What Comes After Money

by Daniel Pinchbeck

  The possibilities inherent in such a plan should not be judged by past experience with local currencies and other exchange alternatives. Just as a modern jet aircraft bears little resemblance to the Wright brothers’ first airplane, so too are the more optimized exchange structures I propose unlike any community currency, LETS, or commercial “barter” exchange with which people might be familiar. Based on the principles we have outlined, it is now possible to engineer and build exchange systems to carry heavy economic loads within local bioregions and to operate them according to sound business principles. This is a multistage project that will proceed in the following sequence:

  Institute measures that promote import substitution.

  Provide an alternative payment medium, independent of any political currency and banking establishment.

  Issue a supplemental regional currency.

  Develop basic support structures that strengthen the local economy and enhance the community’s quality of life.

  Develop an independent value standard and unit of account.

  STAGE I: MAPPING THE TERRITORY & IMPORT SUBSTITUTION

  Jane Jacobs has argued that cities, not nation states, are the salient economic entities, and that city and regional economies develop through a process of import substitution. That being the case, it would seem reasonable that a regional economic development program should begin with actions that support that process.

  The first stage of the development program might look rather conventional and similar to some buy local programs of the past, but it will be more comprehensive in its social, economic, and political aspects. It begins by organizing solidarity groups that include all sectors of the constituent communities—particularly the locally owned and controlled businesses, municipal governments, the nonprofit sector, social entrepreneurs, and activists. By building bridges between these groups and identifying common objectives, it should be possible to achieve the commitment to do the hard work necessary to move together toward greater regional economic self-sufficiency.

  The first major task is to launch a buy local campaign in which the economic resources and business relationships within the region are clearly mapped. That database can then be used to assist businesses in finding local sources for the things they buy and local customers for the things they sell. The services of brokers can be employed to help match up supplies with wants and needs. Critical gaps are identified and local entrepreneurs can be encouraged to find ways to fill them, perhaps with support from a local microlending agency. As this process proceeds, the community becomes less dependent upon outside entities and more resilient and self-determining.

  These measures alone, however, are far from sufficient. Given the fact that conventional money and banking are themselves externally controlled and act in ways that are parasitic upon the local economy, some way must be found to reclaim at least a portion of the “credit commons” and bring it under local control. So unlike conventional buy local initiatives, this project moves quickly to implement the second stage.

  STAGE II: MUTUAL CREDIT CLEARING PROVIDES AN ALTERNATIVE MEANS OF PAYMENT

  The second stage is the most important and unique stage of the project. It provides an alternative means of payment based on the community’s own credit through the process of direct credit clearing.

  Working capital in the form of conventional money is always scarce and expensive for most businesses. Mutual credit clearing is an extension of the common business practice of selling on “open account,” but it is done on a more organized multilateral basis, which has the effect of sharing the risks and enabling a participant’s sales to pay for purchases without the use of any third-party credit instrument such as conventional money. As a member of a mutual credit clearing exchange, a business can have an interest-free line of credit, it will be able to acquire the things it needs without the use of cash, and (because it accepts payment in the form of exchange credit) will be a preferred source of supply for others who are members of the exchange.

  The allocation of credit in a clearing exchange involves the granting of an “overdraft privilege,” which means that a member’s account may have a negative balance up to some specified limit. In allocating lines of credit, it is important (especially in the beginning) to allocate the greatest share of credit to “trusted issuers”—i.e., those that are well established, financially sound, and whose products and services are in greatest demand within the local region. This is the key to maintaining a rapid circulation of credits through the system, avoiding defaults, and preventing the excessive accumulation of credits in the hands of businesses that cannot easily spend them. In brief, the businesses that you wish to have accept community credits in payment are the ones that should be issuing them in the first place. By beginning with trusted issuers, the value and usefulness of the community credits is quickly demonstrated beyond any doubt. As the process gains credibility and general acceptance in the community, more businesses and individuals will want to join the credit clearing exchange and as each member develops a trading history they too can earn an overdraft privilege commensurate with their volume of sales within the system.

  Like any network, a credit clearing system becomes more valuable and useful as it continues to expand and a greater variety of goods and services become available within the network. By way of example one may note that the first fax machine was very expensive—but useless. As more fax machines were deployed and connected in an expanding network, the fax became more valuable to all users—even as prices plummeted and quality improved. The same will happen with clearing networks, but it is essential that the network and each node in it be properly designed and operated from the very start.

  STAGE III: THE CREDIT OF TRUSTED ISSUERS PROVIDES AN ALTERNATIVE CURRENCY FOR REGIONAL CIRCULATION

  The third stage of the program will be the joint issuance of credits into the general community by the members of the clearing association. This is accomplished by the association members buying goods and services from nonmembers who are outside the credit-clearing circle. They make these purchases by using some form of uniform credit instrument, like a voucher or certificate, which all association members are obliged to redeem—not for cash, but for the goods and services that are their normal stock in trade. That provides a sound regional currency based on the productive capacity of the region’s leading enterprises, a currency that can circulate among any and all as a supplemental medium of exchange. The availability of such a currency to supplement the flow of official money insulates but does not isolate the local economy. Just as a breakwater protects a small boat harbor from the turbulence of the open sea, a sound regional currency provides a measure of protection from the turbulence of the global economy and centralized banking and finance.

  This externalization of credits from the clearing association into the general community can be achieved using any of several available forms and devices. Credits may take the form of paper notes, coupons, vouchers, or certificates; they might be placed on stored value cards like the gift cards that are commonly issued by major retailers and are so popular these days with consumers; or they could manifest as credits in accounts that reside on a central server that can be accessed by use of a debit card and point-of-sale card reader.

  STAGE IV: SUPPORT STRUCTURES FOR LOCALIZATION—SAVING, INVESTMENT, FINANCE, AND EDUCATION

  While the most fundamental need is for mechanisms that enable local control over the exchange function, the health and independence of local economies also requires the localization of savings and investments. In today’s world, locally owned and managed banks have become increasingly rare, most having been acquired or replaced by branches of huge bank holding companies that are owned and controlled by entities outside the region. Local savings deposited in those banks can and do get invested anywhere in the world, often in ways that are detrimental to the interests of the saver and the health of his or her local economy. They often leave homegrown enterprises starved for capital while funding mega-corp
orations, weapons, war, and projects that are socially or environmentally destructive. Structures can be created that channel temporary surpluses of both conventional money and exchange credits into enterprises that enhance local production and quality of life.

  Additional support structures are suggested by the experience of the Mondragon cooperatives in the Basque region of northern Spain. Over a period of more than fifty years, the Mondragon network has grown and thrived on the basis of cooperation and social solidarity. In addition to more than 250 industrial and service cooperatives and associated companies, it has developed structures to provide finance, education, and research in support of its regional cooperative economy. The Caja Laboral Popular (CLP, or Working People’s Bank), for example, is itself a cooperative that invests the savings of the local community and provides financing for the other cooperative enterprises.

  STAGE V AND BEYOND: TRANSITION TO AN OBJECTIVE MEASURE OF VALUE AND ACCOUNTING UNIT

  Eventually, it will become necessary to denominate local credits in some independent, objective, nonpolitical unit of account based on a concrete standard of value. This will become especially important as political currencies continue to be inflated and their monetary units are debased, and as local clearing networks become interlinked regionally and across national boundaries. Trade credit units originally defined as being equivalent to the dominant political currency unit (like dollars, pounds, euros, and yen) will shift over to a value unit that is objectively defined in terms of valuable, commonly traded commodities. Such a unit will facilitate trading across national borders by obviating the need for foreign exchange and eliminating the exchange rate risk, and will be immune to the inflationary and deflationary effects that beset national political currencies.

  The remaining design details and implementation strategies can be settled upon as the program unfolds. For now, it is sufficient to say that all of the necessary monetary science is well established and all of the major system components are readily available. With a modest amount of funding or investment, programs designed along these lines can be quickly launched and a credit clearing system can quickly reach critical mass. It is expected that the success of this model in one or two local regions will inspire others to implement it, leading to a rapid proliferation of healthy and sustainable communities that might associate to form a worldwide economic democracy.

  21

  A RETURN TO THE VALUE OF BEING HUMAN

  HARDIN TIBBS

  SEEKING ESCAPE

  In March 2007, the BBC broadcast in the UK a three-part documentary called The Trap, by the controversial British filmmaker Adam Curtis.1 Its message was that “a simplistic model of human beings as self-seeking, almost robotic, creatures” plus an overriding belief in human selfishness have created “a cage” for human beings in modern society. The documentary argued that this predicament is in part the result of a long process by which social and personal values have become dominated by reductionist thinking. The Trap was pessimistic in tone and did not offer any clear solution. The question it left open, which this paper addresses, is whether it is possible to reverse this process by establishing a basis for values that would not be reductionistic, and that would offer a way out of the present trap.

  REDUCTIONISM AND HUMAN IDENTITY

  The root of the problem is that our picture of human beings has been gradually reshaped by the dominance of one particular mode of thinking—reductionism—as a means of generating knowledge. What this has caused us to believe and value about ourselves in turn shapes how we behave toward each other. If our picture is somehow inadequate or incomplete, our behavior will also fall short of its natural potential and serious social and other problems may develop. This can easily happen without our noticing it and is not easy to detect or correct.

  Reductionism is essentially the procedure of reducing things to their component parts. The idea of taking things apart as a means of finding out more about them has been an extremely powerful way of building scientific knowledge. Early scientists began by looking at easily visible internal structures, and then we developed instruments such as microscopes for looking at parts at smaller and smaller size scales. This led us to the modern theory of the atom, and beyond that to subatomic physics, and to the paradoxes of the quantum realm.

  What we lost sight of in the process is that knowing what things are made of does not necessarily help us to value them appropriately.

  The basic assumption of reductionism is that a thing really is simply the sum of its parts. Each part is made of something smaller, right down to the basic building blocks of material reality, the subatomic particles. In this view, everything is a material construct. The properties of multiparticle things are seen as outcomes of system interactions, and thanks to computer simulations we now know these can be surprising and unpredictable. The features that appear as things get more elaborate are referred to as “emergent” properties of complex systems.

  We see everyday objects around us that have internal structure and are built up from smaller parts, and this does apparently explain how their properties arise. This can be seen very clearly with simple machines. If we take a bicycle apart we are left with a collection of mechanical components and we can see exactly how they come together to form the bicycle. The fact that this approach works so well with machines made it easy to think that it could be applied to living organisms without raising any new issues.

  Simple reductionism sees the properties of the whole as fully determined by the properties observed in the parts when separate. Complex systems theory refines that by saying that although the parts of complex systems determine emergent behaviors, these new properties must be studied as phenomena in their own right. But in both cases, parts are seen as primal and causal, reflecting a bias that the parts somehow exist first and then come together to form the whole.

  If we ask how the parts of a living system are different from the parts of a bicycle, a somewhat deeper answer is that the parts are themselves altered by the dynamic interaction among the parts in a way that does not happen in a bicycle. When the parts are in the living system they are literally different than when they are not—we call the latter state “dead.” This suggests a holistic reality in which parts and wholes are interdependent, so that in biological systems the whole can dynamically reshape the parts. An analogy would be the creative activity of engineering design, in which the parts are shaped as a means of accomplishing the concept of the whole.

  Yet even this answer is still subtly framed in terms of parts, whereas a better way to see living organisms might be as patterns of resonance like holograms. Living organisms are not assembled from parts like a machine—they appear as much simpler and smaller formations we call eggs or seeds, and all their internal structure appears from nowhere as they grow. From a reductionist perspective we have trouble making sense of this, which suggests that for science to transcend its current limits, it now needs to move beyond reductionism.

  Nevertheless, in reductionist biology the explanatory arrow goes from parts to wholes. Biological organisms clearly have complex internal structure, and do have parts, although these parts are bound together in a much more intimate way than the parts of a bicycle, as anyone who has attempted a dissection will know. Dissection—and sometimes vivisection—of living creatures enabled the knowledge base of biology to be built up, leading eventually to molecular biology, in which the operative parts are not bones, muscles, and nerves but the far smaller nucleic acids, proteins, and enzymes. It was quickly obvious that the internal structure of human beings is very similar to that of animals, so similar that we often talk colloquially about “the human animal.”

  This similarity, and the effectiveness of reductionism, led to the modernist understanding of a human being. We asked ourselves, what is a human being? And we answered by saying: human beings are advanced animals. And what are animals? They are systems of life processes. And what are these life processes? Well, they are dynamic systems of atoms and molecules. A
nd so, in a few simple steps we reduced our idea of a human being to a set of material, atomic phenomena.

  The largely unseen problem is that when we apply reductionism to living creatures, and most significantly to human beings, we inadvertently perform not one but two reductions. The obvious one is that we reduce the living creature to its material components. The other, overlooked one, is that we also reduce our appreciation of its qualities as a living being. In place of an appreciation of distinctive human qualities we are left with a perception of material qualities only. We have reduced our understanding of human beings to the same level as our understanding of material things.

  There are several qualities of being human that are devalued or even lost when this happens. As humans, we are self-aware, able to choose, and the holistic experience of being human is our unique existential identity. These qualities cannot be found in the parts that make up a human, or in material constructs such as bicycles, but can only be appreciated from the standpoint of actually being human. To be able to put the appropriate value on these qualities, we must use the holistic experience of being human as our frame of reference and basis of analysis.