What Comes After Money

by Daniel Pinchbeck

  Governments, particularly regional governments, will also benefit. Notice that the most effective way for governments at any level to encourage the implementation of the C3 strategy is for them to accept payment of taxes and fees in the C3 currency. This encourages everybody to accept the C3 currency in payment, and provides additional income to the government from transactions that otherwise wouldn’t take place. Furthermore, that additional income becomes automatically available in conventional national currency at the latest ninety days after the payment, thereby not upsetting any existing procurement policies. The first country that has followed this strategy is Uruguay.

  The C3 approach is also a dependable way to systemically reduce unemployment. Governments at different levels (EU, national, regional) can contribute to a joint guarantee mechanism. Such a guarantee mechanism is considerably cheaper to fund than subsidies or other traditional approaches to reduce unemployment. C3 helps shift economic activities from the black or grey economy into the official economy, because SMEs need to be formally incorporated to participate, and all exchanges are electronic and therefore traceable.

  C3 systems are best organized at a regional level, so that each network remains at a manageable scale. Businesses with an account in the same regional network have an incentive to spend their balances with each other, and thus further stimulate the regional economy. C3 provides a win-win environment for all participants, and therefore promotes other collaborative activities among regional businesses. Each C3 network should use the same insurance standards and compatible software so that they can interconnect as a network of networks to facilitate exchanges internationally.

  The win-win approach of C3 also benefits banks and the financial system. As the entire C3 process is computerized, it significantly streamlines the lending and management for the insurance and loan providers. SMEs can therefore become a more profitable sector for banks, because the credit lines are negotiated with the entire clearing network, providing the financial sector with automatic risk diversification among the participants in the network. In the upcoming surge of new competitors in the market—such as Facebook, Google, or Tesco currencies and banks—this monetary innovation provides an additional window for banks to sell their core activities. Most banks are also involved in providing insurance services. C3 opens for them a whole new market for insurances and credit, all the way down to services for microfinance enterprises. As C3 is completely computerized, even such individually small-scale entities can now be serviced at a very low cost. Finally, the C3 mechanism systemically contributes to the stability of employment and of the entire economy, which is helpful for the overall solidity of the banks’ portfolios.

  We propose that businesses take the initiative of creating such business-to-business (B2B) systems at whatever scale makes most sense to them.

  There is one more thing that the businesses that get involved in such systems should consider doing: lobbying their respective governments to have them accept their B2B currency in payment of business taxes. This could apply only temporarily, i.e., for the period during which the banking system will not be in a position to fulfill its traditional role of financing the “real” economy to the extent that is necessary. The lobbyists have a simple but powerful argument: it doesn’t cost the government any money, will actually increase tax revenue, and is the best systemic way to reduce unemployment.

  GOVERNMENTS

  Governments will not be willing or able to force banks to lend out to the “real” economy, any more than you can push on a string. Therefore, in addition and parallel to accepting the usual bank-debt conventional money, accepting some complementary currency for payment of taxes makes a lot of sense. Which currencies should be acceptable for payment of what types of taxes is a political question that remains open for each government to decide.

  They also have a built-in interest in receiving payments in a robust currency. It is obvious that the existence of such a currency facilitates exchanges that otherwise wouldn’t happen, while conventional money or credit are difficult to obtain. These additional exchanges, in turn, increase the taxable income of the businesses involved, thereby starting a virtuous loop that counteracts the credit reductions by the banking system.

  When people and businesses are strangled by lack of money, taxable income is automatically squeezed as well. By accepting some payments in currencies other than bank-debt money, by definition more governmental income is possible.

  CITIES AND LOCAL GOVERNMENTS

  There are two reasons why we recommend allowing cities and local governments to choose their own complementary currencies to implement this strategy. First, cities and local governments will be the first governmental entities to get into still deeper trouble than they are today; and second, they represent diversity and resilience at work. Given that this approach is radically new, it is simply safer to test out a new system as a pilot at a city or local level, rather than directly on a larger scale at the national level.

  Indeed, cities and other local government entities will find themselves in the first line to bear the brunt of the social effects of the looming recession, while at the same time they will see their tax revenue shrink, and conventional financing through debt become much harder to obtain. This kind of problem is not going to be limited only to the United States.

  The London-based Observer asks, “What could possibly come along in the middle of this series of economic nightmares to make things even worse? How about a total depletion of local government finances that pay for the things that make up the very fabric of American society? Imagine that rippling across the rest of the world, reducing public services to skeleton operations.” Such ramifications are further explored by fiscal analyst Sujit Canagaretna:

  What is most disconcerting about the way this turmoil is panning out is that most state governments were already in a terrible state. But now things have worsened considerably and the credit markets have a real choke hold on almost all state treasuries. It is so bad that economic activity in most states has all but ground to a halt.24

  The second argument for local currencies is that some diversity in experimenting with a new strategy can only be beneficial to all concerned. If specific issues are considered a political priority, other types of complementary currencies than the B2B ones described above could be considered. For instance, if carbon reduction is considered an important priority, a carbon reduction currency program could be launched and accepted in partial payment in taxes. Some applications of the eco-money programs in Japan are relevant precedents in this domain.

  Similarly, local or regional taxes could be paid partially in conventional money, and partially in regional currencies. In short, a whole new set of tools to create incentives for specific behavior patterns, either corporate or individual, is now available, tools that in most cases have already been tested somewhere in the world.

  Obviously, implementing a strategy of this nature should be done in careful steps, starting with pilot application on a limited scale. A European-wide project, for instance, should be started with a cooperative venture on a smaller scale.

  ANSWERING SOME OBJECTIONS

  The first objection will obviously arise from the banking system, which would prefer to keep the status quo. However, banks are going to be disintermediated by a broader use of B2B currencies only if they themselves remain aloof.

  The second objection that is quite predictable will come from traditional economic thinking: using multiple currencies within a national economy reduces the efficacy of the price formation process and of the exchanges among economic agents. While this argument is valid, we know now that this overarching emphasis on efficacy is precisely what has reduced the resilience of the system, and made it so brittle.

  SOME ADVANTAGES OF THE PROPOSED APPROACH

  Our proposal, therefore, provides a systemic solution to the instability of the monetary system, something that the current approaches are not even trying to achieve. Systemic solutions are the only ones th
at will avoid repeatedly having to go through the same type of problem in the future. For example, as the WIR example demonstrates, complementary currency systems have proven to be a key factor in fostering counter-cyclical stability.

  A multiscale multistakeholder strategy has a number of advantages for the different parties involved, particularly during the transition period that we now have entered. Leadership will be required at all levels—public and private, local and national—to guide ourselves out of this crisis.

  This approach will avoid or reduce the strangulation of the real economy by the banking credit contraction that unquestionably is going to continue for a while.

  The decision that governments should reach—accepting payment of taxes in money other than exclusively bank-debt money—rests completely within their own political decision power. This strategy is also very flexible: a government can decide to accept payment of certain taxes only, only for a given percentage, for specific types of complementary currencies chosen for their robustness and have other positive effects, and/or only for specific fiscal years.

  Until now, taxes have been payable only in “legal tender,” which means conventional bank-debt money. Any currency is an incentive scheme, and our current way of dealing with taxes and subsidies is limited to that single instrument, which needs to be scarcer than its usefulness to keep its value. With complementary currencies, a whole additional array of options become available, which can focus on—and fine-tune precisely—the objectives that one wants to reach. We can, therefore, tailor the complementary currencies accepted for payments of taxes to the massive challenges currently faced around the world.

  Complementary currencies have proven a useful tool for enabling the design of incentive schemes in a wide variety of domains, regardless of whether a crisis is at hand. The evidence for this can be found in a number of publications.

  Perhaps most importantly: This strategy will avoid repeating the worst part of the 1930s scenario where economic strangulation was left to play out fully, which resulted in massive bankruptcies in the productive economy, intolerably high unemployment and untold suffering, and a toxic political fallout that has proven a dangerous mess to disentangle once started. Hjalmar Schacht, Hitler’s central banker, pointed out correctly that the electoral popularity of Nazism was directly due to mass “despair and unemployment.”

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  POVERTY (UN)CONSCIOUSNESS

  ANTONIO LOPEZ

  If you want an image of post–American Empire collapse, there is at least one contemporary portrait to draw upon. It looks a bit like a nuclear war circa 1958, which is akin to what I witnessed in Havana after the collapse of the Soviet Union and the subsequent “special period” that followed. By the mid-’90s Havana’s massive deep port harbor was empty and there was little gas to drive the scant, duct-taped cars that still existed there, yet it amazed me how music and culture remained such a resilient tool of empowerment and happiness. People still played baseball, made love, wrote books, painted paintings, and jammed. In fact, in a postfinancial world, jamming might be a good skill to cultivate. Improvisation requires openness, creativity, and ingenuity, which certainly are the hallmarks of survival and evolution (both cultural and natural)—which helps explain why during this period Cuba emerged as a world innovator in organic agriculture. No doubt, it was also hard to walk down Havana’s streets without being solicited by prostitutes and drug dealers, but when I visited there over a dozen years ago it was a veritable hub of African and Caribbean students who were there to take advantage of an innovative educational system focused on provisioning without industrial resources. And unlike the polluted and dangerous streets of modern capitalist cities, Havana’s avenues were quiet, with the exception of the clanging bells of Chinese bicycles and the breezy music wafting through the air.

  What is amazing about culture is how it persists in the face of cataclysmic adversity. Consider jazz, flamenco, reggae, and hip-hop as examples of high art forms that have absorbed and digested the oppression and destruction of so many lost lives. In the case of the Mexica (the tribal name for the Aztecs), their culture transcended the “conquest” because of an underlying philosophy, flor y canto—“flower and song.” I put conquest in quotation marks because many of my Native American friends remind me that it’s a transient state; consider the fate of Spain in the Americas. After five hundred years, who remains standing? Even in California, as urban historian Mike Davis argues, “USA” is a temporary identity. In the surviving poetry of preconquest culture, Mexica verse speaks of life’s temporality, and how each of us is on loan to each other during our short lives on earth. Mexica poets were wise to know that empires come and go, but flower and song remain. Thus, an open, compassionate cultural architecture, though rare, is absolutely necessary. As the Dalai Lama has warned regarding the Chinese occupation of Tibet, to commit to violence in response to history is to go to war with oneself, because the heart and mind can never be united in such a quest. Flower and song will die, however, if we let civilization destroy our spirit.

  In contrast to the survivors of Tibetan occupation or the Spanish invasion of the Americas, affluent Americans should count their blessings. Life has been prosperous and relatively safe by comparison to what so many have endured; we have benefited greatly by other people’s misery, as the Situationists once pontificated. The world’s “social majorities,” whom our system has condemned mostly to death, war, exploitation, and malnutrition, may end up being our biggest teachers. Let us listen with open hearts to what they can teach us about survival in harsh economic times. One such teacher is the only artist I have heard everywhere I have traveled in the world: Bob Marley. That kind of wisdom doesn’t come easily.

  As it stands we will need lots of new allies. Due to the unfolding financial crisis, we Americans are likely on our way to joining the majority of the world in terms of economic resources, or the lack thereof. With deindustrialization, decapitalization, deconsumerism and all the other d’s that accompany Depression, this is a good wake-up call for a minority of the world’s population with the highest per capita ecological footprint. Still, it goes without saying that economic decline is not happening without considerable pain and difficulty for many people. I don’t mean to trivialize suffering, but we can survive. Ask an Aztec. Reflect on how the majority of the world manages while living with considerably less; in many cases the “poor” are significantly happier than rich Americans who consistently rank lowest in the world’s happiness index (Indonesians, for example, are ranked as the happiest people in the world, despite their considerably lower standard of living than Europeans or Americans). We all know by this point that consumer goods don’t equate with contentment. Having a refrigerator and dishwasher make life simpler, so we’re told; yet when the final bill comes due, maybe that perceived comfort comes at a terrible cost of unmanageable economic and ecological complexity.

  Oikos, the Greek root for ecology and economics, means “household.” Like in Cuba, our financial home environment can be “disturbed,” to borrow a term from ecology, but our reaction depends on the level of diversity maintained in our state of being. The lesson from ecology is that disturbances have less impact when there is greater biodiversity to absorb the change in an ecological system. Just like the tightrope walker’s balance pole, the shorter it is, the less ability to absorb shock to the system. Like the Buddha said, add a touch of salt to a glass of water, and it will taste salty. But throw the same amount of salt into a lake, and you won’t taste the difference.

  Consider, then, that your attitude is potentially the most diverse asset at your disposal, because it is the one thing you have control over (that is, unless you let it control you, as is the case with most unconscious beings). We suffer from mechanistic interpretations of the world and act out of addictive behavior. It’s not just about the collapse of the petroleum economy or the disintegration of the finance pyramid, but the implosion of the guiding paradigm of Western civilization. If you think the global elites h
ave a grip on the situation, you are very wrong, because grip is the opposite of what we need. We are badly in need of an expansion of consciousness, and again, it is something you have access to: given an average baseline mental state, no amount of economic despair will prevent your mind from functioning as evolution intended.

  Still, Marx was right when he argued that material conditions produce consciousness (we make history but not in the environment of our choosing). Let’s not lose site of the fact that hunger and withdrawal can lead to desperation and confusion, while at the same time acknowledging that if you do have food in your stomach and a roof over your head, be thankful and continue to work on the big picture in little ways, both internally and externally.

  George Bush Sr. once said that the American way of life is not negotiable. This kind of mentality will not handle the disturbance of crashing markets very well. That’s why Americans, who are accustomed to a certain lifestyle, should reconsider what it means to be “wealthy.” Lynne Twist, author of The Soul of Money, argues that “abundance” is the wrong material goal, both personally and socially. She says it’s better to be “sufficient.” I find this an aspiration that is in keeping with the justice and equity equation of ecological sustainability. It’s in line with Gandhi’s notion that the world has enough for our needs, but not for our greed. Sufficiency suggests that we live within our means, that we only consume that which is available in real time. The ecologically disembedded financial system has brought the world economy to its knees, reminding us that we have to stop borrowing against the planet’s resource bank through our extraction of ancient solar energy, and return to using the solar energy that is available to us on a daily basis, such as from local agriculture and our labor. This is how our ancestors lived, and this is how the surviving humans of this age will carry on. Labor, especially with our hands, has been a dirty word since antiquity. It’s time to reintroduce craft (work with our hands) as an asset and value. As such, DIY may be one of the best cultural attributes that Americans have for surviving this phase. But let’s unify the “handiness” of DIY with spirituality as well. To paraphrase a Sufi saying, talk to God but tether your camel.