Plain vanilla loans
Enterprises need people and resources. The recruitment of people in the Other Now did not strike Costa as being so radically different from what he was familiar with, notwithstanding the spontaneous and democratic nature of the hiring process. But when it came to the allocation of resources, the difference was truly radical.
Before private wealth emancipated him from the labour market, every job offer Costa had ever received came with thinly veiled encouragements to demonstrate his trust in the company by buying shares in it. Later on, he was offered share options: the legal, but rescindable, right to buy shares in the company on some future date at a fixed, low price. Share options are a powerful instrument in Our Now. They enrich insiders but are also a mighty disciplinary device – a juicy carrot dangled in front of you that can be removed at the drop of hat by your boss. By contrast, on the day of his appointment, Kosti was automatically handed his single share of the company he joined – for free, no strings attached, just as a student gets her library card or a new employee his security badge. The prospect of buying a few more shares in the company could not even have occurred to Kosti. Indeed, the success of the one-share-one-person system was that the very idea of buying and selling shares had become as appalling as the notion of a trade in votes or babies.
And yet a market for shares allows for savings – whether from an individual’s bank account or from a large pension fund – to be put back into use as investment, the crucial mechanism on which companies in Our Now rely in order to be born and to grow. So how were people’s savings put to work in the absence of such a market? How did companies raise funding? How did stored cash turn into actual investment? How did past labour’s energy crystallize into new machinery, new means of producing stuff?
‘Through direct lending to business facilitated by every person’s PerCap account,’ Kosti explained.
Upon being hired, Kosti was offered the chance to divert part of his PerCap holdings to the company. So, while he cannot buy ownership rights in corporations, he is allowed and encouraged to lend to them – especially to the corporation that he works for. The incentive to lend to one’s new work community is twofold: a sense of reciprocal commitment and, more practically, the thought that otherwise the company will have to rely on loans from strangers, perhaps at a premium reflecting a higher risk assessment by outsiders. Of course, youngsters getting their first job have no savings stored in their PerCap’s Accumulation, but if they wish they can lend their new company part of their PerCap Legacy – making first use of the trust fund society set up for them at birth.
But anyone is also at liberty to lend to a company other than their employer. And this is what Kosti had done. Over the years, he had lived off his company basic pay and the monthly Dividend, saving his bonuses into his Accumulation, from which he then lent to other companies whose wares and services to the broader community he felt should be supported, accruing interest on the monies he had lent. Were he to move on to another corporation, Kosti would take with him his PerCap, from which he might choose to lend to his new company. A free market for plain vanilla savings thus ensures that businesses have access to people’s PerCap and, in turn, savers have access to a liquid market that makes good use of their PerCap savings.
As for what happens when a member of staff leaves a company, it’s simple: one ups stumps and goes one’s way with whatever one’s PerCap contains. Dismissals are, naturally, more painful. In the same way that anyone within the company can invite others to help set up a search committee to recruit new staff, they can also set up a board of inquiry into whether it is time to let go an underperforming or misbehaving colleague. Once the committee has heard from all sides and deliberated in full view of any staff wishing to observe the distressing proceedings, an all-member vote decides the matter.
The PerCap account that everyone owns from birth makes all this much easier. Whether joining or leaving corporations, it follows you wherever you go. Whether Kosti leaves his firm voluntarily or is fired, no golden handshake or compensation is legally required. Of course, if his colleagues wish to, they can vote to transfer part of their pay, basic or bonus, to him as a gift in acknowledgement of the service he has contributed to the enterprise, or as a means of soothing a dismissal’s unpleasantness. Otherwise, Kosti will exit carrying with him only his PerCap.
In the limited space Kosti had to explain the Other Now’s corporate law, he added two important details. The first one concerned the arrangements for dissolving small corporations or partnerships. When two colleagues no longer see eye to eye, the impossibility of a majority vote prevents a decision on who keeps the company and who departs. In such cases, the Shootout Clause is activated: each submits a sealed number representing the financial value they assign to staying on. When the numbers are revealed, the higher bidder keeps the company. However, the price of keeping it is that she or he will have to lend the company, from her or his PerCap, a sum equal to the winning bid – and also pay a state tax proportional to the bid. The Shootout’s design means that the partner who thinks more highly of the company’s capacity to repay its debt, and contribute to society, gets to keep it.
The second detail answered another concern of Costa’s: how are corporations made to take into account the interests of those who don’t work directly for them – of consumers, communities and society at large?
Socialworthiness
In Our (capitalist) Now, the only interests that company directors are legally obliged to serve are those of their shareholders. The rest of us must live in hope that the state and its agencies are not ‘captured’ by big business but will protect us against it, at least to some extent.
Yet, over the past two centuries, the cartel of mega-firms and mega-banks running the world have proved adept at watering down, bypassing and ultimately making a mockery of the regulatory frameworks designed to constrain them: from banking rules and labour protections to environmental standards and local community consultations. In Costa’s view, the rise of big tech had made a bad situation markedly worse, with Facebook and its ilk turning abuse of their users into an Olympic sport. What would Costa not give to witness their neutering?
In the Other Now, Kosti explained, corporations are by nature much less commanding. The lack of stock exchanges and companies’ flat management structures keep their size relatively small – typically, no more than a few hundred staff. Nevertheless, Kosti was keen to point out that the public had demanded mechanisms that guaranteed corporate accountability to society. Hence the Other Now’s Social Accountability Act, which stipulates that every corporation is graded according to a Socialworthiness Index by regional panels of randomly selected local citizens known as Citizens’ Juries. These representative panels are drawn not from the entire pool of the general public, however, but from a digital stakeholder community, formed whenever a new company is registered, which can be joined at any time by its customers, users and the communities served or affected by it. Every company’s conduct, activities and effects on communities is eventually monitored by these juries, who periodically grade the company using a standardized social ratings system, developed and refined over time across different industries and jurisdictions. Once checked and settled, these ratings are published online, available at the touch of a screen to anyone.
The juries’ social ratings are designed to encourage those within a company to care about those outside it. If a company’s ratings fall consistently below a certain threshold, a public inquiry is ordered that may result in the company’s deregistration – in which case the firm will either be shut down or put out to tender, so that any other group interested in trying to run it better has the opportunity to do so. Though this happens infrequently, the very existence of this Damoclean sword is what curbs exploitative practices. However, Citizens’ Juries’ social ratings make their most significant difference at another, subtler level.
It is human nature to bask in the glory of,
or to recoil ashamed from, the organization one is, or was, part of. Eva, for example, was stigmatized by her Lehman past, which depleted much of the social capital she had gained at Stanford. The moment Lehman’s shares tanked, she rapidly transitioned from master of the universe to pariah. It is also humanity’s natural, though admittedly disagreeable, tendency to want to quantify and rank one another using numbers. But whereas in Our Now, there is only one, albeit constantly fluctuating, number with which to do so – a company’s share price – in the Other Now share prices do not exist and the juries’ social ratings fill the void.
Kosti reported that his company’s social ratings rubbed off on him. In professional contexts, people tend to check on one another’s company ratings before embarking on a collaboration or negotiations for a deal. Inevitably these social ratings spill over into the personal sphere and are used more casually, in the same way one looks online at customer reviews of a product or a film.
Perhaps most importantly, if Kosti wanted to move on and apply for a job at a new company, those taking an interest in him would scrutinize not only his personal record but also his company’s social standing. Naturally, their first port of call would be Kosti’s personal record, reflected in the voting record of his colleagues – the merit points they granted him over the years when allocating bonuses. But hiring committees would also scrutinize the collective appreciation or otherwise of his company within the broader community – just as students in Our Now look at the league tables for universities when evaluating a particular course.
Costa could see the attraction. But he was also struggling to fend off a sense of repugnance. Turning people into numbers was awful, he felt. The surest way to destroy a quality is to turn it into a quantity. Was this not what capitalism had done to us? Reduce every value to a price, every exchange into a transaction, every thing of incalculable beauty into a measurable object of desire? And yet, despite his idealism, Costa also recognized that a democratic, technologically advanced, large-scale economy cannot be run like a commune. It needs numbers. Quantification is unavoidable.
‘If we are to be turned into numbers, we might as well design a system in which the numbers are determined democratically,’ he opined.
‘Randomness is the great ally against tyranny,’ Kosti replied. ‘If the juries determining our numbers were chosen by any other process than purely random selection, they would be open to influence and ultimately exploitation and tyranny. Even if they were determined by elections, for example, then a new oligarchy would soon be created. We borrowed this fabulous idea from the ancient Athenians, in fact. However sexist and imperialistic ancient Athenians were, it was remarkable that almost all the city’s officeholders, including its judges, were randomly selected. They loathed elections – and were on to something!’
Reflecting on all that Kosti had described, Costa looked out of the window of his laboratory. He saw San Fransciscans going about their business and realized that each of them was carrying around their necks the invisible albatross of a number – a number that, for most people, was steeped in pain, resulting in sleepless nights over unpaid bills and mortgages. A number calculated opaquely by the same people that helped cause the 2008 crash by giving their hearty approval to the bankers’ most appalling practices. A number that widens the gulf between private wealth and poverty, that reflects a person’s power in a society that has abolished any prospect of economic democracy. A repulsive number mirroring a repulsive system. That number was their creditworthiness score.
‘If we are to carry around a number,’ Costa acknowledged, ‘it might as well convey our socialworthiness, not our creditworthiness. A number that is produced transparently, collectively and by randomly chosen fellow citizens – not by the bankers’ handmaidens.’
TATIANA lives!
Every piece of information he gathered about the Other Now made Costa think of Iris. What would she be thinking? He tried to imagine the questions she would put to Kosti. And he feared her ire if she were to find out that he had so far learned nothing about the Other Now’s handling of issues like patriarchy, racism, sexual politics, democracy, climate change. He surprised himself by also thinking that Eva would have worthy questions to add about aspects of Kosti’s world, particularly the extent to which personal liberty was safeguarded there.
Caught up in the excitement, he had not contacted Iris since 7 April, the day he ran that fateful test on Cerberus. As for Eva, though they had hardly seen each other for years, Iris had somehow managed to keep her in his mind through frequent mentions of their most noteworthy quarrels. Now that he held the key to the Other Now, these two people, in their very different ways, were uniquely placed to help him make sense of it. Time to take a break from HALPEVAM and pay them a visit.
Before travelling to Brighton, he needed to give Iris some notice. An enigmatic message only she could decrypt would do nicely, especially if it promised to dispel one of her primal fears: that Thatcher might have been right. That maybe financialized capitalism was, warts and all, better than the feasible alternatives. That perhaps, in the absence of fathomable alternatives, our commodified present was our only viable option.
Back in the 1980s, Iris had railed at public meetings against Thatcher’s famous claim, ‘There Is No Alternative’, referred to as TINA, and in favour of TATIANA, her radical, Thatcher-busting cousin – the opposing doctrine That Astonishingly There Is AN Alternative. After almost two months of messaging with Kosti, Costa sent Iris the triumphant message: ‘TINA was a lie. TATIANA lives. I have the proof. See you next week.’
A week later, he set off for Brighton to explain in person.
4
HOW CAPITALISM DIED
The end of banking
Costa had no idea how he could persuade Iris and Eva to take him seriously. Convincing them that the Other Now existed and that he had found a way to communicate with the Other Costa seemed unlikely. And yet his real fear was what might happen if he succeeded.
He was certain Iris would take him to task for having put to Kosti all the wrong questions. And he expected Eva to complain that his questions did not address money, the role of government and, above all else, property rights over land and scarce resources. His planned defence was to invite them to think of this first set of transcripts as an appetizer – and of his visit’s purpose as their opportunity to contribute questions that he would then put to Kosti.
Throughout the long-haul flight to Gatwick and the taxi ride from there to Iris’s home, Costa’s mind was racing. Besides fretting over Iris and Eva’s unpredictable reactions to his inconceivable news, something else was nagging at him. In his guts he knew he had missed something big, that he had failed fully to grasp the import of Kosti’s dispatches. Shortly before touchdown, a massive realization hit him: These bastards have eliminated the banks!
There could be no doubt. Kosti had said that everyone kept, from birth, a digital account with the central bank – their PerCap. Each PerCap comprised Legacy, socially inherited capital holdings; Dividend, essentially an account where the state deposited a monthly amount; and Accumulation, a savings account where all other incomes ended up. Assuming that everyone can make any kind of payment they need to out of this one account, why would they ever need a commercial bank account as well? The whole purpose of retail commercial banks had disappeared.
And so too for the investment banks. It often struck Costa how few people really understood what they do. Despite their name, one thing they do not do is invest – at least, not in skills, equipment, solar panels, hospitals or anything else of tangible value. Investment bankers spend their considerable energies and talents conjuring up complicated trades involving debt and shares. First they create fiendishly complicated forms of debt, exactly as Eva had done at Lehman. Then they sell these so-called debt instruments to speculators such as large pension funds looking for a return on the accumulated contributions of their employees, who bet that these debt instr
uments will increase in price. Investment bankers then lend all the money they have amassed in return for these debt instruments to their clients, who in turn use it to invest heavily in selected shares, thereby turbocharging their price. The higher they drive these share prices, the more customers the investment banks find to buy their ever-more-complicated bundles of debt and shares. This mutual reinforcement of debt and share prices is a closed circle, and so the world of money is decoupled from the real world, in which most people struggle, and leads eventually to a handful of super-funds owning almost everything.
But take tradable shares out of the equation and the whole structure evaporates. Costa now realized that the only remaining purpose of investment banks was to help people lend their money to corporations like Kosti’s. And while such brokers exist in the Other Now, plain vanilla lending reduces their power to almost zero. Kosti and everyone else have access to the same digital central bank payment system and are at liberty to lend simply and transparently to anyone within it using one of many competing apps playing the role of intermediary. No room is left for any financier to act as super-powerful go-between.
It had always struck Costa as the most extraordinary racket how in Our Now the banks and their most powerful clients create power for each other out of thin air. First the bankers grant their rich customers outsized overdraft facilities with which to buy shares. Thus, entirely fictitious money is used to acquire bits of different companies. Then, rather than treating those shares as investments, the bankers’ preferred clients don’t hang around waiting for the companies to make a profit and pay a dividend. Instead, they simply sell their shares on at a higher price. To whom? To other money men who also use fictitious money provided by some other bank overdraft.
Another Now Page 6