus 14 (3): 32. ISSN 1093-1767. 
  18. ↑ "Editor's Introduction". The American Journal of Economics and Sociology. November 1, 2006. https://www.highbeam.com/doc/1G1-156553329.html. "Referencing Moss [1977]2005: 125-128". 
  19. ↑ Bartenstein, Ben; Russo, Camila (May 21, 2018). "Yale's Shiller warns crypto may be another Cincinnati time store". San Francisco Chronicle. Bloomberg News. https://www.sfgate.com/business/article/Yale-s-Shiller-warns-crypto-may-be-another-12931912.php. "...Two years later, the Welsh textile manufacturer Robert Owen attempted to establish the National Equitable Labour Exchange in London based on 'time money.' Both experiments failed, and a century later, economist John Pease Norton's proposal of an 'electric dollar' devolved into comedic fodder rather than a monetary innovation." 
  20. ↑ Shiller, Robert J. (May 22, 2018). "Opinion: Bitcoin isn't the first revolutionary currency". Market Watch. https://www.marketwatch.com/story/the-old-allure-of-new-money-2018-05-21. "Cryptocurrencies are only latest in long line of wanna-be game-changing currencies." 

Bibliography

  • Equitable Commerce by Josiah Warren (1846)



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