As our demands grow bolder—true full employment, the rebuilding of the social safety net starting with Medicare for All, an overdue green and just transition—so will the naysayers’ inevitable refrain: “How will you pay for it?” This Left Forum panel on June 5, 2018 moderated by Gar Alperovitz brought together the speakers listed above. They show a way out of the austerity trap and reveal that the obstacles to bold action at a national scale on jobs, healthcare, and climate are political, not economic. This is a partial, edited transcript.

Gar Alperovitz: One of the things that’s happening around the country, as you probably know, is  there’s an upsurge of interest in the idea that the banks ought to be under public control. There are public banking initiatives in something like 30 or 40 cities and a couple of states around the country. There was a forum on this  only six years ago promoting the idea. We’re seeing all over the country a very, very fast pick-up on this, including in Los Angeles, Washington D.C. and several other cities. State legislation pending in Michigan and Washington state.

The subject we’re going after today is probably the other piece of the puzzle, monetary policy and money, because there’s a revolution going on in that area as well. It’s not simply the establishment of public banks, but actually getting down to how money works, a subject that has been obfuscated for many, many decades.

We’re going to go into how the revolution is emerging very, very fast on the ground as well as in theory.

Our first speaker, Stephanie Kelton, is currently a professor of public policy and economics at Stony Brook University. She was also chief economist on the minority staff of the Senate Budget Committee. More important, she was the key economist behind Bernie Sanders’ presidential campaign, so we’re delighted to have her. She is also one of the leading experts in this field and getting a lot of attention, deservedly so, for not only for opening a way to rethink monetary theory or monetary practice, but for explaining it to the public in serious terms.

The ‘pay-for-it’ trap

Stephanie Kelton: I’m going to try to focus my remarks on three broad topics. I’m aiming at a progressive audience obviously, but honestly I give a version of this exact same talk most of the time to conservative audiences. The response that I get in those audiences, it would surprise you probably, is extremely positive.

What is it about what I’m going to say that can resonate both with audiences like this and with a very fiscally conservative audience? Let me jump in and we’ll see where this takes us.

This is just to tell you the kinds of things progressives are up against when they propose a big, ambitious agenda.

Bernie Sanders runs for president on the most ambitious agenda I have seen in my lifetime. Hillary Clinton publishes in her book a bit of an exchange she had with someone who said, “Man, it’s awful. Every time we propose something, he goes bigger. We say we want debt-free college. We want to help make college more affordable. He says, ‘Let’s make it free.’ If we say we want to make health care more affordable and increase access, he says, ‘Let’s just make it free.’ Every time we propose something, he goes bigger.” In this exchange that is included in her book somebody said, “This is like Bernie saying, ‘I think America should get a pony.’” Hillary, the fiscally responsible voice in the room says, “How will you pay for the pony?”

It’s the idea that all of this stuff is so grandiose that it’s beyond reality. This is what we’re up against as progressives, putting forward a bold agenda.

This again is Hillary Clinton, from years before the 2016 campaign, when she’s a senator. She’s talking about the reality of being in Washington D.C.She says, “The reality is you cannot cut taxes or increase spending unless you can pay for it.”

What she’s saying is, and I worked on the budget committee, if you propose to do something, you’ve got to show people how you’re going to pay for it. If you want to cut taxes or you want to put more money in education or infrastructure or defense or anything else, you’ve got to show where the money is going to come from. A congressional budget office has to take a look at it. Things are supposed to be done in a deficit-neutral way so that you’re not adding to future deficits so that you’re not increasing the size of the national debt.

Okay, so Senator Sanders gets accused of putting forward a big proposal and not paying for any of it, right? Everybody “knows” that. That was the accusation, but that wasn’t the reality. He actually attempted to play by Washington rules, which are you’ve got to pay for the stuff you want to do. If you go down his agenda, every item on the agenda, you could really draw a line from what it was he was proposing to the source of revenue that was supposed to pay for it all, whether it was Medicare, infrastructure, making public colleges and universities tuition-free. If you actually looked at what he proposed, it was paid for in the conventional sense of the word.

Now, obviously if you have to find the money, as Hillary Clinton says, then where do you look when you need money? Who’s going to pay for stuff? Who’s got the money? Obviously the rich people have the money. It’s a natural place to look when you’re trying to find the money to pay for a big ambitious agenda. You go for the billionaire class or you go for Wall Street, and you say Wall Street will pay.

If it’s making public colleges and universities tuition-free, which was one of the things he proposed, the pay-for on the other side of that was a tax on Wall Street speculation. You’ve all heard this probably 100 times.

How do you pay for a progressive agenda if these are the constraints because this is the current narrative? This means that you have to fight two battles. You have to fight for the agenda that you’re fighting for, and you have to sell policies on their own merits, and you simultaneously have to wage war on another front, which is you have to fight to raise the revenue. You have to get people to vote for the tax increase, for the closing of the loopholes of whatever it is that’s giving you the additional revenue. You’re waging two battles when you do this. My spending proposal is this, and here’s where I propose we get the money. This one can’t happen unless and until this one happens and you have success on the revenue front.  It actually means that you are in a very real sense dependent upon the rich because you can’t feed a hungry kid, you can’t fix crumbling infrastructure, you can’t provide health care for all, unless and until you can claw some cash away from the people who have it. You need their money. It makes you dependent upon the wealthy.

I think progressives should ask themselves, “What is the purpose of tax?” If your instinct, if your impulse is to say to pay for the stuff we want, my suggestion is you’re doing it wrong.

Rethinking taxes

In the 1940s, the New York Federal Reserve Bank was headed by a guy named Beardsley Ruml. He wrote this really important piece in 1946 called “Taxes for Revenue are Obsolete’” What’s he saying? I don’t know that I need to read the whole thing, but he says basically the need for the government to raise taxes in order to remain solvent and run its affairs is completely yesterday. We don’t do that anymore. Why? Because we have a central bank and because we went off the gold standard. The fact that we changed the monetary system in this fundamental way opens up space for us to do stuff we couldn’t do before when we had to find the money.

You’re trapped in a gold standard framework when you’re operating in this frame of mind that money is this finite thing that exists somewhere, it’s physical and you’ve got to find it, and you’ve got to go get it in order to spend it. Ruml says, no, no, no, that’s not how it works in the modern era – by the way, modern in the 1940s, and we still haven’t caught up with this reality.

Ruml goes on to say the purpose of the tax is not to fund the federal government. The purpose of the tax is multifold. One important thing it does is it allows the government to remove some money from the economy so that you don’t overheat the economy through government spending. In other words, taxes help you keep a lid on inflation. If you just spent money into the economy but you didn’t tax anything back, you’d run the risk of overheating the economy, causing an inflation problem.

Another thing taxes do is affect the distribution of income. You lower taxes on some folks, they end up with more take-home pay. You raise taxes on others, it takes the money away. You impact the distribution of income. You use taxes to incentivize or disincentivize behavior. A carbon tax is a good example. You don’t want as much pollution. You don’t want certain activities taking place, put a tax on it. You want to encourage certain other things like people driving electric cars, give a tax incentive or some form of a subsidy to encourage that.

The last one is he says you might want for some reason or another to have a line item where you can keep track of a certain program, like for example Social Security or the Highway Trust Fund or something like that. Taxes do a lot of stuff that’s important. What they don’t do is provide the government with revenue that it needs in order to operate.

Go back to this picture. You don’t tax the rich because you need their money in order to feed a hungry kid or fix a crumbling bridge. You tax the rich because they are too damn rich and extreme concentrations of wealth especially, but also income, are bad for the functioning of the economy, are bad for democracy. That’s the rationale for taxing the rich. Not because we can’t do other things unless we get money from them to pay for it.

You tax Wall Street speculation because you want to discourage certain behaviors, not because you need their money that you raise from a financial transaction task in order to pay for free college. Think it through. Suppose you said, “We’re going to make public colleges and universities tuition-free in the US. It’s going to cost about $70 billion a year to do that.” Now, to pay for it, we’re going to put a tax on Wall Street. Every time somebody buys stocks or engages in derivatives trading or bond trading, they’re going to pay a small transactions tax. That’s our tax.

Now, you simultaneously have said you want to break up the banks, you want to make banking boring, you want to shrink the size of the financial sector, and you have made yourself completely dependent upon what in order to fund your education proposal? Wall Street speculation. Not only do you need Wall Street to continue to speculate, but you’re going to need them to do more of it over time and grow because of the amount of money need to pay for college and university. You don’t want to hitch your wagon to the very thing that you loathe and are trying to shrink as part of your overall economy. There is a rationale for doing it, right? That would be to discourage certain behaviors, not to fund programs.

The household fallacy

My argument is that when we think about the government’s financial operations we tend to do so with reference to our own. We think of the government as a household. I say, “Well, I can’t go on spending more than I take in year after year and borrowing. I’d go broke.” This is a huge mistake, and if progressives do it, they need to stop it right now. The federal government is nothing like the household. The federal government plays by a completely different set of rules compared to all the rest of us.

If we want to go out and buy a car tomorrow, we have to have the money in the bank or be able to prearrange the financing. The dealership is not going to let us drive off the lot with a car until we have security financing to pay for the car, right? What we think is that the government prearranges its financing – the T.A.B. or “taxes and borrowing”; it collects taxes from the rest of us, it engages in borrowing when it sells bonds. It arranges the financing. It raises the revenue. It has money and now it goes out and spends. The spending comes last.

That’s completely backwards. What happens in reality is the federal government – the House and Senate – get a budget together. If the budget passes, there’s an appropriations process. It is through the appropriations processes that the budget authorization for government spending is triggered. That’s how the government pays for everything. We spend first, and the taxes and borrowing are secondary. The rest of us can’t do this. Money matters.

The fact that the federal government has control of the U.S. dollar, creates it, issues it, and is its sole source, means it can never run out of money.. You can try to create it, but you’d get arrested for counterfeit. You can’t do it. You can’t create high-powered money. The government’s money is special.

How should progressives answer the question, “How will you pay for it?” It’s a trap. Don’t fall into this. What they’re really asking is not how will you pay for it but who will pay for it. The question is designed to name the enemy. Who’s going to be footing the bill? In other words, who’s paying the T.A.B.? Don’t answer that question.

The bottom line is all this pay-for stuff is built around the idea that deficits are bad. They aren’t. Dr. Evil told us a long time ago that deficits don’t matter. Well, it turns out they do, but not the way we usually think about it. Deficits matter, but not because they add to the national debt, burden future generations and all that kind of stuff, create instability in the economy. Deficits matter because the government’s deficits become surpluses somewhere else in the economy. Guess what? Dick Cheney knows it and the Republicans know it. How do I know that? Because they just passed tax cuts that will add $1.5 trillion to deficits over the next 10 years. Why did they do that? Because they know that when a government is increasing its deficit somebody else’s surplus is going up, and they know exactly whose surplus it is. They’re using the budget deficit to channel financial resources to the people they are trying to help. Democrats or Greens or whoever could be using budget deficits to channel financial resources, infrastructure, real things, to the people they’re trying to help.

How should progressives talk about money, debt and taxes? Don’t repeat this stuff about taxes paying for federal government programs. It’s not taxpayer money. This is the wrong frame. Don’t talk about the debt as if it’s something that we owe. It’s something that some of us own. You may have treasuries. Mostly they are concentrated in the hands of wealthier individuals. Don’t talk about government money as if it’s something that the government needs to get from us. They’re the source of the money. We get it from them. They don’t need it from us.

An economy on FIRE

Gar: The next person is going to give us the next step. Michael Hudson is the distinguished professor of economics at University of Missouri, Kansas City. He’s also a research fellow of the Democracy Collaborative. Michael has been in this for a long time. Michael, take it away.

Michael Hudson: My first discussion of modern monetary theory really was in Canada 40 years ago. I was the financial advisor to the Canadian government. At that time the big problem from Canada was how provinces would get enough money to build infrastructure. I’m going to talk a little bit about that because it’s the same problem that the United States is facing today. You can understand it, I think, more clearly in the international sense.

There are two ways of financing infrastructure. One would be if the government, the Bank of Canada, which was more than any other bank able to create its own money, spent the money into the real economy for infrastructure. The banking lobbyists – I won’t call them conservatives; they were radical reactionaries and lobbyists for the banks – said, “Look, if the government creates the money, you’ll have to borrow it, and you’ll have to pay 5 percent, 6 percent, but you can save half a percentage point by borrowing German marks or Swiss francs.”

This was Trudeau’s liberal government, and you can’t get more right-wing than the liberals in Canada. What they did was they borrowed billions for Deutsche marks and Swiss francs that were turned over to the government central bank. What did the government do? All this domestic spending in the real economy was in Canadian dollars to hire Canadian labor, to buy Canadian goods and services, to build the infrastructure.

My point was, why do you need Swiss francs and German marks if you’re going to create dollars? The Swiss francs and German marks ended up in Canada’s central bank as its foreign exchange reserves. What did it need these reserves for? If the government is going to create the money as a result of this borrowing abroad, why have the foreigners?

Well, the answer from the banks was you need the foreign banks as an honest broker because they’re responsible. In literature, you think of bankers as being responsible, but they’re really not responsible. What happened after 1979 was that the Canadian dollar went down from about $1.06 into the $0.80s. The Swiss franc went way up. The German mark went way up. The result was that Canada had to pay a 50 percent premium on the capital as a result of having the banks work as the honest broker for them.

None of this was necessary. The government could spend it into the real economy. The problem is the private sector is not just the real economy. The private sector also is the FIRE – finance, insurance and real estate – sector. You can see today the ability of the government to spend money into the economy through the Federal Reserve’s quantitative easing, technically bailout money to subsidize the finance, insurance and real estate sector. This is considered to be noninflationary.

Who gets to create money

You have to ask, what kind of inflation are people talking about? When they talk about government spending into the real economy and running deficits, they say there will be price inflation. What they really mean is wage inflation. What they want to do is keep wages down. When they talk about inflation of prices, they really mean living standards going up. We don’t want that, do we, because we call that consumer price inflation. We don’t call that rising living standards. The fact is, there’s a disconnect. There’s no reason why consumer prices should rise when wages go up. There’s a disconnect with the largest increase in prices that we have today, whether it’s housing prices and rents, as you have in New York, or medical care.

The government is able to create money now for the financial sector, but there is this patter about why you can’t run a deficit for the domestic economy. Now, what is true for Canada is exactly what Stephanie has explained for the United States. Banks can create money simply on their computers. If the rich people lend this money to be spent, how is the price effect any different from the government simply creating the money? The effect is exactly the same. That’s what they don’t get. You don’t need to borrow to spend into the economy at all. It’s a science fiction story, a parallel universe, as if the governments are somehow dependent on the banks.

All this developed about 100 years ago when the Federal Reserve was created in 1913 and ‘14. Before that, there was a crisis in the United States in 1907. Congress had maybe 18 volumes of national monetary commission reports. One of the volumes explained everything that the Federal Reserve had done, creating money, moving it around 12 districts, pumping it into the economy for the autumnal drain when you have to move the crops. All of this was done by the treasury. The difference is that the treasury was controlled in Washington. I have on my website from an Indian journey all of the documents of how the Federal Reserve was created, essentially to take control of the money supply out of Washington and distribute it to the banks in the various Federal Reserve districts.

You have a whole political fight between the FIRE sector and the government sector. You can only understand this fight by looking at the politics of it.

Unforeseen financialization

The fact is that Karl Marx was much too optimistic about the financial system. His volume three of “Capital” was all about how finance tended to grow and extract more and more from the economy. The FIRE sector today essentially funds real estate. It extracts rents. It raises prices. It backs great monopolies. Banks don’t create money into the real economy basically. They create money to buy companies, divide real estate already in existence. They transfer wealth, but they don’t really produce.

I’m working with Gar’s group to re-describe how the gross domestic product accounts. We actually treat the FIRE sector, finance, as a subtraction from gross domestic product, not an addition to.

Getting back to Marx, Marx expected in the late 19th century that the historical destiny of capitalists, he wrote, was to take banking and money creation out of the feudal stage, out of the medieval European stage and industrialize it and essentially move towards public banking. The whole 19th century was doing this. There are three volumes of the national monetary commissionary report on the right spot for the large German banks and how German banks were working hand in hand with government to finance industry. The Bank of Canada was formed during this time.

Things had not worked out that way. World War I changed everything, and now you have instead of industrializing finance, you’ve had a financialization of industry. What you’re having instead of the government spending into the real economy, it’s starving the real economy.

What happens when a government doesn’t pump money into the economy? That means there are only two sources. One source is international. You borrow the money abroad in a foreign currency that you’ll have to repay at a currency risk. The other source is domestic; you borrow from the banks or you let the banks pump the money into the economy. The problem is the banks don’t pump the money into the economy. The banks only lend essentially for the real estate, corporate raids, corporate loans. They even make loans to corporations to pay dividends. The beneficiaries are the 1 percent or the 5 percent.

The real question of the budget deficits or modern monetary theory is who’s to get the benefit of the money? Will it be the 1 percent or will it be the 99 percent? The answer can be increasing the flow of funds, and the flow of funds, who gets what will make it very clear. Who gets the result of the government spending in forms that do not take the form of a deficit or if it runs the deficit, is it into the real economy or the FIRE sector? You need to divide the private sector into FIRE and into the industrial, agricultural and infrastructure.

Gar: Let me say, I suspect there are people out there, because I’ve done this myself several times, who hear the words ‘the banks will create the money’, and that doesn’t ring straight for most people, that money is actually created. Those questions, I’m sure, are going to hang in the air into which modern monetary theory has the answers. I want you to understand that.

Another way to think about it, although we can easily get into a trap about taxes here: When the government wants to run a war, money does not seem to be a problem. It creates money when it wants to, and it taxes back some of it if it likes to. By way of comment, having talked to a number of folks, the word ‘create’ kind of gets in the way sometimes if you’re not economists.

Fear of a job guarantee

Our next speaker is Pavlina Tcherneva, an associate professor and chair of the department of economics at Bard College and a research associate at the Levy Economics Institute. She’s led the way in showing very, very practical applications of the theory.

Pavlina Tcherneva: Thank you. You are all, I’m sure, familiar with the seven deadly sins. Today I would like to address the seven deadly fears of economic policy. Mostly I’d like to address and face those fears and how to defend a progressive agenda, whatever that may be.

The policy proposal that I’ve been working on for 20-odd years is an employment program that has become known as the job guarantee program that has recently entered the mainstream conversation. A number of senators and representatives have endorsed the program. There are lots of versions of the program out there, but it is a recognition that the government has a responsibility to do something about the persistent problem of unemployment.

What I’d like to do today is basically address some of those seven deadly fears. As the program has discussed, there’s a lot of response, both on the right and on the left, and a lot of it is quite alarmist, frankly. I’d like to ease our fears by addressing each one of them.

First, what is the job guarantee? Essentially, it’s a public option for jobs that offers decent work at decent pay. The public sector acts as an employer of last resort, if you will, when people seek work and they’re unable to find good work at decent pay.

It is a permanent program. The unemployment problem is an ongoing problem, and thus, this program is a standby option for jobs. It’s federally funded but locally administered. It’s voluntary. Nobody is asked to work for their benefits. It’s open-ended. You can go to the unemployment office, and you seek work. There will be a list of options for you. The way we propose it is that those list of options will largely focus on public service and the neglected areas of public sector work. It’s open to all people irrespective of their labor market status, race, sex, color or creed.

The way I think of this program is that it’s an employment safety net, the way we have safety nets for various other problems. If the problem is that you don’t have retirement insurance, we guarantee it; we have Social Security. If the problem is access to food, we guarantee that there will be access to food.

It’s also a transitional program where people essentially get their starter jobs if they need to. They get their stepping stone. They enter into this program and then transition out of it if they so desire.

Overcoming the spending myth

Let’s discuss the fears. The first one that we normally have to address is the fear of spending. It’s based on a deep misunderstanding of what money is and what it does. Again, Stephanie explained how normally there are images that are conjured in our mind that, “Gee, my hard-earned money. I’ve been saving it, and now the government wants to tax it away from me so that it can pay for these policies. Who knows if they’re going to be good or bad?”

We just need to give up this myth of the taxpayer money because this is not how actually the public sector spends. I want to add one other purpose of taxes to the list that Stephanie provided: taxes create demand for money; for the dollar, in a sense. Just think of it this way: If the government tomorrow decided to tax you in Canadian dollars and April 15 you have to deliver Canadian dollars or euros, what will you ask your employer to pay you? Will you ask them for dollars or will you ask them for euros? The tax in this coercive way, if you will, creates demand for the very thing that the government issues: the dollar. The reason is the government needs to be able to spend something that we value to be able to fulfill its various public service objectives.

Here’s one way of thinking about it. The government is the monopoly issuer of the dollar. It is the ultimate source of dollars. Unemployment in a way is people seeking dollars but not able to find them. Whatever the other arguments for addressing the problem of unemployment, and we can discuss that, there is one key aspect to this problem. It is that there is only one sector that can actually choke up the demand for dollars. There’s only one sector that can actually provide it to those who need it, and that is the public sector.

Another piece to the story is that the unemployed are already in the public sector. The government is already responsible for the unemployed. We do the right thing. We provide unemployment insurance, as inadequate as it might be. We provide various other income supports, even though those programs are also underfunded. We have this understanding that we have to provide for people who don’t have access to decent employment or decent incomes.

We provide a slew of programs, but we don’t provide the one that many people need, and that is employment. We are not only responsible for the unemployed, but we also bear the costs of underemployment poverty. If you think of virtually all social, economic and political problems, in one way or another they are connected to communities that have lost their economic life, people who have lost economic opportunities. The distress that families feel not being able to provide for themselves. These are large invisible but very real costs that we already bear.

The fear of spending is the first fear that we need to debunk. This is a bit of an esoteric point, but I want to put it out there. If the government sector is the monopoly issuer of the currency, and it provides the currency in exchange for employment in the public sector, public sector work, then there is an exchange. We establish some sort of baseline value for that currency. We anchor the value of the currency and labor power. We know exactly what it is worth. It is worth $10 or $15 for one hour of publicly useful labor. In a sense, it’s our gold standard. It uses not gold, but it uses labor to anchor the value of the currency.

Big numbers and big government

The next fear is the fear of inflation. I think that that is really the fear of big numbers when we estimate what a job guarantee would cost. We have a proposal that you can find at the Levy Institute website that estimates a job guarantee would cost between $300 billion to $500 billion a year to employ 50 million people. A lot of people have said, “Oh gee, this is an enormous program. It’s going to be very inflationary.” Is $300 billion really inflationary? The Department of Defense, including the war budget, is about $900 billion. Social Security is upwards of $1 trillion. Medicare is $700 billion. Medicaid is $600 billion.

Somehow $300 billion is supposed to generate this massive inflation that will erode the value of the currency. This is not really the problem. A lot of people are actually worried that this actually might push up wages, that it might actually provide wages at a decent living level. We understand that the job guarantee will be the effective minimum wage for the economy, so why would you work for $7 an hour if there’s a public option of $15? The private employer has to match this. We have modeled this, and we find negligible impact of this very bold program on inflation.

The other thing that virtually everybody misses in this discussion is that a one-time adjustment in prices and wages across the economy, across the board, is not inflationary. Inflation is when prices keep going up. If the wage goes up from $15 to $16 to $20 to $25 to $30, then the private sector will have to match it. Yes, that will be inflationary, but no, we are anchoring the floor. We are raising the floor, and we are anchoring it at $15.

The second piece that everybody misses is that the job guarantee actually shrinks when the economy is growing. When the economy is growing, when private employment is growing, when there are ”inflationary pressures” in the economy, the program shrinks. Actually, it’s a dampening effect on inflation, not a fueling effect to inflation.

There’s a fear of big government, of course, but most people ignore the fact that we already have big government. What I already pointed out is that government has devoted enormous amounts of financial and real resources to deal with the fallout from unemployment, underemployment and poverty.

In this sense, the way to think about this is that the job guarantee actually reduces the costs of unemployment.

Whatever you discuss, whatever your policy priority is, always separate the financial cost from the real cost.

When you defend Social Security, don’t fall into the trap of this discussion of how will we pay for it. The question is what would we do with a whole bunch of people who are retiring who don’t have the goods and services that they might require to live a decent life. It is not a matter of financially providing for them but providing for them in real resources.

It’s the same thing with unemployment. It’s not the problem of paying for unemployment, but the problem is, do we really want to maintain this paradigm of neglect, of abandoning our public spaces, of abandoning our public purpose, of allowing people to suffer all the consequences that come with unemployment.

Double standards

There’s also fear of the administrative burden. This is a unique double standard that the job guarantee faces. We never hear that we can’t go to war, we can’t engage in nation-building because it’s going to be an administrative nightmare. The job guarantee uses the existing institutional infrastructure to simply expand the number of jobs out there.

Is it really so difficult to employ 50 million people? Is this really the biggest problem that the government is facing? Well, public education serves 50 million students. Nobody is saying we have to take it away because it’s an administrative nightmare. Social Security, 50, 60 million people. Medicare 44 million. Medicaid 70 million. Yeah, it’s easy to sign a check, but all of this involves a fair amount of administration, and we don’t discuss these.

Fear of boondoggles. This was the fear during the New Deal that somehow the government is going to create bad jobs. Well, just go to the Living New Deal map, and you will find what we did and the legacy that we left. Don’t fall into the trap of productivity. What’s the productivity of these jobs? It’s a natural impulse to say, “But what will people really do?” I can give you a very long list of what they can do. Good useful jobs. The way to answer this question is what is the productivity of the unemployed today? It’s negative productivity. You have malnourished children that go to school because their parents don’t have income to provide for them. That is the productivity you need to be focusing on.

Finally, there’s the fear of political revolution. This was raised by Robert Samuelson in The Washington Post. He says, “Imagine people who work in the private sector who suddenly realize the public option provides Medicare and child care, and they don’t have it. This is going to be enormously disruptive to the business as usual model.”

Look, in information technology, disruptions are considered great, right, progressive. In public policy, disruptions are awful, terrible. This is a defense of the status quo. It is the defense of a model where firms are only profitable when they pay poverty wages. We don’t want to defend this model. We want to disrupt it.

Finally, I think all of this amounts to pure change, but Americans are really not so afraid of it; a recent survey showed that the job guarantee had overwhelming support, and even in deep red states upwards of 70 percent of respondents supported it.

Those of us that have been working on this project are very encouraged, excited that it is in the mainstream, but my cautionary note is that we put way too much on the shoulders of the job guarantee. We have had decades of neglect of the public sector. We have enormous environmental challenges. We are suddenly putting all of these problems on the shoulders of the job guarantee and saying, “Hey, look, see, this is the program that will solve these problems.” It will not.

This program provides jobs for all. This program is a very crucial piece of the progressive agenda, but we need so much more than that.

Rethinking the monetary system

Gar: I want to introduce Raúl Carrillo, who’s the staff attorney at the New Economy Project and a member of the board of directors at the Modern Money Network, and he’s going to talk about actual on-the-ground projects that he’s working on and how they relate to this theory.

Raúl Carrillo: What I’m going to try to do, depending on your opinion, is synthesize or bastardize some of the ideas that were just presented by three of my heroes here and articulate those in a language that is useful, I think, to organizers, activists, people who are in this economy trying to heal the wounds, trying to take care of other people, trying to actually introduce some of these intellectual paradigms to work on the ground.

I’m particularly going to focus on two movements that I’m a part of. The first is the Modern Money movement. I’m affiliated with a number of modern money organizations, but principally Modern Money Network, which a few of us started several years ago when we were law students at Columbia and activists. We started thinking how does this kernel of what we consider to be factually correct analysis of the economy connect to law, organizing, technology, all these other things? How can we build bridges? How can we create packages that are useful for activists and organizers to use?

Over the last five years or so we’ve held about 70 symposia in the United States, United Kingdom, Germany, Australia, Brazil and a few other places, trying to connect MMT (Modern Monetary Theory) to other things.

The other one is that I work for the New Economy Project, which is a 20-year-old nonprofit here in New York City, and we do two things. One is we fight corporate power. I personally operate a financial justice hotline where folks can call when they have problems with banks, debt collectors, landlords, etc. They come to the office. We try and help them out on a very individual level. We also bring some impact litigation.

The second thing that we do is community economic development. We try to build community land trusts, financial cooperatives. We work with co-ops, all the good stuff that I know a lot of people in the audience are involved in already.

What is “the New Economy movement”? The essential idea is we’re trying to move out capitalism, but we have a very, very strong focus on environmental sustainability. The production system with FIRE (finance, insurance and real estate) on top of it, as Michael mentioned, is tricking us, so how do we get out of here?

The New Economy Project has a particular focus on something called the “just transition,” which arose in the 1980s and 1990s. The idea here is that we don’t just want to go to an economy that’s more sustainable. Along the way we want to heal some of the wounds that have been caused. We want to help people who face the biggest threats from ecological disaster. That means a particular focus on racial justice, gender justice, all the various forms of social justice that need to come along with a push to an environmentally sustainable world.

How does Modern Monetary Theory help? I’m actually going to borrow a quote from one of the organizers of this panel: ‘What MMT and PK theory does is it concentrates our minds on the real limits, on the real things we need to make more sustainable.” That means we’re focusing on the real: What’s happening to people, what’s happening to communities, what’s happening to the planet.

The dig-burn-dump economy

If we’re talking about an economy with limits, money is not necessarily the enemy. In fact, a lot of MMTers agree. A dear friend, Fidel, often says our economy runs on waste now. One of the fears, fear of waste for the job guarantee, fear of financial waste, fear of fiscal waste. That’s nothing. We make that stuff. It’s a legal construct. It’s a social construct. Really, the problem is when money is used to burn up a planet.

This is how an environmental justice group in Oakland called the Movement Generation Justice and Ecology Project describes the process that the industrial production system applies to our planet and thus to us: We dig up resources, we burn them, then we dump the waste, we churn it up.

Not only does the industrial production system do this to nature, but the financial system does this to people. FIRE burns people. It’s right there in the name.

What does the FIRE system do? It converts a participant in the economy, you or I whether in our capacity as a worker, a tenant, a borrower, a debtor of some sort, and it turns us into nonrenewable participants. It treats us like it can draw money out of us and then discard us, whether that’s in a place of employment, whether that’s in the credit system. It treats us like we’re disposable. We are waste.

How did we get here? Again, lots of different leftist stories on how this is done, but I think that MMT adds a particular element to this. We all know the story of enclosure, property rights, etc. People become dispossessed. They become part of a labor force that is roving. We don’t have property. We can’t work just for biophysical resources. We can’t just find some land and grow some food, even if we wanted to. We have to pay taxes. By taxes, what we really mean is any kind of fines, fees, obligation with the state. That means the fees you get for walking while black in Ferguson. That means student loan interest. That means a wide variety of things.

The point is the system is set up so we have to get money, and people take advantage of that. Now capitalists are not only trying to control the means of production. They’re trying to control the means of the means of production, the FIRE system, as well as the industrial production system.

How does this system keep going? It acts like the money comes from the users, from the resources that are being used rather than by the system itself. We talked about the taxpayer money frame, how that’s particularly harmful. When we think that the money to keep a machine running has to be extracted from people, we get some really terrible political dynamics.

The other lie is that banks are just either making money wildly or they’re using our deposits and turning back around and the banks rely on us. I would say that the banks are rogue public utilities. They have been chartered by the government, licensed by the government, regulated by the government, and they’re out here not doing their job. When we talk about pushing them to do particular things, we have to recognize that it’s even worse than we thought. They’re powerful. They have the money power. They can create and generate credit at the point of lending. They can do a wide variety of other things that are very, very terrible.

Austerity makes room for financial extraction. If the government is not putting money into the economy, the banks are controlling the borrowing process, and we’re all going to die if we don’t stop it.

Money doesn’t grow on rich people, not on wealthy taxpayers, not on banks. What we want to do is get the money power away from the banks, away from rich people by making claims on the state. You’ve got that giant piggy bank, call it what you will, money can come out of the state. Monetary sovereignty means that you can spend on people, on planet, on communities.

The way that we stake our claim and make the state do that is we establish rights to the things that we want. Then the dynamics for fiscal spending become repooled. We pull money out of state coffers, depending on how much we need based on each eligible individual instead of waiting for whoever in Congress, rich folks, to write that check and change the dynamics.

Basically what we’re talking about here is that MMT allows activists and people to, once they establish rights, pull money out of the system rather than wait for them to push.

What does that mean for activists, for organizers, for leftists? We’re establishing rights. We’re marching for jobs. We’re marching for various other freedoms. We want the entitlements. Fiscal austerity is the enemy even though we might want to be austere towards nature and other sorts of respects.

The plant-nurture-thrive alternative

Now I’m going to go out on a real, I think, new limb here. I’m going to suggest that MMT combined with a new-economy focus on environmental sustainability can take us away from the dig-burn-dump model and into a plant-nurture-thrive model.

Plant. We establish rights with this right to housing, with its right to jobs. We free up space to grow, to pool funding and to have a space outside of the profit motive, even outside of the revenue motive. We can start to do new things within that space. We fertilize the space with more of that sweet, sweet money from the public government. We can start to heal wounds, start to do things more equitably. People from bad sectors will leave to new jobs and a job guarantee. People from bad buildings will leave to new houses and new forms of shelter with the home sprawl movement that’s going on.

I’m just going to do a little bit of implementation here and talk about how MMT can potentially change things. I think that public money for public purpose is awesome, and that’s going to give us a platform to do new things. Eventually, it can be public money for public power. We can do even more. The way that dynamic works is by reversing essentially the dig-burn-dump cycle that we have going on here.

We can eventually move on to even stronger things like unions, to collective bargaining. People leave spaces that are extractive. No one wants to be a part-time prison guard anymore. No one wants to work in fast fashion. No one wants to work in fast food. Not necessarily everybody is going to leave, but it provides people with the opportunity to do so, so we can move again towards a regenerative economy, towards people leaving extractive industries.

Eventually, you can layer on democratic processes into the job guarantee, into the new space that’s been created. Participatory budgeting and worker co-ops can fold into the job guarantee.

Just two more examples of implementation. Extractive finance in housing is dispossessing people, either through the initial capture of land or gentrification. The landlord is in charge. The landlord kicks you out. The landlord doesn’t like you. The landlord segregates people. You get redlined. You get gentrified. You get surveilled by all these crazy consumer reporting systems. Then the threat of homelessness keeps you in line. This is true even for the middle class who’s enthralled to the banks, if not to landlords.

With MMT, what does it look like? You establish a right to housing. MMTers don’t necessarily believe in that, but I do. The point is that you can establish a right. You create a space. Once it’s guaranteed that everyone gets this thing, now you have room to maneuver. The rights pull the money down to tenants. You can have things like social housing projects. Then you can start doing things that are more democratic over time. Community land trusts, mutual housing associations. These things can all be contemplated once we have the funding and public capital. Again, that sweet, sweet fertilizer.

In East Harlem, the New Economy Project is helping to build a community land trust where you take land off the market, the residents own it. These things can be helped by MMT.

Finally, everybody is familiar with the access to credit scenario. I think that in and of itself is a problem that we think that people don’t have enough loans. Really what we want is for people to get more money, for people to get money from the state and from benefits. More people will get higher wages whether that’s through a job guarantee program or something else.

In the instance that people need credit, right now they’d be set with a bunch of predators, whether that’s payday lenders, whether that’s banks acting terribly, whether it’s this new fintech stuff from online, which actually turns out to be just as predatory as the analog version. What you can do with an MMT framework is again, establish public infrastructure. Establish rights. You can do some forms of postal banking. You can do public banking. From then on out the threat of you having to go to a payday lender is gone, so you have room to maneuver. Again, political room and fiscal room. You can start doing things like complementary currencies. You can start doing things like public banking. You can start doing all these more democratic things once the public sector is putting pressure on the private sector and giving civil society room to grow.

As you see here, there is a regenerative model for all of these things. You just need the public money. My friends in Reston, England have a complementary currency program. They generate money, or you could say their own forms of IOUs, which they use in the local community so that people only do business with local business. They’re keeping what they call “clone town London” out of there. These are acceptable in receipt of taxes, which is very interesting.

Finally, Gar mentioned the public banking movement. The New Economy Project and a coalition of other grassroots groups are launching an effort to create one here in New York. The idea there is that the public bank will generate credit to lend to democratic enterprises, ideally we would want federal money, but this is something that is powerful that municipalities can do, and in the process we can highlight a lot of what money really is. It’s a public feature that should be used for the public good, and we can do a lot of political education with this as well as whatever material healing help to organizations throughout New York City. Public money for public power.

Gar: Let me just say one thing. I’m from Racine, Wisconsin. I had an aunt who ran a little tiny Jewish bakery. She used to say, “You know, during the Depression there wasn’t any money around. Then they decided to run a war, and there was all kinds of money around. Why can’t we do that when we want to do that?” That is probably the point.

Photo by kevin dooley

The post Money Matters! Why Monetary Theory and Policy Is a Critical Terrain For the Left appeared first on P2P Foundation.

The work of artist and activist, Cassie Thornton is included in the upcoming Playbour– Work, Pleasure, Survival exhibition at Furtherfield, curated by Dani Admiss. In this interview I wanted to explore the following questions as revealed in her current Hologram project:

• What do current conditions say about trust and care, and can we trust the current, governing systems to have our best interests at heart?
• How do we produce non-hierarchical trust and care that thrives outside of the doctor/patient relationship, which is especially important in the U.S., where it is a profit making industry?
• How do we reverse engineer all this tragedy, and put power back where it needs to be?
• How do we begin to build solidarity?

Cassie Thornton is an artist and activist from the U.S., currently living in Canada. Thornton is currently the co-director of the Reimagining Value Action Lab in Thunder Bay, an art and social center at Lakehead University in Ontario, Canada.

Thornton describes herself as feminist economist. Drawing on social science research methods develops alternative social technologies and infrastructures that might produce health and life in a future society without reproducing oppression — like those of our current money, police, or prison systems.

Interview

Marc Garrett: Since before the 2008 financial collapse, you have focused on researching and revealing the complex nature of debt through socially engaged art. Your recent work examines health in the age of financialization and works to reveal the connection between the body and capitalism. It turns towards institutions once again to ask how they produce or take away from the health of the artists and workers they “support”. This important turn towards health in your work has birthed a series of experiments that actively counter the effects of indebtedness through somatic work, including the Hologram project.

The social consequences of indebtedness, include the formatting of one’s relationship to society as a series of strategies to (competitively) survive economically, alone, to pay the obligations that you has been forced into. It takes so much work to survive and pay that we don’t have time to see that no one is thriving. Those whom most feel the harsh realities of the continual onslaught of extreme capitalism, tend to feel guilty, and/or like a failure. One of your current art ventures  is the Hologram, a feminist social health-care project, in which you ask individuals to join and provide accountability, attention, and solidarity as a source of long term care.

Could you elaborate on the context of the project is, as well as the practices, and techniques, you’ve developed?

CT: Many studies show that the experience of debt contributes to higher levels of anxiety, depression, and suicide. Debt disables us from getting the care we need and leads us away from recognizing ourselves as part of a cooperative species: it is clear that debt makes us sick. In my work for the past decade, I have been developing practices that attempt to collectively discover what debt is and how it affects the imagination of all of us: the wealthy, the poor, the indebted, financial workers, babies, and anyone in-between. Under the banner of “art” I have developed rogue anthropological techniques like debt visualization or auxiliary credit reportingto see how others ‘see’ debt as an object or a space, and how they have been forced to feel like failures in an economy that makes it hard for anyone (especially racialized, indigenous, disabled, gender non-binary, or ‘immigrant’) to secure the basic needs (housing, healthcare, food and education) they need to survive, because it is made to enrich the already wealthy and privileged.

“The rise of mental health problems such as depression cannot be understood in narrowly medical terms, but needs to be understood in its political economic context. An economy driven by debt (and prone to problem debt at the level of households) will have a predisposition towards rising rates of depression.”⁴

After years of watching the pain and denial around debt grow for individuals and entire societies, I was so excited to fall into a ‘social practice project’ that has the capacity to discuss and heal some of this capital-induced sickness through mending broken trust and finding lost solidarity. This project is called the hologram.

MG: What kind of people were involved?

CT: The entire time I lived in the Bay Area I was precarious and indebted. I only survived, and thrived, because of the networks of solidarity and mutual aid I participated in. As the city gentrified beyond the imagination, I was forced to leave. I didn’t want to let those networks die. So, at first, the people who were involved were like me– people really trying to have a stake in a place that didn’t know how to value people over real estate and capital

The hologram project developed when, as I was leaving the city, I had invited a group of precariously employed, transient activists and artists to get together in the Bay Area for a week of working together. We aimed to figure out ways to share responsibility for our mutual economic and social needs. This project was called the “Intentional Community in Exile (ICE)” [the ICE pun was always there, now an ever more intense reference in the public eye] and it grew out of an opportunity offered by Heavy Breathing to choreograph an event at The Berkeley Art Museum. They allowed me to go above and beyond my budget to invite a group of 8 women together from across the US to choreograph methods of mutual aid: sharing resources, discussing common problems and developing methods for cooperating to co-develop an economic and social infrastructure that would allow us to thrive together, interdependently. What would it mean for our work as activists and artists to feel that we had roots within an intentional community, even if we didn’t have the experience of property that makes most people feel at home?

Facebook event: “In departing from the idea of a long term home, family, property, or ownership, ICE models a mutual aid society to sustain creative and political practices within a hostile economic system. This project is about finding ways to exit economic precarity by building human relationships instead of accumulating capital– or to make exile warm. After a one week convergence of a small group of collaborators, ICE presents a discussion and performance of life practices as well as frameworks for material and immaterial mutual support.”

The Hologram was one of many ideas that developed as part of this project. One of the group members, Tara Spalty, founder of Slowpoke Acupuncture, (and one of the two acupuncturists you will see at SF protests or homeless encampments) and I fell into this idea when combining our knowledge about the solidarity clinics in Greece, our growing indebtedness and lack of medical records, and the community acupuncture movement. Then the group brainstormed about what the process would be like to produce a viral network of peer support.

MG: What inspired you to do this project? (particularly interested in the Greek influences here and what this means to you)

CT: My practice of looking at debt became boring to me by 2015 as it became more and more clear that individual financial debt was a signal of a larger problem that was not being addressed. The hyper individualism produced by indebtedness allows us to look away from a much bigger deeper story of our collective debts, financial and otherwise. We don’t know what to do with these much bigger debts, which include sovereign debts, municipal debts, debts to our ancestors and grandchildren, debts to the planet, debts to those wronged by colonialism and racism and more. We find it so much easier to ignore them.

When visiting austerity-wracked Greece after living in Oakland, I noticed that Oakland appeared to have far more homeless people on the street. It made me realize that, while we label some places “in crisis,” the same crisis exists elsewhere, ultimately created and manipulated by the same financial oligarchs. The hedge funds that profit off of the bankruptcy in Puerto Rico are flipping houses in Oakland and profiting off of the debt of Greece. We’re all a part of the same global economic systems. The “crisis” in Greece is also the crisis Oakland and the crisis in London. For this reason, I have been interested in what we can all learn from activists, organizers and others in crisis zones, who see the conditions without illusions.

This led me to an interest in the the Greek Solidarity Clinic movement, which since “the crisis” there has mobilized nurses, doctors, dentists, other health professionals and the public at large to offer autonomous access to basic health care. I went to go visit some of these clinics with Tori Abernathy, radical health researcher. Another project using this social technology is called the Accountability Model, by the anonymous collective Power Makes Us Sick. These solidarity clinics are run by participant assembly and are very much tied in to radical struggles against austerity. But they have also been a platform for rethinking what health and care might mean, and how they fit together. The most inspiring example for me was in at a solidarity clinic in Thessaloniki, the second largest city in Greece. The “Group for a Different Medicine” emerged with the idea that they didn’t want to just give away free medicine, but to rethink the way that medicine happens beyond conventional models, including specifically things like gender dynamics, unfair treatment based on race and nationality and patient-doctor hierarchies. This group opened a workers’ clinic inside of an occupied factory called vio.me as place offer an experimental “healed” version of free medicine.

When new patients came to the clinic for their initial visit they would meet for 90 minutes with a team: a medical doctor, a psychotherapist and a social worker. They’d ask questions like: Who is your mother? What do you eat? Where do you work? Can you afford your rent? Where are the financial hardships in your family?

The team would get a very broad and complex picture of this person, and building on the initial interview they’d work with that person to make a one-year plan for how they could be supported to access and take care of the things they need to be healthy. I imagine a conversation: “Your job is making you really anxious. What can we do to help you with that? You need surgery. We’ll sneak you in. You are lonely. Would you like to be in a social movement?” It was about making a plan that was truly holistic and based around the relationship between health, community and struggles to transform society and the economy from the bottom-up . And when I heard about it, I was like: obviously!

So the Hologram project is an attempt by me and my collaborators in the US and abroad to take inspiration from this model and create a kind of viral network of non-experts who organize into these trio/triage teams to help care for one another in a complex way. The name comes from a conversation I had with Frosso, one of the members of the Group for a Different Medicine, who explained that they wanted to move away from seeing a person as just a “patient”, a body or a number and instead see them as a complex, three dimensional social being, to create a kind of hologram of them.

MG: Could you explain how the viral holographic care system works?

CT: Based on the shape above, we can see that we have three people attending to one person, and each person represents a different quality of concern. In this new model, these three people are not experts or authorities, but people willing to lend attention and to do co-research, to be a scribe, or a living record for the person in the center, the Hologram. We call these three attendees ‘patience’. Our aim is to translate the Workers’ Clinic project to a peer to peer project where the Hologram receives attention, curiosity and long term commitment from the patience looking after her, who are not professionals. Another project using this social technology is called the Accountability Model, by the anonymous collective Power Makes Us Sick.

So the beginning of the process, like that of the Workers’ Clinic, is to perform an initial intake where the three patience ask the Hologram questions which are provided in an online form, about the basic things that help or hurt her social, physical and emotional/mental health. When this (rather extended) process is complete, the Hologram will meet as a group every season to do a general check in. The goal of this process is to build a social and a physical holistic health record, as well as to continue to grow the patience understanding of the Hologram’s integrated patterns.

Ultimately, over time we hope to build trust and a sense of interdependence, so that if the Hologram meets a situation where she has to make a big health decision (health always in an expansive sense) about a medical procedure, a job, a move, she will have three people who can support her to see her lived patterns, to help her ask the right questions, and to support peer research so that the Hologram is not making big decisions unsupported.

But, in order for the Hologram to receive this care without charge and guilt free, she needs to know that her patience are taken care of as she is. I think this is one part of the project that acknowledges and makes a practice built from the work of feminists and social reproductive theorists – you can’t build something new using the labor of people without acknowledging the work of keeping those people alive; reproducing the energy and care we need to overturn capitalism needs a lot of support. Getting support from someone feels so different if you know they are being, well taken care of. This is also how we begin to unbuild the hierarchical and authoritarian structures we have become accustomed to – with empty hands and empty pockets.

And then, the last important structural aspect of the Hologram project is the real kicker, and touches on the mystery of what it means to be human outside of Clientelist Capitalism – that the real ‘healing’ (if we even want to say it!) comes when the person who is at the center of care, turns outward to care for someone else. This, the secret sauce, the goal and the desired byproduct of every holographic meeting– to allow people to feel that they are not broken, and that their healing is bound up in the health and liberation of others.

The viral structure, is built into this system and there is a reversal of the standard way of seeing the doctor and patient relationship. In this structure it is essential that we see the work of the Hologram as the work of a teacher or explicator, delivering a case that will ultimately allow the patience to learn things they didn’t previously know. This is the most important, (though totally devalued by money) potent and immediately applicable, form of learning we can do, and it is what the medical system has made into a commodity, at the same time as it is seen as ‘women’s work’ or completely useless.

MG: Could you take us through the processes of engagement. For instance, you say a group of four people meet and select one person who will become a Hologram, and that this means they and their health will become ‘dimensional’ to the group. Could you elaborate how this happens and why it’s important for those involved?

CT: We are about to experiment, this fall, with what it means for these groups to form in different ways. We will start with four test cases, where an invited, self-selected person will become a Hologram. She will be supported to select three Patience in a way that suits her, based on an interview and survey. The selection of Patience is a part of the process that we have not had a chance to refine. It is not simple for any individual to understand what support looks like for them, or who they want support from, if they’ve never really had it.

The experiments we will work through this fall will attempt to understand what changes in the experience of the whole Hologram when the Hologram is supported by Patience who are trusted friends and family, acquaintances or highly recommended strangers. An ‘objective’ perspective from an outside participant also adds a layer of formality to the project, because, instead of a casual gathering of friends, an unfamiliar person signals to the other members of the hologram to be on time, and make the meetings more structured than a regular friend to friend chat.

The onboarding process for the Hologram and the Patience includes a set of conversations and a training ritual, which are still quite bumpy. The two roles every participant is involved in, requires a different set of skills, and so they both involve a special kind of “training” that one can do in a group or independently. This “training” is a structured personal ritual that allows participants to witness and adapt their own communication habits so that they feel prepared to participate and set up trust, curiosity and solidarity for the group in the opening intake conversations.

At the completion of the intake process, the Hologram (1) transitions to become a Patience. At this time, the Hologram (1) begins a short training to transition to the other role, and she is supported by her Patience to do this work. At the conclusion of the Hologram’s (1) transition to Patience, and the completion of the new Hologram’s (2) intake process, the original Hologram’s (1) Patience become Holograms (3,4,5).

MG: The Hologram project was first trialed as part of an exhibition called Sick Time, Sleepy Time, Crip Time at the Elizabeth Foundation Project Space in New York City, March 31-May 13, 2017. What have you learnt in more recent undertakings of The Hologram project?

CT: Since the original trial one year ago, which lasted for 3 months, the research has shifted to looking at building skills and answering acute questions that will accumulate to support and build the larger project. Starting in the Spring of 2017, I began to offer the Hologram project as a workshop, where participants could test the communication model that is implicit in the Hologram format. The method for offering it is, as a performance artist and rogue architect, creating a situation in a space where people go through a difficult psycho social physical experience together. In the reflective conversations that follow, I ask the groups to use the personal pronoun ‘we’ for the entire duration of the conversation. The idea is that one person’s experience can be shared by the group, and even as temporary Patience we can take a leap and share their experience with them for a duration of time, allowing a Hologram to feel as if their experience is “our” experience. And this feeling that one is not alone in an experience, if carried into other parts of life, has the potential to break a lot of the assumptions and habits that we have inherited from living and adapting to a debt driven hellscape.

1. Graeber, David. The Newstatesman. We’re racing towards another private debt crisis –so why did no one see it coming? 18 August 2017. bit.ly/2we2Bv5
2. Kimberly, Amadeo. Austerity Measures, Do They Work, with Examples. The Balance. 2018. thebalance.com/austerity-measures-definition-examples-do-they-work-3306285
3. Amadeo, Kimberly. Medical Bankruptcy and the Economy: Do Medical Bills Really Devastate America’s Families? The Balance. Updated May 16, 2018. thebalance.com/medical-bankruptcy-statistics-4154729
4. Davies, Will. Wallin, Sara. Montgomerie, Johnna. Financial Melancholia –Mental Health and Indebtedness. PDF Edition. 2015. perc.org.uk/project_posts/financial-melancholia-mental-health-and-indebtedness/

Reposted from Furtherfield.

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The Political Economy of the Common. Ed. by Andrea Fumagalli

(as yet untranslated Italian-language book)

Economia politica del comune, collects a series of essays, mostly published elsewhere, which summarize his analysis of post-crisis contemporary capitalism.

Capitalism has changed. Andrea Fumagalli says so. And he said that, for a long time, his school; the tradition of autonomy, starting from the early writings of Mario Tronti and Raniero Panzieri of the sixties, passing through the intellectually fertile experience of Potere Operaio of the seventies and the brilliant analysis of post-Fordism and the new figure of the social worker ‘of the eighties, always with the analysis firmly anchored in the thought of the now internationally recognized master of the Italian Theory Antonio Negri, has developed a Marxism for the digital age, focused on the Grundrisse, and in particular on the famous’ fragment on the machines ‘, more than on Capital. Together with Christian Marazzi and Maurizio Lazzarato, Andrea Fumagalli is the person who most contributed to this perspective, adding a solid empirical basis based on his experience as a professional economist.

The new book by Andrea, Economia politica del comune, collects a series of essays, mostly published elsewhere, which summarize his analysis of post-crisis contemporary capitalism. For the author, the scenario of the last ten years has been a strengthening of a model of biocapitalism where capitalist exploitation is based no longer on the mere theft of working time in factories or on the appropriation of intellectual production – in the form of technological innovation or intellectual property, central to the analysis of cognitive capitalism – but now on the subsumption – that is, the inclusion and putting to work – of the deepest dimensions of the human condition, such as those related to affections or relationships, particularly when they are articulated through the ubiquitous connectivity of smartphones and social media, and even to life itself as an object of biotechnology.

The man-machine union, visible and potential object of criticism or sabotage in the Fordist factories, has now progressed to become part of the human condition and in this way capable of making life itself – la nuda vita, Agamben would say – in its dimensions pre and post human, in vitro as well as in silico, object of appropriation and capitalist valorization.

In biocapitalism, production is based on putting the commons to work, a concept that is different from that of common goods, even if these are part of it, but which also refers to that life in common – made up of elements such as language, the gestures, the affections, the corporality and the relationships – which now, through digital technologies, is potentially put to work in its most varied manifestations: the freelancer who organizes his temporary cooperation with a team for a specific project, the Airbnb guest who strives to offer a positive stay experience or the teenager who posts a selfie with her favorite brand on Instagram.

Capitalist valorization has also progressed far beyond the Marxian model of the bourgeois drinker of the worker’ sweat. Financial markets play an increasingly central role and, through the financialization of life and productive relations, operate like giant vacuum cleaners that suck up crumbs of surplus value from the global productive and reproductive factory – the credit card, the shipping insurance required in the just-in-time value-chain – to then redistribute them, without transparency or democratic regulation, on financial markets. In this situation in which the socialization of the productive forces, the commons that constitute the true source of value – has now left the greedy pockets of the individual bourgeois to circulate on the financial markets in the form of digitized data – communism is already with us, only that does not belong to us. Biocapitalism represents the realization of the communism of capital, the famous concept taken up by Antonio Negri – and by Marx who, although he never uses it, mentions this possibility in the Grundrisse.

What to do then, comrades? There is no longer a factory to be sabotaged, nor a winter palace to be conquered. But, Andrea suggests, we can re-appropriate the tools in the hands of the capitalist class: finance and money. The currency, – writes Andrea – is now a direct expression of capitalist power, without the intermediation of the state. Andrea proposes the creation of coins and alternative financial instruments, suggesting the use of the seductive technology of the crypto-currencies: blokchain and bitcoin, which are able to establish circuits of valorization external to global finance; it would be desirable for a new currency of the commons suitable to finance a new welfare of the commons, triggering processes of local redistribution of wealth, to then let them grow and acquire more and more powerful autonomy. A strategy similar to that of the autonomy of the eighties, the age of the Hakim Beyi’s TAZ’s, the golden age of the Italian centri sociali of the nineties that, among other things, Andrea recognizes as his main source of inspiration.

The book offers a theoretical sum by one of the main representatives not only of the contemporary Marxist thought but of one of its most fruitful veins. As such it should be seen, in particular the introductory essay “The premise and Twenty thesis on bio-cognitive capitalism”, which sums up the subject with admirable clarity. For me it was a very fruitful reading: Andrea is and always has been, since its brilliant analysis of the new forms of self-employment of the second generation in 1994, a Master.

At the same time I think that the book a little exaggerate the grip and power of bio-capitalism. The result is a totalitarian image, where every human activity is immediately subsumed and exploited, from pedaling for Deliveroo to being on Facebook, and, using the same logic – why not -, playing soccer is actually a way to help reproduce the basics of the football market that exploits the fans as well as the television audience. What to me it sounds “weird”, however, it is the astonishing ineffectiveness of contemporary capitalism in exploiting the common which has partly generated. Facebook, Airbnb and Amazon earnings all in all modest, Uber and Deliveroo are at a loss, start-up incubators around the world are abandoning the cash for equity model, finding that they do not make a lot of money by incubating start-ups. Above all, there is a lack of innovation and ideas: large multinational companies have liquid reserves of unprecedented historical size – Apple announces a stock buy back of $ 100 billion – and no one seems able to find profitable use of big data or algorithms that go beyond the completion of the advertising targeting or the advice of other songs you may like on Spotify.

Capitalism like that will definitely not be able to survive the radical challenges that await us as we begin to cross the Anthropocene. To paraphrase another great master of Italian postwar Marxism, Giovanni Arrighi, the problem is not that the cognitive biocapitalism exploits our life, but that it isn’t able to do it well enough. I say this because as long as there is exploitation at least there is a rationality to criticize or sabotage. Instead contemporary biocapitalism looks increasingly like a rotting body that no one has the power to take away, as the German sociologist Wolfgang Streeck claims. In this context, the alternative currency will certainly contribute to creating alternative valorisation circuits. My intuition is that the protagonists of this process are not so much those of Macao or Teatro Valle, but rather the entrepreneurs of that pirate modernity that now connects the small Chinese factories with the needs of the popular classes of Lagos or Tangier, passing through Piazza Garibaldi of Naples.

Photo by Lanpernas .

The post Book of the day: The Political Economy of the Common appeared first on P2P Foundation.

While recognizing that these systems have enormous potential for “radical innovation and transformation,” he astutely warns against their dangerous psychological and cultural effects. They transfer entire dimensions of perception, feeling, relationships, trust-building, and more — both individually and collectively experienced — into algorithmic calculations. The System becomes the new repository of such relational epiphenomena. And in the process, our very sense of our shared agency and intentionality, relationships, and a common fate begins to dissolve.

In their current incarnations, the blockchain and related network-based technologies start with the ontological presumption that everything can be broken apart into individual units of feeling and action. Our character, viewpoints, emotions, behaviors, are more are all translated into data-artifacts. This is the essential role of data, after all – to distill the world into manipulable, calculable units of presumably significant information.

Think that you are a whole human being?  Forget it.  Data systems are abstracting, fragmenting and filleting our identities into profiles that we don’t even control. A simulacrum of our “real identities” is being constructed to suit new business models, laying the foundation for what Iaconesi calls the “transactionalization of life.” As he writes:

Everything is turning into a transaction: our relationships, emotions and expressions; our ways of producing, acquiring and transferring knowledge; communication; everything.

As soon as each of these things become the subject of a service, they become transactions: they become an atomic part of a procedure.

Because this is what a transaction is: an atom in a procedure, in an algorithm. This includes the fact that transactions are designed, according to a certain business, operational, strategic, marketing model.

This means that when our relationships, emotions, expressions, knowledge, communication and everything become transactions, they also become atoms of those business models whose forms, allowances, degrees of freedoms and liberty are established by those models.

“Everything, including our relations and emotions, progressively becomes transactionalized/financialized, and the blockchain represent an apex of this tendency. This is already becoming a problem for informality, for the possibility of transgression, for the normation and normalization of conflicts and, thus, in prospect, for our liberties and fundamental rights, and for our possibility to perceive them (because we are talking about psychological effects),” according to Iaconesi.

How does this process work?

By moving “attention onto the algorithm, on the system, on the framework. Instead of supporting and maintaining the necessity and culture of establishing co-responsibility between human beings, these systems include “trust” in procedural ways. In ways which are technical. Thus, the necessity for trust (and, thus, on the responsibility to attribute trust, based on human relations) progressively disappears,” he writes.

Therefore, together with it, society disappears. Society as actively and consciously built by people who freely decide if and when to trust each other, and who collectively agree to the modalities of this attribution.

What remains is only consumption of services and products. Safe, transparent and all. But mere transactionalized consumption. Society ends, and so does citizenship: we become citizen of nothing, of the network, of the algorithm.

These are not technical issues, but psychological ones, perceptive ones. And, thus, even more serious.

As soon as I start using them [blockchains], as soon as I start imagining the world through them, everything starts looking as a transaction, as something which is “tokenizable”….Technology creates us just as much as we create technology.

In short, the radical atomization, objectification and financialization of human relationships begins to dissolve the very idea of a shared society.

Institutions and other people disappear, replaced by an algorithm. Who knows where trust is at/in! It is everywhere, diffused, in the peer-to-peer network. Which means that it’s nowhere, and in nobody.

In a weird way it is like in call centers: they are not really useful for the client, and they completely serve the purpose minimizing bother for the companies, letting clients slipping into the “procedure” (which is synonym with algorithm), and avoiding them from obtaining real answers and effects, in their own terms outside of procedures.

These are all processes which separate people from each other, from institutions, organizations, companies, through the Procedure.

Citizens of everywhere. Citizens of nowhere and nothing.

So what might be done?

Iaconesi talks about the Third Infoscape, which is drives from the concept of the Third Landscape.  He writes that in the Third Landscape, “where ‘technicians’ see ‘weeds,’ the Third Landscape sees opportunity, biodiversity, an open source media which is a reservoir for the future of the planet, which does not require energy to maintain, but produces energy, food, knowledge, relations.”

Citing Marco Casagrande, Iaconesi argues that data and information should not be “laid out geometrically, formally, as in gardens, but more like the woods and wild nature, in which multiple forms of dimensions, boundaries, layers and interpretations co-exist by complex desire, relation and interaction, not by design.”

This, of course, implies “a different kind of technology, a different kind of science, with a different imagination to support it.” It also implies that we begin to speak not just of technology design, but of “sensibility, imagination and aesthetics.”

Iaconesi’s critique reminded me of Montreal-based communications professor Brian Massumi’s important 2015 book, Ontopower: War, Powers and the State of Perception.  His basic thesis is that the national security state, in its perpetual fight against terrorism, has telescoped its political priorities into a new ontological paradigm. It seeks to validate a new reality through what he calls “ontopower.” This is “the mode of power embodying the logic of preemption across the full spectrum of force, from the ‘hard’ (military intervention) to the ‘soft’ (surveillance).”

The point is that perception of reality itself is the new battleground. Power is not just carried out in overt state or policy settings – legislatures, courts, the media. State power wants to go beyond messaging and framing the terms of debate. It has deliberately moved into the realm of ontology to define the terms of reality itself. In the national security context, that means that nefarious terrorist threats exist potentially everywhere, and thus the logic of preemptive military action (drone killings, extra-legal violence, etc.) is thus fully justified. (Cf. the film Minority Report.)

Massumi writes:

“Security threats, regardless of the existence of credible intelligence, are now felt into reality. Whereas nations once waited for a clear and present danger to emerge before using force, a threat’s felt reality now demands launching a preemptive strike. Power refocuses on what may emerge, as that potential presents itself to feeling.”

So if ontopower is arising as a new strategy in national security agencies, it should not be surprising that a related mode of ontopower is being developed by Silicon Valley, which is a frequent partner with the national security state.

The new frontier in Big Tech is to leverage Big Data to obtain unassailable market dominance and consumer control.  Naturally, the surveillance state envies this capacity and wants to be dealt into the game. Hence the tight alliances between the US Government and Silicon Valley, as revealed by Snowden. Now that the likes of Google, Amazon, Facebook and others have secured political and economic supremacy in so many markets and cultural vectors, is it any wonder that such power is itching to define social reality itself?

Photo by Yosh the Fishhead

The post Data Technologies Colonize the Ontological Frontier appeared first on P2P Foundation.

Originally published on Medium.com

A recent article about the BlockChain appeared on the Italian version of Vice’s Motherboard and raised a series of interesting conversations, and was soon followed up by another one.

In that article I was called to express a series of opinions about what was happening with BlockChains and cryptocurrencies, from the point of view of an organization such as the one I lead (HER, Human Ecosystems Relazioni), which deals with data, complex connections between sciences, technology, society, design and art, and the social, political, cultural and psychological implications of these connections and interactions.

In my job, everyday, I deal with multiple points of view which confront with these impacts brought on by data, blockchains and cryptocurrencies, with a wide variety of subjects from hyper-technical ones, to entrepreneurs and investors, to policymakers, up to the ones beyond suspicion, “ordinary” people who have to understand what an artwork which uses the blockchain does, or who deals with culture, museums, the city’s neighborhoods. People who — whether they like it or not — have to do with these technologies and practices. A large variety.
I have the maximum respect for the blockchain. It possibly is the technology which bears the highest potential for radical innovation and transformation today. With all its limits and problems.

My critique is not technical, but psychological.

It moves across the domain of perception and of comprehension of reality.

In this domain — the one of the psychic processes which are engaged and shared by people and their relations as they interpret the world to understand how to orient themselves and how to act in it — technologies like the Blockchain are a disaster.

Why?

On the one hand, they are a very powerful agent towards the “transactionalization of life”, that is of the fact that all the elements of our lives are progressively turning into transactions.

Which overlaps with the fact that they become “financialized”. Everything, including our relations and emotions, progressively becomes transactionalized/financialized, and the Blockchain represent an apex of this tendency. This is already becoming a problem for informality, for the possibility of transgression, for the normation and normalization of conflicts and, thus, in prospect, for our liberties and fundamental rights, and for our possibility to perceive them (because we are talking about psychological effects).

On the other hand, they move attention onto the algorithm, on the system, on the framework. Instead of supporting and maintaining the necessity and culture of establishing co-responsibility between human beings, these systems include “trust” in procedural ways. In ways which are technical. Thus, the necessity for trust (and, thus, on the responsibility to attribute trust, based on human relations) progressively disappears.

Therefore, together with it, society disappears. Society as actively and consciously built by people who freely decide if and when to trust each other, and who collectively agree to the modalities of this attribution.

What remains is only consumption of services and products. Safe, transparent and all. But mere transactionalized consumption. Society ends, and so does citizenship: we become citizen of nothing, of the network, of the algorithm.

These are not technical issues, but psychological ones, perceptive ones. And, thus, even more serious.

Technology is not neutral.

I can use a hammer to plant a nail or to smash it on your head, that’s true. But what is also true is that as soon as I have a hammer in my hand, everything starts looking like a nail.

This is the same for Blockchains. As soon as I start using them, as soon as I start imagining the world through them, everything starts looking as a transaction, as something which is “tokenizable”. And this is a disaster, in the ancient sense of the word (dis-aster, without stars for orientation).

Technology creates us just as much as we create technology.

We are starting to design systems which are, on the one hand, completely open and transparent. Which is a good thing from one point of view, and a problematic thing to do on the other. (unless the complete transparency of “The Circle” scenarios is something we feel comfortable with).

From another point of view, these systems are progressively being associated to identity systems, meaning that all the advantages and freedoms deriving from the fact that digital identity is anything but univocal and fixed are progressively being lost. Byebye anonymous, temporary, shared, multiple, plural, identities. Goodbye all the freedoms that come with them.

What derives are “citizenship” sytems (not “existence”, not “inhabitantship”) which are literally trustless, “without the need for trust”, in which trust is in the peer-to-peer network, in the automation, in the algorithm.

Institutions and other people disappear, replaced by an algorithm. Who knows where trust is at/in! It is everywhere, diffused, in the peer-to-peer network. Which means that it’s nowhere, and in nobody.

In a weird way it is like in call centers: they are not really useful for the client, and they completely serve the purpose minimizing bother for the companies, letting clients slipping into the “procedure” (which is synonym with algorithm), and avoiding them from obtaining real answers and effects, in their own terms outside of procedures.

These are all processes which separate people from each other, from institutions, organizations, companies, through the Procedure.

Citizens of everywhere. Citizens of nowhere and nothing.

From a philosophical and psychological point of view it corresponds to a powerful addition to a process which is already taking place on a large scale: the transactionalisation of life.

Everything is turning into a transaction: our relationships, emotions and expressions; our ways of producing, acquiring and transferring knowledge; communication; everything.

As soon as each of these things become the subject of a service, they become transactions: they become an atomic part of a procedure.

Because this is what a transaction is: an atom in a procedure, in an algorithm. This includes the fact that transactions are designed, according to a certain business, operational, strategic, marketing model.

This means that when our relationships, emotions, expressions, knowledge, communication and everything become transactions, they also become atoms of those business models whose forms, allowances, degrees of freedoms and liberty are established by those models.

With the Internet of Things these processes also arrive to the objects which fill our daily lives, to the elements of the environment and to the environment itself.

This means that we will be surrounded by transactions, within ourselves and in everything around us. It will become truly difficult to think of something that does not correspond to a transaction.

As said above: this will bring on issues for informality, the possibility for transgression and for our freedoms and rights.

Many of these these will simply disappear, as we lose capacity to conceive them outside of the “procedure”, of the transaction that embodies them. Whether it is purchase or an emotional expression, it will not make any difference.

Furthermore, speaking of transactionalization and its equivalent, financialization, the issue of access will also arise from the fact that there will be a limited amount of subjects who will have the resources to sustain the cost of the transactions which are needed to have rights and freedoms, or to pull themselves out of the procedures themselves. And of course there will be people who don’t have these resources.

These reflections have long been outside of the discussions which are going on about these new technologies. Hackers, activists, researchers, philosophers, antropologists are talking about the blockchain, as well as governments, organizations, companies and banks themselves. Yet none of these doubts are yet on agendas. There is a mono, singular narrative, which is interpreted for activism, business, governance, exploitation.

Investments, from above (with governments, financial institutions, investors) and below (with crowd based operations, evangelism, activism and also with the desire to exploit and to access funds and resources, to abandon the state of crisis) are happening.

And yet we must consider.

The Blockchain is the first tentative answer in years to the extremely centralized models which are de facto ruling us today, whether we talk about energy, environment, finance, welfare, governance.

The Blockchain is all about distribution of power.

And yet, this same distribution is its weak spot, if our objective is to collectively create a society with more freedoms, solidarity and opportunities for relation, emotion, communication and knowledge.

Because this distribution of power does not require conscience and desire, and the responsibility of these conscience and desire. Because these are in the algorithm, not in ourselves and in our relations.

It is not the algorithm serving us, and what we want. It is the algorithm turing us into itself, making us become like it.

What can we do?

The most important thing we can do is, probably, that we need to realize that these are not technological or technical issues.

Design only arrives up to a certain point. The design and production of services, products and instruments does not address a class of issues which are aesthetic, psychological and which deal with sensibility and imagination.

For example, in our practice we often talk about the Third Infoscape, which is originated from the concept of the Third Landscape.

As in the Third Landscape: where “technicians” see “weeds”, the Third Landscape sees opportunity, biodiversity, an open source media which is a reservoir for the future of the planet, which does not require energy to maintain, but produces energy, food, knowledge, relations.

As Marco Casagrande describes, the entire territory becomes a form of knowledge, with all its conflicts, dissonances and polyphonies. This is not a transactional (or transactionalizing) vision. It is a thing in which data and information are not laid out geometrically, formally, as in gardens, but more like the woods and wild nature, in which multiple forms of dimensions, boundaries, layers and interpretations co-exist by complex desire, relation and interaction, not by design.

It is a different kind of technology, a different kind of science, with a different imagination to support it.

The Third Infoscape, just as the Third Landscape, is not a matter of technology or technique. It is a question of sensibility, of imagination and of aesthetics.

The problem? It is current science and data. Which we are now using as something absolute and immutable. As a society, we are now using Science and Data like once we used Religion and Magic.

The Blockchain is one direct effect of this.

It is the procedure that “liberates” us from trust, from having to trust, from having to trust others. It compels you to trust, because it is the algorithm itself which embodies trust. And, by doing that, by forcing you to become like it, transforms all into a transaction.

To make trust exist, it transforms all into itself.

We need a change in sensibility and imagination, not disruptive services.

The post The Financialization of Life appeared first on P2P Foundation.

They’re missing the point. The rise of nationalist sentiments are not the cause of the economic shift underway, but a result of it. The real force energizing these changes is digital. While the digital economy has accelerated and amplified many of the mechanisms investors and corporations use to grow their capital, it has left most people with less money and less opportunity. This latest burst of fear stemming from that lack of opportunity is coming in the form of nationalism, and even protectionism, but it also could offer us a fleeting but real chance to turn our digital economy toward the needs of people instead of finance itself.

Don’t get me wrong. I’m all for prosperous businesses, digital and otherwise. But I’ve also witnessed with horror over the past 20 years as the potential for widespread, bottom-up prosperity unleashed by digital technology have been surrendered to the priorities of extractive global capitalism. This is not the way it was supposed to go, at least not according to me and my cyberpunk friends of the late ’80s.

Back then, the emergence of low-cost computers and networking appeared to augur a peer-to-peer, fluid, and more open economic landscape, one where we all step off the industrial-age, punch-the-clock treadmill and work in our own time, collaboratively, on creative pursuits, from home, in our underwear. Instead, we’re getting an exacerbation of some of extractive corporatism’s worst effects: joblessness, disenfranchisement, wealth disparity, corporate lethargy, artificial growth, and financialization.

Why aren’t we getting new, digitally enabled forms of community currency, worker-owned businesses, networked cooperatives, and peer-to-peer marketplaces? It turns out it is not because they don’t work; it’s simply because there are entrenched powers and limited visions preventing their rise. They find it hard to see digital technology as anything other than an investment opportunity. A company is not a provider of goods or services, but a “disruptor” capable of overturning an existing marketplace and generating 100x returns to the early shareholders. It doesn’t matter what the company does, if anything, after that.

So young developers in their dorm rooms may come up with a great idea for a revenue-generating and largely beneficial application. But then, almost automatically, they rush to find angel investors or venture capitalists to back their ideas. Along with the infusion of capital come unrealistically high valuations and unrefusable demands to “pivot” away from whatever the company may have once sought to accomplish. Instead, the company must focus on how to hit a 100x “home run,” usually by disrupting an existing marketplace and establishing the sort of temporary monopoly that convinces a new round of investors to buy the shares of the last ones.

Silicon Valley may trumpet its innovation bona fides, but this is a very old way of doing business, which digital technology should have rendered obsolete instead of amplifying. But most business leaders, bankers, and even economists tend to accept venture capitalism as a pre-existing condition of nature. It is not. The rules of capitalism were invented by human beings, at particular moments in history, with particular goals and agendas. It’s like a computer program, with accumulated lines of code written by developers throughout history with specific functions in mind. By refusing to acknowledge this, we end up incapable of getting beneath the surface. We end up transacting, and living, at the mercy of a system—of a medium, really.

In fact, there are precedents to the digitally distributed economy so many of still imagine. And they are often characterized by a retreat from international ambitions and restored focus on the power of local, circulatory economics.

The last example of this happening on a grand scale was back in the late Middle Ages, just after the expansionism of the Crusades. As European soldiers returned home, they brought with them many innovations from the Arab world. One of them was the bazaar, or what became known as the market. It was a local economic innovation that turned market activity into a bottom-up, generative, and local affair. Former peasants began to trade the goods they made with one another, instead of simply paying up to the lords. They also imported the idea for market moneys that were good just for one day—like poker chips, except representing a loaf of bread or pound of grain—and optimized for priming transactions. And they began to get wealthy.

Threatened by the rise of a middle class, the aristocracy and monarchs “innovated” against the former peasants. They made market moneys illegal, and forced merchants to borrow from the central treasury, at interest. That allowed the wealthy to make money simply by controlling currency, while also setting in motion the growth trap we’re caught in today. The monarchs also restricted entrance to particular industries by issuing “monopoly charters” to their favorite businesses, in return for a stake in the profits.

So, as I’ve tried to show in my book Throwing Rocks at the Google Bus, from which the chart above is taken, the hands-on economy of the artisanal market was overtaken by the more extractive rules of early industrialism. Workers were disconnected from the value they created and paid by the hour instead. In this light, industrialism and mechanization were just ways to remove human beings from the value chain.

That’s the economy we’ve been living in for the past 600-or-so years. The growth mandate was great for colonial powers looking to expand into new territories. As long as there were new people to enslave and resources to extract, capital could grow. But by the end of World War II, those people and places started to push back. Could we finally give up the global expansionist agenda of late medieval capitalism, and revisit an economic model that didn’t require the sort of growth that was proving impossible to maintain?

Now, digital technology should have been able to retrieve the values of pre-industrialism, and realize them in new ways. The human-to-human contact of the local marketplace is retrieved by the personalization of our digital networks. Market currencies can be retrieved by blockchains or even simpler authentication methods. Web-enabled cottage industries should thrive with their newfound equal footing and distributive power. Meanwhile, the commons and crowdfunding—enclosed and regulated out of existence during the corporate industrial era—find new life in an age whose foundational technologies are based in sharing processing cycles.

But by the early 90s, the cyberpunks’ human-centered vision of a networked marketplace was replaced by another vision of digital business, the one espoused by the libertarian early editors of Wired magazine and the corporate-sponsored futurists of Cambridge, Massachusetts. They looked at digital technology and saw the salvation of the securities markets and the infinitely expanding global economy. The stock market had crashed in 1987, along with the bursting of the biotech bubble. But now digital technology was to restore the NASDAQ to its former glory, and beyond. Indeed, just when it looked like we had reached the limits of the physical world to supply us with more opportunities for growth, it seemed we had discovered a virtual world from which to extract still more value. This new digital economy would augur a “long boom” of economic growth: a digitally amplified, speculative economy that could literally expand forever.

To do that, however, technologies with the potential to distribute value throughout their marketplaces and generate long-term sustainable revenue streams are instead converted into powerfully extractive versions of themselves. Amazon, for one ready example, could have developed itself into a value-creating marketplace like eBay. Instead, it adopted a scorched earth approach to its markets. Amazon chose the book industry as its initial beachhead not because of Jeff Bezos love of reading, but because it was a no-growth, highly inefficient market, ripe for domination. Amazon’s purpose is not to make authors and publishers wealthier, but to use its capital to undercut existing players, establish a monopoly, and then used that monopoly to “pivot” into other “verticals.” It’s the same extractive model utilized by 20th-century behemoths like Walmart, except the total domination of a market occurs even more quickly.

Uber, likewise, could have developed a thriving taxi marketplace by letting local companies and drivers maintain their autonomy on the platform or, alternatively, allowing drivers to earn shares proportionate to the miles they’ve driven. At least that way, once robots replace the human drivers, they would still get some revenue from the platform they helped build with their labor. But that’s not Uber’s goal. The company is still on the chartered monopolist’s script. Only in this case, instead of using the King’s law to maintain their status, they use code. They can’t see that having wealthy customers and employees is actually good for the long-term health of their businesses because they’re trapped in an early colonial mindset that sees markets as territories to conquer, resources to extract, and people to enslave.

Reinforcing all this is a shareholder mentality obsessed with growth and a tax code that favors capital gains over real earnings. No wonder companies focus on stock price, IPOs, and acquisition over real, taxable revenues. Most digital companies’ shares are their only true product.

So instead of moving to the last column of the chart—digital distributism—we have ended up stuck in the third: a digitally amplified version of the same old global industrialism. Digital industrialism is characterized more by the destruction of value and its conversion into share price than the creation of value and its distribution to the stakeholders who made it possible. Digital industrialism exacerbates the imbalance between the traditional factors of production – land, labor, and capital, giving voice only to the needs of the venture capitalists and their mindless pursuit of growth.

But it’s working too well for its own good. These corporations are great at extracting capital from the markets they enter but really bad at deploying it. Corporate profit over size has been declining steadily for decades, now. They grow obese and lose the ability to innovate. So, Google becomes Alphabet, a “holding company” that buys and sells technology companies because it can no longer innovate, itself. Facebook’s biggest moves are not technology developments but acquisitions. Digital industrialism turns its biggest players into vacuum cleaners that suck out the value, and maybe park it in share price or, worse, overseas—but don’t know how to distribute it or even put it to work.

That’s because they’re trapped trying to run 21st-century digital businesses on a 13th-century printing-press-era operating system. The real problem with the digital economy as it is currently constituted is not the digital, but the economics.

The nationalism and protectionism of today’s anti-globalists may be based in jingoism and xenophobia, but it could also—at least temporarily—create the boundary conditions necessary for something more like local, circulatory economic activity to take root. Such boundaries, like closing borders or enacting harsh import tariffs, don’t just prevent the leak of jobs overseas. They discourage businesses from thinking of their markets as global, much less infinite. The markets in which they operate are decidedly finite.

This forces them to stop thinking of themselves as simply sucking up all the cash in a particular territory and then moving on to the next. They must develop local economies that are capable of renewing themselves and delivering ongoing revenue. Instead of earning 10 dollars once, businesses must figure out how to earn the same dollar 10 times. That means promoting not the extraction of capital from a market, but the velocity of money through a market. What goes around comes around.

With any luck, businesses will take a cue from those who already operate this way, such as the US Steelworkers Union. Faced with the declining stock market of 2007, the steelworkers were looking for alternative investments for their pension fund. Instead of outsourcing their funds to S&P index funds, they got the fantastically circular idea to invest in construction projects that hired steelworkers. They invested in a project that not only earned them equity but paid them back their investment as wages.

Such strategies are actually more consonant with digital networks, which circulate information in a distributed fashion and share resources more easily than they hoard them. They are not infinitely expanding; they are bounded and self-sustaining. But they are really difficult to execute in an economic environment characterized by rapid growth startups and infinitely scaling corporate growth. The real world doesn’t scale.

A momentary withdrawal from that game forced by anti-globalist protectionist policies may actually allow for some digital distributism to gain traction. It will force us to remember that an economy doesn’t require global scale or growth to function; it simply needs people with skills, people with needs, and a means of exchange. The finance ministers and corporate chiefs attending Davos—as well as the decisions they make—are inconsequential to this activity. Their effort to salvage the global economy is really just an effort to keep us back in the third column of the chart, the digital industrialism that extracts value from people by evermore technologically creative means.

In contrast, a genuinely distributed economy requires those on the ground to develop strategies for economic and social viability from the bottom up. Don’t be surprised to see labor cooperatives, commons-based approaches to resource management, and even local currencies emerge to fill in where federal action falls short. While these mechanisms may not have worked convincingly before, digital technologies may just lend us the decentralized methods of accounting and authentication we lacked in the Middle Ages.

Whether we like it or not, it’s again time to return from the Crusades, and try a second time to build a new economy here at home.

Cross-posted from Fast Company

Photo by kalieye

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