Showing posts with label interest. Show all posts
Showing posts with label interest. Show all posts

15 January 2012

On Interest, Cyclicality and Sonnets

More nuance today from the man who likes to drive his readership to distraction with prevarication and belligerent fence-sitting. Confession: I am no conviction politician. I believe there are alternatives, even to the alternatives. TINA (There Is No Alternative) can go hang. Which is of course conviction of sorts, but I remain widely open as to implementation and evolution of the new, not to mention being something of a moral relativist.

In that vein, you are today to be treated to a kind of homage to the dying system I have spent so much of my time and energy battling and critiquing these last years. It was a damn good system in many ways, particularly at driving growth, and at generating and sustaining elitism (which has been mostly appropriate for this ‘post-primitive’ portion of the human journey). Nothing which flourishes out to the global scale and produces the degree of cohesion it produced can be called utterly defective, even considering its rapacious heart, its sociopathic soul, its inflexible limbs, its machine-like viscera. For it to be ‘bad’ in net effect, for it to be seen, generally, as broken, requires an evolution of consciousness in the vast majority of us; first we must learn the necessary perceptive abilities culturally. Until that happens, what was once ‘good’ will continue its collapse, something like ‘human nature’ will cop the blame, yet another iteration of this paradigm will be tried again, and the TINA Brigade will have been proven right. Speaking brutally, until humanity builds a flourishing alternative, there is no alternative. We have to earn it. Ideas on pages aren’t enough.

So, what is dying, why is it dying, and why was it ‘good?’ Charles Eisenstein’s analysis in “The Ascent of Humanity” is as thorough an analysis of our paradigm as I have seen, and I strongly agree with it. In his thesis, humanity emerged from undifferentiated unison with its environment, many thousands of years ago, to begin the long, slow process we call Civilization. With the advent of technologies like taming fire, domesticating seeds and animals, humans unwittingly initiated for themselves a developmental arc characterized by ever increasing ‘separation’ from and opposition to Not-Self, indeed created an ever more clearly delineated Not-Self. In the Bible, the myth which echoes this is Adam and Eve’s eviction from Eden. Today we might see a baby’s eviction from its mother’s womb as a similar break. Thus we begin a sense of Us and Them when the area within the warmth and light of the ‘controlled’ fire is safe, the darkness beyond dangerous; when some aspects of nature become clear enemies—insect pests, winter, adverse weather—and others friends—wheat, chicken, dog, horse. The pattern is one of increasingly sophisticated control of both wanted and unwanted variables, so as to maximize the former and minimize the latter. We are still engaged in this fight against Not-Self today, looking for the perfect life, the perfect partner, job, city, system, etc.

One of the many emergent properties of this developmental arc has been elitism (the state), which, to me, is a necessary social dynamic for keeping increasingly complex societies cohesive (specialization plays an enormous role here). Of course there are negatives, but nothing is perfect, so that goes without saying. And there is no master plan. Shit just happens. Early humans taming fire, domesticating seed and beast, had not the slightest idea where their experimentation would lead. It is not better or worse to be differentiated, just as there is nothing ‘ignoble’ about undifferentiated ‘savages.’ Shit just happens, and beauty lies in the eye of the beholder. So, for one thousand and one reasons, elitism emerged and bedded down, no master plan necessary. You can’t make omelets without breaking eggs.

As a brief aside, for a long time I believed elitism’s structure was wedded to growth and therefore inherently unsustainable. I no longer hold that opinion. Elitism is doomed because it suffers poor information flow. As to growth, there is a far simpler explanation for our systemic addiction to it. It is because we tend not to kill our children or old folk when population pressures might recommend such measures (rabbits eat their young); we are inventive, have powerful emotions, and seek solutions that offer the ‘hope’ of letting as many of us live as possible. This simple dynamic is sufficient to explain why the human race has been multiplying, and continues to want to. That we thrive exponentially like bacteria today is an explosive consequence of science, fossil fuels and good hygiene. Elitism (hierarchical state structures of rulers and ruled) is a ‘necessary’ emergent property of differentiated social animals with abstract language dealing with the challenges of increasingly complex tribal life (specialization), population pressures, and war (and other things too, but those are the main factors I feel). We thrived because we wanted to, and could. In many ways, our ‘control’ of nature has proven very effective. Mainly, we still see our continuing expansion as Good, but this is changing quickly. I believe there are two main driving factors for this shift of perception; technological unemployment and Peak Growth (a complex term which includes fossil fuel depletion, climate change, peak debt, etc.).

While we have earned no ‘better’ system; while we have not made it clear to ourselves, culturally, globally even, that an open, egalitarian-hierarchical hybrid based on abundance and sharing is now the more ‘sensible’ arrangement; while we prefer our comfort zones to the perils of change, we will not be able to transcend what, to me and some others, is a broken (not ‘evil’) paradigm. We must evolve out of where we are and into what we might be, which takes doing, trial and error, experimentation, and time. As always, we accumulate wisdom along the way, stand on giants’ shoulders, who themselves stood on others’ shoulders, but cannot know where it will take us, just as our long dead forebears playing with fire could not see far by its light. Clearly, the vast majority of us do not yet want to put in the degree of effort deep change requires, again for a thousand and one reasons. So, competition, scarcity, ‘I’m all right, Jack,’ classism, property, greed, short-termism, etc., will be with us for a while yet, warts and all. Indeed, they are some of the key elements which drove us here, cooked us into what we culturally are. They are the main ingredients of our current stew, and, like the frog which cannot tell it is being cooked alive because the water’s temperature increases so slowly, so we too fail to discern how hot it is getting. This too is changing. We are waking up and smelling the fire.

And yet, back in the day, with the knowledge and ignorance of the time, what ‘better’ money system could humanity have designed, what better social arrangement? Like nature, our system is cyclical; boom and bust, spring and winter, growth and decay. It has an incentive built in; the absence in the money supply of the interest owed acts as a constant flame, keeps things cooking, and fosters growth, rather like the sun around which all earthly life revolves. Believing in human Ascent, a system which helps drive us forward is no bad thing, especially when we ‘know’ humans tend to laziness ‘by nature.’ If we believe, more or less, that we ought to grow our economy forever, with boom and bust included, as fulfillment of our Destiny, then a fiat, usurious, debt-based money system is a ‘good’ way to go. There are casualties of course, but as science developed and fossil fuels were available, population growth these last 150 years is proof humanity did a ‘good’ job of ‘dominating’ nature, generally speaking. What would Malthus say if he saw all seven billion of us now?

What this system has not delivered, is precisely that escape from the Enemy Wild we thought we sought. Today we can look on jealously at ‘primitives’ seemingly at one with their environment, enjoying an easy leisure we can only dream of, a peace of mind which remains out of reach, even on expensive holidays in the sun, even in clean, gated communities protected by armed guards. We brought the wild with us, built concrete jungles every bit as uncontrollable as the ‘unclean’ jungles we fled. There was no separation after all. We are beasts too (which is no bad thing). Still we scrabble towards an illusory ‘top,’ in blind pursuit of something we left behind, pursuing it because we don’t see it right there, under our noses, where it always was.

And yet, that we increasingly see our manic system as unsustainable—though a sign of hope perhaps—is not (yet) as important as our general inability to see reality as a whole in which we are embedded, at a sufficiently deep and broad scale to bring about lasting change. But this too is changing. We are becoming one. To be cute, I’d say we’re becoming an Updated One. Differentiation and spicy variety included.

Positive interest and its development was pretty clever, considering the times. You have a money supply that is generated by and responsive to economic activity (or the promise of it), which can only be an amount too little to cover what’s owed, whereby competition is ensured. The money supply is fine-tunable via various mechanisms; credit-money destruction upon debt repayment, recycling the interest earned back into the system, and encouraging further economic activity with further loans, always keeping things scarce, always encouraging entrepreneurship and inventiveness. What’s not to like? Look at the nature of the challenges the money-system addresses. We have extreme specialization already baked into our cultural and socioeconomic DNA, inevitable hierarchy as a direct consequence thereof, social complexity beyond human comprehension, and a need to keep as many people as possible ‘provably’ useful to society to prevent pointless and bloody revolution. To meet these challenges, we have high powered and credit money in a positive interest-bearing debt system using expunging, default, bonds and taxation as tools to drain money from the economy; private sector credit-extension, and public sector government borrowing, to inject money into the economy; the separation of powers (or the notion thereof, which has its potency even in today’s advanced stage of corruption and breakdown); waged labour; and representative democracy. If we accept that nothing’s perfect, we have to agree it’s a pretty good system, surely? Could you organize a country or planet any better? Could I? Can we? I’m not talking about talking the talk, but walking the walk.

Peter Joseph criticizes consumerism for being cyclical. But so’s nature. Our money system is prone to collapse, but look at forest fires. Great swathes of people are poor, but who really believes life is fair? We’re consuming resources too fast, but so do locusts (fascinating creatures by the way). They suffer population collapse, then start up again when conditions permit. What’s wrong with that? What if human population collapses to about 2 billion and we start the game again? Would that be bad? Why are humans more important to Universe than locusts? Do we have a special destiny? Must we survive? Must there be seven billion of us, or two, or twenty?

Such questions are unhelpful, for the most part. We cannot not want to survive, and we are special, just as are locusts, just as is grass, simply because we can perceive specialness. That ability has evolved in us. As we are of Universe, all we do is of Universe. We ask philosophical questions, we muse, we care, we care not, we struggle to overcome with inventiveness, can imagine the future, want the best for our children’s children, and ‘know’ we want the best. This is our nature, our nurture. There are alternatives.

Dinosaurs died out, furry little mammals didn’t. In time, the furry mammals evolved into apes, now there’s homo sapiens sapiens. Change is the only constant. Change is nature, Universe. And now we say we love life. We know joy. We believe deeply still in a bunch of stuff that is the dying paradigm, but that’s changing. In competing to maximize self-interest, we have rendered ourselves virtually economically redundant, but why should the economy be the only thing that matters? That’s an addressable challenge, because value is no absolute and is very poorly measured with a linear scale like $ or €. We can learn to do ‘better,’ are learning to do ‘better.’ We know burning through fossil fuels to power our creature comforts is highly unsustainable. We are concerned with fairness and justice, suffer when confronted with ongoing and obvious injustice. But we do not want a grey, featureless future of conformity and uniformity. We want to spread joy, live rich, meaningful lives, even if most today are very narcissistic and immature in that endeavour. And it is for simple reasons like wanting to live and loving joy that I put my shoulder to this wheel and push.

And then there is the panda. Billions of cells working in harmony to be a cute animal which has a very hard time turning out new pandas, and is very fussy about it’s food. It is at the edge of its time on earth, kept alive by human intervention. Changing the ‘flawed’ wisdom of the panda, a wisdom it acquired over millions of years of evolution, is hard. Getting it to like a wider variety of food stuffs, or be more fertile and prolific, isn’t easy. All those cells evolved to operate in a particular way. The cells of human society are held together by a paradigm, by beliefs, which evolved over many millennia to become the corpus of structures that make up society today, the ideas, the mores, the expectations. And while it’s easier to change a paradigm than a panda, it certainly isn’t a snap. But the more important message of this comparison is not the relative difficulty, but the absence of a victim, the absence of evil doers. Whom should we blame for the panda’s fate? For humanity’s? ‘Blame’ is a perception-filter we created, but maybe soon we won’t need that filter any more. It’s complex out there. Things evolve, cope, adapt, as they happen to, not as our short-sighted egos desire, from nucleated cells to fissiparous human societies, fractious, avaricious, creative, destructive, evolving.

I am not writing this in a vacuum. The ideas I draw on have been available to humanity for thousands of years. We could call them our genetic social potential, a vein of fertility we have not quite learned to tap. Whether we do or not is up to the gods, up to us, up to chance. Whether we do or not is neither good nor bad. Shit just happens, and nothing can stop that.

Partly because I believe in progress—not that progress is Good or Bad, but that wisdom accumulates and humans now cast value judgments upon those accumulations—I also believe the momentum is sufficiently in the direction of ‘improvement’ to be ‘hopeful’ about coming decades. Species go extinct, and humans might too. But I don’t think so. Universe evolved this way, is finding more exquisite expressions of interbeing as it goes, and we are in that, of that. The appreciation of Universal complexity I have learned these last years is a gift given I share with others. The experiences of joy discovery unleashes, life unleashes, in and amongst the horrors, are gifts we share. Without sharing—sharing too is a gift—, even in the form of competitive enmity, there can be nothing. Without interbeing, nothing can be. We are. This core and simple reality, as it dovetails with change and evolution, is why I am excited about this period. It’s not that the old is Bad and the new Good, or vice versa, but that we can be involved, and can enjoy the struggle of that involvement.
Shall I compare thee to a Summer’s day?
Thou art more lovely and more temperate:
Rough winds do shake the darling buds of May,
And Summer’s lease hath all too short a date:
Sometime too hot the eye of heaven shines,
And oft’ is his gold complexion dimm’d;
And every fair from fair sometime declines,
By chance or nature’s changing course untrimm’d:
But thy eternal Summer shall not fade
Nor lose possession of that fair thou owest;
Nor shall Death brag thou wanderest in his shade,
When in eternal lines to time thou growest:

So long as men can breathe, or eyes can see,
So long lives this, and this gives life to thee.

30 January 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.