by Kate Raworth
Monetary redesign is under way in the commons too, with diverse communities creating their own complementary currencies to be used alongside a nation’s official currency. ‘Wherever there are unmet needs and spare resources,’ explains financial economist Tony Greenham, ‘we can find new ways of creating money.’54 Issued from within their community of users, these currencies are sometimes paper, sometimes electronic, and are usually interest-free. Whether their use is intended to boost the local economy, empower marginalised communities, or reward work that is traditionally unpaid, such currency schemes are thriving, creating more resilient and more equitable local monetary ecosystems.
Take Bangladesh – not the country, but the sprawling slum district on the outskirts of Mombasa, Kenya, where money is tight and business is highly volatile, leaving many families frequently short of cash for life’s essentials. In 2013, Bangla Pesa was launched as a complementary currency for use by small businesses within that community. The government’s first response? To arrest the scheme’s founder, Will Ruddick, an American community development worker, along with five of the currency’s first users, for fear that its paper vouchers were aiming to oust the official Kenyan Shilling. But once government officials understood that Bangla Pesa actually served to complement, not compete with, Kenyan shillings, they released the group and instead began supporting them in spreading the scheme.
Over 200 traders, the majority of them women – from bakers and fruit sellers to carpenters and tailors – are now members of the network. Every new member must be endorsed by four others before being issued with Bangla vouchers, which they must commit to back with their own goods and services – thus ensuring that the scheme is underwritten by its own members.55 Within two years of the scheme’s launch, traders’ total revenues had increased substantially, in good part thanks to the economic stability and liquidity provided by the scheme. Using Bangla vouchers to buy and sell within the network allows members to keep their Kenyan shillings to pay for essentials like electricity that demand hard cash. Furthermore, the complementary currency provides a buffer against the frequent slumps in cash spending in the community. When a three-day power cut hit the district in 2014, small businesses like John Wacharia’s barber shop lost customers and cash revenue. But as a member of the network, he had an alternative means of exchange at hand. ‘Bangla Pesa allowed me to provide for my family, eat, and survive when I could no longer work,’ he said.56
Complementary currencies are not only for the cash-poor. Take St Gallen, a wealthy Swiss city that introduced time banking in 2012 in order to provide more care for elderly people. Its scheme, Zeitvorsoge, literally meaning ‘time-provision’, invites every citizen over the age of 60 to earn care-time credits by helping a local elderly resident with everyday tasks such as shopping and cooking, while also keeping them company. This makes it an ideal way for senior citizens to build up a ‘time pension’ to cover their own future needs for care and companionship. Zeitvorsoge distributes an initial stock of care-time credits – which are essentially its currency – among the city’s more needy elderly residents, making the scheme socially redistributive from the outset. Each carer can earn up to 750 hours of time credits and the city council acts as guarantor, promising to redeem those credits for cash should the initiative fail.57
So far the scheme is only growing in popularity. Once a week Elspeth Messerli, aged 73, spends a day helping 70-year-old Jacob Brasselberg, whose multiple sclerosis confines him to a wheelchair. Why does Elspeth do it? ‘The first two years after retirement I enjoyed life – and then I needed a goal again,’ she explains, ‘so I give today and I will take tomorrow, if I should need it.’58 Of course schemes such as this one – in which care-currency is earned by giving care – are open to the concern that, like paying kids to read books, they risk replacing morals with money, albeit money of a very different kind. As such schemes spread, research is needed to investigate the full ripple of their social effects, and to explore how they can be designed in ways that serve to reinforce rather than replace the human instinct to care for others.
Complementary currencies can clearly enrich and empower communities but game-changing ones are now emerging, thanks to the invention of Blockchain. Combining database and network technologies, Blockchain is a digital peer-to-peer decentralised platform for tracking all kinds of value exchanged between people. Its name derives from the blocks of data – each one a snapshot of all transactions that have just been made in the network – which are linked together to create a chain of data blocks, adding up to a minute-by-minute record of the network’s activity. And since that record is stored on every computer in the network, it acts as a public ledger that cannot be altered, corrupted or deleted, making it a highly secure digital backbone for the future of e-commerce and transparent governance.
One fast-rising digital currency that uses blockchain technology is Ethereum, which, among its many possible applications, is enabling electricity microgrids to set up peer-to-peer trading in renewable energy. These microgrids allow every nearby home, office or institution with a smart meter, Internet connection, and solar panel on its roof to hook in and sell or buy surplus electrons as they are generated, all automatically recorded in units of the digital currency. Such decentralised networks – ranging from a neighbourhood block to a whole city – build community resilience against blackouts and cut long-distance energy transmission losses at the same time. What’s more, the information embedded in every Ethereum transaction allows network members to put their values into action in the microgrid market, for example by opting to buy electricity from the nearest or greenest suppliers, or only from those that are community-owned or not-for-profit.59 And this is just one example of its potential. ‘Ethereum is a currency for the modern age,’ says the cryptocurrency expert David Seaman. ‘It’s a platform that could be really important to society down the road in ways that we can’t even predict yet.’60
These very different examples illustrate a few of the myriad possibilities of monetary redesign, involving the market, the state and the commons. But each one makes clear that the way that money is designed – its creation, its character, and its intended use – has far-reaching distributional implications. Recognising this invites us to escape the monoculture of money and put the potential of distributive design at the heart of a new financial ecosystem.
Who owns your labour?
Stagnant wages have become a familiar story. Over the past three decades, the majority of workers across high-income countries have seen their wages barely increase, flatline, or even fall while executive pay has ballooned. In the UK, GDP has grown far faster than the average worker’s wages since 1980, and the wage gap has widened too, resulting in the average worker earning 25% less than they otherwise would have done by 2010.61 In the US, the years 2002–12 have been dubbed ‘the lost decade for wages’: while the economy’s productivity grew by 30%, wages for the bottom 70% of workers were stagnant or in decline.62 Even in Germany – where trade unions have far greater influence over industrial policy – the share of wages in national output fell from 61% of GDP in 2001 to just 55% by 2007, its lowest level in five decades.63 Indeed, across all high-income countries, while workers’ productivity grew by over 5% from 2009 to 2013, their wages rose just 0.4%.64
At the heart of this inequity lies a simple design question: who owns the enterprise, and so captures the value that workers generate? When the founding fathers of economics disagreed over how income would be distributed between labour, landlords and capitalists, they could all agree on one thing: that these were obviously three distinct groups of people. In the midst of the industrial revolution – when industrialists issued shares to wealthy investors while hiring penniless workers at the factory gate – that was a fair assumption. But what determined each group’s respective share of earnings? Economic theory says it is their relative productivity, but in practice it has largely turned out to be their relative power. The rise of shareholder capitalism entrenched the culture of
shareholder primacy, with the belief that a company’s primary obligation is to maximise returns for those who own its shares.
There’s a deep irony to this model. Employees who turn up for work day-in, day-out are essentially cast as outsiders: a production cost to be minimised, an input to be hired and fired as profitability requires. Shareholders, meanwhile, who probably never set foot on the company premises, are treated as the ultimate insiders: their narrow interest of maximising profits comes before all. No wonder that, under this set-up, the average worker has been losing out, especially since trade unions in many countries were stripped of their bargaining power from the 1980s onwards.
But this set-up is, of course, just one among many possible enterprise designs. It happens to have dominated the nineteenth and twentieth centuries but that doesn’t mean it has to dominate the twenty-first. The analyst Marjorie Kelly has dedicated her career to understanding the effects of alternative enterprise designs, ranging from Fortune 500 corporations to local not-for-profits. For enterprise to be inherently distributive of the value it creates, she argues, two design principles are particularly key: rooted membership and stakeholder finance, and together they flip the dominant ownership model on its head.65 Imagine if labour ceased to be the expendable outsider and became, instead, the ultimate insider, rooted in employee-owned firms. Imagine, too, if those enterprises raised finance not by issuing shares to outside investors but by issuing bonds, promising their stakeholder-investors not a slice of ownership but a fair fixed return. No need only to imagine, of course: such enterprises are growing fast.
Employee-owned companies and member-owned cooperatives have long been a cornerstone of distributive enterprise design, born out of the cooperative movement that took off in mid nineteenth-century England, offering its members better pay, greater job security, and a say in managing the business. It is a model that thrives today, from the Evergreen Cooperatives running greenhouses, laundries and solar installation services in Cleveland, Ohio to the Mamsera Rural Cooperative in Rombo, Tanzania, whose members grow high-quality coffee and manage tree nurseries. They are both part of a growing force: in 2012 the 300 largest cooperatives worldwide, covering agriculture, retail, insurance, and healthcare, generated $2.2 trillion in revenue – equivalent to the world’s seventh largest economy.66 In the UK, the John Lewis Partnership, a leading retailer for almost a century, has over 90,000 permanent staff named as Partners in the business. In 2011 the company raised £50 million in capital by inviting employees and customers to purchase five-year bonds in return for an annual 4.5% dividend plus 2% in shop vouchers.67
Other new business designs are now joining this long-established model to create a veritable ecosystem of enterprises. It is happening, in good part, thanks to innovative entrepreneurs and lawyers teaming up to write new kinds of corporate charters and company articles of association, which are effectively a company’s user manual, setting out its objectives, structure, and employee or members’ rights and duties. Redesign that and you’ve redesigned the DNA of business. From not-for-profits to community interest companies, the bottom-up experiment in business redesign is giving rise to a network of enterprise alternatives operating alongside the old-style corporate mainstream. ‘What’s underway is an ownership revolution,’ says Todd Johnson, one of the innovative US lawyers rewriting corporate charters. ‘It’s about broadening economic power from the few to the many and about changing the mindset from social indifference to social benefit.’68 These are the foundations of a dynamic and inspiring movement, but critics point out that mainstream corporate practice, driven by shareholder primacy, still dominates. ‘Ultimately we will need to change the operating system at the heart of major corporations,’ Kelly acknowledges. ‘But if we begin there, we will fail. The place to begin is with what’s doable, what’s enlivening – and what points toward bigger wins in the future.’69
Who will own the robots?
‘The digital revolution is far more significant than the invention of writing or even of printing,’ said Douglas Engelbart, the acclaimed American innovator in human–computer interaction. He may well turn out to be right. But the significance of this revolution for work, wages and wealth hinges on how digital technologies are owned and used. So far, they have generated two opposing trends whose implications are only just beginning to unfold.
First, the digital revolution has given rise to the network era of near zero-marginal-cost collaboration, as we saw in the dynamic rise of the collaborative commons in Chapter 2. It is essentially unleashing a revolution in distributed capital ownership. Anyone with an Internet connection can entertain, inform, learn, and teach worldwide. Every household, school or business rooftop can generate renewable energy and, if enabled by a blockchain currency, can sell the surplus in a microgrid. With access to a 3D printer, anyone can download designs or create their own and print-to-order the very tool or gadget they need. Such lateral technologies are the essence of distributive design, and they blur the divide between producers and consumers, allowing everyone to become a prosumer, both a maker and user in the peer-to-peer economy.
So far, so empowering. But a parallel process of winner-takes-all dynamics is also in play. Instead of promoting a diversity of web-based enterprises and information providers, the Internet’s strong network effects (with everyone wanting to be on the networks that everyone else is on) have transformed individual providers – like Google, YouTube, Apple, Facebook, eBay, Paypal, and Amazon – into digital monopolies that sit at the heart of the network society. They are now effectively running the global social commons in the interest of their own commercial ventures, while aggressively arming themselves with patents to guard that privilege.70 The global governance to regulate these divisive dynamics is still sorely lacking yet is clearly going to be essential in order to reverse this rapid enclosure of the twenty-first century’s most creative commons.
Alongside this, the digital revolution has brought a second trend of concentration. Just as it is empowering people with near zero-marginal-cost production, it is displacing people with near zero-humans-required production. Thanks to the rise of robots – machines that can mimic and outperform humans – many millions of jobs are at risk. Whose jobs exactly? Anyone with a role involving tasks, skilled or not, that a programmer could write software to perform, from warehouse stackers, car welders and travel agents to taxi drivers, paralegal clerks and heart surgeons. This wave of digital automation is still in its infancy, but it has already led to what the digital economy expert Erik Brynjolfsson has called the ‘great decoupling’ of production from jobs, seen most clearly in the United States. From the end of the Second World War until 2000, US productivity and employment were closely intertwined, but they have strongly diverged ever since: while productivity has kept on rising, employment levels have fallen flat.71
Technology has of course replaced workers before, and it can be to society’s broad benefit when it frees people up to engage in other productive enterprise. In 1900, half of the US labour force worked in agriculture, assisted by over 20 million horses. Just over a century later, thanks to mechanisation only 2% of US workers are employed in agriculture, and the horses have all but gone.72 But economic analysts worry that today’s robot replacements are cutting across so many industrial and service sectors so fast that job creation in other fields simply cannot keep up. Millions of mid-skill jobs lost in the recession of 2007–09 have not come back because they have been replaced by software. Meanwhile, the jobs that have returned post-recession are typically menial, creating an hourglass economy that offers a few high-skill and many low-skill jobs with little in between. Analysts predict that five million jobs across 15 major economies could well be lost to automation by 2020.73 And it is a worldwide trend, with the fastest-growing market for robots in China. There, the electronics manufacturing giant Foxconn, which employs around a million workers, plans to create a ‘million robot army’ and has already replaced 60,000 workers with robots in one factory alone.74
So how could distributive design help to prevent the economic segregation that technology appears to be driving? An obvious starting point is to switch from taxing labour to taxing the use of non-renewable resources: it would help to erode the unfair tax advantage currently given to firms investing in machines (a tax-deductible expense) rather than in human beings (a payroll tax expense). At the same time, invest far more in skilling people up where they beat robots hands-down: in creativity, empathy, insight and human contact – skills that are essential for many kinds of work, from primary school teachers and artistic directors to psychotherapists, social workers and political commentators. As Erik Brynjolfsson and his co-author Andrew McAfee put it, ‘Humans have economic wants that can be satisfied only by other humans, and that makes us less likely to go the way of the horse.’75
That’s reassuring, but only partly, because if most workers continue to earn income just from selling their labour alone, they will simply not earn enough. Wages, analysts anticipate, will fail to capture a big enough slice of the economic pie to ensure that everyone gets some of it, let alone a fair share of it. The future returns to paid employment are on track to create a deeply split labour market with vast inequalities – a prospect that strongly reinforces the rationale behind the many national campaigns demanding a basic income for all.
Human-niche work for some and a guaranteed income for all would make a smart start to handling the rise of the robots but it would leave low-wage workers and the workless forever lobbying to maintain such high levels of redistribution year on year. Far more secure is for every person to have a stake in owning the robot technology itself. What might that look like? Some advocate a ‘robot dividend’, an idea inspired by the Alaska Permanent Fund, which grants every Alaskan citizen, through a state constitutional amendment, an annual slice of the state’s income arising from the oil and gas industry, a dividend that exceeded $2,000 per resident in 2015.76