Every new epoch needs its adapted spirituality. A good candidate for a positive affirmation of a p2p spirituality is this book from marvelous author and speaker Charles Eistenstein, whose earlier The Ascent of Humanity offered a most profound critique of the current system. Here, he describes the positive alternative.
* Book: Charles Eistenstein. Sacred Economics: Money, Gift, and Society in the Age of Transition. EVOLVER EDITIONS/North Atlantic Books, 2011
Today, we feature excerpts on three special topics: Cultural and Spiritual Capital, Mutual Credit, and Disintermediation and the P2P Revolution
* Cultural and Spiritual Capital
Charles Eisenstein:
“Natural capital is one of four broad categories of the commonwealth that also comprises social, cultural, and spiritual capital. Each consists of things that were once free, part of self-sufficiency or the gift economy, that we now pay for. The robbery then is not from mother earth, but from mother culture.
The most familiar of these other forms of capital in the economic discourse is cultural capital, which goes by the term intellectual property. In former times, the vast fund of stories, ideas, songs, artistic motifs, images, and technical inventions formed a commons that everyone could draw upon for pleasure and productivity, or incorporate into yet other innovations. In the Middle Ages, minstrels would listen to each other’s songs and borrow new tunes that they liked, modify them, and circulate them back into the commons of music. Today artists and their corporate sponsors scramble to copyright and protect each new creation, and vigorously prosecute anyone who tries to incorporate those songs into their own. The same happens in every creative sphere.1
The moral justification for intellectual property is, again, “If I am my own, and my labor power belongs to me, then what I make is mine.” But even granting the premise that “I am my own,” the implicit assumption that artistic and intellectual creations arise ex nihilo from the mind of the creator, independent of cultural context, is absurd. Any intellectual creation (including this book) draws on bits and pieces of the sea of culture around us, and from the fund of images, melodies, and ideas that are deeply imprinted upon the human psyche, or perhaps even innate to it. As Lewis Mumford puts it, “A patent is a device that enables one man to claim special financial rewards for being the last link in the complicated social process that produced the invention.”2 The same is true of songs, stories, and all other cultural innovations. By making them private property, we are walling off something that is not ours. We are stealing from the cultural commons. And because, like land, pieces of the cultural commons are themselves productive of continued wealth, this theft is an ongoing crime that contributes to the divide between the haves and the have-nots, the owners and the renters, the creditors and the debtors.
The Russian anarchist Peter Kropotkin made this general point eloquently:
– Every machine has had the same history—a long record of sleepless nights and of poverty, of disillusions and of joys, of partial improvements discovered by several generations of nameless workers, who have added to the original invention these little nothings, without which the most fertile idea would remain fruitless. More than that: every new invention is a synthesis, the resultant of innumerable inventions which have preceded it in the vast field of mechanics and industry. Science and industry, knowledge and application, discovery and practical realization leading to new discoveries, cunning of brain and of hand, toil of mind and muscle—all work together. Each discovery, each advance, each increase in the sum of human riches, owes its being to the physical and mental travail of the past and the present. By what right then can any one whatever appropriate the least morsel of this immense whole and say—This is mine, not yours?
Such considerations inform my desire to make my books freely available online and to forgo some of the normal copyrights. I could not have written this book outside a vast organic matrix of ideas, a commonwealth of cultural capital that I cannot rightfully enclose.
Spiritual capital is more subtle. It refers to our mental and sensuous capacities, for example, the ability to concentrate, to create worlds of the imagination, and to derive pleasure from experiencing life. When I was young, in the very last days before television and video games came to dominate American childhood, we created our own worlds with intricate story lines, practicing the psychic technologies that adults can use to fashion their lives and their collective reality: forming a vision, telling a story around that vision that assigns meanings and roles, playing out those roles, and so on. Today, those worlds of the imagination come prefabricated from TV studios and software companies, and children wander through cheap, gaudy, often violent worlds created by distant strangers. These come with prefabricated images as well, and the ability to form their own images (we call this ability imagination) atrophies. Unable to envision a new world, the child grows up accustomed to accepting whatever reality is handed her. Could this, perhaps, be contributing to the political passivity of the American public?
Another depletion of spiritual capital comes via the intense sensory stimulation of electronic media. Modern action films, for instance, are so fast-paced, so loud, so grossly stimulating, that older movies seem boring in comparison, not to mention books or the world of nature. Despite my best efforts to limit their exposure to modern excesses, my children can barely stand to watch any film made before 1975. Once habituated to intense stimulation, in its absence we get the withdrawal symptom we call boredom. We become dependent, and therefore must pay to acquire something that was once available simply by virtue of being alive. A baby or a hunter-gatherer will be fascinated by the slow processes of nature: a twig floating on the water, a bee visiting a flower, and other things that are beyond the anemic attentiveness of modern adults. Just as the Roman coloni had to pay to use the land they needed to survive, so also must most people today pay the owners of the processes, media, and capital necessary to create the extreme sensory stimulation that they need to feel alive.
It may not be readily apparent that spiritual capital constitutes a commons. What has really been appropriated here is a locus of attention. The capabilities of the human mind that I call spiritual capital do not exist in isolation; it is our upbringing, our nurture, our cultural surroundings that foster and direct them. Our ability to imagine and to obtain sensory fulfillment is to a great degree a collective ability, one today that we can no longer exercise from the freely available sources of mind and nature, but must purchase from their new owners.
The collective attention of the human race is a commons like the land or the air. Like them, it is a raw material of human creativity. To make a tool, to do any work, to do anything at all requires that one place attention on that task rather than on some other. The ubiquity of advertising and media in our society is a co-optation of the collective human attention, and a depletion of our divine bequest. On the road, everywhere my eyes turn, there is a billboard. On the subway, on the internet, on the street, commercial messages reach out to “capture” our attention. They infiltrate our very thoughts, our narratives, our inner dialog, and via these, our emotions, desires, and beliefs, turning all toward the making of product and profit. Our attention is hardly our own anymore, so easily do the powers of politics and commerce manipulate it.
After it has been so long manipulated, chopped up, habituated to intense stimuli, and jerked around from one lurid but empty object to another, our attention is so fragmented we cannot sustain it long enough to create anything independent of the programs that surround us. We lose our capacity to sustain thought, understand nuance, and put ourselves in another person’s shoes. Susceptible to any simplistic narrative with immediate emotional appeal, we are easy targets not just for advertising, but for propaganda, demagoguery, and fascism. In various ways, all of these serve the money power.”
* Mutual Credit
Charles Eisenstein:
” In any mutual-credit system, members have access to credit without the involvement of a bank. Instead of paying money to use money, as in an interest-based credit system, credit is a free social good available to all who have earned the trust of the community. Essentially, today’s credit system is an example of the privatization of the commons I discussed earlier in the book, in this case the “credit commons”—a community’s general judgment of the creditworthiness of each of its members. Mutual-credit systems reclaim this commons by issuing credit cooperatively rather than for private profit.
Mutual credit is not so much a type of currency as a means of issuing that currency. In the dominant system, it is primarily banks that grant access to money by extending credit. In a mutual-credit system, this power goes to the users themselves.
The development of mutual-credit systems is extremely significant, for credit essentially represents a society’s choice of who gets access to money and how much of it. Mutual credit replaces the traditional functions of banks. People with a negative credit balance are under social pressure, and the pressure of their own conscience, to offer goods and services that will bring their account back into positive territory. But I’m sure you can see a potential problem with this system when applied on a large scale. What is to prevent one of the participants from running up a higher and higher negative balance, in essence receiving goods for nothing? The system needs a way to prevent this and eliminate participants who abuse it.
Without negative-balance limits, a mutual-credit currency can be created in unlimited amounts simply by the will to make a transaction. This might seem like a good thing, but it won’t work if that currency is used to exchange scarce goods.1 Ultimately, money represents a social agreement on how to allocate labor and materials. Not everyone can have access to enough credit, say, to construct a multibillion-dollar semiconductor plant or buy the world’s largest diamond.
More sophisticated mutual-credit systems have flexible credit limits based on responsible participation. Global Exchange Trading System (GETS; a proprietary credit-clearing system) and Community Exchange System (CES) use complicated formulas in which credit limits rise with time according to how much or how well one has participated in the system. Those who have fulfilled their negative-balance obligations in the past get a larger credit limit. This formula functions just like a conventional credit rating.
The real world, however, does not always conform to a formula. Different kinds of businesses have different credit needs, and sometimes exceptional circumstances arise that merit a temporary increase in credit. Some mechanism is needed to set these limits and to grant or reject requests for credit. This might require research, familiarity with industries and markets, and knowledge of the borrower’s reputation and circumstances. It could also encompass the social and ecological effects of the investment. Whatever entity performs this function, be it a traditional bank, cooperative, or P2P community, must have a good general understanding of business and must be willing to assume responsibility for its evaluations.
New forms of P2P banking run up against the same general problem of determining creditworthiness over the anonymous gulf of cyberspace. One could imagine a system in which a database connects you, who have $5,000 you want to lend for six months, to a distant person who wants to borrow it for six months. You don’t know her. How do you know she is creditworthy? Perhaps some user rating system à la eBay could provide a partial solution, but such systems are easily gamed. What you really need is a trustworthy institution that knows her better than you do to assure you of her creditworthiness. You lend your money to that institution, and that institution lends it to her. Sound familiar? It’s called a bank.
Banking, like money, has a sacred dimension: a banker is someone who finds beautiful uses for money. If I have more money than I can use, I can say, “Here, Ms. Banker, please find someone who can use this money well until I need it back.” Decaying currency, described in Chapter 12, aligns this conception of banking with self-interest. It will continue to be a necessary function even when “better” no longer means “to increase my personal wealth.”
Whether it is through social consensus, formulas, or the decisions of specialists, there must be some way to allocate credit. Banking functions, whether implicit or explicit, will always exist. Today, a banking cartel has monopolized these functions, profiting not only from its expertise in allocating credit toward its most remunerative use but also from its monopoly control over the former credit commons. Ultimately, a new banking system might arise from the ground up, starting with small mutual-credit cooperatives that form exchange agreements with each other. Convertibility among different mutual-credit systems is a hot topic in the field, with prototypes being developed by CES and the Metacurrency Initiative. The challenge is to strike a balance between convertibility, in order to allow long-distance trade, and insulation of the members’ internal economy from outside predation or financial shocks. These are essentially the same issues that face small sovereign currencies today.
Mutual-credit systems reclaim the functions of banking for a local community, a business community, or a cooperative entity. They foster and protect the internal economy of their members, insulating it from external shocks and financial predation in the same way that local currencies do. Indeed, local currencies will never be able to expand beyond marginal status unless they have a credit mechanism that protects them from the speculative runs that numerous national currencies have suffered in the last twenty years. Local and regional credit-clearing organizations can exercise capital control functions similar to those that wiser nations imposed when developing their economies through import substitution. The most famous mutual-credit system, Switzerland’s WIR, provides a rather extreme model for this principle: once you buy into it, you are not permitted to cash out. On a local level, this would force foreign investors to source components locally. Less extreme but similar measures were applied by Taiwan, Japan, Singapore, and South Korea in the 1950s and 1960s, when they restricted foreign companies’ repatriation of profits.”
* Disintermediation and the P2P Revolution
“Another source of economic shrinkage is the disintermediation that the internet has made possible. Disintermediation refers to the elimination of intermediaries: agents, brokers, middlemen, and so forth. Consider the example of Craigslist, which according to one estimate has destroyed $10 billion of annual revenue from classified ads, replacing it with only $100 million of its own revenues.1 Google has also made advertising more efficient (cheaper), not only seizing ad revenue from existing media but also reducing total industry-wide advertising expenditures. (Total “adspend” across all media fell by 9 percent in 2009.) Of course, as advertising has become cheaper, it has also become more ubiquitous; even so, the total size of the ad industry has peaked. Yes, we are passing through the time of “peak advertising” as the commons of the public attention has been saturated. I hope you aren’t too sad about the end of growth in advertising, which has been a major contributor to GDP growth. Meanwhile, many of the traditional functions of advertising and marketing which were once paid services are now being met for free through social networking. Similarly, the blogosphere has taken over many of the functions of traditional news distribution, but again at much less cost. The same is true of travel agency, stock brokerage, and many other industries where brokers and agents are no longer necessary. All of these factors contribute to economic deflation.
Disintermediation and open source software are both part of a more general phenomenon: the peer-to-peer (P2P) revolution. The older hierarchical and centralized structures of distribution, circulation, and production required a lot of money and human effort to administer. Moreover, their very nature isolated people from each other within narrow specialties, making gift exchange impossible.
Disintermediation is even affecting the credit system and subverting banks’ traditional role as financial intermediaries connecting investors and borrowers. Corporations bypass banks by obtaining financing directly from money markets, while new P2P lending websites such as LendingClub and Prosper.com now allow individuals to borrow directly from each other. Commercial credit-clearing rings, mutual factoring systems, and commercial barter networks, which I will discuss later, are other ways that information technology is reducing the role of centralized intermediary institutions. All of these developments will reduce GDP by lowering spending on “financial services.”
Because these ever-cheaper “information economy” services are a factor of production in nearly every other sector, degrowth here is contagious. This is true even in industries that we think of as growth industries. In 2000, for example, $371 billion was spent on PC hardware, including printers, servicing, and data storage. By 2009, this had shrunk to $326 billion. Obviously, this drop is not because we are buying fewer computers; it is because costs have fallen dramatically.
The commonest profit model on the internet is to run ads, essentially limiting the size of the entire digital economy to what level of advertising the physical economy can support. But the internet cannibalizes even itself: websites that offer free product reviews and price comparison searches render the very advertising that supports them obsolete.
What is happening is that the business model that has worked for all human history (find something people do for themselves or each other in a gift economy, take it away from them, and then sell it back) is being reversed. The internet is allowing people once again to do things for themselves and each other without paying for it. Eric Reasons comments,
Maybe the reason we’re having such a hard time finding out ways to monetize various internet services like Twitter, Facebook, and YouTube, is that they can’t be monetized … or at least not at replacement rates to the industries and services that they’re supplanting. This is exactly what the print media is finding out the hard way as it tries to shift to an online model.2
The internet is a participatory gift economy, a P2P network in which there is no consistent distinction between a producer and a consumer. When we share news, product recommendations, songs, and so forth with our online networks, we do not charge anyone for our “information services.” It is a gift economy. The content of most websites is free as well. Reasons concludes,
We’re told to believe in our future in a knowledge-based economy, but nobody has really figured out how to make real money of it. Of those who are making money off of it (Craigslist, Google), they are making pennies per dollar in the old markets that they’ve upset or practically eliminated with their innovation. This isn’t because we haven’t found the right monetization scheme yet. It is because innovation is leading to efficiency and not growth, and that is exerting deflationary pressure on bloated industries. Moreover, it is largely being done by us, the end user, in our free time, because we want to create and share, not just consume.
While a redirection toward a participatory gift economy is new, the threat of overcapacity and underemployment has bedeviled capitalism for centuries, indicating that we don’t need to work as hard as we do to support human life. Indeed, the imminent advent of an age of leisure has been before us ever since the first industrial machines came into use, machines that could “do the work of a thousand men.” Yet the implied promise, that soon we would all have to work only one-thousandth as hard, shows no signs of manifesting. And here I am promising it again. Will this vision likewise prove to be a mirage? No. The key difference is that we won’t rely on technological improvements in efficiency alone to enable greater leisure. The key is degrowth, not efficiency. It seems very counterintuitive: that degrowth—economic recession—will be what ushers in true affluence for the many.
In a growth economy, the labor that could be freed up through technological progress is devoted instead to producing more and more stuff. If in 1870 it took ten labor-hours to produce the necessities of life for a household, and today it takes one labor-hour to produce the same quantity of things, then our system conspires to make us consume as much as ten households did in 1870. We hear talk about the American consumer, the engine of global economic growth. Implicit is a vision of wealth identified with endlessly accelerating consumption. A new computer every month, a new car every year, a bigger house every five years—new, more, bigger, better. It seems insane, but it is economically necessary in our present system because deflation dynamics lurk close at hand, awaiting the day when consumption lags behind productivity growth.
I do not foresee an abrupt transition to the economy I describe. Let us indulge our gentle disposition and allow that the habits of slavery are of long standing and may need some time to unwind. I foresee a degrowth rate of around 2 percent, so that our use of raw materials, our pollution of the air and water, and our time spent working for money not love falls by about half with each generation, until eventually the pace of degrowth slows as the economy approaches an equilibrium relationship with the planet a couple hundred years from now.
The system I have described offers an alternative to this future of bigger, better, and more followed by catastrophic collapse. Negative interest allows productive investment to continue, and money to circulate, even when the marginal return on capital is zero or less, while a commons-backed currency frees work to go toward nonconsumptive purposes. Next I will describe a third thread in the tapestry: the social dividend, which frees the purchasing power of workers from the need for full employment in the money economy.”