Wednesday, April 8, 2009

Value, Values and the New Economy

Currently value is primarily associated with scarcity. Things like breathable air and drinkable water do not become valuable until they are scarce. This is clearly a problem if we want to have values which reflect the real value of things within a living system.

Also, our models of wealth are completely upside down. Real wealth (derived from "weal" referring to wellness) is not a function of how much stuff you can accumulate. This is like thinking that becoming as fat as possible is to be healthy, or that cancer is a model for healthy systems. (Cancer uses all of its resources to grow more cancer until it kills its host.)

Real wealth is a function of how quickly people's needs are met. You only NEED a few things at a time. You don't need the car when you're not driving it, or the extra house, or the boat or the closets full of clothes you're not wearing. You just need access to those things at the time that you do. This means that scarcity should be dealt with exactly the opposite of how we currently do. Currently, scarce things become costly and hoarded by the wealthy so that even fewer people have access to them. We need currency systems which optimize effective sharing of scarce things so that they can be where they're needed precisely when they're needed.

Money does not do that.

In fact, commercial economies don't do this very well at all (although capitalists loudly exclaim that they do).

As far as I know, the most efficient models for doing this are gift economies. Things are given to who needs them most when they are needed, rather than hoarded by whoever can acquire the most and always underutilized.

To people thinking inside of traditional economic mindsets, this sounds ludicrous at first, but consider this everyday phenomena: Families. Can you imagine if all the things that are shared within families needed to be transacted through commercial exchanges. I need to use the car to run errands, so I have to negotiate a price and pay you for 45 minutes of use. You need to use my shower. You want to watch my TV. Shall we charge for square footage of foodstuffs stored in the refrigerator? Think of how much less efficient a family would be if it didn't operate on a gift economy but actually had to negotiate and process payments for every item shared.

We are one big family. We live in a big house called Earth. We share our house with all other life on the planet, and in turn it shares with us. Our whole commercial economy is built on plundering this gift economy. What does the earth charge for oil, trees and fish? What does the sun charge for growing our food?

So, our challenge lies in designing currencies that facilitate gift economies so that we can maximize the efficiency of our resources and have healthy models for wealth instead of cancerous ones.

There is no such thing as a value-neutral currency. (Yes, I'm speaking of currencies not of markets.) Every currency embodies particular values. It does this by what it measures and what it ignores. Taking care of your own child is not valued in our commercial economy. But as soon as you pay someone else to do it, it becomes a part of our GDP. It is taxed and measured. Only then does it become "valuable."

If currencies are tools for facilitating currents or flows, having one global currency would be like all organisms having one shared bloodstream. There are good reasons that human blood is different than that of fish or tree sap. Currencies can and do (even if we fail to recognize it) fill value niches to support a great diversity of living social systems.

We are witnessing the death of our industrial age economy, and all of its embedded values and financial systems. This is a good thing, because it has become a cancer that is destroying the planet, our lives, our health and itself. About 98% of daily dollar volume of financial transactions occur in the speculative markets (stocks, bonds, currency trading, futures, derivatives, insurance, etc.) rather than in the productive economy. And we think this doing us a service? And this isn't going to skew the whole system out of balance? And that the people who gamble with our money deserve to be paid 100+ times more than people who take care of our kids?

I've got a post brewing about the principles and dynamics of the new economy. I'll try to get it up here soon.

7 comments:

sachutney said...

Nice one. Your opening paragraph is exactly what got me into thinking about this whole money/currency thing.

No Lawn Sean said...

ahh wellness, the true goal of a regenerative way of tracking flows(currency). I am interested in the ability of these currencies to fund positive spirals of change based on building soil. Does this still necessitate the use of money based currency? If we are building lifeboats, are these the places to begin the upward spiral?

cojock said...

We've got to get to the gift economy from here, and I believe that this is possible within a market economy - provided it is a market operating on a "Not for Loss" basis - as Dr Yunus describes "Social businessws".

This presentation of mine

http://www.slideshare.net/ChrisJCook/social-investment-mechanism-12-03-09

aimed to set out how that might be done...

Arthur Brock said...

Wow! I received a huge flurry of responses to this post on my Facebook page. Many of them raised the concern about the conflict between currencies and gift economies. I am posting my response here:

You should know that previous posts in the blog make one thing clear: although in day-to-day English we use the words currency and money interchangeably, we are reclaiming the word currency to be something much more powerful.

Currencies are the tools which allow communities to interact with currents or flows. And flows are what make living systems healthy and alive: flows of trust, sharing, caring, giving, knowledge, wisdom, etc.

Gift Economies revolve around social contract. Even in a family, someone may be "disowned" by breaking this contract.

In our global family, we don't have indicators of who is honoring what social contracts. Currencies (not money, but feedback, metrics and ratings) are the means by which we can see these things.

Reputation currencies do not commoditize gifts because they are not measuring the VALUE of the gifts, rather are being an indicator of who are givers.

Deep in our nature, we are generous. People are hungry to participate in gift economies which nourish their communities. But because of our recent 500 years of artificially scarce, dehumanizing money, there is also mistrust.

If you can address 3 concerns, almost everybody is willing to play in a gift economy:
1. Honesty: I am not getting duped, conned or fleeced.
2. Equity: The gift economy is not imbalanced / I don't have to carry freeloaders.
3. Shared Value: The gift economy creates value for all of us.

You'll find that for communities larger than 150 people or so (like 6 billion+) the first two require reputation currencies. And the third requires NO currency, just the experience of sometimes receiving value from the community that you give to.

This means that MONEY puts the emphasis on exactly the wrong part of the picture as far as gift economies are concerned.

So for all of you who read this article with the idea that currency = money, you were RIGHT to be concerned.

sachutney said...

So Arthur is your argument then that our societies have no way of valuing these other flows? That we don't have "currency" to lubricate our giving?

I would tend to disagree. But, if I were to accept the need for these additional currencies - would this be in the hope of taking a certain amount of "influence" away from money and its destructive nature?

Another question. Are these currencies you talk about just physical manifestations of cultural norms?

Eric Harris-Braun said...

Saul,

I think the point is that not about "valuing" the other flows, it's just about seeing them in the first place. At the large scale, the social body as a whole, and individuals that make it up, can hardly see items 1 & 2, much less changes in them. Reputation currencies, perfomance metric currencies, etc make those things visible first, and as a consequence activate changes in them.

Your last question reminds me of the fact that language doesn't just describe reality, it also creates it. Or perhaps more acurately, we use language to describe reality, but the structure of our language creates our reality. The same is true about these currencies. We use them to reflect cultural norms, but their structure creates cultural norms. For example, there is a huge cultural norm around competition. About how good and necessary it is, and how important it is to teach boys (especially) how to compete. I'm quite certain that that cultural norm is in large part created by the structure of our monetary system that because of its inherent scarcity requires competition.

Thus, as we create new currencies of all sorts, we can start to rewire such cultural norms, and we can also create currencies that do actually reinforce or match cultural norms that we have that we like.

Citizen Cane said...

you make my head hurt. You completely misunderstand economics at its most fundamental level. Not only do you have no understanding of capitalism but you don't understand what money fundamentally is. This is the biggest problem I have with local currencies. I think the Idea of a currency which is not owned or operated by the Government is a great Idea but only if it has basis in reality. Sharing resources can be a great thing especially if it saves money. Money is more than just paper bills electronic numbers or such, money is fundamentally the evaluation of one mans contribution to another happiness. Wealth as properly defined is not an accumulation of stuff you are right. Wealth is the accumulation of money ie Consumption < Production. A farmer who does not consume his entire field of wheat but instead trades a portion of it for silver coins has changed the produced goods for a marker which says "I produced X number of bushels of wheat of which I only consumed Y"