Sunday, January 30, 2011

Sustainability or Growth4Ever? The Choice is Ours

Not only subjective poverty is never overcome by growth, but absolute poverty is increased by it. Growth requires technical progress and technical progress alters the composition of the labor force, making more places for educated workers and fewer for uneducated, but opportunities to acquire qualifications are kept (with a few exceptions for exceptional talents) for those families who have them already [Robinson, 1972, p. 7].

The number of very poor countries has doubled in the last 30 to 40 years, while the number of people living in extreme poverty has also grown two-fold, a UN think-tank warned Thursday. Source.

The debt-money system forces growth upon us by virtue of its ponzi-dynamic of requiring ever more debt to prevent collapse (see “The Ecology of Money”, “The Grip of Death”, “The Ascent of Humanity” and the work of Silvio Gesell, and many others). Growth is forced upon us by the debt-money system, but perhaps more deeply still by interest itself. When we study the consequences of growth – everything has consequences – we must look at the planet as a system. To study only this country or that, or even human population, without considering their effect on planetary carrying capacity, is to fail before you've begun. As for growth creating jobs, ILO figures suggest otherwise.

If you were convinced growth were always and only good, you might be thinking at this point, “So what? At least us lazy douche bags are pushed forward by a bitchin' system which kicked communism's derrière!!” But, as the quotes above demonstrate, not only is economic growth a failure on its own terms, more importantly we live on a finite planet and are experiencing the decline of all living systems, the very systems which make human life possible in the first place. As with everything else, growth is only good when it can clearly and unequivocally be shown to be so. Therefore, being addicted to it on purpose is more than unwise, it is suicidal. (And besides that simple logic, the glitter of modern technology and burgeoning human population could never have happened without oil and a revolution in sanitation. Debt-money can only take a slither of the credit, if you'll pardon the pun.)

I've been looking more deeply this week into the work of German professor of economics, Bernd Senf, in particular, “The Fog Around Money”. As far as I know his work is not available in English, so those who can't read German will have to trust me when I say his style, as well as his approach to the subject matter, is clear, concise, and engaging. What follows is a brief introduction to his analysis. We start with some simple observations.

The money people can save – because they earn more than they 'need' – must earn them money if saving is to happen in banks and not under mattresses. Where is this extra money to come from? Lending. To earn savers money, savings are lent to people who 'need' to borrow – nobody borrows if they don't have to. Not only that, fractional reserve banks could not exist as profit-making businesses without interest-earning deposits as leverage – reserves – for earning profits (although apparently they can lend money to themselves out of thin air to initiate their life as a bank).

So, with interest involved at all stages of money creation, society is forced to encourage people to borrow, at interest, those monies savers don't really 'need' right now. The 'rich' earn yet more money from their, by definition, excess richness from those who have too little. Because of this general dynamic, combined with other factors such as cost-cutting and technological developments, we see, over many decades, growing credit card debt, mortgage debt, overdrafts, national debt, etc. It is the richer sucking money from the poorer, a process which accelerates its own operating because it exacerbates the conditions which power it – the richer the rich become the more money they have to lend, the poorer the poor become the more they have to borrow. Need-differentials (to coin a new expression on the fly) inescapably increase ever more rapidly. This acceleration requires exponential growth; Growth4Ever.

While it cannot be denied that savings bring 'idle' money via bank and other lending processes to those who 'want' to borrow, what is most certainly open to inquiry is the cumulative effect of this over time and across the planet. Also, I do not seek to claim here that only the 'poor' borrow, and know that credit worthiness is part of borrowing (in the early decades of the process anyway!) – ideally lenders need to know they are likely to make a profit – but borrowers are, systemically speaking, poor relative to their lending counterparts. And yes, the thrifty can forgo the delights of consumerism and save money for a rainy day – I myself am like that – while some higher-earners live a too expensive Life of Riley and get swamped in debt. But these are sub-dynamics of a broader, global dynamic which is the needy paying the affluent more and more over time – think third world debt. The main point is that the system is perfectly happy with gluttons, indeed it creates them with the best advertising money can buy, encourages people, every step of the way, to want, to desire, to 'need' more and more shiny stuff. Bernd Senf:

Even the middle and upper income brackets belong therefore to those suffering under the weight of the interest system. Only roughly the highest 10 percent with the highest income, profit from the system. And the final 1% or even 0.1% profit from interest to a barely imaginable degree – at the cost of the vast majority of the population. Unearned income in a society which prides itself on being a "meritocracy"!

Interest acts, then, like a pump: it pumps, day in and day out, enormous quantities of money in opaque and mostly unknown ways from the great majority to a small minority. Who "pumps" this money to themselves, and from whom? Not the borrower from the lender, as the language suggests, rather – seen in the main – the few rich from the great majority of the population -- and this without work or contribution, but simply because they possess so much money.

Professor Senf mentions the marriage of a poor boy to a rich girl. The figures are startling: Poor Boy earned 4,600 DM monthly, before tax, Rich Girl earned from interest over 650,000 DM daily (quoted from Bild, 27/7/1990). These are the types of figures we all need to know about. The very wealthy are so wealthy it is impossible for them to spend even their interest. Their interest-earnings come from borrowers, from the poor. I wonder if Ms Quandt and Mr Klatten are still married, and if happily so.

On a side note, the idea that hard work should be rewarded is wrong, not in the complexity of potential interpretations of that received wisdom, but in the mythical association with external reward in the form of money. Such stems from a paternalistic, hierarchical mindset placing some tiers of society in a fixed posture of judgment over the labour of others. The story of Hard Work Leading to Riches, which are then 'your property' because it was 'your hard work,' that therefore any attempts, via taxation, to 'redistribute' that wealth in the interests of anything that is not you, is also wrong. Success is reward, as is hard work, as is accomplishment. No hard work, no life is even possible without networks of interdependent systems enabling it. Who on their own can create air from a vacuum? Weave gravity from the cloth of space-time? Who can with hard work fashion soil in which to plant the seeds they also somehow created, then cause those seeds to grow with the water and sunlight they likewise summoned from the void? Who can live all alone and develop language, story, art, culture, civilization? When we remember how dependent we are on nature's bounty, on history, on society, we see that hard work is made possible by Universe, not by those of its subsystems we wrongly think of as 'individuals.' 'I' cannot have agency and sovereignty, only we can. I think, therefore we are.

There need not be money as reward for reward to exist. Reward is inevitable simply because of our biology and its embeddedness in the environment; endorphins for example. Reward thus takes many forms. In a system in which money is reward, because of the inescapable and healthy diversity of nature, the different abilities and interests of people, and because of the logic of money, the rich will become richer and the poor poorer, increasingly, unless wisely checked. Societal division is a cost which everyone must then share via decadence and breakdown, though the cost falls predominantly on the poor, as Professor Senf clearly demonstrates in his work. Interest exacerbates this dynamic, accelerating it over time.

To live decently in a modern monetary system, having money is essential. Having less money must be, by design, a hindrance, otherwise money loses its potency; poverty as stick to rich's carrot. Interest, as said, exacerbates, intensifies, conflagrates money's crude reward mechanism by pumping money acceleratingly from the poor to the rich, which leads to obscenely wide and entrenched social divisions, which are the cause of most of what ails us today. Hundreds of millions starve while others earn so much they simply cannot spend it all. Instead they use their excess to make the situation yet worse. 'Hard work' can never and will never justify this inhumanity, even ignoring the fact that most super-rich do not work hard for their 'wealth.'

Usury and money are twinned whips enslaving humanity to the wheels of forced growth in the service of the few. They are the engine driving the increasing absurdity of the rat race, the daily grind, the decadence, corruption, and war. Across the world we see suffering of unimaginable depths just to fuel a system which is destroying us all. While we allow it we are implicitly choosing extinction. No sane person wants this. Surely sustainability is the way forward now. I write in support of a resource-based economy, which is the only system I know of prioritizing sustainability above all else, then proceeding from there. It needs our joint and unprejudiced efforts to become the best it can be.

Saturday, January 29, 2011


If we want to prioritize sustainability in our socioeconomic system, what would have to change? "Zeitgeist: Moving Forward" is a film that sets out why sustainability is the obvious choice as societal priority, then explores the connotations of this simple yet profound decision. At 2:41:00 or so it is not a short film, nor is it perfect, but is a must-see in my opinion.

The point is not to follow the film's advocacy like sheep, but to engage, critique, discuss, learn, teach. Unless we start doing this in our millions, then billions, and in as open minded and polite a manner as we can, we are not going to make it past the oncoming crises. Do we want to go extinct? I believe not. We are therefore obliged to grow up, quickly, to stop expecting state-sanctioned 'experts' from showing us the 'truth' they believe is the best. As corny as it is, as vague as it is, it's up to us.

Thursday, January 20, 2011

Money Cannot Afford

There is a monetary budget and a resources budget. The latter is the more important, though the reverse of this truth is what we hear again and again, primarily because it is firmly believed money is an accurate representation of the value of resources, as well as being the best possible arbiter of how they should be distributed and deployed. In a very real sense, money is seen as wealth.

Suppose we trash the planet in pursuit of monetary wealth, and billions of us die. There are, say, 10,000 survivors huddled together in the barren rot and decay, yet they have in their immediate possession all the planet's untarnished gold and wads of dollar bills. Obviously that monetary ‘wealth’ will be of no use to them whatsoever. Seen in this simplistic way it is blindingly clear that resources represent the more important budgetary constraint. Money cannot afford, resources can.

So today, when we hear, “We can't afford it!” what is actually being said? My answer: The mechanisms or groups controlling money have determined that there is not enough money to accomplish a given objective. That there might be enough resources is not considered. Money, by virtue of its historically proven ‘excellence,’ rules.

However, I believe passionately that we are obliged to question this implied assertion, especially when we repeatedly witness across history poverty and starvation amidst abundance. So, when it is claimed there is not enough money, why isn’t there? Furthermore, under what conditions should a shortage of money be considered a problem? Simple enough questions, but answering them takes us deep into the famous rabbit hole…

The vast majority of money is today created as a debt which vanishes when repaid, though lenders keep the interest charged for further use. In theory lenders continually spend and lend their profits back into the economy, so there should never be a shortage. But as we know, theory is one thing, reality quite another. Not only is money always scarce because more is owed than exists, there are in fact times when very few new loans are being made, but banks are calling in existing debts. This imbalance leads to either a recession or depression, depending on its severity and governmental response. The amount of money being circulated then diminishes, either because there really is less in existence, or because economic uncertainty coupled with systemic addiction to growth exacerbates hoarding behaviours (see below), as people and firms struggle to weather the storm. Then we hear over and over, “We can't afford it!”

Hoarding is best thought of as a leak in the economy through which money escapes. It is not saving as conceived by the theory briefly outlined above, where savings are available to the broader economy, allowing banks to fund entrepreneurs. Hoarding takes money out of the real economy of things – usually because growth has slowed sufficiently to make normal saving unattractive – and funnels it to more exotic money-making schemes such as derivatives, commodities, currency exchanges, etc., aka The Casino. To my mind there is an inevitability to the growth of this type of ‘investment’ while society lauds financial wealth above all other types. The ‘smart’ money goes where it grows fastest, and risk is always ‘taken care of’ by some brilliant scheme or other. Hoarding of this type is therefore in the system’s make up, a system which assumes the existence of a god-like hand cleaning up our messes, as we mortals, automaton-like, maximize profit. This philosophy births vampire squids.

Silvio Gesell’s proposed ‘demurrage money’ – money with negative interest or a storage fee – is the only monetary solution I know of which systemically disincentivizes hoarding. The chances of this being implemented any time soon are vanishingly low at best, despite some quite big gun support. Hoarding therefore remains, for the foreseeable future, an inevitable consequence of money and one of the main challenges to maintaining a healthy amount of money in circulation (if such is at all possible – more later).

“We can't afford it!” means, then, there’s not enough money in the system, and so far, this ‘not enough’ is a result of hoarding, and/or the mathematics of debt-money, a money which is only available in adequate amounts during booms. (The scarcity built in to debt-money is the root of Growth as Necessity, Growth as Good.) This ‘not enough’ has not been, in living memory, a result of too few resources, though ecological disasters do happen, and wars can devastate cities, farms, etc. In the case of war, which of course has occurred in living memory, the wider planet has had enough to help struggling survivors, only the distribution mechanisms, including the money-price system, have not delivered. The nation state too – a fiction created by humans for various reasons – is a part of this problem.

Hoarding is the more complex of the mechanisms discussed (is implicit anyway in the first), though it can seem otherwise when we consider the complexities of finance behind debt-based money. Hoarding implies ownership, including ownership of resources such as land. Hoarding is a natural consequence of a property-based system, which assigns ownership via the laws of exchange and defines success as Owning More Than The Next Guy. It is a system which we think as natural as the air we breathe, a manifestation of Darwin’s survival of the fittest, and certainly one more modern than the sharing, hunter-gatherer lifestyle we left to our distant past, a lifestyle which, sadly, cannot produce ‘high culture’ and many other things we have grown addicted to.

If you have ownership, you have some kind of money. If you have some kind of money, you have ownership. The two are inseparable, and both arise out of scarcity. If we presume scarcity, we encourage, generally, the urge to secure for ourselves as much as we can, to the detriment of our competitors. If success in the sense described above – Owning More Than The Next Guy – strongly motivates us, we will fight to amass vastly more of the planet's resources than the average person has. In short, the competition set up by the presumption of scarcity (whether that presumption is accurate or not) leads inexorably to gross imbalances of distribution of the output of human ingenuity. Hence, with scarcity presumed, we systemically encourage our ‘alphas’ to work to the detriment of their less ambitious, or able, brothers and sisters.

If we presume scarcity and want civilization, we need a way of distributing scarce goods and services without resorting to violence and lawlessness too often. This is money’s principle job. If we presume scarcity, we say, in effect, “We can’t afford enough for everyone, and besides, there’s no such thing as ‘enough,’ since humans are insatiable.” Suffering is therefore built deep into the presumption. So, for as long as we believe that scarcity remains the true state of nature, that greed is one of our deepest drives, money will remain the most civilized way of sharing the spoils of human inventiveness. Without money, it seems, we would have chaos.

But we have a problem – we’ve become too ‘successful’ as a species. Our money system demands perpetual growth on a finite planet. We humans are now close to 7,000,000,000 and rising. Many billions are poor, but want to be rich. Billions are rich and will fight to stay that way. In the meantime we are by some measures consuming resources at a rate equal to 1.5 earths and show very few signs of caring enough about this problem to change direction. The haves and have-nots are on a collision course as we consume our way to resource-destitution. Soon resources will not be able to afford, indeed they cannot now afford the system they suffer under. It seems apocalyptic.

Over 99% of all species that ever lived are now extinct. Apocalypse is therefore a regular occurrence for life on earth, doom the likely outcome for every plant and critter. Is what is currently threatening homo sapiens sapiens an inescapable outcome of our genetic constitution and other natural factors we cannot influence, or is it cultural? My answer is culture (and even genetic behaviour is subject to belief).

Two questions arise from our predicament.

1. Is there actually enough to go around as people like Richard Buckminster Fuller and Jacque Fresco claim?
2. Are humans insatiable?

My answer to 1 is, it depends on how you design your distribution system and your cultural attitude to abundance, and to 2, it depends on how you define insatiable.

Now it may well be that money needs scarcity like water needs oxygen and hydrogen, I'm not sure, and I’m not even sure how we might find out. What I do feel certain of is that debt-driven consumerism is the wrong model generally, and currently about as helpful as a blind-drunk bull in a china shop scented with Eau d’Ovulating Cow (do cows ovulate?). To want to stop the debt train we have to believe it is headed for a cliff, but see too another train nearby, waiting to head off in another direction, a direction that makes enough sense to risk change. Sadly we’ve been made stupid enough, via education, advertising and other propaganda, to ride this debt-train to our doom, rather than try something tamer and safer, and potentially far more beneficial. Better the devil you know, eh?

Forced growth has to stop, that’s for certain. Hence debt-based money creation has to go; deep monetary reform is a necessity. This would mean no private enterprise could be in the money-creation business; it wouldn’t be a business. That on its own is a Very Big Deal, so big it might lock us into this train and power us over the edge. Those psychopathic enough to actually enjoy having enormous wealth and power (The Masters of the Universe) simply cannot care about human society. They'll drive the debt train to our collective doom, just for kicks, and enjoy every second.

Some monetary reformers, e.g. Michael Rowbotham, do not seek to prevent banks from creating money as debt (see “The Grip of Death”, chapter 17). However, we’re suffering Rowbotham’s proposed set up already, and have been for decades. Governments are entitled to create their own money, debt free, and indeed do; roughly 3% of the money in existence was printed debt free. However, painful experience shows that banks have both the desire and ability to swamp government, control the debate via control of the media, and create the vast majority of money in pursuit of profit; corporations are legally bound to grow constantly in an economy which is forced to grow systemically. (A question to those who think money should still be earned from money: why should we maintain that system at all?)

But, how will it be decided how much money is best if the market is not involved? That’s not an easy question to answer. I have big sympathy for the argument levelled by those opposed to monetary reform, that only market-like processes can figure out, in an ongoing way, how much money the economy ‘needs.’ The proposal to create a fourth state pillar ‘separate’ from government, assigned with the task of managing money supply, places too much power into a single institution. A sweet theory perhaps, but we ought to be suspicious; power corrupts, absolute power corrupts absolutely. Although there can be no such thing as perfect competition, an organic system of bottom up control is far preferable to a hierarchy of top down control. Bottom up control is the essence of democracy.

That said, I am not against all forms of centralization per se. Standardized measures are important, as are rules of grammar, and much else besides. Some centralized or centralizing process is necessary to establish ground rules, without which people cannot work together, without which we would be ‘isolated’ beasts like wolverines, and none of the problems I’m discussing here would exist. Society must have some centralized aspects. The question is which, and how?

My heart desires something like an open source society guided by ground rules which enable creative collaboration across the planet, but disable concentrations of power and wealth. I fantasize that an open source money system might be possible, a globally deployable software for creating money dynamically at the moment it is needed, but which also monitors inflationary pressures, applies demurrage, and ‘runs’ the whole money-shebang transparently and dispassionately. No one would get paid to operate it. It would be a commons in the way all open source software is. And it would mean no more banks. Banking itself would be automated. Part of such a system would be a guaranteed income, since we ought to see money as our share of humanity’s ingenuity, not as reward for ‘horrible’ work. Money as ‘human ingenuity shared’ frees us to pursue our passions and contribute to society in the best way we can.

Or, something along the lines proposed by The Venus Project, where money is slowly rendered redundant by gentle pursuance of abundance as guided by planetary carrying capacity, removing ownership and exchange from the economy, and allowing open access to all goods and services the economy and environment can provide. The likelihood of this becoming the solution of choice globally is about as low as you can get, but the proposals The Venus Project has put forward are no less worthy of unprejudiced analysis for it.

In either of the two mentioned alternatives to debt-money, human ‘greed’ or ‘insatiability’ would redirect its energy towards accomplishment, excellence, mutual aid, the spreading of joy, and the never ending attempts to make things just that little bit better. Nothing wrong with that, but neither can it be perfect, nor should we even want perfection. And if my suggestions seem Utopian, that merely demonstrates how shamefully adjusted to decadence we have become, and how unwilling we are to imagine something different, which is, after all, exactly what is required.

Sunday, January 16, 2011

Why Can't We Awaken?

Some excerpts from Ambrose Evans-Pritchard's article of earlier this week:

The actual number of jobs contracted by 260,000 to 153,690,000. The “labour participation rate” for working-age men over 20 dropped to 73.6pc, the lowest the [sic] since the data series began in 1948. My guess is that this figure exceeds the average for the Great Depression (minus the cruellest year of 1932).

The long-term unemployed (more than six months) have reached 42pc of the total, twice the peak of the early 1990s. Nothing like this has been seen since the World War Two.

Raghuram Rajan, the IMF’s former chief economist, argues that the subprime debt build-up was an attempt – “whether carefully planned or the path of least resistance” – to disguise stagnating incomes and to buy off the poor.

Asia’s mercantilist powers have flooded the world with excess capacity.

There is no easy solution to creeping depression in America and swathes of the Old World. A Keynesian `New Deal’ of borrowing on the bond markets to build roads, bridges, solar farms, or nuclear power stations to soak up the army of unemployed is not a credible option in our new age of sovereign debt jitters. The fiscal card is played out.

So we limp on, with very large numbers of people in the West trapped on the wrong side of globalization, and nobody doing much about it. Would Franklin Roosevelt have tolerated such a lamentable state of affairs, or would he have ripped up and reshaped the global system until it answered the needs of his citizens?

I am 'happy' to see bald facts presented in this way in the mainstream, though I doubt very much this makes headlines across the world. (I'd be happy to be corrected on this though, because I no longer read newspapers nor watch television, so miss plenty.)

What saddens me is that a list of statistics which together very clearly highlight a deeply broken system yields neither mention of alternatives nor criticism of the roots of the failed system. The alternative to borrowing money is … a rhetorical flourish referencing a solution Evans-Pritchard has already discounted. Alternatives are not to be mentioned by name (does Evans-Pritchard know of them?), are barely even to be hinted at, no matter how broken the system is, no matter how dried out and useless. Roosevelt changed nothing of the fundamentals of money creation, he merely initiated bold borrowing, a bout of the very Keynesian economics dismissed in the preceding paragraph. And why should any national leader 'rip up and reshape the global system' to the exclusive advantages of his or her citizens? Haven't we exhausted all benefits that attitude can possibly deliver?

This wilful blind spot is the cultural problem Götz Werner speaks of (though not deeply enough). We have conflated money with wealth, work with suffering, can only see money as reward and motivator, a brutish but clever manipulator of 'human nature.' How mighty a kick up the backside do we need to even consider listening, with an open mind, to any ideas that suggest we could organize society around different priorities, such as health, trust, and sustainability?

This is the bizarre netherworld we are wandering through. The only signs we see scream “CHANGE DIRECTION!”, but the ringing in our ears and the white noise of the media hold us so transfixed we fail to respond cohesively to the approaching cliff. We can't redirect our thoughts as we so desperately need to. How bad do things have to get before we open to the new?

Post-scarcity economics, resource-based economics, monetary reform, guaranteed income, revolution in education, cold fusion, geothermal power, wind power, eco-cities, permaculture, aquaculture, and much else besides, under the auspices of sensible priorities as mentioned above, are the alternatives we need to explore globally, acting locally while staying globally interconnected and aware. The know-how and resources are there. Only we stand in our way.

Thursday, January 13, 2011

10 (or so) Questions for Capitalists

How can competition benefit most people when most must be losers by definition? In competition there is typically one winner and many losers. The other way around is logically impossible.

How can we be rich and affluent during a boom one day, then poor, willing embracers of austerity the next? How can it be that this cycle repeats across the centuries, with 'wealth' suddenly disappearing without decent explanation, and yet we apply the same methods in an attempt to get different results.

How do central banks repeatedly fail to notice mounting debt in a debt-money system? Isn't it their first responsibility to monitor the money supply and keep inflation at 'reasonable' levels?

How can the debt-money system be praised during the boom, then stunned surprise announced during the bust, with the finger of blame pointed at the very mechanism – debt – praised the day before for delivering such wonders? How can the way out of this cycle be yet more debt?

How can we refuse to question debt-based money creation when it is universally accepted that nations and citizens took on too much debt?

How can capitalism suddenly not have been in operation these last decades, when during the apparently 'good' times it had killed communism and spread plenty across the western world?

How can capitalism be anything other than a system for creating overly powerful corporations, when it is at core a system for leveraging concentrations of wealth in pursuit of ever more profit?

Why is it now so often heard that, actually, we haven't had 'genuine' capitalism, that 'genuine' capitalism would be better than 'crony capitalism,' or 'corporate capitalism,' while it is simultaneously acknowledged that perfect competition is impossible? Only perfect competition can prevent the concentrations of market-manipulating, price-fixing power so in evidence across the planet and throughout its modern history, concentrations which are in fact capitalism's very engine.

Why is individualism so fanatically insisted upon, so viscerally defended by knee-jerk group-think? Isn't it bitterly ironic that the collective, in almost total unity, insists that the individual has supremacy, while shouting down lone individuals who claim otherwise?

Are we going to let a socioeconomic model called “capitalism” wipe us out while in reckless pursuit of perpetual 'growth,' or are we going to coolly assess the situation and do what needs to be done?

Sunday, January 9, 2011

Is Economics Waking Up?

This week's missive is a collection of quotes from a brace of German economists, as well as Rob Parenteau, a political economist and editor of The Richenbächer Letter, as well as Yves Smith, whose "Econned" contains the Parenteau quote I use.

I think it plain that economics having a — what seems to be deliberate — blind spot in the area of money, is akin to physics refusing to study force, or biology refusing to study blood circulation and its effects. Again and again I find that people simply do not know how money is created. Pointing it out to them, even in the midst of a deep financial crisis many are calling the worst in history, results in angry incredulity. They have a deep sense of money 'just being there,' almost as if created by God, to be the wealth we are rewarded with for our work. This is such a deep assumption one can only marvel at how brilliantly those who benefit from it have seeded it throughout the world.

Uprooting it takes effort. When I first watched Money as Debt, then Zeitgeist Addendum, it took me a further year of reading, discussing, writing and pondering, finally to get how the debt-money system works as an inverse Robin Hood Vacccum Cleaner, stealthily sucking money up from the poorer towards the richer. Bernd Senf says the effect is exponential, perpetually increasing in speed and intensity. To ignore this is to ignore the very roots of injustice.

Of similar importance and of particular interest to me are the assumptions that underpin economic theory. Prof. Götz Werner is very eloquent in this area.

On to the quotes.

Yves Smith: Orthodox economics is peculiarly silent on the subject of banking and finance. Neoclassical models do not even assume the existence of money; they simple postulate a barter system. Macroeconomics, the study of the operations of the economy as a whole, has a similar blind spot here.

Rob Parenteau: General equilibrium theory, the intellectual pinnacle of the profession, has no room for money. Real business cycle theory has no room for finance—negative shocks to productivity, virtually from out of the blue, are the stated source of recessions. The Taylor rule, which essentially guides central bank policy rate setting, has an interest rate but no room for either money or finance, unless it is packed away in the error terms of the canonical equations. Recently, the Henry Kaufman Professor of Financial Institutions at Columbia University and his co-authors concluded the US housing bubble had little effect on consumer spending patterns. Huh?”
Econned, pp203-4

Bernd Senf: When my generation were children we asked, “Where do babies come from?” and got the answer, “From the stork.” Since those times there's clearer information on this topic available to children, thank goodness. Regarding the question, “Where does money come from?” (should the question be asked at all) a large part of the population are still positioned firmly in the fairy tale of the stork. And even economists offer little by way of an explanation of the basics.

Strangely, these matters and points which I have just mentioned [the dynamics of interest rates and money creation by central and private banks], are hardly ever a subject of public discussion, and also do not take place in economics discussion generally. Students of economics learn nothing of any thoroughness in this area.
Source (YouTube, around minutes 3 to 4 (German))

Prof. Götz Werner: The economy does not have the role of creating jobs. On the contrary. The role of the economy is to free people from jobs. And that is precisely what we have managed to do wonderfully well over the last 50 years. [snip]

No businessman wakes up in the morning wondering how to stuff more employees into his business. The very idea is absurd. The question should be asked the other way around: How can I, with as little effort and as few resources as possible do as much for the customer as I possibly can? How can I better organize my business? And better organized always means: minimize work. This is a foundational business principle. [snip]

Indeed a fisherman told me that Icelanders today, thanks to factory-ships, can catch four times as much fish with four times fewer fishermen than 30 years ago. Do you see? 75 percent of people are simply no longer needed. There are such examples everywhere. Our ability to produce things exceeds our need to consume them. This is a simple fact, and no job market reform can change that. [snip]

We really have to ask ourselves: What is the real role of the economy? There are two. The first: It must supply people with goods and services. Never in history has the economy fulfilled this role as well as today. In fact we see a massive oversupply. Even though most factories are by far under-utilized, we can produce everything we can desire. [snip]

We're moving into a society in which jobs are disappearing. The simple question is what all these people are to do with all their time, which is a cultural question. The problem we have does not lie in the jobs market, but in the culture. Sadly, this subject is barely visible in society today. And yet it is precisely here that we have work to do.
Taken from an interview in the Stuttgarter Zeitung, 02 July 2005.

Prof. G. W. Werner / Dr. L. P. Häussner: Our social awareness is lagging a long way behind the possibilities opened up by the worldwide division of labour and the resulting rise in productivity. [snip]

The dictum that technological progress and productivity increases create and destroy jobs in equal measure no longer applies today, and large sections of the population will become poor if we do not put earned incomes, which are diminishing because less and less labour is required to produce goods, on a new footing. As Goethe put it in Faust, "We are starving in abundance".
Source: "The unconditional basic income - from an industrial to a culture-based society"

Professor Götz Werner's words speak for themselves.

Werner is a rare economist who is also a very successful businessman. He owns and founded Germany's most successful chemists (“dm dorgerie”), a chain with hundreds of outlets across Europe and a 2008/9 turnover of 5.2bn Euro, and receiver of multiple awards. Since he founded the business in 1973, its focus has been on minimizing environmental impact and maximizing sustainability. One of his current ambitions is to introduce a guaranteed income, a reform which would include scrapping all taxes except for a sales tax, which he estimates could go as high as 48%. I never agree with anyone on everything, but find his honesty, plus his combination of academic acumen and deep success in the real economy, gives his words a particular gravitas. I have yet to see him mention monetary reform, which Bernd Senf calls for. Prof. Senf is co-founder of an initiative in Germany to reform the money system ("Monetative") along similar lines to those proposed by The American Monetary Institute, including 100% reserve banking.

The more I look, the more German economists and other academics I find who, at least taken together, are building a set of proposals which would put society on a path pointed quite accurately towards a resource-based economics, an economics which places the reality of the environment and human needs above the medium of exchange, whatever that might be. I have a strong suspicion there are other European countries hosting similarly minded economists. Any pointers would be very welcome (though I can only speak German!).

(All translations by me.)

Thursday, January 6, 2011

Demote Money, Promote Wealth

No further revelations of criminality from on high should surprise us anymore; it is now clear corruption reigns. The surprise is how few of us are ready to embrace this fact, how hard it is to accept we’ve sold our dignity for decadence. As with decadence across the ages, dishonesty, corruption, naked greed, psychopathy, casuistry, amorality, and disinformation are this period’s defining characteristics.

This time it’s different. This time the decadence is rotting a global system that has more power than any other in history. Its implosion threatens such devastation that we should all do what we can to free our habits of thought from their socially acquired cages. Nothing, except that which we ourselves work through and understand, can be trusted. We must become arrogant; we must know for ourselves. From there we can reach out to others in humility and openness, as contradictory as that sounds.

Since 2007 at the very latest we’ve been face to face with a seamlessly operating Media, State and Corporate status quo. We must now treat with imaginative skepticism the totality of the story of our times, as propagated – wittingly and unwittingly – by all organs of this status quo, and use our spare energies for our own research. The Internet is invaluable, but I’ve found depth of wisdom comes from careful perusal of source literature, then writing about and discussing it. Sharing our emerging position with others solidifies understanding, corrects inevitable errors.

What matters though is not where our experiments and trials take us, but that we stay true to openness and humble inquiry. It is therefore vital to sidestep, as best we can, the divide-and-conquer tactics deployed so effectively by the status quo. Any status quo’s unchanging aim is self-evidently to sustain its own position of power indefinitely, and as such it is self-tasked with preventing the nucleation of a viable, alternative story. It will do whatever it can to survive, as is natural. Neutrality demands we build a new, loose consensus around our common humanity, using compassionate forms of logic and reason – double-edged as both are – rather than by adhering to left/right myths. Nor should we stay loyal to any particular philosophy or religion. And, essential as they are, we must bear in mind that personal morality, intuition and sensibility also play powerful and deceiving roles; objectivity is an illusion always.

As for powerlessness and its consequent despair, speaking personally I acknowledge and welcome my own anonymity, as well as the smallness of my contribution. It is precisely this smallness and anonymity, as twinned foils to ego-ambition, repeating as echos across the newly opened spaces of the Internet, which can gather into a new song.

Decadent times require steady bridge-building, not trench warfare. Anger and rage are justified but should be wielded wisely. Entrenched and partisan bickering helps only the common enemy, which is now the broader system, its crumbling assumptions and our unavoidable efforts to prop it up; we are all constituent parts of system. If we stay humble but determined, unprejudiced but focused, we can affect real change directly through our own actions. Only through such a process can change be sufficiently wise and radical. Broad and profound understanding leading to a willing pursual of real alternatives is the only viable way. This change cannot be forced from above; it is a methodology, not a conclusion to be agreed with. This is beautiful precisely because it cannot be forced and because there are no guarantees.

My contribution to this difficult and lengthy process is this call: Demote money, promote wealth. Econosophy is an ongoing attempt to give meat to its bones.