Durban Dollars: Tck Tck Tck Money
“A century from now social analysts will look back with angry astonishment at the extent our generation accepted the economists’ fantasy — happiness requires perpetual economic growth. This may have been true once; definitely now it is false.”
— Dennis Meadows, preface to Creating Wealth: Growing Local Economies with Local Currencies
In the classic novel, Ishmael, Daniel Quinn opined, through a telepathic ape in the title role, that our descent from paradise began when they locked up the food. This week finds us back in the Yucatec Mayan world, where Ishmael’s premise seems self-evident. Food has not yet been locked up, nor, by and large, is it stored. People live simply, quite by intention. They do not preserve, neither do they hoard. Three to five generations live together in compounds of thatched houses with dirt floors. Their roofs last 5 to 10 years, depending on tropical storm intensity in those years. The softwood walls last perhaps 20, and if there are doors and windows, they are typically from tropical hardwoods, maybe centuries old already, and will be reused whenever the rest of the building is renewed.
Most families have neither refrigerators nor root cellars. A ham or a rack of fish may hang, slowly smoking, in the rafters, but that day’s chicken or turkey is pecking the ground just outside, next month’s pig is rooting in a nearby mud wallow, and some chocolate is in the cacao nib stage, drying on some pieces of tin in the sun, probably next to some corn that will become masa flour. Less than an hour’s time spent in the forest or on the river yields a rich meal for the whole family for that day. When evening falls, they will climb into their hammocks and sleep while the smoke from the fire keeps mosquitoes at bay.
This is a non-monetary economy. Fractional reserve banking, currency exchanges and debt are alien concepts. Of course in today’s world those things are not entirely avoidable. Mayan family men might earn something taking tourists into the bromeliad corchal in a canoe, mother will weave baskets to sell in the market, and the children will help carry her corn and woven jewelry to trade for some cooking oil, salt, and other supplies. They will be paid in government money, and that they may store and hoard, although seldom more than a month’s worth. Granted, this affords them the opportunity to buy televisions, cars, and home appliances, but they have rejected that path, observing that it leads to a world they would not want for their children.
In Creating Wealth: Growing Local Economies with Local Currencies (New Society Publishers 2011), Gwendolyn Hallsmith and Bernard Lietaer point out that it was not very long ago that most of the world operated this way. The example they use is the !Kung people of Botswana, made famous by their depiction in The Gods Must Be Crazy! In their example, !Kung society gave way to the lure of consumerism, modifying ancient social practices to the modern monetary exchange system. The !Kung went from a sharing people to a hoarding people.
Choices made by any society enable members to attain well-being or to be cast into misery. The choice is always that of an individual, but the social norms and guiding philosophy can conduce towards one result or the other.
For the rural Maya, the community being considered was not merely a single group of humans denoted by geography and culture, but rather the ecological community of all life forms, and generations still to come. What sane economic system would even consider forgetting these, a Mayan might ask. An economist might call what the Mayans are acquiring social, cultural, and ecological capital. To these people, and many others in the intentionally pre-industrial world, they are just good sense.
At the recent Local Future conference in Michigan, Australian economist Steve Keen was asked by the audience, “What should individuals be doing with their savings to build local resilience?” Keen began by giving similar advice to another panelist, Nicole Foss, namely, hold cash, use opportunities to buy distressed assets, and worry more about deflation — “debt deleveraging” — than inflation. He then went on to say that while that might be the best strategy for individuals, it was totally counterproductive for communities, which should be investing in innovation and local green businesses with an eye towards a future of changed circumstances. Individuals taking their money out of circulation and hoarding cash makes a bad situation worse for the greater community. To square those two opposing views, he suggested local currencies.
Jubilee and Currency Change
Steve Keen told the assembly, “When local currency is formed, what you’ve then got is a form of circulation that can supplant the collapse in the credit-based system.”
“At an overall social level, you are in a debt crisis caused by the finance sector convincing you that being in debt is a good thing. It isn’t really individual fault in taking on too much debt, it’s the finance sector convincing us that debt’s a good idea. Economic theory played a huge role in that. So, I’d see two things as being very useful to do at a social level. One is to organize a modern jubilee, abolishing the debt. [The other, not discussed here, is to Occupy Economics Departments – Ed.].
“There are two ways to go about abolishing debt. One is to actually write it off and say 80% shouldn’t have been lent, we’re writing off 80% of the debt and force the banks to a restructuring and reorganization. It would be quite a bloody process.
“The other is … to give everyone a million dollars, or a large amount of money, and say, ‘If you are in debt, you have to pay your debt down using this million. If you’re not in debt you can hang onto it.’ … Now what that would mean is the banks don’t lose any assets because what goes down in loans goes up in their reserves, so the banks’ solvency wouldn’t necessarily be destroyed. What would happen is their liquidity would drop drastically because they rely on large amounts of debt to get their revenue. So if you suddenly give them money instead of debt, their cash flows will decline dramatically.
“The old way of doing a jubilee used to be behead the money lender and free the slaves. We can’t quite do that any more, as tempting as it might be… Economists really caused this crisis.”
[This whole talk is available online in episode 284 of the C-realm podcast]
Replacing Debt-based Money
Hallsmith and Lietaer say, “We don’t really need money. We need the things that money can buy. We don’t need financial capital for its own sake if we can obtain the things it buys. The exchange capacity of money is now, and hopefully in the future, one of the key reasons we need it. Money helps us exchange things that are of value to us—like our time and labor —for things that are of value to someone else.”
The problem that both Keen and Hallsmith/Lietaer put their fingers on is that debt-based money has only very marginal utility — for building hydroelectric dams, photovoltaic cell factories, or some other very large, long-term project, for instance. When debt becomes the medium of exchange, however, it takes on a life of its own and infuses every aspect of our lives. It becomes a monster — a juggernaut of cruel mathematics.
Money is, after all, only a means, not an end. Once we endow it with special characteristics, such as the power over your child’s life or death at the entrance to the hospital’s Emergency Room, what you have to have to pay taxes or tuition, or all that stands between you and your next meal, it becomes something far more sinister. When you add in the necessity for growth to offset the arithmetic of debt service, and you tie national currencies to the interest-and-inflation bandwagon and everyone who handles money finds themselves owing their soul to the company store. Whole nations — Greece, Spain, Portugal, Italy and Iceland to take the most recent examples — find themselves enslaved to debts as ridiculous and unforgiving as subprime mortgages or student loans.
Right now, it is illegal in the United States for any individual, group or government to issue any currency that would compete with Federal Reserve notes. So-called “complimentary currencies,” the community money systems invented by Lietaer decades ago, are forced to fly under the radar by disguising themselves to look like something other than currency: PayPal; airline frequent flyer miles; discount coupons; Time Banks; Local Exchange Trading Systems (LETS); and similar non-threatening exchange media.
The easiest way for the Federal (and/or State) government to force people out of these systems or otherwise maintain its lock on the food has been to require taxes to be paid in dollars. But therein lies a great opening for the change we all want to see.
What if taxes were required to be paid in, say, carbon credits, not dollars?
Well, the first thing that would happen is that people and institutions (airlines, manufacturers, mine-operators, garbage collectors, hospitals) would have to scramble around in search of carbon credits to meet their tax obligations. Those who could not acquire them by reducing actual emissions would have to purchase the surplus emission reductions of others on a carbon exchange. The value of credits would likely appreciate, considerably. It would quickly become much easier to find additional reductions than to have to purchase credits.
Not to be too severe or to price carbon credits out of the reach of most, the program could be phased in, say by 10 percent per year for 10 years. Bank accounts could be allowed to store carbon credits and to electronically pay them to the government each quarter, which would turn around and issue more, awarding them to anyone who can demonstrate greenhouse gas reductions. Tree planting or other land use changes that sequester carbon — organic no-till, holistic management, biochar, etc. — could also qualify to receive fresh government issue.
Hallsmith and Lietaer, while not going quite this far, propose backing national currencies with voluntary carbon reductions. They are sort of like Obama in Copenhagen, except taking another step. In their plan, consumers could make purchases from participating green businesses and receive electronic credits for anything that contributes to verifiable carbon drops. They can either keep their credits (for later tax payment purchases, or as an investment) or sell their credits to the carbon market and pocket the profit. Participating businesses that sell carbon-reducing goods or services gather the necessary data — the amount of carbon reduction achieved with each purchase— to be stored in a national data bank.
“For example, a consumer could earn a CCU when they take a bus to work in the morning instead of driving their car. They would pay for the trip in dollars, and would swipe their CCU debit card for the carbon currency credit. The transit company would have a standard carbon value for bus riders.”
Whatever the variation, the common elements are these: retire fractional reserve (debt based) Federal currency; open the floodgates to local currencies in all their shades and colors; require taxes to be paid in that which we most wish to encourage; and reconsider what constitutes real wealth. Is it what you see advertised in the corporate media, or is it what most rural Maya just call good sense?