Saturday, March 3, 2012

New monies for public purpose- an economic third way

Why is the same money used to buy toothpaste and political campaigns?

After the decline of the competing ideologies of the 19th & 20th centuries- colonialism, communism and socialism- nationalism and capitalism were left triumphant, alone and without an existential critique, other than the tribal, bitter opposition of Islamism. China is more capitalist than we are in many ways, with a pell-mell no-health-insurance, no-safety-net ethic of ruthless get-rich-ism.

Yet there is a great deal of unease in other quarters. Hatred of the US as the world exemplar of hyper-capitalism is widespread, if not for our wealth directly, then for the lack of taste with which we display it, and abuse it.

What other countries hate most about cultural invasion by the West is materialism .. the crass, amoral wastefulness, hedonism and concomitant lack of human values. The West has been given over to its greediest, basest elements rather than uplifted by their most introspective and spiritually inclined. God is dead, and the Market rules in its place.

These thoughts were sparked by a review of Vaclav Havel's career (incidentally also by a biography of Glenn Gould). Havel knew the stifling hand of totalitarian government, as well as its meaningless, hollow post-totalitarian variant. But for all his yearning to break free, he was quite ambivalent about the boons of the West. He was very much a spiritual atheist, an absurdist seeking meaning while leading the cultural evolution of Czechoslovakia; indeed to some extent, the entire West.

Many have dreamed of transcending the market, which mediates many of the brute realities of mundane existence. The Marxists drew on Hegel and some rather cracked economics to simply assert the historical inevitability of its end, replaced by a worker's paradise, then proceeded to make a royal mess of it. Other dreamers have sought to separate more circumscribed human values from the market, with mixed success. The enlightenement brought democracy and the novel currency of votes- one per person. We are still grappling with the question of whether votes can be bought with money (not terribly successfully, judging by the current political season).

The wealth of the West, established through the slow accumulation of technical mastery over the environment, (as well as supple modes of political organization), now enables a dramatically different relationship with markets and materialism in general. Food makes up only 7% of US household spending. Many of our other goods come from overseas, at far less cost than it would take us to make them. They are, in large part, free. With increasing mechanization / robotization, this trend will only increase, making necessities ever less significant shares of our budgets.

Yet GDP is ever-increasing, as we dollar-ize more of our lives, from birth to death and every interaction in between. On top of that, the more luxury-based our economic system becomes, the more unstable it is, prone to enormous diversion by financial gamblers, rentiers, and misappropriating agents like CEOs.

One of the dark comedies of our economic system is the quest for a "business model". Innovators who create phenomenal public services like Twitter are forced to the corrupting rack of advertising in order to "monetize" their users. Great reporters and news organizations dissolve before our eyes in the face of free media, bloggers, and the shameless propagandists of FOX news and the rest of the cable universe. The public interest goes begging because participation in the dollar economy requires making one's service precisely antithetical to the public interest in some critical way that generates ... the business model.

Thus I see a great need to carve out more spheres of non-monetary interaction- more currencies like that of the vote. Today, finance accounts for roughly 10% of GDP- to what end? So that we can gamble with our savings and pad the pockets of those entrusted with them? CEOs serve on each other's boards and compete in paying each other ever more ... because they can. Money increasingly reflects social relations and status rather than fundamental measures of productivity, let alone of personal worth. The mantra of "free markets" has blinded us to the their enormous defects, even in an ideal state. And blinded us to the essential nature of public goods and our rising capability to provide them.

Does our political system need to run on dollars and its attendant corruption? Does the media that conducts our public debates need to be owned by corporations and paid by advertising? Not really. One could imagine currencies like Facebook's "like" system replacing dollars to fund these and many other public services. Citizens would get equal amounts of them just like they get votes ... for being citizens. They would send them to media services or candidates they favor, perhaps electronically. This would resemble a school voucher system, only instead of being used to destroy an existing public service, it would be used to enhance a public service by insulating it from corruption and dramatically broadening its support base. Just imagine what public broadcasters could do if their funding reflected their actual listenership / viewership rather than just those guilted into parting with hard-earned salary money. What if the choice to contribute to a political candidate didn't mean going without essentials like food and medicine?

Similar special-purpose currencies could be used to support the arts, direct selected areas of public spending such as infrastructure, parks, and foreign aid, and support a full range of charities and non-profits. Substantial areas of our public lives could be more democratically directed by getting away from the current binary system of system of dollar-rule or legislative sausage-making. Some corporations could even remake themselves into public interest entities or utilities (such as software makers, perhaps), and tap into such forms of funding. The new currencies would be convertable at the point of use by the receiving organizations into dollars to pay their expenses, or in the case of political candidates, into the new media currency with which in turn to buy exposure.

Ideally, enough resources would be budgeted in each of these areas to render the use of actual dollars superfluous, while still permissible. Actual dollars would be (progressively) taxed out of the remaining economy sufficiently to make room for all this new democratically-directed spending. Such a "new economics" offers a way to foster high personal freedom and democratic principle while reforming corrupt practices, and furthering the public interest in many areas where it is badly or under-served today. It addresses some of the goals of the Occupy movement whose overriding critique is the reality of economic and especially political control / corruption by the 1%, which so starkly contrasts with the democratic principles we supposedly follow. It would represent an important step in our travels towards a truly democratic and public spirited national community.


  • Economic transitions, from feudalism to capitalism, and on to post-capitalism.
  • What do we perceive as fair?
  • How do the 1% get there? It isn't pretty.
  • What class warfare really looks like. Bloodless edition with chart.
  • Introverts are OK ... better than OK!
  • "Because, in my mind, that’s what addiction really is — people trying to blot out the pain of being human with chemicals that inevitably just make the pain even worse."
  • The oceans are in miserable condition. Please don't eat seafood. Incidentally, the Earth is full.
  • Mumbai is also full.
  • Another problem with corporations- they support war.
  • A small critique of finance and Krugman.
  • Economics quote of the week, Ben Bernanke, testifying before Ron Paul:
"Nice to see you again, Dr. Paul."
This exchange was a sterling example of what makes a currency active. Ron Paul held up a silver coin that he claimed had held its value far better than our paper money, and was natural money- not a fiat currency that is fake in some way. Bernanke said that Paul was welcome to hold and exchange as much silver as he liked. Then Paul complained that he couldn't use silver to pay taxes and make other relevant transactions. It was an object lesson in what differentiates a state currency (fiat or otherwise, however virtual, paper, or "fake" it seems ) from a natural currency.

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