A blog series my former self published on 26th March 2012. I thought I'd find a home for it here as the content still seems relevant.
Edit (2019-12-22): See also #GameB.
- Foreword
- Money and Semiotics
- Gift Economies
- The Emergence of Money
- Money and Banking
- Corporatism (Banking)
- Artificial Scarcity
- The Commons
- Social Capital
- Sustainability
- Employment
- Collaborative Consumption
- Panarchy
- Social Media
- Smart Cities
- Peer Production
- Local Currency
- Currency Innovation
- Afterword
Having had some time to reflect and distance myself from earlier ideas, a different set of topics have emerged within my interest ecology that I wish to explore. Broadly speaking this work very briefly considers the transition from the industrial economy to a network economy. I draw inspiration from many people and those who can articulate things far better than I. Michel Bauwens, Yochai Benkler, Charles Eisenstein, Douglas Rushkoff and Bernard Lietaer to name but a few. Those familiar with my previous media projects will know I like to try and synthesize the collection of ideas I have at the time and present them as a creative narrative. The usual caveat being that I don’t claim to have any background in the subjects discussed here, nor am I asking people to believe what I say. The ideas presented here should be taken as scant and necessarily incomplete. That being said I believe that we each have something valuable to contribute and by sharing our understandings with others together we can see a bigger picture. Besides which, I’m sure most of us would agree that orthodox political and economic theory doesn’t appropriate to today’s highly networked society and the issues we collectively face.
We live in era punctuated by exponential change, all of our longstanding social institutions and ideologies are being tested to their breaking point as compounding crises unfold and threaten the stability of human civilization: Climate change, ecosystems collapse, resource shortages, famine, disease, geopolitical conflicts, social unrest, poverty, corruption, national insolvency, disruptive technologies and countless others. Yet beneath the surface of these seemingly disparate issues lies a common thread to which they all converge, how we relate to each other and the World at large. We have long toiled with a schism in our collective psyche, what Charles Eisenstein calls “The Age of Separation”. We have failed to recognize the interdependence of all things and the illusory nature of the discrete and separate self, a teaching that is common to much of perennial philosophy. Separation is not an ultimate reality, but a human projection, an ideology, a story. Now is the time for a new story.
“The single greatest barrier to the needed economic transformation may be the prevailing cultural story that there is no viable alternative.”
“Money, credit, and capital are, quite literally, systems of writing.”
Money is inextricably woven into our civilization’s defining story of self. It’s often been said that money makes the World go round, but what is money exactly? Answering this question often proves more challenging than it may initially seem. The short answer is that money itself is purely an abstraction which takes on various forms that represent values within its own ontology. Conceptually, money functions to negotiate social relations by acting as a legally sanctioned medium of exchange, unit of account and a store of value. As a medium of exchange, money operates as a semiotic system for social agreements and thus determines how we come to understand the world within a bounded system of signs and symbols. Indeed one of the first uses of writing was for keeping accounts.
Monetary exchanges present a structural logic similar to linguistic discourse and just as language shapes peoples’ thoughts and actions, so too does money. Money has the capacity to communicate a multiplicity of meanings depending on how the symbol is structured in reality. Just as a word has no meaning outside of language, money cannot be understood outside of a monetized culture. Both are therefore self-contained discursive systems in which the meaning and experience of a symbol must be interpreted by making references to the system within which the symbol operates. In addition, just as a word may have different meanings depending on the context in which it is used, money communicates experiences between its users that differ depending on the mediated relationship. It’s naive then to assume that money is a value-neutral system free from social biases and power relations. Yet in a capitalist economy money is taken to be the universal equivalent, meaning it is the measure to which everything else is compared. This is a belief system and a destructive one at that.
“Money as an external, universal medium turns an image into reality and reality into a mere image.”
Professor Carl Wennerlind has cautioned that the power of money can extend as far as measuring and valuing human life, so much so that the commodification of people appears natural and unquestionable. Marxist critique reasons that the medium of money knows no bounds, it extends its powers of measurement and persuasion to everything within its reach. Money gains so much power only because we accept the conceptual framework that it places us within and become impervious to its dominion over our lives. Why do some stock brokers commit suicide when the market crashes? Because money is literally their reality, they cannot think beyond it. The same question is now being posed to us all, can we think beyond money?
“All money is a matter of belief.”
People often confuse the meaning of the words money, wealth and value. Wealth refers to an abundance of resources, both tangible and intangible objects that yield benefits to society. Values are inter-subjectively shared agreements about the worth of something. What is necessary to realize is that not all values are monetary, nor should they be monetized. The ontology of money does not reside in the features of the objects that symbolize it, nor the in functions it provides. The emergence of money is the result of an abstract formulation of value measurement and thus at the deepest level of analysis, money can never be materially consistent regardless of what commodity it is backed by. In addition and contrary to popular belief, money is not wealth. As human beings wealth is common to us all, there are more than enough resources to ensure that everyone has enough food, clothing, and shelter. Unfortunately, when money is confused for wealth it is securitised through the accumulation of privately-owned resources called assets. Today we can witness this stranglehold of dispossession around us as 1% of the population holds 99% of the wealth.
The dominant influence of money is so pervasive in today’s World that it’s easy for people to forget that the economy has not always operated using money and markets. It’s important to look at the history of exchange and consider how older human societies operated. People have always expressed their relationships with one another through exchanges of goods and services. More tellingly, such exchanges reflect the underlying socio-political structure. A good case can be made in fact that in hunter-gatherer societies people actually worked less than we do today and enjoyed more leisure time.
Anthropological evidence suggests that for most of human history social organization has been primarily orchestrated through mutual aid. This is also called a gift economy where goods and services are provided freely without an explicit agreement of future compensation, they are asynchronous. Whereas economics is generally concerned with how resources should be allocated by a society, gift economies are not primarily concerned with resource allocation as such egalitarian societies are typically self-sustaining in life-supporting goods. Patriarchy then, is inconsistent with the goals of a gifting society. Gift cultures are more concerned about social bonding, the act of giving is itself a reward of social recognition, relationship and trust which creates a domino effect through the obligation of paying it forward. The beauty of this then is that gifts are open-ended and cement relationships, they cannot be hoarded like commoditised exchanges, they are erotic and must flow. Therefore in a gift economy the only ones who lose are those who don’t give freely.
From an evolutionary biologist perspective, such mutualism can be understood as an effective survival strategy in the form of reciprocal altruism. The idea being that co-operation between individuals increases their evolutionary fitness and thus by giving something freely to another when they need it, the recipient is more likely to return the favour. Such co-operative behaviour derives a synergetic effect which promotes a state of abundance (i.e. non-zero sum). In contrast, competitive behaviour is reductive and promotes scarcity (i.e. zero sum).
Much of the biological diversity that we see in the World has been driven by mutualism and the co-evolution of species. Gift economies can therefore been seen as a sustainable form of human ecology. Furthermore the success of co-operation can be mathematically proven through the highly effective tit for tat strategy in game theory. Tit for tat encompasses the game logic of reciprocal altruism, put simply unless provoked the player will always co-operate. The caveat to the effectiveness is that if negotiations are seeded on bad terms for several rounds then co-operation completely breaks down. For example, if I trust you but you cheat on me then I may be quick to forgive, but if you cheat on me again then I’ll become increasingly unlikely to trust you and will instead compete against you.
We are all born as helpless infants entirely dependent on our carers to nurture us. Life itself is a gift that is given to each of us, our very existence informs a deep sense of gratitude for all life. Phylogenetically, human beings are a non-predatory species, we only act out competitive behaviours because of environmental stresses from unnatural living conditions. Consequently, many people have marred Darwinistic views of human beings as inherently competitive. Alienated from ourselves, we enter into a vicious cycle of destructive, dominating and lustful behaviours which underpin our civilization.
Bartering is a longstanding form of non-monetary exchange where goods and services are directly exchanged for other goods and services. Historically, bartering existed alongside gift economies, but was used much more rarely. Traditional bartering suffers from what is called the problem of coincidence of wants. Put simply, I can’t trade my goods and services for what I want unless the person offering what I want also wants what I have to offer. This is the primary reason why money came to be as a result of the division of labour. Money removes the coincidence of wants and provides a more convenient way for people to exchange using a commonly agreed upon medium.
With the advent of city states, non-monetary exchange was replaced by commodity money. Commodity money refers to a commodity that acts an intermediary for exchanging for other goods and services. For example in ancient Rome salt was used as commodity money and soldiers were paid in salt, incidentally that is where the root of the word salary comes from, the Latin word salarium. More commonly, precious metals have been used as commodity money for much of civilized history as they are durable, portable and easily divisible.
Representative money is another type of money that served as an IOU backed by gold and silver. This meant that citizens could redeem gold and silver at a bank using their IOUs. Shortly thereafter, traditional banking functions were combined with the issuance of bank debt that served as a substitute for gold and silver coins. This system grew into what we know today as fractional-reserve banking. Money became problematic when two kinds of IOUs were issued into circulation each serving different functions. The first served as a claim check for gold and silver on deposit, and the other was a credit instrument issued as a promise to pay backed by some collateral assets, however both were redeemable for gold and silver. Consequently, there was never enough gold and silver to redeem all the notes in circulation. As such, the gold and silver standard was abolished in the U.S. in 1933 and internationally in 1971 by the actions of President Eisenhower and Nixon respectively. As a result representative money disappeared altogether. Today, virtually all money in circulation is fiat money which is backed by nothing but promises and debt.
“Much of the present misery in the world derives from a general failure to understand the nature of money, banking, and credit.”
There has long been a common misconception that money is created by the government, however that isn’t the case. A government can only borrow money through issuing securities with their central bank in exchange for money. Fiat money is created then when private banks extend credit, in other words money is created out of nothing, but a promise, a credo (Latin for belief), and enters into circulation as interest-bearing debt. When new credit is issued the money supply expands and when debts are repaid the money supply contracts, this is what causes the boom and bust cycle. Therefore if all the private and commercial debts within the economy were repaid and settled, the economy would implode because there would be no money supply.
“Of all the many ways of organising banking, the worst is the one we have today.”
Private banks are legally required to use fractional reserve banking which allows them to loan out many times more than they have on reserve and consequently they inflate the money supply. Money is loaned out faster than loans are repaid which creates growth imperative as the need to pay back an increasing amount of debt requires an increasing amount of economic activity. This fosters a short-termist attitude towards investment, short-term gains have precedent over long-term sustainability. Meanwhile, people are forced to egotistically compete amongst themselves to obtain money already in existence and the nature of compounding interest ensures that some debtors eventually default as there isn’t enough money going around to repay all the debt.
In more recent times, continual market deregulation by neoliberal economic policy has led to the formation of huge speculative bubbles from over-financialisation. Put simply, more and more of the economy has become virtualised through the use of credit as a product in and of itself. Derivatives are financial instruments granted special legal exemptions that make them an attractive means of extending credit by repacking outstanding debts and selling them on whilst obfuscating the credit risk and offering strong creditor protections to counterparties. In this way, derivatives can be used to hedge against risk by passing it on to other parties. Alternatively, derivatives can be used to acquire risk and speculate on the future value of the underlying assets and then buy and sell future contracts accordingly as a means of making profit. It’s possible then for traders to make vast financial gains by betting on things like natural disasters, the defaulting of sovereign debt and so on. According to the Bank of International Settlements, as of June 2011 total over-the-counter derivatives contracts have an outstanding notional value of over $700 trillion dollars, that’s more than 11 times global GDP – the total economic output per year. Clearly, there are a lot of bad debts floating around, wrapped up in bureaucracy and sold on to the future. This is economically and ecologically unsustainable. Debt is being repackaged and money printed because there isn’t the absorptive capacity of the World to absorb the debt.
Eventually speculative bubbles burst as bad debts recoil all the way back to the banks whilst governments attempt to keep the system going on a little longer. Public money is used to bail out the banks whilst “austerity measures” are applied to the citizenry and “quantitative easing” is implemented to stimulate the economy and also has the consequence of deflating the currency. None of these actions actually address the structural issues with the banking system and instead just lead to a shorter and more sever business cycle. Is it any wonder then that most of us are dull, dispirited, frustrated and suffocated by the current mindset? According to the World Bank, in the last 25 years alone there have been 97 banking crises and 176 monetary crises. The only way out of our spiralling debt problem is to default or live through a hyperinflationary depression.
“The current money system obliges us to incur debt collectively, and to compete with others in the community, just to obtain the means to perform exchanges between us.”
As the Occupy movement have highlighted, our current economic system concentrates wealth in the hands of the few. According to research by the New Economy Working Group, for the past thirty years more than 80 percent of the benefits of U.S. GDP growth have gone to the richest 5 percent of Americans, whilst the bottom 50 percent experienced a net decline. A significant causal factor is that our banking system is based on usury and therefore tends to concentrate wealth as it is biased towards capital accumulation – those with the most gain the most. The fact that private banks have a monopoly over money creation enables them to dictate the overwhelming majority of transactions in society by who has access to credit. As citizens we are locked into this one-dimensional and deficient monetary system and forced to use legal tender for the clearing of debts and the payment of taxes.
Many people are now aware that money and banking have been politicized and structured to achieve the centralization of power and the concentration of wealth in order to circumvent democratic processes. Unless significant changes are made to the way the banking and monetary system works, there will be further financial crises, rising inequality and poverty, social unrest and starvation, revolution and war, as well as faster environmental breakdown over the coming years.
“Today’s economy is not a recession, it’s the end of an era.”
“Corporations have no soul to save and no body to incarcerate.”
A corporation is a legal entity (i.e. legal personality) that has privileges and liabilities that are distinct from those of its members. Despite not being a natural person, a corporation can exercise human rights against real individuals and the state. Corporate personhood fosters a sociopathic environment which abstracts and distances human relationships both internally and externally. It is easy to commit injustices when the human and natural World are seen as mere commodities to be exploited. People who are subject to life within corporate environments learn to internalize this model and accept it as the dominating form of social organization and thus have marred views of human nature which reinforce social Darwinism.
“As long as we experience the world from the perspective of its corporate conglomerates, we will remain oblivious to the activity and opportunities still available to us on a human scale.”
The limited liability of a corporation means that shareholders are not responsible for corporate debts or for civil or criminal offences. There is virtually no legal provision for directors of corporations to consider interests other than those of shareholders. Consequently, corporations abuse their power to the detriment of the rest of society as they myopically seek to free themselves from regulation, manipulate markets, externalize costs and maximize short-term gains in order to pay dividends to shareholders.
“Until industrial feudalism is replaced by industrial democracy, politics will be the shadow cast on society by big business.”
Corporate power now stands so pervasive that it displaces governments and undermines democracy. Corporations are able to exercise their power via monopolies and mergers, and through their subsequent capacity to leverage broad economic interests. Businesses which are not strictly speaking oligopolies are locked into a network of control by the corporate power of conglomerates. Viewed from within political terms a corporation is a fascist dictatorship, or at best an oligarchy. Furthermore, many civic functions have now been taken over by corporate interests and are run for profit, paving the way towards an Orwellian dystopia.
By no means do I wish to suggest that there is some kind of global conspiracy at work here. Attributing blame, even where seemingly justified, has no useful purpose and just creates adversity. Whilst there are evidently corrupt ruling interests and parasitic institutions which seek to maintain their power and influence, they are but symptoms of longstanding and deeply flawed sociological theories along with an alienated and apathetic populous far too complacent with the agenda.
[Missing]
The commons refers to the collective heritage of humanity – the shared wealth of a community, to which every person has an equal interest and no one can own. The commons can be divided into three spheres. Natural Commons are resources necessary for our survival like soil, forests and oceans. Social Commons are functions necessary for social cohesion like health, education and community. Cultural Commons are knowledge assets necessary for self-actualization such as information, art and science. As our archaic institutions try to hold on to their old ways as long as possible it inevitably accelerates the conversion of anything it can into money, which generates enormous pressure to extend the commodification of the commonwealth. So long as we measure wealth in purely monetary terms we debase the commons and turn all facets of life into artificially scarce commodities.
Common goods are those which are both rival and non-excludable, these conditions combined are said to give rise to what Garrett Hardin termed “The Tragedy of the Commons“. His controversial theory assumes that different groups will purposely compete to exhaust resources so as to deny others access to the same resource. Certainly the tragedy of the commons plagues any imperialistic and stratified socio-economic system as we can see today with the vast plundering natural resources and subsequent failures for countries to agree upon environmental treaties. Yet as professor and Nobel laureate Eleanor Ostrom and others have shown, the failure of the commons is not inevitable in lateralized societies where communities self-organize and cooperate through the husbanding of resources. The primary challenge facing the World is not one of failed commons, rather it’s the tragedy of enclosures. That is, the legalization of private property and commodity exchange by the state and subsequent overuse of commonly managed resources by the market.
The history of the privatization of capital and natural resources is well known. Beginning in the 12th century in northern Europe, and intensifying during the 16th century, the emerging free market laid claim to what seemed to be an endless supply of natural resources existing in empty and limitless space. Enterprising merchants, bankers and politicians enclosed these “vacant” areas and turned them into legally titled property whilst displacing poor and natives peoples from their means of subsistence. The history of enclosures is a legacy of struggle and violence over claims to property, which continues today. Issues related to intellectual property law in particular are leading to what many are now calling the enclosure of the information commons.
The reclamation and recovery of a commons is a long-term undertaking. Today, common goods have all but faded from our modern frame of reference as our highly commercialized society is left grappling to fully appreciate their relevance. At the same time a dawning perception is bringing forth new ways of understanding resources, interrelationships, governing structures, values and standards. A new kind of commonwealth is needed to protect the assets of Earth, resolve our private and public debts, and create a global society of justice, sharing and sustainability for everyone.
Throughout history, community rules for many kinds of commons have been set up to prevent resource overuse while ensuring fair access. For the most part, these rules were customary and gained acceptance through practice. However as communities have been displaced over generations these obligations have been lost.
The movement towards a commons-based society requires the formation of commons trusts to protect the commons from claims of ownership by private individuals, businesses and government. A further consideration as proposed by Charles Eisenstein is a commons-backed currency, such that the value of money is tied to the production and preservation of common goods. Once commons trusts decide how much of each commons should be made available for use, we can issue money backed by it such that the health of the environment and wellbeing of society is the store of monetary value. For example, we might decide that the atmosphere can sustain total sulphur dioxide emissions of two million tons a year. We can then use these emissions as part of a range of indicators to value currency. Consequently access to credit will favour those who contribute the most towards society whilst minimizing their use of the commons. This type of economic system could be called “social capitalism“, as companies would be able to compete on top of the commons and the most profitable would be those who were using resources most effectively and contributing to the progression of society. A noteworthy effect of implementing such a system is that goods and services would reflect the real cost of production. Products which were produced most sustainably would be cheaper, whilst those which were more environmentally destructive would be expensive. This would also provide an economic incentive for repairing, reusing, and recycling more.
“Money is not wealth, we are!”
Social capital broadly refers to the value and integrity of social relationships. It includes things such as friendship, neighbourhood trust, social mobility, community participation, all of which make up the core economy. Whilst there is no commonly agreed upon standard, it is important to measure social capital as it gives a much better indication of social progress than any economic indicators. After all social capital is literally the glue that holds society together and without it there would be no economy, financial capital is therefore the least valuable, enduring and meaningful kind of capital. Unlike other forms of capital which are rival and depleted by use, social capital is anti-rival, it is depleted by non-use.
“In the last 30 years the state and market have destroyed civil society.”
Many of our social problems can be traced back to the fact that the core economy has been damaged by the monetary economy. A growing body research shows that social capital enables many important individual and social goods and that more stratified and less equal societies have poorer outcomes in nearly every social domain. Communities with higher levels of social capital are likely to have higher educational achievement, better performing governmental institutions, faster economic growth, less crime and violence, and happier and healthier residents and lower population growth. Unfortunately, according to research by Pamela Paxton of Ohio State Universe, social capital amongst individuals in the U.S. has approximately halved since 1970. What this generally equates to is that there has been a significant decline in all levels of community, which has to a large degree been caused by growing income inequality, corporate takeover and consumer culture.
Charles Eisenstein writes that “community is nearly impossible in a highly monetized society like our own. That is because community is woven from gifts, which is ultimately why poor people often have stronger communities than rich people. If you are financially independent, then you really don’t depend on your neighbours or indeed on any specific person for anything. You can just pay someone to do it, or pay someone else to do it.”
“Prosperity is relating, not acquiring.”
If gifts are what define community, then it might be because they encourage feelings of generosity and gratitude, which cement bonds of kinship. Studies have shown that what makes people happy is stable human relationships, sharing and cooperation can then been seen as the natural traits of psychologically healthy and morally mature human beings. Scientific results from MRI scans in fact confirm that a healthy human brain is wired for caring, cooperation, and service. When wealth is separate from accumulation but refers to a richness of relationships, each person’s wealth makes everyone wealthier.
“We cannot end the financial crisis without a new monetary system, we cannot create a new monetary system without creating long-term incentives for solving the ecological and energy crises, we cannot create long-term incentives to solve the ecological and energy crises without a low-carbon system of production and trade, we cannot create a low-carbon system of production and trade without a new multilateral system of governance, we cannot create a new multilateralism without a total redefinition of wealth.”
One of the many failures of the current system is the lack of a working and generally accepted measure of real prosperity. GDP is a very poor indicator of social progress as it only represents the total monetary value of economic activity and says nothing of real living conditions. Every car accident, felled forest, oil spill, heart attack and incarceration is counted as growth because they result in greater production and exchange of services. Whereas any acts of gifting and subsistence are invisible to GDP and any act of conservation and internalizing costs actually reduces GDP. GDP isn’t wealth, just as your salary isn’t your net worth. Accumulation isn’t wealth, just as cancer isn’t health. A clear distinction between money and real wealth is essential to any valid resource allocation decision. As GDP growth becomes an unachievable goal, it is especially important that societies re-examine their aims and measures. It stands to reason that economics should only be measured and calibrated in terms of social wellbeing and environmental health. We must abandon the illusory numerical analysis that put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of sustainability.
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
We’ve known for several decades of the scale of destruction caused by the human economic activity and yet because money is given precedent over everything else it has allowed such destruction to continue unabated. The development of clean and renewable energies has been a fledgling industry for many years because it’s been driven out by cartels and lobbying by bigger and more profitable industries. Within the reigning ideology, only when the monetized loss of biodiversity becomes greater than GDP will there be any significant effort to radically attend to health of the environment. Put frankly, our current environmental measures for achieving sustainability are palpably inconsequential and will remain so whilst corporations outflank every puny law and regulation that seeks to constrain their profitability.
Capitalism requires that economies continually expand financially and the only way it can achieve that is by producing more goods and services or through the enclosure of the commons. Since around 1970, global production levels have flat lined and subsequent capital gains have been the result of privatization, cost-cutting and the virtualisation of the economy as discussed earlier. There’s literally no more financial credit to extend without stealing from and desolating the future. Environmental constraints then are a big part of the “economic crisis”.
“Western civilization is a loaded gun pointed at the head of this planet.
John Maynard Keynes joked that governments could generate economic growth just by hiring people to dig holes and fill them up and yet this is essentially what’s happening on a much larger scale in China where empty cities are built to maintain impressive GDP growth. It’s obvious then that corporations and governments are incapable of addressing ecological concerns through their current policies. If governments truly cared about the health of ecosystems then the first point of call would be to end the military industrial complex – the biggest polluter on the planet. Ofcourse, in the current paradigm of infinite growth, governments need such astronomical defence budgets to enable the colonization of foreign lands and acquisition of natural resources. War is an unavoidable accompaniment to an economic system that demands growth.
Any sociological theory which ignores the reality of the body will fail. The biosphere is the foundation of life, not simply a resource that can be priced as if with enough money we could afford to do without it. The very act of seeing something as a resource to be exploited abstracts our relationship with that thing which allows it to be commoditised. In order for our society to make the transition towards a sustainable ecology, we must first realize that humans are not separate from the biosphere. We are embedded within a web of relationships which cannot be reduced to mere financial transactions. Life, not money, must be the basis of an ecological economic system. Whilst this is much harder to quantify, it is more likely to produce the decisions we need to secure future prosperity.
A circular economy is the economic realization of the interconnectedness of all beings. On a practical level, this requires eliminating negative externalities and thus internalizing costs through measures like full cost accounting and cradle to cradle production. Many industries today can only operate because their costs are externalized. For example, statutory caps on liability for oil spills and nuclear meltdowns make offshore drilling and nuclear power profitable for their operators, even though the net effect on society is negative. The result of internalizing costs, if other things remain the same, is that profit is dramatically reduced. Ofcourse, this internally contradicts the underlying goals of our current capitalist system.
Ultimately, the movement towards a steady-state economy requires the removal of interest-bearing debt which propels growth imperative. Unfortunately, growth is integral to the underlying structures and mechanisms of a capitalist economy and as such growth cannot be removed leaving the rest of the economic infrastructure as it is. Seemingly, the only options on the table are to either revolt against the system, or gradually subvert its values and transition the social infrastructure or wait until it collapses in on itself. The longer we wait, the messier it gets.
A post-growth economy does not mean that there would be no functional economic system, it simply means that people live within their means and without the need for capital accumulation. Goods and services would still be produced, but such a society wouldn’t depend on growth of private goods to prosper. Businesses would align themselves towards social and environmental needs instead of solely corporate needs.
“It is obvious that the real wealth of life aboard our planet is a forwardly-operative, metabolic, and intellectual regenerating system.”
No other economic system even approaches the efficiency of capitalism in utilizing capital to meet individual material human needs and wants. Yet from an ecological perspective, capitalism is highly entropic and unsustainable, capital cannot grow without consuming its metabolic periphery and breaking the homeostasis of the system. In doing this the capitalist mode of production depletes social capital as well as natural capital with no incentive to replenish future supplies. Once all natural and social capital are exhausted, the capitalist economy is faced with its glaring onesidedness.
“If humanity is to live in balance with nature, we must turn to ecology for the essential guidelines of how the future society should be organized.”
A sustainable economy must be based on a fundamentally different paradigm, one which is in accordance with living systems which by their very nature are regenerative, synergistic and negentropic. Immature eco-systems are characterized by competition and aggression, while mature eco-systems are symbiotic and cooperative. To learn how best to apply these principles to our economy we should once again reconsider how indigenous peoples have organized their societies. Not to dismiss the role that competition plays in evolutionary selection, naturalists such as Peter Kropotkin have made compelling cases that mutual aid is more important for survival than competition.
The pillars of capitalism were built on the foundation of slavery. The universal conversion of life into labour is the capitalist means of domination. A core requirement of a capitalist society is that a large portion of the population must not possess sources of self-sustenance that would allow them to be independent, and thus in order to survive must sell their alienated labour in exchange for a wage. Forced labour is a form of slavery which would seem incomprehensibly oppressive to even ancients and medieval peasants. In order to create the workforce for the Industrial Revolution, the commons had to be closed such that peasants had no choice but to work. Also, hence the derogatory term “commoner” to refer to such people.
“I would like to see people refusing to work in any job they felt was wrong. I would like to see work-dodgers: honourable and brave people who refuse to continue to feed this monstrous culture.”
In his the popular anarchist essay “The Abolition of Work“, Bob Black argues for the end of consumer-based society in which all of life is reduced to the consumption of commodities. Indeed, so much of life is now monetized that people have little to do outside work, but consume. As such, our alienated culture is awash with distractions and glamour to meet false needs. Black argues that the only way for people to be free is to reclaim their time from jobs and employment, instead turning necessary subsistence tasks into free play done voluntarily. He goes on to say that employment cements rigidity and regularity which prevents people from achieving self-actualization. Furthermore, he reasons that the vast majority of work doesn’t need doing in the first place and only serves to further commerce and social control.
“Do not internalize the industrial model. You are not one of the myriad of interchangeable pieces, but a unique human being.”
In the current system, success in the job market is largely determined by the marketability of one’s skills. To this end we have the faithful resume and curriculum vitae which give a brief one-dimensional representation of a “human resource”. These formal documents do a great injustice to who we are as human beings and are biased towards labour which is institutionalized. However, the Internet allows for mass collaboration and new modes of working which are outside the reach of the categories that formal documents and job titles place us in. For example the boundaries between professionals and amateurs online have blurred such that people can acquire graduate-level knowledge through self-directed learning on the Internet even though they have no formal qualification.
Another common fallacy of working life is how work is distributed. According to a recent labour force survey, the U.K. managed to clock in 2 billion hours of unpaid overtime last year, which is the equivalent of one million extra full-time jobs. There are millions of people who want to work less but struggle to do so because of work requirements. Yet, during the second quarter of 2011 around 9.1% of those employed were underemployed whereas 9.2% of the employed population where overemployed. While it’s not possible to relocate all full-time jobs though a simple substitution, there is a certainly a case for redistribution of paid work. In the U.S. there is an implementation called “results only work environment” where employees have control over their time and are evaluated on what they get done and not how many hours they are at work. Research shows that with ROWE, staff turnover is 45 per cent lower for employees and productivity is 35 per cent higher compared to those in an ordinary working environment. Why should we be expected to work 40+ hours a week if in principle we only need food to keep us alive? Shorter working hours is a practical way for those who care about safeguarding the natural resources of the planet to break the damaging habit of living to work, working to earn, and earning to consume.
The nature of work is changing as our societies are collectively faced with record levels of unemployment, particular amongst the youth. High unemployment is here to stay, because it is largely driven by deep systemic causes. One being the end of infinite growth, when growth slows so does employment. The other being automation which allows firms to increase their operating efficiency multiple times over and reduce the need for human labour. Consequently, the cost savings from deploying automation further concentrates wealth up the hierarchy. The real problem then isn’t technological, but cultural. We face an income crisis not an employment crisis, the emphasis then is how we can distribute wealth rather than producing it. Therefore we have to begin to ask ourselves how can we organize society around something other than employment?
The political focus on full employment is a misnomer, nobody wants a job to occupy their time. People want autonomy over their lives, they want a mission to inspire them and bring out their deepest human capacities. When denied of this, the psyche swings wildly as people reject to their mandated roles and experiment socially to make life more fun and spontaneous through avenues such as aberrant sexual behaviour, drug abuse, body modification, spirituality and radicalized ideologies. Our current system is idiotic as it destroys our vital and creative impulses in order to turn us into mindless zombies staring vacantly into screens doing work that doesn’t matter.
“Unemployment is not a disease that needs to be cured by creating more employment. Unemployment is the cure.”
What is wrong with unemployment is not its proliferation, but the unsustainability of a system where employment is seen as “good” and unemployment as “bad”. In a recent national survey, 75% of respondents said they feel disempowered and disengaged in their workplaces. One of the reasons we have such large consumer debts in the first place is that people use credit to live beyond their means to try and temporarily escape the drudgery of working life. Much of our so-called “free time” is taken up preparing for work, getting to work, getting home from work, recuperating from work and doing what is necessary so we can go to work the next day. The end of employment is by no means the end of doing things, human beings are by nature creative, innovative, and vigorously pursue their goals. The greatest waste is squandering the full richness of human potential by constraining it to a monetary economy. Money itself only ever works as an extrinsic motivator for mechanical work, which provides no room for creativity, put simply we do our best work when money is not an issue. The political economist Karl Polanyi suggested incentives to work should be based on reciprocity, happiness and social approval.
“We have not found a way to let industry pay us to save our own lives.”
To give everyone an equal chance in life, we need to level the playing field in terms of the ownership of assets. This is also especially important given the long-term impact of technological unemployment which excludes people from contributing to society and threatens social stability itself. In his book “The Lights in the Tunnel”, Martin Ford argues that most routine jobs in the economy will ultimately be automated via advancing technologies such as robotics and artificial intelligence. He goes on to suggest that without a basic income guarantee, this will cause widespread unemployment and a drastic decline in consumer demand and confidence.
A common objection to such a proposal of entitlement is that people would have no motivation to work. If money was no longer an issue what would you do? Sit around doing nothing with your life waiting to die, or would you want to find something meaningful to do with your time and skills? Much of the lazy work ethic that people have today is a direct result of doing a job that they don’t care for.
There are many ways such a social dividend could be applied, one straightforward approach would be to provide all citizens with a cash transfer on reaching adulthood, money which could be used to start a business, or could be invested in real assets in their local communities, or in human assets such as continuing education. Another alternative could be that society provides a citizens wage for all, such that everyone is capable of meeting their basic needs. While there would still be poor people and wealthy people, poverty would no longer entail extreme anxiety. Without the pressure of having to “make a living”, there would be little demand for degrading or tedious jobs, to attract workers employers would have to provide jobs that were meaningful and respected human dignity.
“Happiness comes from the intersection of what you love, what you’re good at, and what the world needs.”
In 2004, Charles Clark of St. John’s University estimated the U.S. could afford a basic income guarantee at the 2002 poverty level of $9359 per adult and $3500 per child by eliminating some federal welfare programs and by replacing the individual income tax rates with a flat tax of 35%. Alaska actually already has a system whereby each citizen receives a share of the state’s oil revenues, even though this amount is not necessarily enough to live on. Similarly in 2008, a pilot project with a basic income was started in the Namibian village of Omitara by the Namibian Basic Income Grant Coalition and after six months the project had significantly reduced child malnutrition, increased school attendance and raised the community’s income significantly above the actual amount from the grants as it allowed citizens to partake in more productive economic activities.
“The road to happiness and prosperity lies in an organized diminution of work.”
The goal of the future economy is not to provide “jobs” as most politicians seem to think. This type of thinking is a reification of the infinite growth paradigm they are trying to prop up. New jobs can only be created by producing more private goods and services, that is not what we need because it ultimately encloses the commons ever more and pushes us ever further towards ecological catastrophe. That said, whilst there may be a shortage of jobs, there is no shortage of work to be done. There are communities to rebuild, students to teach, forests to replant, rivers to clean, homeless to feed and so on.
As opportunities to do rewarding work increase, our desire to work for extrinsically motivated work once we have satisfied our basic needs diminishes. People will choose to work less, have less disposable income, whilst enjoying opportunities to create more. At the same time, our reliance on money to meet basic needs will continue to fall anyway.
Fortunately, there is some reprieve from the financial recession as people are having to once again rebuild the ties within their communities and share things once again out of desire and necessity. Where there is no money to facilitate transactions, gift economies reemerge and new kinds of money are created. Collaborative consumption is a term used to describe an emerging economic model based on sharing, swapping, bartering, trading or renting access to products and services as opposed to private ownership. Traditional markets based on conspicuous consumption are being replaced by frugally-minded redistribution markets which enable peer-to-peer exchanges. Peer-to-peer sharing allows for potentially unbounded scalability and access to more resources which are often closer to us. As peer-to-peer companies aren’t subject to the overhead cost of purchasing and maintaining assets of their own, the cost to renters is often lower, at the same time members have the opportunity to monetize their own possessions. Examples include space sharing on Hub Culture, land sharing on Landshare, the activity finder GuideHop, local hospitality service Airbnb, car sharing platform Zipcar, and peer-lending on Zopa.
“The future is about gigs and assets and art and an ever-shifting series of partnerships and projects.”
The sharing economy dovetails with a changing lifestyles and social values towards more collaborative ways of living and demonetization. People are increasingly finding that they care less about money and material things and more about experiences and connecting with other people. As such sites like Zaarly. Gidsy and Skillshare are making it easier than ever to sell your knowledge, skills and experiences in peer-to-peer marketplaces. A new form of freelancing and mircroenterprise is emerging where people are able to earn money for anything from city tours to teaching a musical instrument to learning how to buy quality wine. People within the knowledge economy are now able to create opportunities for themselves simply by entering into the peer-to-peer marketplace and earning reputation and thus a brand.
Collaborative consumption aims to make sharing fun and socially engaging whilst freeing people from the various burdens of owning things outright. It takes advantage of the often overlooked idling capacity of consumables. For example your average power drill is used for 12 minutes of its lifetime. If instead the same power drill were made available to others when it was not being used by the owner then it’s possible to dramatically reduce consumption of power drills. If we share more things in such a way, we suffer no loss of quality of life. Our material lives are just as rich, yet would require less money and produce less waste. Some 40% of the world’s industrial capacity stands idle, that figure could be increased to 80% or more without any loss of human happiness. All we would lose would be the pollution and tedium of a lot of factory production.
“Power does not reside in institutions, not even the state or large corporations. It is located in the networks that structure society.”
When we review history, we find that whenever a profound new media technology is born, there is a paradigm shift in political and social organization. For instance, European nations couldn’t expand their empires without writing and standardized codes of law. We couldn’t have had the modern democratic nation state until we had the printing press, which was necessary to distribute enough information about current events that people could vote. We now have a new form of media technology that is fully interactive and beckons forth a new political and social organization.
“Politics is too important to leave to politicians, economics is too important to leave to economists.”
Hierarchical organization has accompanied industrial era production where large aggregations of capital are needed in centralized locations. Beyond a certain size, hierarchies become grossly inefficient and slow moving. Information and power rests at the top which systematically suppresses negative feedback because information flows down the hierarchy far easier than it flows up. As a result, people with authority make less informed decisions because they are insulated and isolated from the work they’re interfering with. They also deny people a sense of agency, requiring instead that people fall in line with the groupthink. Steven Johnson describes in “The Myth of the Queen Ant” how humans have traditionally looked for “rulers” in ordered systems or “pacemakers” that are responsible for the maintenance of order. However complex adaptive systems like ant colonies and other social processes such as Occupy Wall Street don’t have real leaders, they are self-organizing networks of interactions and relationships and not the aggregation of individual subjects that neoclassical economic theory posits.
Networks are the fundamental organizing principle of life itself, from cells, to ecosystems, to society, technology and beyond. Networks are flexible and resilient, able to adjust to changing environments. They are scalable, have no centre and can operate in a wide range of configurations. With little exaggeration, the 21st century may be called the age of networks as they comprise the very nervous system of our society. The rise of networks implies profound changes for the realm of civil society as individuals and groups engage each other globally in ways they couldn’t do before, the locus of global governance shifts from centrally managed activities to distributed networks. The cumulative effect of the shift from pyramidal hierarchies to networked heterarchies comprised of overlapping spheres of authority and collective action is called panarchy. Panarchy resembles not so much a structure, but an ecosystem – an organic, fluid complex adaptive system. Whilst network topologies have existed throughout history, it is only now that they are gaining significant strength and maturity because communication technology lets scattered, autonomous groups consult, coordinate, and act jointly in real-time across great distances. This is also leading towards the emergence of a noospheric awareness where geographic boundaries do not confine our interactions because in our hyperconnected world what happens “over there” affects what happens here.
Information wants to be free and whether we like it or not, it will increasingly succeed in a networked information age. Since our political and economic systems are predicated on withholding information they risk being contravened and rendered obsolete unless they consciously seek to open themselves to the natural progression of information flows that liberate social progress. We’ve already seen in 2011 the power of social networks in overturning political regimes across the across the World. Whilst sites like Twitter and Facebook are great for getting people to join forces for a cause, they are not built to facilitate the next level of necessary reinvention and reconstruction of our democratic system. The inherent unpredictability of the information society demands new kinds of governance that focus on rapid network-coordinated response over centralized predictive planning. Every organization will soon be expected to present themselves through an interface that removes all of the frictions of the old paradigm. Public services for example are going to need to open themselves up to harness collective intelligence and respond to civic and environmental issues. There is no reason why governments shouldn’t be open so that we the people could participate continuously in the democratic process, through constant referendums, votes, educational campaigns, and public debate. If social sustainability is to triumph it will be the result of predominantly a bottom-up process of participation.
“They say we don’t know what we want, but here we are making our decisions without bankers or politicians intervening in our lives. This is what we want.”
– Anonymous Occupier
Social media, typified by user-generated content and interactive dialogues, has profoundly changed the way people interact and create value within network society. It connects ideas, people, and institutions in such a way that blurs the boundaries of yesterday’s companies and government agencies. It has disrupted many industrial era institutions, from newspapers to movie studios, to education and politics and beyond. It presents a substantial challenge for many institutions where the organizational models and management styles are poorly suited to deal with such transparent, fast moving and decentralized channels which they have little control over. Not only is bad publicity hard to censor on social media, but users also increasingly expect companies to listen and respond to them through social media. As social platforms have grown, individuals and organizations have sought to better utilize them for professional purposes.
We now enjoy an abundance of information goods unparalleled in history, thanks to the negligible marginal cost of distribution allowed by the Internet. This has in turn disrupted old markets for such goods, and spurred exciting business model innovations such as “freemium”. Forward-thinking companies are working out ways to share value for free, and to leverage the resulting gains in attention and reputation to make money through up-selling.
“Attention is the new currency (and data is the new oil).”
In an information-rich society the abundance of information ultimately results in a scarcity of attention. Out of all the information that’s available on the web, we each individually can only consume a negligible amount. This is also furthered by the trend towards consuming information as bite-size chunks. For example, in the past music used to be packaged into albums and made available via CDs, whereas today people can stream music by the track. Likewise increasingly we consume video in bite-sized chunks, the preferred length of a YouTube video is around 2 to 5 minutes. Similarly text has been progressively deconstructed from books to articles to blogs to 140 character tweets. As this occurs value moves from content to context, as that which becomes scarce has economic value attributed to it. Therefore, the market seeks to allocate the limited supply of attention to the demand of information, this is called the attention economy.
Ofcourse, this process has been going on for some time in the form of targeted advertising. It is this model that makes up the vast majority of Google’s revenue and if it weren’t for the success of this model, Google wouldn’t be able to cross-subsidize the free services they provide. The same is true of Facebook and many other platforms, the users are in fact customers by proxy who pay to use the service with their attention and personal data. The catch phrase being “if it’s free, then you are the product being sold”. The challenge to this new business model is not just to protect consumers’ information, but to put users in control of their information. Information rights are the new form of property which can be bought, sold, licensed and so on. It is important then that people are made aware of the economic value of their information and that user information is freed from proprietary silos. This is part of the larger trend towards distributed systems and the emergence of the semantic web and the need for open and interoperable services.
“The crisis we are now living through is essentially a value crisis, where exchange value no longer adequately reflects use value.”
At a recent IPO, Facebook was valued at $100 billion and yet Facebook produces no value at all without its users who are creating use value for them. Michel Bauwens cites this as one of many examples of a failure of the so-called knowledge economy where the value abundance of unpaid knowledge workers undermines the market for paid knowledge workers and thus threatens capital accumulation. A possible solution is revenue sharing where users earn commission for their efforts, just like on Youtube where people can get paid if they allow advertisements to be shown on their videos. Another possibility is rewarding users with social currency so they get discounts and privileges due to their contributions.
“Reputation capital is becoming so important that it will act as a secondary currency.”
Currencies in the broadest sense can be understood as symbols that mark and map flows. The word currency itself derives from the Latin verb “currere”, meaning to flow. We are surrounded by countless types of flow, flows of goods and services, flows of participation, flows of trust, flows of access and flows of permission. We need to map these flows to enable social contracts between different parties, however we can only map certain flows, and the flows we do map affect our actions. Currencies are therefore not a value neutral medium, each favours certain kinds of behaviours and discourages others. By making previously invisible forms of value visible and recognized it is possible to change peoples’ consumer behaviour to reflect more ethical values. The adoption of new currencies also encourages further adoption by producers responding to market preferences.
One of the many avenues leading to innovation within currency design is gamification. Gamification is the process of applying game mechanics and design elements to solve real World problems and engage audiences. Trivial examples include things like leaderboards, badges, rewards and progress indicators which can intrinsically motivate people towards desired behaviours by giving recognition for their achievements and making it easier for them to interact, share, and problem-solve. The bottom line is that games aren’t a waste of time, they’re changing and challenging us, enabling to solve complex problems. Gamification techniques are playing an important component in developing business strategy and can be used in a wide variety of settings to motivate people towards goals that they would otherwise be uninterested in. When combined with social currency it becomes possible to incentivize people towards goals which enhance social welfare such as recycling.
Social currency is not a means of exchange as the name may suggest, it cannot be used up or transferred, it is not fungible per se. Instead it works as a measurement of reputation for individuals and organizations within a network, it can therefore grant access to things, just as trust between people leverages benefits. The opportunities for generating social capital from social currency are quite large. Social currency can extend one’s reputation beyond the limited circle of people who one interacts with on a daily basis to the World at large. The caveat being that social currencies are contextual to the networks in which they are created.
For example I can’t transfer my Amazon reputation to eBay or vice versa, whilst it may seem like a good thing if I could as they serve similar functions, however they have different scoring systems to represent the cultural values within a specific marketplace. A better solution would be to simply display a dashboard of metrics from various sites which I use for commerce to give the broadest representation of my experience. Another example of a social currency system can be found on the community StackOverflow, whilst nobody is paid money for their contributions, they do accrue reputation scores.
This system can then be leveraged for the purposes of employment for example. In this way, social currencies will come to replace much of the formalities of resumes and CVs, we need to assess people relative to the ecosystems in which they exist and what they contribute towards. As another example, Michael Aaij who is a professor of English Literature at a university in Alabama, recently achieved tenure based in part on his 16,000 Wikipedia contributions. Social currencies can also be used to grant access to finance, such is the case with the platform Lenddo which analyzes a user’s social graph to determine their credit risk. It may sound like a novelty, but it is enabling professionals in emerging markets to have access to financial products and services enjoyed in more mature financial markets.
Clearly, there is a need for social analytics to aggregate reputation for both social media and collaborative consumption to help us each connect, collaborate and share with others. Startups like Klout, PeerIndex and TrustCloud are all attempts to measure the influence and trust that people within their social spheres, however they still have some way to go before they reach their full potential. Since the use of commons is based around trust, if online commons are going to be useful to business, companies need to do more work to develop protocols for identity and reputation management.
The rise of new forms of currency is a massive growth area, allowing for new forms of innovative production, consumption and distribution to take place. As such, businesses are increasingly adopting social currencies so as to gain recognition within their respective business environment and to build a community of produsers around them. As the web becomes more socially-oriented, search engines will have to accommodate increasingly around peoples’ social graph, in this way platforms which works as knowledge inventories will resemble what we could call the banks of social currency and social credit.
“The gift economy may seem like an anarchist delusion, yet I believe that sooner or later we will see that it is the only thing that will actually work.”
In a market system the access to goods and services is determined though the pricing mechanism, if you have enough money then you can buy the things you want. It doesn’t matter who you are, what you do, or whether the seller will ever see you again. In a gift economy it works differently, access to goods and services is determined by relationship. Although some people liken the Internet to a gift economy, this isn’t strictly the case. Traditionally, gift economies work in a tribal setting where everyone knows each other. Due to the open-ended nature of the Internet and the psychological limits of personal relationships, when one gives things freely on the Internet there aren’t the mechanisms or support networks in place to ensure that such altruism is mutually rewarded.
In order to make some of the principles behind the gift economy scale up to facilitate a larger social organization it must be based on exchange and not gift giving. The distinction being that when you gift something you don’t explicitly expect anything in return, whereas with exchange there is a direct transaction. Gifts are other-oriented and cannot be quantified, to do so destroys the status of the gift, for example if you were to ask how much a birthday present cost so that you could spend the same amount of the giver. Exchange on the other hand does require quantification and measurement and hence the need for social currencies. These currencies enable patterns of exchange which are neither fully gift based, nor fully market based. What this points to is that money is losing its sway as the sole arbiter of access to goods and services.
“As we move later into the decade, physical currency will be harder to differentiate from virtual currencies like Facebook Credits.”
“Every corporation must become a social enterprise.”
There are increasing signs that the role of solely profit driven multinational companies, without any roots in local communities, is reaching its historical end, and will be replaced increasingly by new models of entities combining profit with the realization of social and public goods. Social enterprise is part of a rapidly growing revolution by stealth which seeks to align capitalism more with philanthropic goals. With vast swathes of social needs unaddressed and deep structural unemployment, social entrepreneurship is on the rise. A large driver of this is the millennial generation, frustrated with the inability of large corporations and governments to create jobs and social change, many young people are becoming entrepreneurs. New organizational structures are taking shape to fill the gaps within local communities. In the U.S. a growing number of states are issuing charters for benefit corporations (BCORPS) and low-profit limited liability corporations (L3Cs). Both of these are organized as for-profit but with the explicit obligation to balance profit-making with advancing social equity and/or environmental goals. Worker co-ops are also on the rise, these are businesses directly owned by workers and community members. According to the New Economy Working Group, 130 million Americans are members of cooperatives and credit unions, which employ more than 650,000 people and hold over $3 trillion in assets.
“In this new world of business, companies and leaders will have to show authenticity, fairness, transparency and good faith. If they don’t, customers and employees may come to distrust them, to potentially disastrous effect.”
New business models are emerging on the back of technological advances, organizational structures are changing as are our working lives. The emphasis on organizations will be to develop communities around them, rather than rely on a one way producer/consumer relationship as in the past. Employees and customers alike, increasingly expect more and those that put people and the planet before profit are more likely to make it through these tough times. These new companies are qualitatively very different to more established institutions and can compete in emerging markets far more effectively.
A sustainable economy must rely on the principles of living systems which capture and store renewable energy. The conjoining of distributed information communication technology and renewable energies in the 21st Century, is giving rise to what Jeremy Rifkin calls the Third Industrial Revolution. Electricity is not cost-effective to store and is expensive to transport and thus is most economical when it is produced and consumed locally as a decentralized resource. In the coming era, people will produce their own green energy in their homes, offices, and factories and share it with each other using on-demand smart grids. In addition, transitioning transport to run on electric and plug in fuel cells means the electricity produced by buildings can also be used to power vehicles. The shift in energy regimes from elite fossil fuels to distributed renewable energies will redefine the very notion of international relations more along the lines of ecological thinking. If we see the Earth as a living organism made up interdependent ecological systems, then our very survival depends on mutually safeguarding the global commons.
By 2050, the World’s population is projected to be more than 9 billion, with roughly 70% of people residing in urban areas. Today’s cities can barely handle the burden of their current populations with core services that are wasteful, inefficient and decrepit. Even though cities only occupy 2% of the landmass of the Earth, they consume over 75% of the Earth’s resources. Smart cities then are generally seen as next stage in the process of sustainable urbanization and evolution of the knowledge economy. Smart cities are strategically designed urban centres which focus on high quality and efficient technosocial infrastructure and the development of both social and environmental capital. It is incumbent then that smart cities incentivize and enable social enterprises which can address social and environmental issues faster and more effectively than the state.
As a short aside, the description I’ve given of a smart city may remind some people of the Venus Project and a Resource-Based Economy. It’s important to realize that those ideas are just one model for how we might organize smart cities and an alternative economy, not the only one. Discussing the flaws and weaknesses of The Venus Project is really beyond the scope of this presentation, but I will briefly state my general position. The project has no transitional implementation for building a city and therefore remains largely a utopian pipe-dream riding on the back of reified scientism, the idea itself will not arise through social reforms and cannot be forced onto the many people who are patently not interested, furthermore it is centrally-planned and thus prone to inefficiency regardless of the algorithms put in place, being centralized it also not resilient as it has a single point of failure, the design itself also breeds socio-economic monoculture.
The infrastructure of a city is comprised of many different systems such as transport and utilities and civic functions, which are key to the quality of life. A city becomes smart when all parts of its infrastructure are digitally connected and optimized. The inclusion of distributed wireless sensor networks allow urban centres to adapt more like living systems. Many interesting parameters can be monitored for more efficient and real-time management of resources and logistics from water delivery systems to disease control and traffic management systems and so on. With the addition of community asset mapping and augmented reality, it is also possible for people to visualize the social and environmental interactions that exist around them. For example, citizens can use their smartphones to report potholes, graffiti, water leaks and so on by taking photos with GPS tags and uploading them to the city management system where they can be prioritized and expedited. Localwiki is example of such an implementation, it acts as a local and collaborative information resource which helps people with everything from local events to lost pets. Another example is meshkit by Jonathan Baldwin which is a platform for building decentralized and distributed multi-layered networking infrastructure on top of wireless mesh protocols. Theoretically it could be used for hyperlocalized resource sharing, peer-to-peer commerce, social currency, policy making and so on.
“When costs of participation are low enough, any motivation may be sufficient to lead to a contribution.”
In his book, “The Penguin and the Leviathan“, Yochai Benkler remarks that “for decades we have been designing systems tailored to harness selfish tendencies, without regard to potential negative effects on the enormous potential for cooperation that pervades society”. Peer production is a long term shift caused by the Internet which has dramatically reduced the overheads to collaboration. It’s a way of producing goods and services that relies on self-organizing communities where the efforts of a large number of people, also known as produsers, are coordinated towards meaningful projects which are often without financial compensation.
“We will see people increasingly comfortable participating in situations where the social value is really about people caring enough rather than being paid to provide.”
Peer production must be modular, that means that objectives must be divisible into tasks or components that can be independently produced and later combined with the efforts of others. One of the most prominent examples of peer production online is Wikipedia, which has become the largest and most popular reference on the Internet with over 21 million articles written collaboratively by volunteers around the world. It is also testament to the power of self-governance rather than relying on market forces or an authoritarian management structure.
The wide scale adoption of peer production has been enabled by a fundamental change in economic strategy from push to pull. The push model tries to anticipate consumer demand, create standardized products and bring the product to the market using standardized distribution channels and marketing. In contrast the pull model is open and adaptive, producing customized products and services that serve localized needs. The social dynamics of pull models are highly centred on creating relationships of trust, sharing knowledge, and close cooperation among network participants. Pull allows each of us to find and access people and resources when we need them, while attracting to us the people and resources that are relevant and valuable, even if we were not even aware before that they existed. For example Amazon uses the pull model to build a community around its online store where you can find information about products from people with similar interests.
“The best people (to solve any given problem) don’t work for your organization.”
At the rate technology is changing, no firm can fully keep up in the innovations needed to compete. No longer is it be a viable investment strategy to horde intellectual property. Rapid innovation will happen in the crowd, outpacing the dense pools of talent in corporate research labs. Open innovation is a way of applying the pull model to innovation, whereby customers and other stakeholders take an active role in the process of research and development of products and services. Brands increasingly need to offer experiences of participation in their goods and services. The result is closer relationships with customers and suppliers, along with more rapid feedback and greater scalability.
Crowdsourcing is a form of peer production whereby companies and organizations outsource projects by leveraging the so-called “wisdom of the crowd” through distributed collaboration. In contrast to outsourcing, with crowdsourcing the task is performed by an undefined public rather than a specific agent. This is creating new opportunities for microjobs and freelancing. A good example is Amazon Mechanical Turk which enables programmers to co-ordinate the use of human intelligence to solve problems that computers currently can’t. Workers can browse and complete small tasks which make up part of the given problem and in return receive monetary payment as set by the requester. Crowdfunding is another popular type of crowdsourcing whereby people pool their money together to support creative work such as blogging, journalism, music and independent film. It is enabling a new form a social fundraising and source of seed money for innovative startups where other sources of finance are unavailable.
“Power is migrating to actors who are skilled at developing networks, and at operating in a world of networks.”
The digital economy has levelled the playing field for both buyers and sellers of all shapes and sizes by squeezing the inefficiencies out of many systems, removing intermediaries and lowering the requirement for capital outlays. As society becomes more hyperconnected, increasingly firms will be pressured into adopting pull models and abandoning the market frictions of centralization which threaten their ability to innovate and compete with smaller and more agile firms.
When everyone has an Internet enabled device, then everyone has the capability to produce information goods. Instead of organizing together physically, we can organize virtually to connect, work, learn, share and so on. With the arrival of affordable 3D printing devices there is the potential to completely decentralize production by turning every household into a factory or “fab lab” as their called. Paired with open design based production and recyclable materials, people will be able to design and fabricate components together and share them with other people. One day fab labs and advanced industrial automation might be able to produce most of the physical goods that people need with a fraction of the amount of human labour and distribution costs.
“The proper function of money is to facilitate the sustainable and equitable utilization of resources to fulfil the needs of people, communities, and nature.”
Currencies work as a medium of exchange, money in the form of legal tender is a type of currency, but by no means the only one. Unlike what many people believe, scarcity is not an inherent quality of money, but an artificially maintained property. One of the most important ways to revive the economy is by increasing the amount of money in circulation. This is ofcourse already happening through top-down policies such as quantitative easing, however a more resilient option is starting a local currency. These are currencies traded within a small geographic area and not necessarily backed by legal tender. The concept of local currency has been used for thousands of years and even in modern times until they will stamped out by post-war monetary reform. They serve as a tool for enabling fiscal localism by keeping wealth within a community and have the potential to increase employment, local production, community self-reliance and more. Examples include the Ithaca HOUR issued in New York, the BerkShare in western Massachusetts and the Brixton Pound which circulates in a district of London.
For such a currency system to work, enough people within a community must be willing to accept it. This means that those who use the currency must have some competitive advantage over another currency. For example for consumers the advantage of using a local currency is that when they buy locally using the currency things are cheaper for them. The same advantage can be given to local producers, the caveat being that for it to be useful to them they must have some local suppliers who will also redeem the currency. The system relies on a circular flow of exchange.
The benefits of local shopping have been documented by studies in both the U.K. and U.S. A study of the west Michigan economy concluded that if residents of the area were to redirect 10 percent of their total spending from chain stores to locally owned businesses, the result would be $140 million in new economic activity for the region, including 1,600 new jobs. In the U.K. small businesses account for the majority of private sector jobs, yet there is a dramatic decline in local shops and services across the country.
Local currencies circulate faster than legal tender due to Gresham’s law which infers that bad money drives out the good. Put simply because local currencies are limited to a regional area they have limited liquidity and people will therefore prefer to spending local currency before using legal tender. Unlike legal tender that is based on scarcity and that fosters competition, local currencies are designed to include everyone who wants to participate. By doing so they create work and protect livelihoods through taking advantage of a wide range of skills and resources, unlike the conventional economy which values certain skills and devalues or ignores others. This is a good thing, increasing the diversity allows for the currency to flow where it is needed, just like blood flows around the body. The introduction of competing currencies helps solve the problem of inflation and insulates communities from the boom/bust cycle that results from using centralized currency.
Local currencies can also implement demurrage as proposed by Silvio Gesell to promote social justice and economic welfare. Demurrage is the cost associated with owning or holding currency over a given period of time. Such a currency incrementally loses a percentage of its value over time or alternatively units of currency may expire. Any money lost to negative interest and expiry must be restocked at the end of each period. Whereas security in an interest-based system comes from accumulating money, in a demurrage system it comes from having productive channels through which to direct it – it puts the focus on relationships, not on accumulation and encourages reciprocation, sharing, and the rapid circulation of wealth.
“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether.”
– Silvio Gesell
Demurrage also works to effectively divorce money of its store of value. This can be considered a good thing, when money remains a store of value its liquidity gives it a universal precedent over everything else and consequentially money becomes the measure of all wealth. With demurrage money would no longer be preferred over physical capital and would instead be spent into circulation or invested in real assets such as land and commodities.
In contrast to interest-bearing money which concentrates wealth and leads to short-term thinking, demurrage promotes long-term thinking and wealth distribution by putting the focus on relationships and not on accumulation. Far from encouraging conspicuous consumption a demurrage system would actually decrease net consumption because the money supply is no longer under the compulsion to grow. Furthermore, the depreciation rate is low enough that it wouldn’t create a noticeable effect on the consumption patterns of working class who live paycheck to paycheck and rarely accumulate more than a couple months’ worth of savings. Instead, it incentivises more affluent members of society to invest back into society. Ofcourse if such a system were implemented, so long as more liquid forms of money exist then people will use those instead to side-step their loss of purchasing power.
In spite of all the economic potential of local currencies they are deemed unacceptable for payment of taxes, and in addition, transactions made in such currencies are subject to income and sales taxes. This is uncompetitive and should be recognized as a blatant abuse of legal tender laws which forces people to pay in a currency that they don’t necessarily use or want to use. Ultimately what this boils down to is that the success of complementary currencies threatens the institution of government itself.
“Complementary currencies are now where opensource software and microfinance were 10 years ago.”
“The future isn’t about one money, it’s about millions of moneys, it’s not about the government creating new money, it’s about you creating new money.”
Today’s monetary and banking system is, in essence, still based on the 500 year old fractional reserve system suited to metal money. It’s absurd for us to think that as we move further the digital age that out most important information system, money will not change. Network society needs networked currencies. An integral part of the evolution of money is the credit commons, instead of being limited to privatized credit. As people have the capacity to create value they can and should be able to issue their own credit. Credit is a public utility and should be run in public interest, not for private profit. Mutual credit is a type of alternative currency in which the currency used in a transaction can be created at the time of the transaction. This involves keeping track of each individual’s balance. Although the effect is like a loan, no interest is charged, and since mutual credit allows for trading and cancelling balances with others, debts can be paid off indirectly.
Perhaps the best example of a credit clearing exchange that has operated successfully over a long period of time is the WIR Economic Circle Cooperative. Founded in Switzerland in the midst of the Great Depression as a self-help organization, WIR provided a means for its member businesses to continue to buy and sell with one another despite a shortage of Swiss francs in circulation. Over the past three quarters of a century, in good times and bad, the WIR has continued to thrive. It has more than 60,000 members throughout Switzerland and trades about $2 billion worth of goods and services each year.
Time banking is another example of a mutual credit system which provides a simple, yet effective alternative to the market economy. For each hour members contribute to their timebank they are able to redeem the same amount of hours as services provided by other members. Everyone’s time is treated equally irrespective of what is chosen for exchange and timebanks don’t pay taxes or get penalized in benefit reductions. Timebanks incentivize community involvement and enable voluntary exchanges which are otherwise devalued by the market economy. By respecting and recognizing the value in the contributions we can all make, time banking provides social support and opportunities to those who would otherwise be formally defined as unemployed or unemployable because they lack “marketable skills”.
“There is no reason products and services could not be swapped directly by consumers and producers through a system of direct exchange, essentially a massive barter economy. All it requires is some commonly used unit of account and adequate computing power to make sure all transactions could be settled immediately. People would pay each other electronically, without the payment being routed through anything that we would currently recognize as a bank. Central banks in their present form would no longer exist, nor would money.”
Most complementary currency systems are in fact forms of multilateral barter, where people exchange things with another through an intermediary using tokens. With the rapid proliferation of social networks and new peer-to-peer currencies based around collaboration, banks are going to have to evolve to meet the new business models and the need for transparency. Software platforms are emerging which can calculate currency conversions on the fly, such that different payments systems can integrate with each other.
One notable example is Ripple which is a decentralized and scalable clearing framework for self-issued credit that is able to negotiate exchanges based on trust between peers and across different currencies. The system takes advantage of transparent credit relationships between friends which depend on reciprocity in order to survive. Put simply when people borrow from agencies which are not common to them, their social relationship is abstracted, in contrast trust between friends provides a personal incentive to pay back debts else prolonged debts turn friendships sour. In this way the project hopes to remind us that money is not about power, but community. Businesses could use Ripple to free up cash flow as they no longer need cash to settle some of their transactions.
One of the most provocative and futuristic ideas for currency innovation is to use energy as a unit of account. The kilowatt-hour for example has many characteristics that would make it an excellent form of currency. It can easily be measured, cannot be counterfeited, is divisible into smaller units and resists inflation and speculation. Since electricity is not a tangible commodity, the currency would take the form of symbolic money, redeemable for one kilowatt hour of power, tradable for any goods and services in the marketplace. The creation of an energy-based money system would also smooth the transition from a human-labour to machine-labour society. Furthermore, since anyone has the capacity to generate electricity money creation cannot be monopolized.
Mobile computing is also enabling new forms of exchange and is one of the fastest growing technology sectors. Micropayments provide financial transactions using mobile devices and provide a decentralized way to create and exchange credit outside of traditional bureaucratic financial institutions. Instead of using cash, cheque or credit card users can pay for things directly from their mobile phone without having to go through an intermediary. This is massively helping bring wealth, innovation and infrastructure to parts of the World which have remained largely undeveloped. Africa is the fastest growing mobile market in the world and will be home to 738 million handsets by the end of this year, according to a survey by the industry body GSMA.
The rise of mobile devices also enables many opportunities for contextual location-aware products and services. By leveraging inventory sharing and local mapping, people can access real-time data while on the go and browse through information about people, places and products which are contextualized by their location and data profile. As more assets are mapped within communities it becomes possible to create novel forms of trade. For example one could create a gamified marketplace where people can make publicly available what they have available to trade and what they want in return, similar to a microjob site. The system would be able to tell users what tasks they would have to complete and for whom in order to get what they want, similar to way RPG quests work. This type of hyperlocal marketplace whilst being quite eccentric would encourage people to think more about how they get the goods and services that they want and who from. For example some items would naturally be harder to obtain, this would be reflected by the number of tasks and supply chains needed to be completed in order to get such items. In this way both the opportunity cost and real cost of production are more accurately represented relative to the labour required for the item.
“We should be without hesitation or embarrassment, utopians. At the end of the twentieth century it is the only acceptable political option, morally speaking nothing but a utopian goal will now suffice.”
This presentation has barely scratched the surface of the rapid socioeconomic and technological changes that are happening around us. We are at the crescendo of human history, it is quite clear though that the narratives that have structured our society in the 20th century are no longer working in the 21st century. Lacking a coherent narrative to make sense of the World life becomes increasingly chaotic and confusing as the so-called apocalypse looms. It sounds cliché and it is, but this decade is the most important in human history because there is so much at stake. For us to make the needed transition to a new society it is incumbent that a culture of openness is established such that the synergy of collective intelligence can be utilized. This ofcourse involves lowering the barriers that have been put in place to maintain a hierarchical society. Governments which pass austerity measures onto their citizenry are not progressive, when people are denied a livable future, they will rightfully revolt.
“Those who make peaceful revolution impossible, make violent revolution inevitable.”
The ruling elite are unwilling to let go of their wealth, privilege and control, backed into the corner and burying their heads in the sand insisting that there is no alternative to “business as usual”. What they must realize is that they are dependent on us and the World around them, just as we are dependent on them, the existence of social classes only seeks to further divide people. We’re just beginning to confront the reality of our nature as living beings existing in relationships to other living beings. Life can only exist in community and as quantum physics suggests only relationships are real. It is time to open our hearts and minds and discuss what we all want out of life and what it is that makes life truly worth living. There is the real potential with the rise in new technologies such that for the first time in the human history we have the material conditions to achieve an equal, just and peaceful human civilization across the planet. This will only happen if we can relate on a human level.
“Preventing the collapse of human civilization requires nothing less than a wholesale transformation of dominant cultural patterns. A transformation that rejects consumerism and promotes sustainability.”
We are certainly in for some very challenging times ahead, a lot of crises will likely climax in the next 10 years and the inevitable collapse of the monetary system will bring a lot down with it. Fortunately, when we fear loss we can act very quickly albeit irrationally, yet it won’t take long until people begin to realize that acting together as a community is infinitely more productive and rewarding. In this transitory phase people and communities must do what they can to build the infrastructure for a new economy which is decentralized, distributed, collaborative, open, transparent and lateralised. We are moving to a relationship-based and peer-to-peer enabled network economy. It looks inefficient to a capitalist, but it is sufficiently diverse and therefore sustainable. A viable society is based on cooperation and peer-production rather than the classical division of labour that separates resource producers and providers from resource users, which treats nature, community and culture as exploitable externalities.
Our capacity to survive and thrive depends on a balance between efficiency and resilience within our socioeconomic system. Neither market fundamentalism nor market rejectionism will be appropriate response to the reality of our economic complexity. Yet markets should not be permitted to monopolize our definition of value, nor should the availability of money be permitted to define the range of possibility. The evolution beyond money will take time. Yet as the recession deepens social currencies and complementary currencies will come to replace many uses of money.
We can each individually make small changes which help move the transition along. Anything you do to become self-sufficient speeds up the demise of the old system, whether that be growing your own food, having your own source of renewable energy, being self-employed, using non-monetary forms of exchange, forming strong community relations, buying local, making and repairing your own stuff, protecting the commons, using local credit unions, refusing to contract with corporations and banks and so on. As part of larger social movement, groups could lawfully occupy vacant buildings to provide a venue for learning, collaboration and charitable work in addition to starting crowdfunding campaigns for implementing progressive social change and seeding new social enterprises. In the UK for example, 1 in 7 of all shops are vacant with numbers set to grow. The charity 3Space takes empty commercial properties and makes them available to other charities, community groups, community organizations, and social enterprise for temporary projects free of charge.
There are huge psychosocial habits that tie us to the old paradigm based on social Darwinism., many are still in plain denial about what is happening. This is understandable, they have grown accustomed to a socially constructed reality which is very much part of their identity. Some people want mass death and destruction purely to satisfy their own backward faith in religious prophecy. In order to advance this social transition we need new stories that will be about how people are woven together by helping each other, making the whole community stronger. We need stories of collective will, heroic gifts and reciprocity. We need stories that help shift our identity from me to we and illuminate our interconnectedness. In the next 25 years we can remake the world. Now is the time. We are the 100%.
“The quest for a sustainable world may succeed, or it may fail. If it fails, the world will become unthinkable. If it works, the world will become unimaginable.”