Economies should be shaped to suit man
I cannot predict how the Age of Reunion will unfold in linear time. I do know, however, that by the end of our lifetimes, my generation will live in a world unimaginably more beautiful than the one we were born into. And it will be a world that is palpably improving year after year…Mines and quarries will barely exist, as we reuse the vast accumulation of materials from the industrial age. We will live in dwellings that are extensions of ourselves, eat food grown by people who know us, and use articles that are the best that people in the full flow of their talents could make them…most of the time, the loudest noises we hear will be the sounds of nature and the laughter of children…If this description evokes anger, despair or grief, then it has touched our common wound, the wound of separation. Yet the knowledge of what is possible lives on inside each of us, inextinguishable… (Sacred Economics, pp 445-6)
Sacred Economics is a hugely ambitious book. It takes aim at the most basic intellectual and moral foundations of our modern industrial societies. The author, Charles Eisenstein, is fully aware that many of his arguments and proposals will seem naïve, utopian and hopelessly idealistic to sceptical readers, versed in the realities of current-day economic theory and practice. However, as he puts it, these ideas only 'await a deepening of the crisis for the unthinkable to become common sense.'
In this, Eistenstein is following the Machiavellian thinking of none other than Milton Friedman, who wrote in his preface to Capitalism and Freedom that:
Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around…Our basic function [as intellectuals] is to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.
Friedman's crisis came in the form of the 'stagflation' of the 1970s – the combination of the recessionary effects of the two OPEC oil shocks (1973-4 and 1979) and declining business profitability stemming in part from the peak of trade union power and militancy. The inability of Keynesian social democracy to deal with that conundrum paved the way for the counter-revolutions led by Thatcher and Reagan, and the ushering in of the neoliberal era.
Eistenstein's crisis is nothing less than 'the crisis of civilization'. This crisis, he says, results from the fact that an endlessly-expanding financial system, founded on usury (the practice of lending money at interest), means that so much of the natural and human world has been commodified (converted into money) that, collectively, we are effectively destitute and bankrupt. The insatiably voracious nature of the contemporary financial sector means that it is cannabilising the so-called 'real' economy of goods and services, on which it ultimately depends for its own growth.
This crisis is more than simply 'the end of economic growth', although that will be a central feature of it. Having regard to recent warnings of a 'lost decade' (issued by that well-known body of radicals, the International Monetary Fund) and continued downward revisions of growth, it does seem that whatever the next few years hold in store, 'normal' levels of economic growth may not be in the offing. But for Eisenstein, the crisis is terminal rather than temporary, the 'final stage of what began in the 1930s' (p 129). That crisis was resolved, in the first instance with catastrophic world war, then with a permanent post-war militarised economy, and more recently with the commodification of almost anything imaginable (including water, soil, and now the atmosphere).
Eisenstein says we have reached the limits of this frantic process of commodification: 'there is no more room for the conversion of life and the world into money' (p 131). No annulment of debts, no redistribution of wealth, no economic stimulus will do the trick of returning us to economic growth. We are, as he puts it, 'maxed out':
Maxed out on nature's capacity to receive our wastes without destroying the ecological basis of civilization, maxed out on society's ability to withstand any more loss of community and connection; maxed out on our forests' ability to withstand more clear-cuts; maxed out on the human body's capacity to stay viable in a depleted, toxic world. (p 135)
Eisenstein therefore expects a 'Great Unraveling of the money system', first taking the form of 'persistent deflation, stagnation and wealth polarization, followed by social unrest, hyperinflation, or currency collapse' (p 136). As the civilizational crisis intensifies, the scope for new thinking and new ideas will broaden, pace Friedman.
However unlike Friedman, Eisenstein's proposals advocate the redistribution of wealth and a more egalitarian society, rather than continued wealth concentration and inequality. His marco-economic framework for a 'Sacred Economy' has seven pillars, all of which undermine central tenets of neoliberalism. Together, they amount to a wholesale social and political transformation ushering in the era of what Eisenstein calls a 'new materialism': the conscious design of money and economies to recover and embed the higher values of beauty and connectedness. This is what he means by a 'Sacred Economy'; it overcomes the millenial duality that separates the spiritual from the material realm, and in its reverence for humanity and the earth is indeed 'more materialistic than our current culture' (p 426).
Eisenstein juxtaposes his Sacred Economy with our current 'economy of separation':
Standard commodities that bear no relationship to the individual user, buildings that bear no relation to the land they occupy, retail outlets that bear no connection to local production, and products made in obliviousness to their effects on nature and people. (p 431)
So what are Eisenstein's proposals to take us from the economy of separation to the Sacred Economy of beauty and connectedness? Each gets its own detailed chapter, but they are helpfully summarised in the middle of the book (pp 332-346), and in the order in which they appear on those pages, are as follows:
1. Negative-interest currency: Proceeding from the recognition that the social institution of 'Money as Debt' has resulted, amongst other things, in the enrichment of the investing and owning classes – those with the power to loan money into existence - at the expense of everyone else, Eisenstein proposes a currency system that, consistent with the ecological reality that all matter decays, 'loses value with time'. Bank deposits will pay zero or negative interest rates, encouraging the flow of money and its productive use. The idea of 'economy and money as flow' rather than hoarding, saving and accumulation, is a central theme in his work.
2. Elimination of economic rents: In order to address the polarization of wealth flowing from concentrated ownership of property and resources, Eisenstein proposes a series of taxation and other measures that will gradually return the profits accruing from the mere ownership of something (e.g. a patent, copyright or mineral leases) back to 'the people'.
3. Internalisation of social and environmental costs: While at present the costs of polluting industries are displaced either onto the general public or to future generations, Eisenstein advocates the gradual internalisation of these costs into the production process, initially via taxes and 'cap-and-trade' auction systems. The long-term goal is the creation of currencies which 'are backed with Earth's resources and its capacity to absorb and transform waste'.
4. Economic and monetary localisation: A key plank of the transition to economies of connection rather than separation, Eisenstein rightly notes that this trend is well advanced in many areas, as seen for example in the burgeoning local food movement in places like Illinois, Toronto and Todmorden. He expects that as the global financial crisis deepens, moves to reclaim economic and political sovereignty, with nations and regions issuing (or reclaiming) their own currencies, will become more common.
5. Social dividend: Building on the social credit theory developed by British Engineer C H Douglas in the aftermath of World War I, the idea of a social dividend is to provide a universal payment to every person in order to guarantee the minimum necessities of life. Calling this a 'dividend' recognises that we are all rightful inheritors of the collective wealth produced by successive human generations over the centuries, just as we are all stewards of the natural wealth of the Earth. Contrary to predominant economic theory and the structure of welfare systems, we are not 'inherently lazy', and we do not have to be forced 'to earn a living'.
6. Economic degrowth: GDP growth has not only become counter-productive socially and environmentally; it is no longer possible, according to the laws of thermodynamics. In fact, stripping out the bloated and parasitical financial sector, we have effectively been in a period of stagnation and de-growth since the 1970s, says Eisenstein. Contrary to official government statistics, real unemployment rates are in the range of 15-20%, which is only to be expected because technological enhancements (productivity improvements) inevitably mean the loss of jobs. Once we get rid of interest-bearing money systems, a degrowth economy becomes feasible and desirable, combined with the other redistributive macro-economic proposals such as the social dividend and abolition of economic rents.
7. Gift culture and P2P economics: The monetisation and commercialisation of all relationships 'is a primary reason for the decline of community in modern societies, with its attendant alienation, loneliness, and psychological misery' (p 344). As the monetary realm contracts, the realm of gifts and sharing will expand. Whereas status currently accrues through ownership and the ability to manipulate others, in a Sacred Economy 'the connected self grows rich by giving, by playing its role to the fullest in the nourishment of that which extends beyond itself' (p 327). This trend is already evident with the rise of open source software and P2P collaborative platforms, such as Wikipedia.
Eisenstein concludes his book with practical suggestions for individuals who wish to embody these principles in their lives now. This begins with the development of a 'gift consciousness', which is 'the foundation of a sacred economy' (p 350). Cultivating a spirit and practice of generosity, through giving and receiving gifts, engenders feelings of gratitude and obligation which ultimately are the 'social glue' that binds a community together. From there, Eisenstein proceeds to the practice of 'non-accumulation' and 'right livelihood and investing', which will, he believes, both provide the best form of security in turbulent times, and create the pathway to the 'new materialism':
If you want to create a world of abundance, a world of gratitude, a world of the gift, you can start by using today's money, while it still exists, to create more gratitutde in the world. If we have a large enough reservoir of gratitude, then our society can withstand practically anything. [W]e live in a world of fundamental abundance that we have, through our beliefs and habits, rendered artificially poor…We will put [the modern consumer lifestyle] aside because we can no longer stand the emptiness, the ugliness. We are starving for spiritual nourishment. We are starving for a life that is personal, connected and meaningful. By choice, that is where we will direct our energy. (pp390, 426)
Eisenstein's vision is bold and compelling. His proposals are comprehensive, coherent and persuasive. His pathways for action demand much of individuals steeped in a culture of endless consumption, but then much will be required to meet the challenges of this century.
My main difficulty with this book is that it glosses over the concrete struggles that will be required to bring about any of the redistributive macro-economic proposals discussed, let alone all of them. Powerful and ruling classes have never at any time willingly ceded their wealth, privilege and status, and there is little reason to expect them to do so now. This is a book mapping out a post-capitalist economy, but it lacks a post-capitalist politics. How we actually get from here to there is the chapter yet to be written, but ultimately it will be the task of future historians to write it.