Recently I've had some discussions about our MetaCurrency work with folks trained in economics. For some reason it seems particularly hard for some of them to grok what we're up to. More than once I've been told that working on changing the money system "hooey" and is barking up the wrong tree because "money simply facilitates trades," and that's it. Well, here's another statement: "cars simply facilitate moving stuff." Like the idea that "money simply facilitates trades" it is true for a narrow range of inquiry. But for even a slightly broader range of inquiry both of these statements are false. What's so interesting to is how hard it is in the case of money, to see that that statement is being made in a narrow context at all!
In the case of the technology of cars we know that the details of the technology itself has huge systemic implications. The CO2 produced by the internal combustion engines they run on has large consequences to the health of the planet's ecosystems. The specific effects of cars as a facilitator of moving stuff around vs. for example trains & and various other communal methods, or horses and buggies for that matter, have large consequences to the health of human social ecosystems.
You can't ignore the details of the technology in the case of cars, nor can you in the case of money. Both are technologies who's specifics make huge difference. What's weird is that by and large people don't even seem to think that money HAS any specifics. But it does. The currency alphabet that we've talking about (or currency literacy) is about getting the semantic and conceptual tools in our heads to see those specifics re money, so we can actually create forms of them that don't have the pernicious side effects. On top of that we're claiming that the best way to use such an alphabet is in an open, distributed, and democratic context, not a centralized one.
I see this situation is as if we lived in a society where we had invented cars, but we still had absolutely no idea how the production of CO2 by internal combustion could be responsible for climate change. We have created money, but we don't realize that the form of issuance of that money (debt based issuance), has very large side-effects. We don't really know why there isn't money for health care and education, we don't know why fundamentally our financial systems crash all the time. But it turns out that there are lots of other ways of issuing money into circulation (as there are other types of engines for cars), that don't have the same side-effects. My claim is that many, many of the fundamental patterns of our society are largely driven by the systemics that spin out from that basic axiom of debt based central issuance. If you change that one thing, lots of other things change. But it goes further than that too, just like in the case of cars as "facilitators of moving stuff." You can change out the engines to all be fuel cell electrics and thus solve the CO2 problem, but if we keep cars in place as our main way of moving people around we still have a huge range of social problems created by traffic, commuting, segregation of life into bedroom-suburbs and business centers, etc. And it goes even further, we pave over thousands of acres of arable land for cars. There are safety issues in using cars. They kill people and animals in ways that other transportation systems don't. They consume a scarce fuel resources which sets up other dependency relationships. They are built of metals which are getting increasingly scarce. They change the way people not in cars behave while moving around the world, and the list goes on. Just as it does with money, when you start to dig in deeper.
So I can see how all of this would seem to some economists as "hooey." If you are a traffic engineer, then any talk of switching out engines in cars as if it were meaningful is indeed hooey. It doesn't make a difference in that narrow context of getting cars to flow through intersections.
So although it may be true that money "simply facilitates trades," oversimplifying it in this way completely ignores other very real effects which emerge from money and our decisions about how we issue it, manage it and transact it. Different currencies change the rules about those things and although they may still facilitate trades, they can completely change all the ancillary "side-effects."
Intentional design of currencies is about waking up to the fact that these things are indeed not just "side-effects" but "actual systemic effects" and we should be responsible for them in similar ways that we need to be responsible for all those "side-effects" of using cars to move stuff.
We can't ignore those these "side-effects" and have a livable planet, livable economies or livable communities.
Yet looking at money in this way is completely (and possibly intentionally) outside the scope of traditional economics. Traditional economics seems to look at things like this in terms of "externalities," and certainly there is a loud cry from within traditional economics for accounting for externalities and moving them into the system. And some economist seem to get the deeper issue. Here is a great answer by environmental economist Neva Goodwin to a question about externalities in an article in grist:
The problem I have with classical microeconomics is the failure to account for "externalities" that relate to fundamental human and environmental values. What do you propose to do to incorporate the breadth of human activity and resource use into the economist's paradigm and avoid us living out the "tragedy of the commons"? -- David Hohmann, Bexley, Ohio
Many people who are critical of economics say that the problem is that economists don't take account of externalities. In fact, this is one of the most hopeful areas of agreement between economists and environmentalists. Externalities are costs or benefits that are "external" to the market system -- that is, they don't come back to affect the economic actor that caused them. This is very distressing to economists, because the presence of an externality means that the market is not working as theory says it should. Economists used to mostly ignore the prevalence of externalities -- they can justly be criticized for that -- but since environmentalists discovered the word and began to bring examples to the attention of economists, they have been working hard to figure out ways to "internalize the externalities." If this effort could fully succeed, we would have a world in which any polluting firm would bear the full cost of its pollution, rather than leaving individuals to bear the cost in terms of ill health, etc., and every family whose children grow up to be constructive members of society would be fully compensated for the foregone earnings and other costs involved in devoting time and resources to raising children.
That's the positive part. The negative is that, even while mainstream economists are actively (and sometimes successfully) wrestling with efforts to internalize (into the system of market signals) the costs of economic activity that have been externalized to the natural world or onto societies, there's something bigger going on -- which I suspect is behind your question. There are "meta-externalities" -- unwanted side-effects of the whole economic system on its physical and social contexts -- which continue to be invisible to the theory. Critical meta-externalities show up in the impact of the economic system on the social context. Productive enterprises need a workforce that has been socialized to be able to defer gratification, to think independently and sometimes creatively, and to be honest and responsible. Citizens and politicians need to care about the long run, and to be able and willing to address intelligently the myriad highly complex issues that face modern societies. But the sales efforts within modern enterprises are focused on a different set of requirements. From the sales point of view, the self-interest of business is served by a culture of instant gratification and simplified thinking that urges material purchase as the answer to any discomfort. A serious, as yet insufficiently recognized, set of meta-externalities are the selfishness, short-term thinking, cynicism, and impatience with complexity that are cultivated in the populace at large -- even though these are not characteristics that will best contribute to a healthy society or a healthy economy.
The heart of the difficulty in seeing this issue, I think lies is in the fact that traditional economics rests exactly on that "system of market signals" as the central feedback loop necessary for governing flows of goods and services. It's fairly easy to see how pollution is an externality, and how by pricing mechanisms like cap & trade, it can be brought into the market signal system. But as Neva Goodwin says, what about the meta-externalities of the very information signaling system you use to bring those externalities into the system? They will necessarily remain invisible without a level jump.
That's the idea behind the MetaCurrency project. It's a level jump that allows the side-effects of the signaling system itself to be taken into account, by putting the signal system itself into play.