Read Sacred Economics: Money, Gift, and Society in the Age of Transition Online
Authors: Charles Eisenstein
Sacred Economics: Money, Gift, and Society in the Age of Transition (24 page)
Not only does association with money (and therefore with abstract “value”) elevate a thing to a sacred status, it also impels us to create more and more of it. Gold’s association with money encourages the continued (and very environmentally destructive) effort to mine more gold. To dig holes in the ground and fill them back up again is the epitome of wasted work, yet that is essentially what gold mining does. At huge effort, we dig gold ore out of the ground, transport it, refine it, and eventually put it into other holes in the ground called vaults. This effort, and the scarcity of gold, is one (very haphazard) way to regulate the money supply, but why not regulate it through purposeful social and political agreements, or through some more organic process, and save all that hole digging?
The above-mentioned problem with gold extends to other commodities. In places where cattle serve as money, they take on a value beyond the utility of their milk and meat, with the result that
people maintain herds larger than they really need. As with gold mining, this wastes human labor and burdens the environment. I am afraid that any commodity-based money will have the same effect. If it is oil, then an incentive will be created to pump more oil—the amount needed for fuel, plus an additional amount for money. Generalized, the principle is, “The use of any thing for money will increase the supply of that thing.”
Chapter 11
draws on this principle to create a money system to increase the supply of things we agree are positive goods for humanity and the planet. What if money were “backed” by clean water, unpolluted air, healthy ecosystems, and the cultural commons? Is there a way to encourage the creation of more and more of these in the same way that the social agreement of gold’s value drives us to mine more and more of it? Just as the monetization of gold causes us to covet it and seek to produce more of it, and to relinquish it only to meet a real, pressing need, so also might the use of these things for money cause us to create more of them, to create a more beautiful planet, and to sacrifice them only for a well-considered reason, only in response to a real need, only to create something as valuable as what has been destroyed. We destroy many things today for the sake of money, but we do not willingly destroy money itself. And so it shall be.
The question of currency backing leads us to broader and more essential questions: Who gets to create money, and by what process? What limits should govern the amount of its creation? What are the agreements that money embodies? More generally, what is the story of value that we impart to money?
Since the days of ancient Greece, money has always embodied an agreement. Usually, though, the agreement has been an unintentional one. People believed gold was valuable, rarely stopping
to think that this value was conventional. Later, fiat paper currencies were obviously conventional, yet as far as I know no one ever designed their issue with a specific social purpose in mind beyond providing a medium of exchange. Never has it been asked, “What story of the world are we creating, and what kind of money will embody and reinforce that story?” No one decided to create a fractional-reserve banking system with the conscious purpose of impelling the expansion of the human realm. Today, for the first time, we have the opportunity to infuse some consciousness into our choice of money. It is time to ask ourselves what collective story we wish to enact upon this earth, and to choose a money system aligned with that story.
In the rest of this book I will draw the broad outlines of a money system embodying humanity’s emerging new relationship to ourselves and to the earth, a money system that reflects and nourishes the things that are becoming sacred to us. I will also offer ideas on how to get there from here, on both a collective and a personal level. This sacred economy will bear the following characteristics:
It will restore the mentality of the gift to our vocations and economic life.
It will reverse the money-induced homogenization and depersonalization of society.
It will be an extension of the ecosystem, not a violation of it.
It will promote local economies and revive community.
It will encourage initiative and reward entrepreneurship.
It will be consistent with zero growth, yet foster the continued development of our uniquely human gifts.
It will promote an equitable distribution of wealth.
It will promote a new materialism that treats the world as sacred.
It will be aligned with political egalitarianism and people power and will not induce more centralized control.
It will restore lost realms of natural, social, cultural, and spiritual capital.
And, most importantly, it is something that we can start creating right now!
The next few chapters will present and synthesize various themes of the new Story of Value that will define a future money system. Weaving them together, a picture will emerge of an economy that is very different from what we know today.
1.
Temple,
The Genius of China
, 117, 119.
2.
Vallely, “How Islamic Inventors Changed the World.”
3.
See, for example, the Chicago Federal Reserve’s publication “Modern Money Mechanics,” which is widely available on the internet.
4.
If a bank’s margin reserves are insufficient to meet requirements, it simply borrows the necessary cash from the Fed or the money markets. If there is a system-wide insufficiency of reserves, then the Fed expands the monetary base through open-market operations. That is why M0 growth typically lags behind M1 and M2 by many months—the opposite of what one would expect from the multiplier effect if we lived in a fractional reserve system (see Keen, “The Roving Cavaliers of Credit”). That is also why recent “quantitative easing” by the Fed and other central banks has done little to increase the money supply.
5.
This in fact happened many times; during the Great Depression it happened in nearly every country. Holders of currency demanded gold from banks and ultimately central banks, which eventually said no. In the United States in the 1930s it actually became illegal under Roosevelt’s Executive Order 6102 to hold more than a small amount of gold. Yet the dollars whose value supposedly depended on gold did not become worthless.
6.
Look at it this way: bank-issued credit is backed by the collateral on the loan or, in the case of unsecured loans, by the future earnings of the borrower. Economy-wide then, the sum total of all credit-money issued is backed by the sum total of all existing and future goods and services in the economy and, therefore, by the promise of growth. Another way to see it is that without growth, the default rate will rise, and the money supply will shrink.
THE LAW OF RETURN
Socialism failed because it couldn’t tell the economic truth; capitalism may fail because it couldn’t tell the ecological truth
.
—Lester Brown
Here is a certainty: the linear conversion of resources into waste is unsustainable on a finite planet. More unsustainable still is exponential growth, whether of resource use, money, or population.
Not only is it unsustainable; it is also unnatural. In an ecology, no species creates waste that other species cannot use—hence the maxim, “Waste is food.” No other species creates growing amounts of substances that are toxic to the rest of life, such as dioxin, PCBs, and radioactive waste. Our linear/exponential growth economy manifestly violates nature’s law of return, the cycling of resources.
A sacred economy is an extension of the ecology and obeys all of its rules, among them the law of return. Specifically, that means that every substance produced through industrial processes or other human activities is either used in some other human activity or, ultimately, returned to the ecology in a form, and at a rate, that other beings can process.
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It means there is no such thing as industrial waste. Everything cycles back to its source. As in the rest of nature, our waste becomes another’s food.
Why do I call such an economy “sacred” rather than natural or ecological? It is because of the sacredness of gifts. To obey the law of return is to honor the spirit of the Gift because we receive what has been given us, and from that gift, we give in turn. Gifts are meant to be passed on. Either we hold onto them for a while and then give them forward, or we use them, digest them, integrate them, and pass them on in altered form. That this is a sacred responsibility is apparent from both a theistic and an atheistic perspective.
From the theistic perspective, consider the source of this world we have been given. It would be a grave error to say, as some evangelicals have told me, that it is fine to use nature destructively, because after all God gave it to us. To squander a gift, to use it poorly, is to devalue the gift and insult the giver. If you give someone a present and he trashes it right in front of your face, you might feel insulted or disappointed; certainly you’ll stop giving gifts to that person. I think that anyone who truly believes in God wouldn’t dare treat Creation that way but would instead make the most beautiful use possible of life, earth, and everything on it. That means we treat it as the divine gift that it is. In gratitude, we use it well and give in turn. That is the theistic reason why I call a zero-waste economy sacred.
From an atheistic perspective, a zero-waste economy is the economic realization of the interconnectedness of all beings. It embodies the truth that as I do unto the other, so I do unto myself. To the extent that we realize oneness, we desire to pass our gifts forward, to do no harm, and to love others as we love our selves.
On a very practical level, this vision of sacred economy requires eliminating what economists refer to as “externalities.” Externalized costs are costs of production that someone else pays. For
example, one reason vegetables from California’s Central Valley are cheaper to buy in Pennsylvania than local produce is that they don’t reflect their full cost. Since producers are not liable to pay the current and future costs of aquifer depletion, pesticide poisoning, soil salinization, and other effects of their farming methods, these costs do not contribute to the price of a head of lettuce. Moreover, the cost of trucking produce across the continent is also highly subsidized. The price of a tank of fuel doesn’t include the cost of the pollution it generates, nor the cost of the wars fought to secure it, nor the cost of oil spills. Transport costs don’t reflect the construction and maintenance of highways. If all these costs were embodied in a head of lettuce, California lettuce would be prohibitively expensive in Pennsylvania. We would buy only very special things from faraway places.
Many industries today can only operate because their costs are externalized. For example, statutory caps on liability for oil spills and nuclear meltdowns make offshore drilling and nuclear power profitable for their operators, even as the net effect on society is negative. Even if BP goes bankrupt trying, there is no way the company will, or can, pay the full costs of the spill in the Gulf of Mexico. Society will pay the costs, in effect transferring wealth from the public to the company’s investors.
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Any industry with the potential for catastrophic losses is essentially enacting a transfer of wealth from public to private hands, from the many to the few. Those industries operate with free insurance. They get the profits, we assume the risks. It is also so in the financial industry, where the largest operators can take huge risks knowing that they will be
bailed out if those risks fail. Externalized costs render economical things that are actually uneconomical, such as deep-sea oil drilling and nuclear power.
The elimination of externalities thwarts the business plan of the ages: “I keep the income and someone else pays the costs.” I fertilize my field with nitrogen fertilizer, and the shrimp fishermen pay the cost of eutrophication downriver. I burn coal to make electricity, and society pays the medical costs of mercury emissions and the environmental costs of acid rain. All of these strategies are variations on a theme I’ve already described: the monetization of the commons. The capacity of the earth to absorb various kinds of waste is a form of commonwealth, as is the richness of the soil, the seas, and the aquifers. The collective leisure time of society might be considered a commons as well, which is depleted when polluters make messes for everyone else to clean up.
“I keep the income, and someone else pays the costs” reflects the mind-set of the separate self, in which your well-being is fundamentally disconnected from mine. What does it matter what happens to you? If you are poor, or sick, or in prison, what does that matter to me, as long as I sufficiently insulate myself from the social and environmental toxicity out there? What does it matter to me if the Gulf of Mexico is dying under an oil slick? I’ll just live somewhere else. What does it matter to me that there is a thousand-mile-wide gyre of plastic in the Pacific Ocean? From the perspective of separation, it doesn’t matter—in principle we can insulate ourselves from the effects of our actions. Profiting by externalizing costs is part and parcel of that perspective. But from the perspective of the connected self, connected to other people and to the earth, your well-being is inseparable from my own because you and I are not fundamentally separate. The internalization of all costs is simply
the economic embodiment of that principle of interbeingness: “As I do unto others, so I do unto myself.”
Internalizing costs also reflects the perceptions of a gift culture. In the circle of the gift, your good fortune is my good fortune, and your loss is my loss, because you will have correspondingly more or less to give. From that worldview, it is a matter of common sense to include damage to society or nature on the balance sheet. If I depend on you for the gifts you give me, then it is illogical to enrich myself by impoverishing you. In such a world, the best business decision is the one that enriches everybody: society and the planet. A sacred economy must embody this principle, aligning profit with the common weal.
