Economics – Apr 19

April 19, 2013

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Sacred Economics: Chapter 17, Summary and Roadmap (Pt.18)

Charles Eisenstein, Reality Sandwich

The following is the eighteenth installment from Sacred Economics: Money, Gift, and Society in the Age of Transition, available from EVOLVER EDITIONS/North Atlantic Books.

First they ignore you, then they laugh at you, then they fight you, then you win. –Mohandas Gandhi

Before I explore more deeply the shift in personal economic thinking and practice that is part of sacred economy, I will summarize its key macroeconomic elements. Some are coming into place already; others are still outside the purview of acceptable political discourse and await a deepening of the crisis for the unthinkable to become common sense.

The transition I map out is evolutionary. It does not involve confiscation of property or the wholesale destruction of present institutions, but their transformation. As the following summaries describe, this transformation is under way already, or incipient in existing institutions.

The reader may notice that, except where they are off the map entirely, most of these developments fall on the left side of the political spectrum. That is because they gradually redistribute wealth from the rich to everybody else. Whereas the moneyed classes have always desired higher interest rates, and labor lower interest rates, this book foresees them going negative. Whereas liberals are fond of social welfare programs, this book foresees their universalization in a social dividend. Whereas corporate interests advocate the gutting of environmental and social protections, this book foresees the reclamation of the commons. The single major exception to the foregoing is the elimination of the income tax, which will actually benefit that small subset of the wealthy whose wealth comes from entrepreneurial productivity rather than control of money and property generating economic rents.

…1. Negative-Interest Currency Motivation: Negative interest on reserves, and a physical currency that loses value with time, reverses the effects of interest. It enables prosperity without growth, systemically encourages the equitable distribution of wealth, and ends the discounting of future cash flows so that we no longer are pressed to mortgage our future for short-term returns. Moreover, it embodies the truth about the world, in which all things decay and return to their source. No longer is money an illusory exception to nature’s law. Finally, since money in some sense represents the accumulated power of millennia of technological development, which is the common inheritance of all human beings, it is unjust for someone to profit merely by owning it, as happens in the current system of risk-free positive interest.

…2. Elimination of Economic Rents, and Compensation for Depletion of the Commons Motivation: Polarization of wealth is inevitable when people are allowed to profit from merely owning a thing, without producing anything or contributing to society. These profits, known as economic rents, accrue to the holders of land, the electromagnetic spectrum, mineral rights, oil reserves, patents, and many other forms of property. Because these forms of property either were prior to any human being or are the collective product of human culture, they should not belong to any private individual who does not use them for the benefit of the public and the planet.

…3. Internalization of Social and Environmental Costs Motivation: Just as it is possible today to deplete aquifers without paying society for it, it is also possible to deplete the earth’s capacity to absorb and process waste, the geosphere’s capacity to recycle carbon, and the human body’s capacity to deal with toxic pollutants. Today, pollution and other forms of environmental degradation generate costs that are usually borne by society and future generations, not the polluters. Not only is this patently unfair, but it also encourages continued pollution and environmental degradation.

…4. Economic and Monetary Localization Motivation: As community has disintegrated around the world, people yearn for a return to local economies where we know personally the people we depend on. We want to be connected to people and places, not adrift in an anonymous global monoculture. Moreover, global commodity production puts localities into competition with each other, fomenting a "race to the bottom" in wages and environmental regulations. Moreover, when production and economic exchange are local, the social and environmental effects of our actions are much more obvious, reinforcing our innate compassion.

…5. The Social Dividend Motivation: Thousands of years of technological advances have made production of the quantifiable necessities of life extremely easy. These advances, the gift of our ancestors, should be the common property of all humanity. All deserve a share of the wealth they have made possible. The same is true of the natural wealth of the earth, which was made by no man. The current economic system essentially forces us to work for what is already ours. It is more just to pay out the proceeds of the economic rent compensation, pollution taxes, and so on (see 2 and 3 above) to all citizens as a social dividend. This also serves to mitigate concentration of wealth and prevent deflationary crises. The social dividend would ideally provide the bare amount to cover life’s necessities; beyond that, people could still choose to earn their own money. It frees work from the pressure of necessity; people would work because they want to, not because they have to.

…6. Economic Degrowth Motivation: Over hundreds of years of inventing labor-saving devices, from the spinning jenny to the digital computer, we have at every turn chosen to consume more rather than to work less. This choice, driven by the money system, accompanied an accelerating drawdown of social and natural capital. Today, the option of accelerating consumption is no longer available to us. Absent the driving force of positive risk-free interest, economic growth will no longer be necessary to promote the flow of capital, and a degrowth economy will become feasible. Technology will continue to advance, and we will be left with the second option: to work less or, more accurately, to work less for money.

…7. Gift Culture and P2P economics Motivation: The expansion of the money realm has come at the expense of other forms of economic circulation, in particular gifts. When every economic relationship becomes a paid service, we are left independent of everyone we know and dependent, via money, on anonymous, distant service providers. That is a primary reason for the decline of community in modern societies, with its attendant alienation, loneliness, and psychological misery. Moreover, money is unsuited to facilitate the circulation and development of the unquantifiable things that truly make life rich…

(from Sacred Economics)

A Practical Utopian’s Guide to the Coming Collapse

David Graeber, The Baffler
What is a revolution? We used to think we knew. Revolutions were seizures of power by popular forces aiming to transform the very nature of the political, social, and economic system in the country in which the revolution took place, usually according to some visionary dream of a just society. Nowadays, we live in an age when, if rebel armies do come sweeping into a city, or mass uprisings overthrow a dictator, it’s unlikely to have any such implications; when profound social transformation does occur—as with, say, the rise of feminism—it’s likely to take an entirely different form. It’s not that revolutionary dreams aren’t out there. But contemporary revolutionaries rarely think they can bring them into being by some modern-day equivalent of storming the Bastille.

At moments like this, it generally pays to go back to the history one already knows and ask: Were revolutions ever really what we thought them to be? For me, the person who has asked this most effectively is the great world historian Immanuel Wallerstein. He argues that for the last quarter millennium or so, revolutions have consisted above all of planetwide transformations of political common sense.

Already by the time of the French Revolution, Wallerstein notes, there was a single world market, and increasingly a single world political system as well, dominated by the huge colonial empires. As a result, the storming of the Bastille in Paris could well end up having effects on Denmark, or even Egypt, just as profound as on France itself—in some cases, even more so. Hence he speaks of the “world revolution of 1789,” followed by the “world revolution of 1848,” which saw revolutions break out almost simultaneously in fifty countries, from Wallachia to Brazil. In no case did the revolutionaries succeed in taking power, but afterward, institutions inspired by the French Revolution—notably, universal systems of primary education—were put in place pretty much everywhere. Similarly, the Russian Revolution of 1917 was a world revolution ultimately responsible for the New Deal and European welfare states as much as for Soviet communism. The last in the series was the world revolution of 1968—which, much like 1848, broke out almost everywhere, from China to Mexico, seized power nowhere, but nonetheless changed everything. This was a revolution against state bureaucracies, and for the inseparability of personal and political liberation, whose most lasting legacy will likely be the birth of modern feminism.

Revolutions are thus planetary phenomena. But there is more. What they really do is transform basic assumptions about what politics is ultimately about. In the wake of a revolution, ideas that had been considered veritably lunatic fringe quickly become the accepted currency of debate. Before the French Revolution, the ideas that change is good, that government policy is the proper way to manage it, and that governments derive their authority from an entity called “the people” were considered the sorts of things one might hear from crackpots and demagogues, or at best a handful of freethinking intellectuals who spend their time debating in cafés. A generation later, even the stuffiest magistrates, priests, and headmasters had to at least pay lip service to these ideas. Before long, we had reached the situation we are in today: that it’s necessary to lay out the terms for anyone to even notice they are there. They’ve become common sense, the very grounds of political discussion.

…In retrospect, though, I think that later historians will conclude that the legacy of the sixties revolution was deeper than we now imagine, and that the triumph of capitalist markets and their various planetary administrators and enforcers—which seemed so epochal and permanent in the wake of the collapse of the Soviet Union in 1991—was, in fact, far shallower…

(March 2013)

The End of Growth, Part 1

Satyajit Das, Minyanville
Alan Weisman’s bestselling book The World Without Us was based around a thought experiment – what would a world bereft of humans revert to. Society increasingly needs to focus on what a world without growth, or at least low and uneven rates of growth will look like.

Growth is a relatively recent phenomenon. In a deliberately provocative 2012 National Bureau of Economic Research paper entitled "Is US Economic Growth Over? Faltering Innovation Confronts The Six Headwinds," economist Robert Gordon found that prior to 1750 there was little or no economic growth (as measured by increases in gross domestic product per capita).

It took approximately five centuries (from 1300 to 1800) for the standard of living to double in terms of income per capita. Between 1800 and 1900, it doubled again. The twentieth century saw rapid improvements in living standards, which increased by between five or six times. Living standards doubled between 1929 and 1957 (28 years) and again between 1957 and 1988 (31 years)…

(16 April 2013)
Read Part 2 of this article here.

The Limits of the Earth, Part 1: Problems

Ramez Naam, Scientific American blog
This is part one of a two-part series on the limits of human economic growth on planet Earth. Part one details some of the environmental and natural resource challenges we’re up against. Part two, on the ultimate size of the resource pool and solutions to our problems, will be published tomorrow and linked here. Both parts are based on Ramez Naam’s new book, The Infinite Resource: The Power of Ideas on a Finite Planet

The world is facing incredibly serious natural resource and environmental challenges: Climate change, fresh water depletion, ocean over-fishing, deforestation, air and water pollution, the struggle to feed a planet of billions.

All of these challenges are exacerbated by ever rising demand – over the next 40 years estimates are that demand for fresh water will rise 50%, demand for food will rise 70%, and demand for energy will nearly double – all in the same period that we need to tackle climate change, depletion of rivers and aquifers, and deforestation.

One view of these looming threats is that we’ve exhausted planet’s resources. We’ve overshot the planet’s carrying capacity. Economic growth – the root problem driving our growing consumption and pollution – has to end. Indeed, the global economy may even need to shrink to avoid complete ecological disaster. That’s the thesis of a long line of environmental books, from The Limits to Growth to Peak Everything.

In my own new book, The Infinite Resource: The Power of Ideas on a Finite Planet, I challenge this view. The problem isn’t economic growth, per se. Nor is the problem that our natural resources are too small. While finite, the natural resources the planet supplies are vast and far larger than humanity needs in order to continue to thrive and grow prosperity for centuries to come. The problem, rather, is the types of resources we access, and the manner and efficiency with which we use them…

(17 April 2013)
Read Part II of this article here.

Are social enterprises the future for libraries?

Staff, The Guardian
The local library, along with schools and hospitals, used to form part of an unbreakable bond between citizen and state. Since austerity measures were enacted in 2010, however, that bond became much more fragile. Many local authorities have been quick to divest of library services, and their reasons for doing so are understandable. As Pete Gascoigne, executive director at Wigan Leisure and Culture Trust (WLCT) says, "No public libraries make a profit."

Much less understandable then, has been the subsequent eagerness of social enterprises to take them on…
(2 April 2012)

Tags: economic growth, end of growth, gift economies, Sacred Economics, social enterprises