Money: A New Beginning


 

This essay is the first in a two-part series.

 

An irremediable structural flaw lies at the base of our
civilization. I call it Separation, and it has generated all the converging
crises — economic, health, ecological, and political — of our day. It
manifests as separation from each other in the dissolution of community,
separation from nature in the destruction of the environment, separation within
our selves in the deterioration of health. Science is its deep ideology,
technology is its accomplice, and money is its agent.

Money as we know it today is intimately related to our
identity as discrete and separate selves, as well as to the destruction that
our separation has wrought. A saying goes, "Money is the root of all
evil." But why should it be? After all, the purpose of money is, at its
most basic, simply to facilitate exchange; in other words, to connect human
gifts with human needs. What power, what monstrous perversion, has turned money
into the opposite: an agent of scarcity?

For indeed, we live in a world of fundamental abundance, a
world where vast quantities of food, energy, and materials go to waste. Half
the world starves while the other half wastes enough to feed the first half. In
the Third World and our own ghettos, people lack food,
shelter, and other basic necessities, but cannot afford to buy them. Other
people would love to supply these necessities and do other meaningful work, but
cannot because there is no money in it.

Money utterly fails to connect gifts
and needs. We pour vast resources into wars, plastic junk, and innumerable
other products that do not serve human needs or human happiness. Why? It is not
difficult to trace it back to greed, to the love of money. Ultimately though,
greed is a red herring, itself a symptom and not a cause of a deeper problem.
To blame greed and to fight it by intensifying the program of self-control is
to intensify the war against the self, which is just another expression of the
war against nature and the war against the other that lies at the base of our
civilization.

Amidst superabundance, even we in rich countries live in an
omnipresent anxiety, craving "financial security" as we try to keep
scarcity at bay. We make choices (even those having nothing to do with money)
according to what we can "afford," and we commonly associate freedom
with wealth. But when we pursue it, we find that the paradise of financial
freedom is a mirage, receding as we approach it, and that the chase itself
enslaves. The anxiety is always there, the scarcity always just one disaster
away. Greed is simply a response to the perception of scarcity. Money, which
has turned abundance into scarcity, precedes greed. But not money per se, only
the kind of money we use today, the kind of money that is evaporating as we
speak, money with a very special characteristic that ensures its eventual
demise.

This characteristic appears, in different forms, in the
other substructures of our civilization as well. By understanding it, we can
clarify the "irremediable structural flaw" of our civilization
itself; more importantly, we can design new systems of money to supplant the
old and that bear the opposite characteristic. The results will be the opposite
as well: abundance, not scarcity; generosity, not greed; and sustainability,
not ruin.

The defining characteristic of money today is usury, better
known as interest. It is usury that both generates today's endemic anxiety and
drives the world-devouring engine of perpetual growth. To explain how, I will
quote Bernard Leitaer's now-famous parable The Eleventh Round, from his book The
Future of Money
.

Once upon a time, in a small village in the Outback,
people used barter for all their transactions. On every market day, people
walked around with chickens, eggs, hams, and breads, and engaged in prolonged
negotiations among themselves to exchange what they needed. At key periods of
the year, like harvests or whenever someone's barn needed big repairs after a
storm, people recalled the tradition of helping each other out that they had
brought from the old country. They knew that if they had a problem someday,
others would aid them in return.

One market day, a stranger with shiny black shoes and an
elegant white hat came by and observed the whole process with a sardonic smile.
When he saw one farmer running around to corral the six chickens he wanted to
exchange for a big ham, he could not refrain from laughing. "Poor
people," he said, "so primitive." The farmer's wife overheard him and
challenged the stranger, "Do you think you can do a better job handling
chickens?" "Chickens, no," responded the stranger, "But
there is a much better way to eliminate all that hassle." "Oh yes, how
so?" asked the woman. "See that tree there?" the stranger
replied. " Well, I will go wait there for one of you to bring me one large
cowhide. Then have every family visit me. I'll explain the better way."

And so it happened. He took the cowhide, and cut perfect
leather rounds in it, and put an elaborate and graceful little stamp on each
round. Then he gave to each family 10 rounds, and explained that each
represented the value of one chicken. "Now you can trade and bargain with
the rounds instead of the unwieldy chickens," he explained.

It made sense. Everybody was impressed with the man with
the shiny shoes and inspiring hat.

"Oh, by the way," he added after every family
had received their 10 rounds, "in a year's time, I will come back and sit
under that same tree. I want you to each bring me back 11 rounds. That 11th
round is a token of appreciation for the technological improvement I just made
possible in your lives." "But where will the 11th round come
from?" asked the farmer with the six chickens. "You'll see,"
said the man with a reassuring smile.

Assuming that the population and its annual production
remain exactly the same during that next year, what do you think had to happen?
Remember, that 11th round was never created. Therefore, bottom line, one of
each 11 families will have to lose all its rounds, even if everybody managed
their affairs well, in order to provide the 11th round to 10 others.

So when a storm threatened the crop of one of the
families, people became less generous with their time to help bring it in
before disaster struck. While it was much more convenient to exchange the
rounds instead of the chickens on market days, the new game also had the
unintended side effect of actively discouraging the spontaneous cooperation
that was traditional in the village. Instead, the new money game was generating
a systemic undertow of competition among all the participants.

There are really only three ways this story can end:
inflation, bankruptcy, or growth. The same choices face any economy based on
usury. The villagers could procure another cowhide and make more currency; or
one of each 11 families could go bankrupt, as Lietaer observes; or they could
increase the number of chickens so that new "rounds" would have the
same value as before. In a real economy, all three pressures operate
simultaneously. The bankruptcy pressure drives a built-in insecurity, which in
turn drives people and institutions to "make" more money through
inflationary or productive means. Of these two choices, inflation is only a
temporary solution (as we are discovering today). It can only push the
grow-or-die imperative slightly into the future.

In other words, because of the money system,
competition, insecurity, and greed are an inseparable part of our economy. They
can never be eliminated as long as the necessities of life are denominated in
usury-money. But this is only one reason why money destroys community. The
other is related to the third pressure: perpetual growth.

As Lietaer's parable explains, because of interest, at any
given time the amount of money owed is greater than the amount of money already
existing. To make non-inflationary new money to keep the whole system going, we
have to breed more chickens — in other words, we have to create more
"goods and services." The principal way of doing so is to begin
selling something that was once free. It is to convert forests into timber,
music into product, ideas into intellectual property, social reciprocity into
paid services.

Would you like to get rich? Here is a business idea that, in
one form or another, has worked spectacularly for thousands of years. Very simply,
find anything that people do for themselves or each other for free. Then take
it away from them: make it illegal, inconvenient, or otherwise unavailable.
Then sell back to them what you have taken. Granted, usually no one does this
consciously, but that has been the net effect of culture and technology over
the last several thousand years.

Your 13th-century peasant
ancestors rarely paid money for food, shelter, clothing, or entertainment (much
less in a hunter-gatherer tribe). People were self-sufficient in all these
things or, more likely, depended on elaborate gift networks, sharing, and
reciprocity. Of these things is community built. Today, we pay strangers to
meet most of our physical and cultural needs. You probably don't know the
person who grew your food, wove your shirt, built your house, or sang the songs
on your iPod. Abetted by technology, the commodification of formerly
non-monetary goods and services has accelerated over the last few centuries, to
the point today where very little is left outside the money realm. The vast
commons, whether of land or of culture, has been cordoned off and sold — all
to keep pace with the exponential growth of money. This is the deep reason why
we convert forests to timber, songs to intellectual property, and so on. It is
why two-thirds of all American meals are now prepared outside the home. It is
why herbal folk remedies have given way to pharmaceutical medicines, why child
care has become a paid service, why
drinking water is now the number one beverage sales growth category.

The imperative of perpetual growth
implicit in interest is what drives the relentless conversion of life, world,
and spirit into money. Completing the vicious circle, the more of life we
convert into money, the more we need money to live. Usury, not money, is the
proverbial root of all evil. Inducing competition and replacing personal
relationships with paid services, it rends the fabric of community.

Community is closely linked to
gift-giving; when anthropologists seek to understand a culture, they trace the
flow of gifts. Unlike money transactions, in which no obligations linger after
the transaction is completed, the giving
of a gift creates a tie (which is the literal meaning of "obligation").
When gifts circulate, the community bonds. Lending money at interest is utterly
contrary to the spirit of the gift. For one thing, a cardinal feature of an
authentic gift is that we give it unconditionally. We may expect to be gifted
in return, whether by the recipient or another member of the community, but we
do not impose conditions on a true gift, or it is not really a gift.

More importantly, a universal
characteristic of a gift is that it naturally increases as it circulates within
a community, and that this increase must not be kept for oneself, but allowed
to circulate with the gift. Interest amounts to keeping the increase on the
gift for oneself, thereby withholding it from circulation in the community,
weakening community for the benefit of the individual. It is no accident that many
societies prohibited usury among themselves but allowed it in transactions with
outsiders, who could not be trusted to recirculate a true gift back into the
community. Hence the prohibition in Deuteronomy 23:20: "Unto a stranger
you may lend upon usury, but unto thy brother thou shalt not lend upon
usury."

The ramifications of this
injunction when combined with Jesus' teaching that all men are brothers are
obvious: interest is forbidden entirely. This was the position of the Catholic
Church throughout the Middle Ages, and is still the rule in Islam today.
However, starting with the merger of Church and state and accelerating with the
rise of mercantilism in the late Middle Ages, pressure mounted to resolve the
fundamental tension between Christian teaching and the requirements of
commerce. The solution provided by Martin Luther and John Calvin was to
separate moral and civil law, maintaining that the ways of Christ are not the
ways of the world. Thus spirit became further separated from matter, and religion
retreated another step toward worldly irrelevancy.

Abandoning the prohibition on
interest was a key step in religion's complicity in the desacralizing of the
world. After all, it is interest that drives the conversion of all that is
sacred about the world — its beauty, uniqueness, and living relationships —
into something profane. Why do we intuitively know money is profane? Because it
is the one great exception to the irreducible uniqueness of all beings.

In my
last Reality Sandwich essay, I described how each drop of water, even each
electron, is unique and sacred. But not so each dollar. Money is by design
standard, generic. Your dollar is the same as my dollar. Money today lacks even
a unique serial number: It is bits in a computer, an abstraction of an
abstraction of an abstraction. A forest is unique and sacred; not so the money
from its clearcutting. Convert two distinct forests into money and they become
the same. Applied to cultures, the same principle is fast creating a global
monoculture where every service is a paid service.

When money mediates all our
relationships, we too lose our uniqueness to become a standardized consumer of
standardized goods and services, and a standardized functionary performing
other services. No personal economic relationships are important, because we
can always pay someone else to do it. No wonder, strive as we might, we find it
so hard to create community. No wonder we feel so insecure, so replaceable. It
is all because of the conversion, driven by usury, of the unique and sacred
into the monetized and generic.

Because money is identified with
Benthamite "utility" — that is, the good — this entire process is
considered rational in traditional (neoclassical) economic theory. Quite
simply, whenever anything is monetized, the world's "goodness" level
rises. The same assumption appears in the euphemism "goods" to
describe the products of industry. The very definition of a "good" is
anything exchanged for money. In other words, Money = Good. Got that?

By definition, when we buy bottled
water instead of tap water too polluted to drink, that is good. When we pay for
day care instead of caring for our babies at home, that is good. When we buy a
video game instead of playing outdoors, that is good.

In terms of conventional economics, it may actually be in an
individual's rational self-interest to engage in activities that render the
earth uninhabitable. This is potentially true even on the collective level:
given the exponential nature of future cash flow discounting, it may be more in
our "rational self-interest" to liquidate all natural capital right
now — cash in the earth — than to preserve it for future generations. After
all, the net present value of an eternal annual cash flow of one trillion
dollars is only some twenty trillion dollars (at a 5% discount rate).
Economically speaking, it would be more rational to destroy the planet in ten
years while generating income of $100 trillion, than to settle for a
sustainable level of $3 trillion a year forever.

If this seems like an outlandish fantasy, consider that it
is exactly what we are doing today! According to the parameters we have
established, we are making the insane but rational choice to incinerate our
natural, social, cultural, and spiritual capital for financial profit.
Amazingly, this end was foreseen thousands of years ago by the originator of
the story of King Midas, whose touch turned everything to gold. Delighted at
first with his gift, soon he had turned all his food, flowers, even his loved
ones into cold, hard metal. Just like King Midas, we too are converting natural
beauty, human relationships, and the basis of our very survival into money.

Yet
despite this ancient warning, we continue to behave as if we could eat our
money: David Korten once spoke of an East Asian minister who said his country's
forests would be more valuable clearcut, with the money put in the bank to earn
interest. Apparently, the effects of destroying the planet are of little
concern to economists. William Nordhaus of Yale proclaims, "Agriculture,
the part of the economy that is sensitive to climate change, accounts for just
three percent of national output. That means there is no way to get a very
large effect on the US
economy." Oxford economist
Wilfred Beckerman echoes him: "Even if net output of agriculture fell by
50 percent by the end of the next century, this is only a 1.5 per cent cut in
GNP."

Must we, like King Midas, find ourselves marooned in a cold,
comfortless, ugly, inhospitable world before we realize we cannot eat our
money?

Because it builds exponentially, interest feeds a linearity
that puts humankind outside of nature, which is bound by cycles. Subtly but
inexorably, it drives the assumption that human beings exist apart from natural
law. As well, interest drives a relentless anxiety by demanding always more,
more, more, propelling the endless conversion of all wealth into financial
capital. Part of this anxiety is encoded in the very word,
"interest," which implies that self-interest too is bound up in
ever-lasting increase.

Interest is a necessary counterpart to the mentality of
externalization. Like interest, externalization involves a denial of nature's
cyclicity by treating it as an infinite reservoir of resources and an infinite
dumping ground for waste. Interest is also akin to fire, the foundation of
modern technology. To keep it going requires the addition of ever more fuel,
until the whole world is consumed, leaving but a pile of dollars or ash.

Money is a most peculiar kind of property, for unlike physical
inventories of goods, "rust doth not corrode nor moths corrupt" it.
Cash does not depreciate in value; on the contrary, in its modern, abstracted
form of bits in a bank's computer, it grows in value as it earns interest. Thus
it appears to violate a fundamental natural law: impermanence. Money does not
require maintenance like a plot of farmland to maintain its productivity. It
does not require constant rotation of stock like a store of grain to keep it
fresh. No accident, then, was money's early and enduring association with gold,
the metal most famously impervious to oxidation. Money perpetuates the
fundamental illusion of independence from nature; financial wealth endures
without constant interaction with the environment. Other forms of wealth are bothersome,
because they require a continuing relationship with other people and the
environment. But not money, which is now wholly abstract from physical
commodities and thus abstract as well from natural laws of decay and change.
Money as we know it is thus an integral component of the discrete and separate
self.

It is a curious fact that most people are extremely
unwilling to share their money. Even among relatives, sharing money is bound by
strong taboos: I know countless poor families whose brothers, cousins, or
uncles' families are very wealthy. And how many friendships have disintegrated,
how many family members have shunned each other for years, over issues of
money? Money, it seems, is inextricably wrapped up in the very essence of
selfishness — a clue to its deep association with self. Hence the intense
sense of violation we feel upon getting "ripped off" (as if a part of
our bodies were being removed) when from another perspective all that has
happened is pieces of paper changing hands or bits turning on and off in a bank
computer.

We do not usually share our money because we see it almost
as part of our selves and the foundation of our biological security. Money is
self. Meanwhile, conditioned by science and the origins of separation
underlying it, we see other people as essentially just that, "other."
Mixing these two realms invites confusion and conflict. The problem is, the
more of life we convert to money, the more territory falls into one of these
dichotomous realms, mine or yours, and the less common ground there is to share
life and develop unguarded relationships. The conversion of life to money
reduces everything to an economic transaction, leaving us the loneliest people
ever to inhabit the planet. The propertization of the whole world means that
everything is either mine, or someone else's. No longer is anything in common.

The violation we feel at being ripped off is much akin to
the violation an indigenous hunter-gatherer must feel at witnessing the
destruction of nature. When "I" is defined not as a discrete
individual but through a web of relationships with people, earth, animals, and
plants, then any harm to them violates ourselves as well. Even we moderns
sometimes feel an echo of this violation when we see the bulldozers knocking down
the trees to build a new shopping center. That is because our separation from
the trees is illusory. The buried connectedness can be resisted through
ideology, narcotized through distractions, or intimidated through the
invocation of survival anxiety, but it can never die because it is germane to
who we really are. The love of life that Edwin Wilson has named biophilia, and
our natural empathy toward other human beings, is ultimately irrepressible
because we are life and life is us.

The regime of separation has deadened us to the
self-violation inherent in the despoliation of the planet and the degradation
of its inhabitants. In an attempt to compensate for our lost sense of
beingness, we transfer it to possessions and particularly to money, setting the
stage for disaster. How? Because money (bearing interest) is an outright lie,
encoding a false promise of imperishability and eternal growth. Identified with
self, money and its associated "assets" suggest that if we stay in
control of it, the self might be maintained forever, impervious to the rest of
the cycle that follows growth: decay, death, and rebirth.

Obviously, there is a problem when something that does not
decay but only grows, forever, exponentially, is linked to commodities which do
not share this property. The only possible result is that these other
commodities — social, cultural, natural, and spiritual capital — will
eventually be exhausted in the frantic, hopeless attempt to redeem the
ultimately fraudulent promise inherent in money with interest.

They are almost exhausted already. What more of community or
of nature can we still commoditize, before the very basis of life and sanity
crumbles? All of today's crises originate in the conversion of natural, social,
cultural, and spiritual capital into money. Yet even usury is not the deepest
root. It is not an accidental feature of our system that, if only someone
had made a wiser choice, could be different. It is implicit in our
Newtonian-Cartesian cosmology in which, by definition, more for me is less for
you. As this cosmology rapidly becomes obsolete, we can glimpse an emerging new
money system embodying a very different conception of self and world. Until we
transition to it, there is no hope that the current conversion of social,
cultural, natural, and spiritual capital into money will ever abate. Under an
interest-based money system, it is inevitable that we will cash in the earth.

In Part 2 of this essay, I will describe what the currency
of Reunion will look like. When it reflects the new
human identity and relationship to nature that is emerging from the present
convergence of crises, money will have the opposite effects it has today. It
will be a force for sharing, not competition; for generosity, not greed; for
community, not division; for conservation, not liquidation. Can you imagine a
world where money is the ally of all our best impulses? That is the promise of
the new money I will describe in Part 2.

Photo by TW Collins courtesy of Creative Commons License