A national conversation has begun which is alarming, yet also familiar. It talks about costs and trade-offs, losses and accounts. It is a conversation about human lives framed in the language of economics.

A recent study by Philip Thomas, professor of risk management at Bristol University, suggests that ‘If the coronavirus lockdown leads to a fall in GDP of more than 6.4 per cent more years of life will be lost due to recession than will be gained through beating the virus’.

Research like this presents us with a terrible dilemma, even leading some people to wonder whether the trade-off for trying to save elderly and vulnerable lives is really worth it, when it would cripple the economy for decades.

In times like these it helps to remember that we are presented with this misleading narrative every time we decide to act on our conscience. We are told we cannot halt the arms trade, because we will lose jobs. We are told we cannot reduce carbon emissions, because we will lose jobs. Now we are told we cannot save people’s lives, because we will lose jobs. For decades governments have used the threat of recession to badger us into maintaining an economic system that has made the poor poorer and the rich richer at the expense of the Earth’s support system. We are told this makes economic sense, but does it? 

Economics vs Chrematistics

In their book ‘For the Common Good’ economist Herman Daly and theologian John Cobb, Jr explain the difference between the practice of economics (from the Greek word oikonomia ‘the management of the household so as to increase its use value to all members over the long term’) and chrematistics (from khrema, meaning money and referring to ‘the branch of political economy relating to the manipulation of property and wealth so as to maximize short-term monetary exchange value to the owner’):

“Oikonomia differs from chrematistics in three ways. First, it takes the long-run rather than the short-run view. Second, it considers costs and benefits to the whole community, not just to the parties to the transaction. Third, it focuses on concrete use value and the limited accumulation thereof, rather than on an abstract exchange value and its impetus towards unlimited accumulation…. For oikonomia, there is such a thing as enough. For chrematistics, more is always better… “

In this definition of economics financial wealth does not trump the wellbeing of the community, as it is distinct from the actions a society must undertake to look after its members. The threat to our livelihoods that a fall in GDP represents is due to a conflation of economics with chrematistics.  

If for a moment we were to prise them apart we would see a different picture.

Whereas the lockdown has caused a drop in GDP growth (chrematistics) with the threat of recession and likely hardship for many people, apart from restricting our movements, it generally does not make us less able. It will mean many of us will not have access to society’s current means of exchange (money), but it does not represent a loss of ability, talent and willingness to contribute in the population at large. 

In fact, despite the fear and anxiety generated by the crisis, what we are witnessing is a phenomenal upsurge in generosity and creativity as people pull together to support each other with whatever they have. We are collectively defying the popular economic notion of humans as selfish utility maximising individuals and mostly showing solidarity and kindness. In the process we are realising who the real wealth creators are. They are the frontline workers in the caring economy: the nurses and doctors, the shop assistants and delivery drivers, the shelf stackers, the cleaners, the 750.000 (and counting) volunteers that have come forward to help the NHS. Online, they are the people offering free education, performances, exercise classes, financial advice, museum tours, mental health support, the list just goes on.  Behind closed doors it is those managing the domestic life: the family members doing their best to keep their children and themselves healthy and happy and sane, the friends joining together at a distance via a multitude of platforms. 

In this moment of crisis the fragilities of a globalised system have been exposed and it is ‘ordinary people’ and communities working together that are heading off socio-economic breakdown. They are demonstrating in the words of Naomi Klein in her book No is Not Enough, that ‘If the goal is to move from a society based on endless taking and depletion to one based on caretaking and renewal, then all of our relationships have to be grounded in those same principles of reciprocity and care —because our relationships with one another are our most valuable resource of all.’

The effects of Covid 19 will continue to place an unprecedented strain on societies that will require international cooperation, imagination and courage to overcome, but these efforts must not be geared towards returning to business as usual. Instead, we need to foreground the countless social and economic practices that have been developed over the last four decades by academics and practitioners dedicated to creating economic systems that serve all life on earth, and put in place mechanisms that reward people for generating real wealth and value. 

Time for bold solutions

After years of waiting in the wings Universal Basic Income (UBI) has now entered public discourse. Many pilots are underway, but the oldest ongoing experiment, The Alaska Dividend Fund, has shown no decrease in labour market participation and has ‘significantly mitigated poverty, especially among Alaska’s vulnerable rural Indigenous population.’ 

Currency experts such as Bernard Lietaer have shown that diversifying our exchange systems will make them more resilient to shocks in the global market and enable us to support social and ecological regeneration. The Human Scale Development framework developed in Latin America in the 1980s can help us evaluate whether what we are currently producing is actually meeting our real needs or pseudo satisfying manufactured wants. Together with Doughnut Economics and Steady State Economics such frameworks can help us steer a course that keeps our economic activity within the Earth’s limits. 

Vulnerable international food chains must now be replaced by regenerative local food systems. Building a vibrant food culture could simultaneously tackle obesity and youth unemployment, while ensuring future food security and restoring our soils. Land and property ownership must come under scrutiny and re-imagined to ensure food sovereignty, the regeneration of natural habitats and truly affordable and secure housing for all. The creation of worker cooperatives and support for local businesses have been shown to multiply local wealth and wellbeing, and will be needed to create more cohesive living and working communities.

In order to give people a say in shaping their lives and their communities, local authorities could introduce participatory budgeting, citizens’ assemblies and community charters.  Both nationally and internationally we must look at ways to abolish the crippling debt that is forcing people into unsafe work or destitution. We must also urgently start a discussion about the internet as a public utility. Work done by the P2P Foundation and the Institute for Local Self-Reliance can provide a guiding framework for sharing the wealth created by our communal efforts and make sure we all have access to its vital services.

The unintended social experiment precipitated by the virus presents a once-only window of opportunity to re-think our economic and social organisation in ways that can help us survive both the Corona epidemic and the greater threat of climate change that is now playing out. Instead of making people and planet fit around the numbers, it is time for numbers (financial mechanisms, exchange systems) to start fitting around people and planet. 

GDP does not measure what we value most. This crisis must be an opportunity to challenge what we have allowed corporations around the world to do with the natural environment (conveniently referred to as resources) and people (labour) in the name of economic growth. Thatcher was wrong: there are alternatives. Many of us have been working on them for decades. We are ready to take our rightful place at the table to help us turn the corner into a possible and hopeful future.  

Lead image by Tim Mossholder

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Description

Bernard Lietaer calls for three paradigm shifts – With specific actions by individuals and leaders

With unsuitable means we half-heartedly try to repair the complicated clockwork of our world. This gets us nowhere. It won’t get us out of the crisis, because it will not result in a sustainable world.

The time has come to lead ourselves and our world through “three paradigm shifts”.

This is what Bernard Lietaer demands in this book, which he dictated on his deathbed.

First: Recognize and adhere to the law of sustainability

The book shows that in our world we are dealing with “living systems” that are linked in many ways. With forests, our money, our society, and .. and .. and. Our well-being depends on the future sustainability of these systems.

The “Law of the Sustainability of Living Systems“, developed with other experts, explains and specifies the principles of sustainability:  

It says that living systems are only sustainable if they achieve a balance between productivity and elasticity. Balance, therefore, between short-term benefits of long-term existence. Just like that of Yin and Yang – not an “either – or”.  

We violate this law criminally. We have driven most living systems out of balance, making them non-sustainable.. Monocultures of all kinds, for example, emphasize short-term benefits and are not even sustainable in the short term without massive additional costs, as Lietaer shows with the example of forests and today’s monetary system. 

The book calls on readers to ensure that this law of sustainability is recognized and complied with. Both as individuals and as leaders in business and politics, readers are challenged to balance the short-sighted overvaluation of rapid return with the preservation of resilience.

Second: Balance matrifocal and patrifocal values

In order to view our society within the framework of the law of sustainability, Bernard Lietaer uses the terms “matrifocal” (“give and maintain”) and “patrifocal” (“take and have”). Both men and women follow this pair of values, each person according to their personal orientation. 

From this point of view it becomes clear that here, too, we are violating the law of sustainability. All over the world we live by patrifocal (“have”) values and neglect the matrifocal (“give”) side of balance, as we can see in our dealings with education, the elderly, people in need of care and with each other. 

Even though Lietaer sees signs of improvement, he does not only demand a fundamental change in our values in this area. He invites his readers to become aware of these values in themselves and to achieve their personal balance. Leaders must also establish and maintain a matrifocal/patrifocal balance in their areas of responsibility.

Third: Make personal information personal again

An extremely important system for the sustainability of mankind is the flow of human information. It enables learning and solving problems together. This is also why the “General declarations of human rights” declares unhindered flow of information a principle human right. 

The book shows that this system, which is essential for survival, is completely out of balance. Companies have centralized flow of information and exploit it to their advantage. We individuals have thus been dispossessed of our information and, from the point of view of the law of sustainability the information system has deeply slipped into the “productivity corner”. 

The answer is to make this system of human resources sustainable by restoring personal ownership of our information. This must be achieved jointly by both IT companies and governments

A convincing message

Despite addressing  at first glance a seemingly complex matter the book creates a convincing message – in simple and clear descriptions, examples and pictures.

Find out more in the book’s website.

Lead image: * Planet * by pareeerica on 2009-02-01 16:05:33

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Today’s WIR-Bank, originally the Wirtschaftsring (“Economic Circle”), was founded in 1934, in the depths of the Great Depression. It was based on the ideas of Silvio Gesell, a German-Argentine merchant and economist who saw how ordinary money circulation had collapsed. Money fearfully clutched rather than freely exchanged only makes a downturn worse.

By reinventing their own currencies based on long-term reciprocity among community members – rather than gold or central bank limits – communities can break this vicious cycle. Hundreds of such currencies sprang up in the Great Depression, as noted by Yale’s Irving Fisher, the early monetary economist.¹ Recent research by the authors² confirms that WIR circulation does indeed accelerate in a recession; as people hoard their limited holdings of Swiss Francs (SFr), they are more willing to use WIR for market exchanges.

WIR are actually somewhat less valuable than SFr because they are less negotiable: not easily changed for another currency, nor accepted outside the circle of WIR users. But that circle of Swiss circulation is fairly wide. In 2013, WIR counted some 50,000 small and medium enterprises (SMEs) among its clients, enabling 1.43 billion Swiss Francs (SFr) of trade, or US$1.59 billion.³ About 80 percent of WIR users are SMEs and larger firms; the rest are households.

What is the social basis of the WIR’s long-term reciprocity among people? Textbooks on the origin of money usually start with the “double-coincidence of wants” problem: If you and I are both to benefit from barter, it’s not enough for you to want what I have – you also need to have what I want. As the division of labor grows, such double-coincidences are harder to find. We need to find long circular chains of single coincidences, wherein A gives Bread to B, who gives Cheese to C, who gives an Apple to A. Money helps solve this problem by serving as an intermediary “good” that everyone wants.

This explanation begins and ends with individual wants. But our species has not survived primarily by such exchange. A century of anthropological and historical research shows that it was gifts – not money or barter – that brought the original human economy into being.⁴

In his Great Transformation, Polanyi characterizes the gift economy as “free gifts that are expected to be reciprocated, though not necessarily by the same individuals – a procedure minutely articulated and perfectly safeguarded by elaborate methods of publicity.” This is the original solution to the “double coincidence” problem – a network of multilateral gifts and reciprocity between individual and group – not just two individuals.

Even the earliest forms of currency were community records, not impersonal stores of value. Lietaer’s Mystery of Money describes pottery-based currencies centered on ancient temples to Mother Goddesses and medieval shrines to the Virgin Mary. These early monies were a way of remembering personal indebtedness. The Latin root for “monetary” – deriving from the temple of , the mother goddess who “monitors” all exchange – reflects this fact. The WIR is Juno’s descendant, a way of monitoring multilateral (not just bilateral) reciprocity, within a community of named individuals.

Impersonal money as the basis of trade came much later, allowing the economy to stretch far beyond interpersonal community. But this new impersonal money creates its own new problem – How should its quantity be controlled? Too much means inflation and wasted resources; too little causes deflation and unemployment. Precious metals are an arbitrary form of control, and central banks a blunt one. History shows shortages and gluts for gold and silver, and the limitations of central banks are confirmed by current conditions.

The supply of WIR is not limited by gold or central bank “base money” – it grows by as much or as little as people are willing to trade in it. That willingness is greatest (a) in a recession, (b) in highly cyclical industries like construction and hospitality, and (c) among those shortest on cash. Unlike ordinary money, it flows where it is most needed.

WIR is a community currency, but at even its small-nation scale, it is no longer highly “communitarian.” Time Banks (US), LETS (Canada) and Fureai kippu (Japan) are other notable currencies that are closer to their community roots. But like all of these, the WIR recreates an awareness of need-based gift exchange. It may be the form of exchange to which our species is best suited.

James Stodder (USA) teaches economics and econometrics in the School of Management at Rensselaer Polytechnic Institute and the Management Department at the US Coast Guard Academy. His research is on exchange systems, behavioral economics, inequality and economic anthropology.

Bernard Lietaer (Belgium) is the author of The Future of Money (translated into eighteen languages), and an expert in the design and implementation of currency systems.  He codesigned and implemented the convergence mechanism to the single European currency system (the Euro) and served as president of the Electronic Payment System at the National Bank of Belgium (the Belgian Central Bank).

Photo by AlicePopkorn

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