What Comes After Money Read online

  Our current economic system is institutionalized psychopathology, a parasitic virus, and its perpetuation would likely lead to the termination of the human experiment in an accelerating series of catastrophes, as climate change accelerates and the exploitation of resources and technological domination of nature intensify. The alternative is extremely difficult to imagine, until we realize it. Albert Einstein once noted that a problem is never solved by the same level of consciousness that created it, but can be superseded once a new level of consciousness is attained. We rapidly approach an exciting threshold where breakdown and breakthrough could happen almost simultaneously.

  The good bad news is that we are witnessing the collapse of the current financial order, a bit like watching a multi-car collision take place in sickening slow motion. While vast amounts of intangible finance capital continue to amass, the real assets of the earth are in rapid decline, and this growing gap between the abstract and the real is bringing on an inevitable crash, one in which the delusions of finance capital can no longer be maintained. The global system has revealed itself as a massive Ponzi scheme, a debt pyramid, and we are reaching that thrilling, terrifying precipice where maintaining the fiction is no longer possible.

  Nobody has ever been in this situation before. What happens next is anyone’s guess, but a few alternatives seem most plausible. Over the last decades, wealth has been concentrated in fewer and fewer hands. According to a recent study, fewer than seven hundred billionaires have a combined net worth of more than $2 trillion. At the same time, an estimated 2.8 billion people survive on less than $2 a day, and 1.2 billion live on less than $1. Here in the United States, fewer than 7,500 individuals out of 300 million control “almost three-quarters of the nation’s industrial (nonfinancial) assets, almost two-thirds of all banking assets, and more than three-quarters of all insurance assets,” notes political scientist Thomas Dye in Who’s Running America? Members of this small group can be found in the top tiers of the most exclusive law firms, investment banks, federal government posts, and military commands, where they can control the herd.

  As the superstructure of the financial system melts down, it is unlikely that this small coterie of the world’s financial elite will choose, in a great heartfelt conversion, to democratize wealth and share resources equitably. They will, more likely, seek to grasp onto their privilege and keep their stranglehold over resources, potentially creating an increasingly authoritarian state apparatus in which the divide between the haves and have-nots becomes ever greater. As social pressure builds, draconian restrictions based on trumped-up fears of terrorists, immigrants, and other bogeymen may supplant democratic freedoms. The corporate oligarchy has spent decades mastering techniques of getting uninformed and ignorant people to act against their own best interests, and will continue to foster stupefaction and mob rule. As increasing constraints are placed on us, as security forces patrol the perimeter and drone helicopters circle overhead, as basic necessities like drinking water are sold back to us, as hyperinflation leaves only a few megabanks still standing, we will be told—over and over again—that this culture is still the greatest thing ever, that the evil others are to blame, and that it is all being done for our own good.

  The other option is the one discussed, from various angles, in the essays collected in this book: the prospect that the rapidly deepening, globally systemic, economic-ecological collapse will provide the necessary ground for a mass awakening, and for the reinvention of our economic system in accord with a design science that follows nature’s operating principles. As the economist Bernard Lietaer has noted, what we require is a shift from a fragile monoculture based on one form of money to a diversified offering of many currency tools, providing a variety of ways for human beings to exchange value. The current form of Yang currency that supports masculine competition and aggression must be complemented, perhaps superseded, by Yin currencies that foster collaboration and cooperation.

  More fundamental than any new currency is the shift in awareness, the change of consciousness, necessary before a truly equitable global society can emerge. This change is already occurring on many levels, some visible and some subliminal, throughout our increasingly interconnected world. We are developing a thoroughly evolutionary perspective, one that sees human cultures, relationships, and social systems as expressions of an evolution of life and of a consciousness that is perpetually ongoing. We are not passive observers of this process, but active participants. We are the coming-into-consciousness of the Gaian mind, and our actions and intentions—as individuals and communities—determine the trajectory of our future culture.

  From this evolutionary viewpoint, we can see the development of capitalism over the last few hundred years as a necessary phase, but not a final endpoint, toward the inception of a planetary community. Capitalism drove technological innovation and a melding of the world’s cultures, but kept us locked in an adolescent state of mind. Communications technologies such as the internet have now linked humanity into a global tribe, able to communicate instantaneously and experience simultaneously. The intensifying economic and ecological meltdown is akin to the process that occurs when a caterpillar morphs into a butterfly: There is, first of all, a disintegration of the caterpillar form and the emergence of imaginal cells that direct the process of transmutation into a new form of life. To the old system, this appears as danger, as death, but to the new emergent form, it is necessary as an aspect of the birthing process.

  We are inexorably moving toward the realization of humanity as a unified being, a singular organism, meshed with the delicate planetary ecology that nurtures us. As Bruce Lipton and Steven Bhaerman discuss in their book Spontaneous Evolution, the cells in the human body have developed to work together in perfect symbiosis, sharing resources equitably. You don’t find one cell hoarding masses of energy while another cell is left utterly deprived and gasping. If individual humans are akin to cells in a greater Gaian organism, we could similarly reach a point at which sufficient energy is provided to all, for everyone’s benefit, to ensure the effective functioning of the whole.

  The essays in What Comes After Money? are thought experiments that explore our current economic predicament and reveal the path to a new economy, biospherically balanced and equitably attuned. For many people, the idea that our global capitalist system could make a quantum jump into a new systemic paradigm will initially seem impossible and outlandish. However, human culture can change with remarkable speed when necessary. Before 1989, among all the highly paid think tank analysts and political specialists, nobody predicted that the Berlin Wall would be taken down, piece by piece, through a euphoric civilian uprising, while the military stood down—that East would reunite with West without nuclear conflict or vast loss of life. This happened because, on a secret and subliminal level, the consciousness of people operating under that old oppressive order could no longer tolerate a barricade created by ideology and maintained through domination. Today, Wall Street and its “banksta” allies in foreign capitals control the movements of capital and the destiny of people and nations. Is it possible that a civil society upsurge could tear this conceptual barricade down as well? If something like this were to take place, the best-case scenario would be that we would have a new paradigm, a working operating system for exchanging goods and services using different principles, ready for rollout before social chaos could lead to the imposing of authoritarian controls.

  Personally, I agree with the visionary thinker José Argüelles, who proposes that time is not money: time is art. The next phase of human development should be one of conscious evolution and co-creative collaboration, when we recognize that society is, in itself, an art project. We have the power to use our intelligence and imagination to reinvent society’s operating system so that it fulfills humanity’s highest hopes and age-old aspirations. If we can develop and construct a new economic foundation that strikes a balance between the gift exchanges of the archaic past and our modern system of swift global transacti
ons, we might manifest a magnificent art project, an ever-evolving social sculpture, together. Such an expression of our collective human genius will benefit our kin and our descendants, and support the greater web of life. Facing a crisis unleashed by human greed and ignorance, we have an extraordinary opportunity to bring about a new—or renewed—society that is far more comfortable, harmonic, relaxed, peaceful, and humane. My hope is that this book offers a set of helpful tools for thinking through this extraordinary process, and that it inspires you to collaborate on the great co-creative experiment that lies ahead.

  1

  MONEY AND THE CRISIS OF CIVILIZATION

  CHARLES EISENSTEIN

  Suppose you give me a million dollars with the instructions, “Invest this profitably, and I’ll pay you well.” I’m a sharp dresser—why not? So I go out onto the street and hand out stacks of bills to random passersby: ten thousand dollars each. In return, each scribbles out an IOU for twenty thousand dollars, payable in five years. I come back to you and say, “Look at these IOUs! I have generated a 20 percent annual return on your investment.” You are very pleased, and pay me an enormous commission.

  Now I’ve got a big stack of IOUs, so I use these “assets” as collateral to borrow even more money, which I lend out to even more people, or sell them to others like myself who do the same. I also buy insurance to cover me in case the borrowers default—and I pay for it with those selfsame IOUs! Round and round it goes, each new loan becoming somebody’s asset against which to borrow yet more money. We all rake in huge commissions and bonuses, as the total face value of all the assets we’ve created from that initial million dollars is now fifty times that.

  Then one day, the first batch of IOUs comes due. But guess what? The person who scribbled his name on the IOU can’t pay me back right now. In fact, lots of the borrowers can’t. I try to hush up this embarrassing fact as long as possible, but pretty soon you get suspicious. You want your million-plus dollars back—in cash. I try to sell the IOUs and their derivatives that I hold, but everyone else is suspicious too, and no one buys them. The insurance company tries to cover my losses, but it can only do so by selling the IOUs I gave it.

  So finally, the government steps in and buys the IOUs, bailing out the insurance company and everyone else holding the IOUs and the derivatives stacked on them. Their total value is way more than a million dollars now. I and my fellow entrepreneurs retire with our lucre. Everyone else pays for it.

  This is the first level of what has happened in the financial industry over the past decade. It is a huge transfer of wealth to the financial elite, to be funded by U.S. taxpayers, foreign corporations and governments, and ultimately the foreign workers who subsidize U.S. debt indirectly via the lower purchasing power of their wages. However, to see the current crisis as merely the result of a big con is to miss its true significance.

  I think we all sense that we are nearing the end of an era. On the most superficial level, it is the era of unregulated casino-style financial manipulation that is ending. But the recent efforts of the political elites to fix the crisis at this level only reveal its deeper dimensions. In fact, the crisis goes all the way to the bottom. It arises from the very nature of money and property in the world today, and it will persist and continue to intensify until money itself is transformed. A process centuries in the making is in its final stages of unfoldment.

  Money as we know it today has crisis and collapse built into its basic design. That is because money seeks interest, bears interest, and indeed is born of interest. To see how this works, let’s go back to some finance basics. Money is created when somebody takes out a loan from a bank (or more recently, a disguised loan from some other kind of institution). A debt is a promise to pay money in the future in order to buy something today; in other words, borrowing money is a form of delayed trading. I receive something now (bought with the money I borrowed) and agree to give something in the future (a good or service which I will sell for the money to pay back the debt). A bank or any other lender will ordinarily only agree to lend you money if there is a reasonable expectation you will pay it back—in other words, if there is a reasonable expectation you will produce goods or services of equivalent value. This “reasonable expectation” can be guaranteed in the form of collateral, or it can be encoded in one’s credit rating.

  Any time you use money, you are essentially guaranteeing, “I have performed a service or provided a good of equivalent value to the one I am buying.” If the money is borrowed money, you are saying that you will provide an equivalent good or service in the future.

  Now enters interest. What motivates a bank to lend anyone money in the first place? It is interest. Interest drives the creation of money today. Any time money is created through debt, a need to create even more money in the future is also created. The amount of money must grow over time, which means that the volume of goods and services must grow over time as well.

  If the volume of money grows faster than the volume of goods and services, the result is inflation. If it grows more slowly—for example through a slowdown in lending—the result is bankruptcies, recession, or deflation. The government can increase or decrease the supply of money in several ways. First, it can create money by borrowing it from the central bank, or in the United States, from the Federal Reserve. This money ends up as bank deposits, which in turn give banks more margin reserves on which to extend loans. You see, a bank’s capacity to create money is limited by margin reserve requirements. Typically, a bank must hold cash (or central bank deposits) equal to about 10 percent of its total customer deposits. The other 90 percent it can loan out, thus creating new money. This money ends up back in a bank as deposits, allowing another 81 percent of it (90 percent of 90 percent) to be lent out again. In this way, each dollar of initial deposits ends up as nine dollars of new money. Government spending of money borrowed from the central bank acts a seed for new money creation. (Of course, this depends on banks’ willingness to lend. Since 2008, banks have hoarded excess reserves, so that repeated injections of government money have had little effect.)

  Another way to increase the money supply is to lower margin reserve requirements. In practice this is rarely done, at least directly. However, in the recent past, various kinds of nonbank lending skirted the margin reserve requirement, through the alphabet soup of financial instruments that haunted the news and the public imagination during the 2008 financial crisis. The result is that each dollar of original equity is leveraged not to nine times its original value, as in traditional banking, but to seventy times or even more. This allows returns on investment far beyond the 5 percent or so available from traditional banking, along with “compensation” packages beyond the dreams of avarice.

  Each new dollar that is created comes with a new dollar of debt—more than a dollar of debt, because of interest. The debt is eventually redeemed either with goods and services, or with more borrowed money, which in turn can be redeemed with yet more borrowed money … but eventually it will be used to buy goods and services. The interest has to come from somewhere. Borrowing more money to make the interest payments on an existing loan merely postpones the day of reckoning by deferring the need to create new goods and services.

  The whole system of interest-bearing money works fine as long as the volume of goods and services exchanged for money keeps growing. The crisis we saw in 2008 was in part because new money was created much faster than goods and services were, and much faster than has been historically sustainable. There are only two ways out of such a situation: inflation and defaults. The rescue packages that followed the crisis basically came down to an attempt to prevent both. Superficially successful, actually they only kicked the problem into the future. The mortgage-backed securities were bailed out and morphed into sovereign debt, and more and more of society’s wealth concentrated in the hands of the creditors, as is inevitable when interest rates exceed economic growth.

  There was a much deeper crisis at work as well, a crisis in the creation
of goods and services that underlie money to begin with, and it was this crisis that gave birth to the real estate bubble everyone blamed for the 2008 crisis. To understand it, let’s get clear on what constitutes a good or a service. In economics, these terms refer to something that is exchanged for money. If I babysit your children for free, economists don’t count it as a service. It cannot be used to pay a financial debt: I cannot go to the supermarket and say, “I watched my neighbor’s kids this morning, so please give me food.” But if I open a day care center and charge you money, I have created a service. Gross domestic product (GDP) rises and, according to economists, society has become wealthier.

  The same is true if I cut down a forest and sell the timber. While it is still standing and inaccessible, it is not a good. It only becomes a good when I build a logging road, hire labor, cut it down, and transport it to a buyer. I convert a forest to timber, a commodity, and GDP goes up. Similarly, if I create a new song and share it for free, GDP does not go up and society is not considered wealthier, but if I copyright it and sell it, it becomes a good. Or I can find a traditional society that uses herbs and shamanic techniques for healing, destroy their culture and make them dependent on pharmaceutical medicine which they must purchase, evict them from their land so they cannot be subsistence farmers and must buy food, clear the land and hire them on a banana plantation—and I have made the world richer. I have brought various functions, relationships, and natural resources into the realm of money. In The Ascent of Humanity I describe this process in depth: the conversion of social capital, natural capital, cultural capital, and spiritual capital into money.