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Debt, outsourcing, and suburban isolation

Continuing our serialization of Penny Nelson’s interview with Douglas Rushkoff for HiLobrow magazine, this week the conversation turns to the emotional components of debt, the inherent structures of corporations and why men must be kept busy with the front lawn. We recommend that you read the first part if you haven’t already, to get some context. Please, check back on Friday for the third and final installment.


4. Let’s All Be Independent Together

[Rudolf the Red-Nosed Reindeer, dir. Kizo Nagashima, Larry Roemer, 1974]

PN: How does idea of the individual fit into these other developments?

DR: Corporatism, with its promotion of competition between individuals over scarce resources and money, laid the ground for individualism and for a heightened concept of the self. I’m a media ecologist, I look at media and society as an ecology in which changes in one area reflect changes in another. The notion of the individual was invented, re-invented, in the Renaissance. This is part of why it was a re-naissance, a re-birth of old ideas, the rebirth of Greek ideals. The the Greek notion of the individual, which was always “the individual in relationship to the state,” the citizen, was recast as “the individual.”

The first individual in Renaissance literature was Dr. Faustus, who represented the extreme limits of greed. This was the new man, not a citizen of the city-state but an individual who has his own perspective on the world. We get perspective painting in the Renaissance, which meant the individual was a self-sufficient being whose point of view is important; we get reading in the Renaissance, which meant that a man can sit alone in his study and have his own relationship to the Bible, instead of gathering in the town square or the church, having the Bible read to him by a priest, as part of a congregation. So on the one hand it was this beautiful celebration of individual consciousness and perspective, but on the other it was all in the context of a new economy, one in which individuals were in competition against one another for scarce jobs, scarce resources, scarce land, and scarce money.

PN: OK, I’ll ask: but what about the artists?

DR: Historians say that one of the great things about the Renaissance were the patrons who could patronize a great artist. But before the Renaissance you didn’t need a “patron” in order to be an artist! You could actually live in a town and do some stuff and be a great artist. The Renaissance model of commerce and arts was not a pre-existing condition of the universe. Yes, the Vatican could commission some basilica to be painted, but . . . I’d be interested to see what Leonardo da Vinci or Michelangelo would have been like had they not been part of a centralized bureaucracy, but instead been independent little homespun artist guys. They might have been better artists . . . you never know.

PN: So now we have individuals and corporations as we know them.

DR: The king’s currency, centralized currency, is monopoly currency; demurrage currencies were declared illegal by the king. Why? First, centralized currency is easier to tax. Second, the king could remove gold from the currency whenever he wanted, he could basically suck the value out of it at will. And finally, because this is a currency based in scarcity, everyone has to compete for it. It’s a way to help people who have money be powerful just for having money — not because of what they can spend, but because of what they can hold.

PN: So money becomes a resource.

DR: It becomes a resource in itself. Actually it’s a resource once-removed, literally a derivative, the first derivative. Centralizing turns money from a representation of something real into a derivative asset class. We live in this derivatives-based economy today, it has trickled down to us in the form of central banking. Now most people believe that the way to fuel an economy is for a bank to inject money, and the way to start a business is by borrowing from the bank. The way that money comes into existence is it is literally lent into existence. But for every dollar that is lent into existence, for every dollar you earn, there’s a negative on the balance sheet somewhere.

PN: There’s debt right at the beginning?

DR: It is debt, the money we have is debt. Here’s how it works. You start a business by borrowing $100K from the bank. This means that you’re going to have to pay back say, $200K or $300K to the bank in 10 years when your loan is up. Where does the other $200K come from? It comes from someone else who’s borrowed $100K from the bank. And where are they going to get that? Either they go bankrupt, because they can’t pay it back, or they borrow another $200K from the bank. And then that has to be paid back, plus interest. So now they’ve borrowed $300K total and might have $900K to pay back.

The money supply has to grow as a function of interest. The rate at which we do business and make profit is actually driven and determined by the debt structure of the company rather than supply and demand. This is what Adam Smith was actually talking about. Adam Smith was not a free market libertarian, he was not a corporate industrialist the way the Economist or the Wall Street Journal likes to paint him. Smith said that economies only work in scale, they only work locally. He was living in a world where everyone was a farmer, and he hated corporations as much as he hated central government, because he knew that an interest-based economy does not ultimately work. And that is because debt is not actually a product. There’s nothing there.Nothing. Yet that’s what it was made for. The debt-based economy was invented so that people with money could get richer by having money, that’s what it’s for. I’m not saying it’s evil, it was an idea. But, it doesn’t actually work. If the number of people who want to make money by having money gets so big that there are more people existing that way than actually producing anything, eventually the economy will collapse.

PN: It sounds like a big Ponzi scheme.

DR: It is a Ponzi scheme! None of the companies we’re looking at as companies are what they are, they’re all just the names on debt. GM is a name on debt, Sony’s a name on debt.

PN: The New York Times . . .

DR: . . . is a name on debt. They’re all publically-listed, traded companies with these P/E ratios; there are the issued shares, and then there’s the actual business: those two things aren’t the same. The shares are actually more a drag on the system than they are an investment in the company. There’s all this debt to pay back.

5. Corporations R Us

 

[Monopoly Guy, street art by Alec, 2010]

PN: Debt has an emotional component as well, in the sense of, you’re going to owe me, and you’re going to owe me forever. So, better get to work, no slacking.

DR: Slowly over time, as corporations attempted to extract more and more value from people, both as workers and as consumers and ultimately as shareholders and investors in our own 401k plans, we all basically outsourced our lives. I outsource my job to a company. I outsource my consumption to a company, I go to Wal-Mart, I go to Costco. I outsource my investing and savings to companies, I give it to Citibank, instead of the local banker or my credit union or my restaurant or my children or my cathedral. All of our interactions have been mediated by corporations — you don’t work for me and I don’t work for you.

PN: Let’s talk about different kinds of value. Right now we have money, we measure everything by the little green metric. But there are other kinds, we all know that, there are personal relationships, there are other ways of measuring value . . .

DR: We have different ways of experiencing value, but it’s really hard to measure those. I feel that in the current environment, what people could or should be valuing makes them nervous, makes them anxious.

PN: What kind of ways?

DR: Sitting with a friend . . . OK, I’ll sit with a friend as long as I have my Paxil or something, because it’s almost like we’ve been acculturated to be desocialized. I can spend time with you because we’re working, right?

PN: Right, it’s productive.

DR: Productive — and we can measure it on the tape! Is it still turning?

PN: You’re saying money is not value-neutral.

DR: Not only is money not value-neutral, but our money is not money-neutral. Our currency is not the only money. There are other kinds of money, just like there are different kinds of media out there, and they all encourage different behaviors. Computers encourage certain kinds of behavior, television encourages certain kinds of behavior. A gold-based money encourages certain kinds of behavior, a centralized currency encourages certain kinds of behavior, and a demurrage local grain-based currency encourages certain other kinds of behavior. The kind of behavior that our money encourages, intentionally, by design, is: hoarding. This is currency that earns interest over time so you want to hoard it and not spend it. And that’s OK if you need that tool.

PN: But maybe that shouldn’t be the only thing in the toolbox?

DR: It’s like we only have a hammer and it’s really hard to put in screws. Centralized currency is really, really good for competition, it’s really, really good for big companies. Wal-Mart and Citibank can get money more cheaply; the bigger you are, the closer you are to the storehouse. And the big guys don’t want local currencies, they don’t want bottom-up value creation, work-based money, money that is worked into existence instead of borrowed into existence, because that reduces their monopoly over the means of exchange.

PN: The problem with defining ourselves by our jobs or socialism or by economic class is that we’re not just our economics, we’re not just our money.

DR: Right, I create value, but the value I create for my community is not just say, as a baker. It’s not just as a tailor. It’s also as the guy who brings those funny jokes to the party, the guy who has that beautiful daughter . . .

PN: And it’s not just ONE thing and it’s not measurable in just one way.

6. Home Sweet Home Depot

 

 

DR: From the 1920s to the 1970s an iconography was developed that turned corporations into our heroes. Instead of me buying stuff from people I know, I actually trust the Quaker Oat Man more than you. This is the result of public relations campaigns, and the development of public relations as a profession.

PN: Did the rise of PR just happen, or did they have to do that in order to prevent things from getting out of control?

DR: They had to do that in order to prevent things from getting out of control. The significant points in the development of public relations were all at crisis moments. For example, labor movements; it’s not just that labor was revolting but that people were seeing that labor was revolting. There was a need to re-fashion the stories so that people would think that labor activists were bad scary people, so that people would think they should move to the suburbs and insulate themselves from these throngs of laborers, from “the masses.” Or to return to the Quaker Oats example, people used to look at long-distance-shipped factory products with distrust. Here’s a plain brown box, it’s being shipped from far away, why am I supposed to buy this instead of something from a person I’ve known all my life? A mass media is necessary to make you distrust your neighbor and transfer your trust to an abstract entity, the corporation, and believe it will usher in a better tomorrow and all that.

It got the most crafty after WWII when all the soldiers were coming home. FDR was in cahoots with the PR people. Traumatized vets were coming back from WWII, and everyone knew these guys were freaked out and fucked up. We had enough psychology and psychiatry by then to know that these guys were badly off, they knew how to use weapons, and — this was bad! If the vets came back into the same labor movement that they left before WWII, it would have been all over. So the idea was that we should provide houses for these guys, make them feel good, and we get the creation of Levittown and other carefully planned developments designed with psychologists and social scientists. Let’s put these vets in a house, let’s celebrate the nuclear family.

PN: So home becomes a thing, rather than a series of relationships?

DR: The definition of home as people use the word now means “my house,” rather than what it had been previously, which was “where I’m from.’” My home’s New York, what’s your home?

PN: Right, my town.

DR: Where are you from? Not that “structure.” But they had to redefine home, and they used a lot of government money to do it. They created houses in neighborhoods specifically designed to isolate people from one another, and prevent men in particular from congregating and organizing — there are no social halls, no beer halls in these developments. They wanted men to be busy with their front lawns, with three fruit trees in every garden, with home fix-it-up projects; for the women, the kitchen will be in the back where they can see the kids playing in the back yard.

PN: So you don’t see the neighbors going by. No front porch.

DR: Everything’s got to be individual, this was all planned! Any man that has a mortgage to pay is not going to be a revolutionary. With that amount to pay back, he’s got a stake in the system. True, he’s on the short end of the stick of the interest economy, but in 30 years he could own his own home.

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