November - December, 2008

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November 11. It's hard to explain demurrage currency, because it works by creating an economic system fundamentally different from the one we're used to. I'm going to call these two systems fire economies and water economies. (Coincidentally, there is already an acronym FIRE for "finance, insurance, and real estate", the main elements of the speculative economy that replaced the manufacturing economy in America after domestic oil peaked in the early 1970's.)

In a "fire" economy, money makes money, the same way that fire catches more things on fire. A very small fire is hard to keep going, but a large fire is hard to put out, and it tends to grow and consume everything in its path. There's a saying: turning ten dollars into twenty dollars is very difficult, but turning ten million into twenty million is inevitable. This is not a natural law but a human law, created by human rules. The two big ones are interest and rent. Both depend on deeper rules that money and land can be "owned" by someone who is not using them, and on top of that, they allow the "owners" to leverage their wealth/power into more wealth/power, by charging fees to non-"owning" users. The result is a giant river of money flowing from the have-nots to the haves, so that wealth and poverty, power and weakness, are in positive feedback loops. And the only negative feedback is collapse.

In a "water" economy, wealth and poverty have negative feedback, and masses of money are like waves in the ocean -- the higher they get, the more they are pulled down by gravity, and the lower the troughs get, the more they are filled in. There are waves, even big waves, but they move around, and individual water molecules are constantly moving up and down. It's easy to make money because it's easy to lose money. In fact, in a system without perpetual growth, the only way to have upward mobility is to have equal downward mobility.

We can build a water economy by setting up rules that make concentrations of money shrink over time. If this is the normal behavior of the system, and if everyone knows it, then people who find themselves with extra money will not hoard it, but spend it buying goods and services from people with less money, and then those people will spend it instead of hoarding it, and the wave will keep moving. And because negative feedback is built in, the system has equilibrium, and economic collapse is not necessary.

So how do we keep concentrations of wealth shrinking? The way it's been done historically is by setting up money itself to have built-in depreciation. This Charles Eisenstein chapter, The Currency of Cooperation, covers some examples. Another is the Brakteaten system. And several readers have argued that the same thing could be done with inflation, although I think their point was, "Inflation does the same thing as demurrage, inflation ruins economies, therefore demurrage is bad."

To use inflation to create a water economy, the rate of inflation would have to always be higher than the highest interest rate (and also the highest rate that wealth could "grow" through other mechanisms like rent). Now you might say, in that case, nobody would lend money. That's exactly the point! Lending would exist only as a charity, not as a means to profit. If you wanted to buy something big, you would do it by saving instead of borrowing. And if you wanted to profit, you would have to be a skilled participant in profitable activity instead of a broad-scale speculator.

The problem is, if you're trying to do this with inflation, and if it's still legal to charge interest, then the private institutions that want easy profits through lending will get in a race with the public institutions that set the inflation rate. The whole thing will be unstable, unless you make a law setting a maximum interest rate. But if you're going to put a legal cap on interest, and make sure inflation is always high enough so that nobody wants to loan money anyway, then it's best to just cap interest at zero and forbid it completely.

Then the government could just constantly print money into existence, creating whatever it spent out of thin air, instead of collecting taxes. The exact rate would be negotiated through the political system to keep the balance between public and private interests, but suppose that the government created ten percent of the total money supply every year. Then the money supply would grow by a factor of ten roughly every 25 years, and you could just knock a zero off and keep going. It's not unstable because money is imaginary. The inflationary "tax" would be a flat rate, so fiscal conservatives would love it, and it would redistribute wealth, so socialists would love it. It would function like demurrage, but it would be logistically easier than requiring everyone to turn their money in every year.

November 18. Remember how, in 2000 and 2004, liberals said they would move to Canada or Europe if Bush won? And now that Obama has won, someone raised a funny question: where can McCain voters go? There is no place in the world that's to the right of America on both social and economic issues, not a total hellhole, and not ruled by Muslims. I suppose they could move to Alaska and secede.

But the more interesting point is that it's mostly Americans who think this way. It reminds me of the Lou Reed line: "I do believe, if you don't like things you leave, for some place you've never gone before." And also the Leonard Cohen line: "You, who must leave everything that you cannot control. It begins with your family but soon it comes round to your soul."

Of course, sometimes leaving is the right move. But in America we have a whole culture based on leaving. For hundreds of years, people all over the world who were inclined toward leaving have been coming here. And now that the world is full, and our economy is collapsing, the wealthiest habitual migrants will move on, while the rest of us will be stuck here, and we'll finally learn to make a good life where we are.

December 3. Photo gallery of an etymological atlas, which replaces names with their original literal meanings, and makes this world look like Tolkien! You can buy them here: Atlas of True Names.

December 4-6. A reader comments:

How nice it must be to not have a real job at your age and just sit around all day and live off others. You're obviously an intelligent fellow (smart enough to let others do the work and you reap the rewards) but be honest, do you ever feel guilty, do you feel good about living on someone's else couch in a house that they have to slave to pay rent for while you play on the internet all day?

Nobody ever asks this kind of question to Stephen King or J.K. Rowling, even though they also sit around writing all day instead of having "real" jobs, and they consume a lot more resources and more of the labor of others than I do. Of course, the difference is that they operate in the money economy, while I operate in the gift economy. They treat their writing as a zero-sum commodity, and charge money for it, while I treat my writing as a sharable commons, which I can "give away" free without ever losing it. Likewise, when I stay with people, their housing is a sharable commons which they can give without losing anything -- and they feel like they're gaining something, or they wouldn't invite me back.

But from the perspective of Dominator or Prisoner consciousness, any activity seems respectable if money changes hands, even if it's exploitative, and any activity where money doesn't change hands seems like stealing, even if everyone benefits. People say that money is neutral, but I disagree. No tool has ever been neutral, and money is a dead thing that takes the place of love: If you love doing something, you will do it without being paid money, and if you are paid money, you will do something without loving it.

Casemeau comments:

I think posts like today are perhaps the most helpful posts for your readers. The main barriers to getting outside the norms are not tangible (like, "where will I get food if I quit my job?") but are intangible. I've been living in a van down by the river for years now, and I quickly forget how hard it was to unlearn and overcome the negativity which was coming from within myself. Those are the most difficult obstacles to freedom. Finding food is a breeze.

I also want to say, concepts like "paying back" and "balancing out" do not apply to a gift economy. Of course, there are some individuals who go through life consistently taking more than they give. How much slack we give them, and when we cut them off, depends on how much we continue to enjoy giving to them, how much we can afford to give, and how much our whole society and landbase can afford to support them. It's an emotional and ecological question, not an accounting question. To paraphrase Fredy Perlman: Trade is something we do with our enemies.

But even that doesn't go far enough, because it's still inside the frame that says it's more desirable to receive than to give. When we have to be told "It's better to give than receive," that means that the opposite belief is embedded in our culture: Whenever something is given, we imagine that the receiver is being helped and feeling good, while the giver is being hurt or drained. But really we often feel more pleasure and satisfaction from giving than from getting.

This is only tangentially related to the issue of money economies vs gift economies. What it's really about is whether we have a psychology of scarcity or abundance. And that is not necessarily related to whether resources are scarce or abundant. It could even be inversely related: Many forager-hunter tribes have had a psychology of abundance while living barely above survival, and America of the last 60 years has had more material wealth than any society in history, while having a scarcity psychology, where no matter how much people have, they never feel like they have enough and they're always afraid of being ripped off.

The original email's author, Bret, writes:

I wasn't criticizing you nor defending the domination system, but rather trying to make sense of my own guilt for living the way you do. You and I lead very similar lives. I understand how you felt attacked and I sort of wanted it to feel that way so I could see how you would respond, because obviously people who live the kind of lives we do are going to come under heavy attack by a lot of people who think we are simply freeloaders as opposed to someone making a conscious effort to become more free.

December 10. Been thinking about last week's Archdruid post, Taking Evolution Seriously:

...evolution has no levels, it just has adaptations. There is no straight line of progress along which living things can be ranked. Instead, evolutionary lineages splay outward like the branches of an unruly shrub. Sometimes those branches take unexpected turns, but these evolutionary breakthroughs can no more be ranked in an ascending hierarchy than organisms can. They move outward into new niches, rather than upward to some imagined goal.

Therefore, it doesn't make sense to say "that the approaching crisis is part of our transition to a new evolutionary level." Industrial civilization is not "more evolved" than agrarian or forager-hunter society -- it's just better adapted to fossil fuels. And as fossil fuels run out, different kinds of human society will become dominant, but Greer argues that these adaptations will not lead to utopia, any more than industrial society did.

Basically he's throwing down a challenge: Using "evolution" to mean adaptation, can we still make an argument that human societies of the future will evolve to be much better than societies of the present and past?

Yes, because we are adapting on more than one level. There's no reason to think we're going anywhere merely by adapting to changing food/energy sources. But we are also adapting to our own expanding body of experience from trying different kinds of cultures and societies.

Now, you could say, hominids have been around for millions of years, so if we were going to find utopia we would have done it already. Or if you're a primitivist, you would say we already did. But to repeat a point I made in Beyond Civilized and Primitive, we're not the same hominids that our ancestors were 50,000 or even 10,000 years ago. Specifically, we developed enormous intellect that gave us godlike powers much more quickly than we could develop godlike wisdom and foresight.

We have barely begun to adapt to these powers. As gods, we're still infants. Eventually our wisdom and foresight may catch up, and we can build stable, enduring, non-repressive and ecologically beneficial societies -- but only if our power stops growing.

December 28. Teiji writes:

I'm from Honolulu, and last night our whole island experienced one of the longest blackouts in recent history, 12+ hours. Just for fun, I took my motorcycle out for a ride around town, and instead of chaos and traffic jams, things were orderly. Without police or traffic lights, lanes of traffic would stop to let the other direction go, then those lanes would stop after a while to let the first direction go, and so on back and forth. Only a few of the biggest intersections had cops directing traffic, and I wonder if they were even necessary. I heard on the radio that one pedestrian took it on himself to direct traffic, until the cops told him he wasn't allowed to do that. My theory is that without control and authority, people still know what to do and can manage themselves.

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