Sacred Economics: The Currency of Life


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It is crucial that these bonds bear zero or negative interest, a possibility I will explain in the next two chapters. Otherwise, a need for perpetual growth in the use of the commons would be created. Either way, producers would have a financial incentive to minimize their use of the commons.

No such incentive exists today, or if it does, it exists only haphazardly. This system would fully internalize social and ecological costs. With this system, that is no longer true.

Sacred Economics: The Currency of Life

Instead, products that avoided pollution in their manufacture would be cheaper because pollution quotas would cost a lot of money. Products would be more expensive in proportion to the amount of the natural commons consumed in their production. Some might object that this system would necessitate a lot of bureaucracy and paperwork, since it requires keeping track of every pollutant and social cost generated in the process of production. My answer to that is twofold. First, this system embodies the new attitude of environmental responsibility that wants to know and take responsibility for the effects of our actions on other beings.

Look what happens to the earth, when we are oblivious to the risk of oil spills and nuclear disasters. Increasingly, we want to know what we are doing, we want to know all the effects of our actions, and we want to take responsibility for them. You might see this as a form of indirect taxation, but another way to look at it is that producers are simply paying for the things they take from the commons, the things they take from us all. It is only fair. The kind of taxes, the means of levying contributions to the common good, that we have today are nearly the opposite of what we want to create in our world.

We can take from the commons—that which no one should own—without paying for it, yet the one thing we can be said to own—our own productive labor—is subject to taxation in the form of income tax. Meanwhile, we are forced to pay a tax on the circulation of goods—a sales tax—while there is no tax on the accumulation of wealth not used for exchange. We have it backward. The money system I am describing in this chapter reverses income tax, shifting taxes away from what you earn and onto what you take. The next chapter describes a similar reversal of sales tax, shifting costs away from spending and onto hoarding.

Despite my upbringing in a politically liberal household that justifies income taxes on the grounds that they put more of the tax burden on those most able to pay, I always felt a kind of primal indignation about income tax. Why should the most productive or hardworking people pay more? It makes much more sense to make people pay for what they are actually taking.

See a Problem?

For the reader unfamiliar with unorthodox economic thought, I want to emphasize that this proposal fits into a respectable historical context. It is a synthesis of several elements. The idea of shifting taxes onto polluters and resource consumption was developed by A. Pigou in the early twentieth century and carried forward by such people as Herman Daly, Paul Hawken, and numerous environmentalists.

The idea of eliminating profit from the ownership of the commons goes back to the tradition of Henry George that I discussed in Chapter 4. What I am describing in this chapter is the natural extension of the ideas of Henry George and Silvio Gesell into the ecological age, firmly grounded in two or three converging traditions of thought. The most important item of the commonwealth is undoubtedly the land itself, the subject of the original criticisms of the institution of property.

The proposals of George and Gesell that arise from this criticism fit seamlessly into the monetary system I have described. This tax, which applies to the underlying value of land independent of any improvements upon it 4 , could also take the form of a lease or a right-to-use payment. Obviously, since improvements to land are immobile and often require years or decades to build, lessees would have to enjoy the first right to renew. Many gradual and gentle ways have been proposed to realize the reclamation of the land commons for the public; there is no need to confiscate existing real estate holdings, but only to enact the principle that the earth belongs to everyone.

The same goes for the electromagnetic spectrum, the minerals under the earth, the genome, and the accumulated fund of human knowledge. These should be available for rent, not ownership, and the rents should go to the public. Presumably, those who can put these assets to best use would be the most eager to rent them. There would still be room for entrepreneurship—even more so than today since access to resources would be based not on prior ownership but on most effective use.

The foregoing account of currency issue may have left the impression that it is the federal government that will create most of the money. This is not what I envision. Many of the commons on which money will be based are best administered bioregionally. Many pollutants, for instance, wreak their most devastating effects on local ecosystems, and only indirectly on the planet as a whole.

An Adult Society

It does little good to restrict global emissions of ozone when the damage to people and trees comes from regional concentrations of it. Thus it might be the state of California, or perhaps smaller political divisions of it, that issue currency backed by ozone emissions allowances. In some cases, where there is an overlap of local and global effects, polluters might have to pay for two different allowances for the same pollutant. Of course, there are some kinds of commonwealth, and some human endeavors, that involve the entire planet; inescapably, then, there must be political power on a global level with the ability to coordinate human activity, probably using money.

But global or national governments should not administer any form of the commons that is inherently regional or local. Since so much of the commons—land, watersheds, minerals, some fisheries, and the capacity of the ecosystem to handle many types of pollution—is local, the money system I describe corresponds to a shift in political power away from centralized governments. Local governments will have the power to issue money backed by real wealth. So far I have described how national and local governments could issue money based on the natural wealth they administer in trust for communities, humanity, and the earth.

Yet not every source of wealth is something from the collective commons. Critics of property going back to the early Christian fathers recognized that a person at least owns his or her own time, labor, and life.


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After all, we are born with nothing else, and shall return to the grave with not even that. If anything, our lives are our own. Well, we already do this today, when private enterprises and individuals create money through bank credit. I ask this question because some monetary reformers think this is a bad idea and have built entire economic philosophies around gold or fiat money systems in which fractional-reserve banking and private creation of credit-money would be prohibited.

I will address this issue in some depth because it represents an important line of thinking in the New Economics. Recent proposals by monetary historian Stephen Zarlenga have even found sympathy in the fringes of American politics, notably with Congressman Ron Paul. The abolition of fractional-reserve banking also is part of the philosophies of certain followers of the social credit movement, the Austrian School of economics, and many others.

Their logic seemed compelling to me at first, and they provide a very thorough account of the disastrous effects of debt growth in the mid- and late-twentieth century, when money became decoupled from gold. A percent reserve system, it is claimed, would prevent debt from outstripping money—but how, then, to prevent concentration of wealth in the presence of interest?

Except for the Austrian School, most proponents of percent reserves also support some kind of economic redistribution or monetary expansion, such as direct spending of government fiat money into the economy so that debtors can obtain enough money to repay principle and interest on loans. Frederick Soddy, among the first modern economists to recognize the impossibility of unlimited exponential growth and to distinguish between money and wealth, proposed a percent reserve requirement for banks, excluding them from the business of money creation, but also provided that the government would spend money into existence at levels sufficient to prevent deflation.

I spent quite a while trying to resolve the question of whether fractional-reserve banking or full-reserve banking is consistent with sacred economics. After wrestling with the formidable complexities of the issue and reading papers going back to the s, one day I gave up and lay down on the couch where, predictably and somewhat to my chagrin, it dawned on me that the two systems are not as fundamentally different as most people think.

The confusion, which is rife on the internet, comes on one level from a simplistic and incorrect view of how fractional-reserve banking actually works, and on a deeper level from an artificial and irrelevant distinction between what is conventional and what is real. I present an alternative view in the appendix. Here, suffice it to say that the proposals of this book can fit into either system.

Overall I am more sympathetic to a system that includes private credit, first because it allows organic, endogenous money creation independent of a central authority; second because it more easily incorporates exciting new modes of economic cooperation such as commercial barter rings and mutual-credit systems; third because it allows for much more flexibility in financial intermediation and capital formation; and fourth because it simplifies interbank credit clearing.

Because of interest, at any given time the amount of money owed is greater than the amount of money already existing. To make new money to keep the system going, we have to create more goods and services, and the main way of doing this is to sell something that once was free: Completing the vicious circle, the more of life we convert into money, the more we need money to live. The insufficiency of money drives us into competition with each other, as we become increasingly indebted and, thus, need to provide more goods and services economic growth, defined as growth in total goods and services exchanged for money.

Even in good times, growth is rarely fast enough to keep pace with interest. Concentration of wealth — both income and assets — is an inescapable corollary of debt growing faster than goods and services. Concentration of wealth had been seen many times by BC.

During Roman times, as long as the empire was expanding rapidly, acquiring new lands and new tribute, everything worked passably well, and there was no extreme concentration of wealth. But when the empire slowed, concentration of wealth intensified and the once-extensive class of small farmers, the backbone of the legions, fell into debt peonage. The empire became a slave economy. Today, many individuals and nations have fallen deeply in debt.

Thus it is that U. Even corporations suffer under an unprecedented degree of leverage, so that a large proportion of their revenue goes to banks and bondholders. Even if you carry no debt, interest costs factor into the price of nearly everything you buy — a tax that goes to the owners of money. Those who have money can increase their wealth, and unless borrowers can increase their wealth just as fast — only possible in an expanding economy — wealth will concentrate in the hands of the lenders.

You get richer faster by owning than by producing, because when economic growth speeds up interest rates are raised. Absent redistributive measures, the concentration of wealth intensifies through both good times and bad. Most societies redistribute only enough to maintain social order. In ancient times, some practiced a periodic nullification of debts like the jubilee of the ancient Hebrews, in which debts were cancelled every seven years. A person who declares personal bankruptcy in the U. Debt repudiation — refusing to pay a debt or transfer collateral to the creditor — will only be possible when the legal system and the legitimacy of the state begin to fall apart, revealing money and property as the social conventions they are.

Countries with resilient domestic economies and resources to barter with neighbors can default on their debts, but in practice they rarely do. Rulers, democratic or otherwise, usually ally themselves with the global financial establishment, which rewards them handsomely for their cooperation. Today even wealthy countries are being forced to adopt austerity programs cut social services because of their mounting, unpayable debt. Yet the authorities keep trying to find a way for debts to be paid and for the debt pyramid to keep growing.

The present crisis is the final stage of what began in the s. Others — globalization, plunder of national resources once off limits, and financial autocannibalism — have run their course. The credit bubble blamed as the source of our current economic woes was a symptom of them, not a cause.

When returns on capital investment began falling in the early s, capital began a desperate search for other ways to maintain its expansion. But the real economy was stagnating. To maintain the exponential growth of money, either the volume of goods and services must be able to keep pace with it, or imperialism and war must continue, or both.

The best way to ensure your own security, is to create community. If you have wealth now, use it to enrich the people around you in lasting ways. In addition, anything you can do to protect some natural or social resource from conversion into money will both hasten the collapse and mitigate its severity. Add wealth to the public domain with a zero or negative return on your money , withdraw from the mainstream economy as much as possible, teach or learn skills of self-sufficiency, and enter the spirit of the gift, which embodies the felt understanding of non-separation.

Its currency is cyclical rather than exponential, always returning to its source; it encourages the protection and enrichment of nature, it defines wealth as the ability to give, and it manifests abundance. The desire of an assurance of return, a compensation for the risk of generosity, is the fundamental mindset of interest, an adolescent mindset that will be superseded by a more expansive adult self that has matured into full membership in the community of being.

The money of the future will be backed by the things we want to create, nurture, and preserve: A sacred economy will:. 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. According to the law of return, every substance produced by human activities must either be used in another human activity or, ultimately, returned to the ecology in a form and at a rate that other beings can process.

There can be no such thing as industrial waste. To squander a gift, or use it poorly, is to devalue it and insult the giver. A zero-waste economy is the economic realization of the interconnectedness of all beings, embodying the truth that as I do unto another, I do unto myself.

Statutory caps on liability for oil spills and nuclear meltdowns, for example, make offshore drilling and nuclear power profitable for their operators, even as the net effect on society is negative. Thus is wealth transferred from the public to corporate higher-ups and investors. Property is a social agreement that a person or group has the right to use something in prescribed ways.

Today, access to money, via credit, goes to those likely to expand the realm of goods and services. In a sacred economy it will go to those who contribute to a more beautiful world. Around these common values, which political language tends to obfuscate by superimposing divisions on our common humanity, the currency of the sacred economy will emerge. Eisenstein asks us to keep in mind that, like all of our institutions, government is going to change dramatically in the coming years.

He says he envisions decentralized, self-organizing, fluid, peer-to-peer expressions of political will.

Sacred Economics: The Currency of Life by Eileen Workman

Products will be more or less expensive in proportion to the amount of the natural commons consumed in their production, and taxes will be shifted away from what you earn onto what you take. Many, if not most, of the commons are best administered locally or bioregionally, which is why political and financial authority will have to devolve to the local level, with bioregional and global bodies dealing with issues affecting larger areas. Local governments will have the power to issue money backed by the wealth of their area.

Eisenstein also favors including private credit, because it allows more freedom and flexibility, incorporating new modes of economic cooperation, such as barter rings and mutual-credit systems. So, you could increase the money supply by giving an IOU to a friend, who might give it to a friend of hers in lieu of cash. Governments can then afford to start repairing and restoring the commons.

Negative interest, however, can replenish the commons and create cooperation, community, and abundance. With negative interest, money becomes less valuable over time. In this way, money would no longer be preferred to physical capital which also decays over time , and it would be forced to circulate, thus preventing artificial scarcity and economic depression. In , an unemployment relief bill was introduced in both the U. House of Representatives and the U.

As noted above, Western economies have been in a state of zero growth for at least 20 years. Whatever growth there has been has come largely from such things as real estate bubbles, the prison industry, health care and education costs, insurance and financial services, and the weapons industry. The more expensive these are, the more the economy is assumed to have grown. Recently, several prominent mainstream economists have proposed modern alternatives to fixing stamps on currency.

Since most money is electronic, the key measure would be either some kind of liquidity tax or a negative interest rate on deposits in the Federal Reserve. Physical currency would need to be subject to the same depreciation rate as reserves, which could be accomplished by having expiration dates on it.

Change we make ourselves

Other currencies — paper or electronic — could also thrive alongside the official, negative-interest currency and be outside the purview of the central government. The bottom line, Eisenstein says, is that any use of money or aspects of the commons must at all times be socially productive. Decaying currency proposals offer more than a temporary fix for a stagnant economy; they promise a sustainable, long-term foundation for a permanently non-growing one.

Historically, economic contraction or stagnant growth has meant human misery and an increase in the divide between the haves and the have-nots. Negative interest prevents this from happening by providing a way for money to circulate without needing to be driven by growth-dependent lending.

Welcome to a world without greed, scarcity, the quantification and commoditization, the discounting of the future for the sake of the present, equating security with accumulation, and a fundamental opposition between financial interest and the common good. At some point, default, or mass debt forgiveness, is inevitable. We need to start reducing debt gradually. When the federal government bought bad debts in the bailout to keep the system afloat, all the money went to creditors.

They used this money to buy risk-free bonds, pay executive bonuses, or buy up smaller institutions, none of which did anything for the economy or debtors. Student loans, for example, could have been made no-interest, mortgage principals cut to pre-bubble levels, and third-world sovereign debt forgiven entirely. The increased money supply, subject to demurrage, would shrink over time. In a negative-interest economy, banks will be happy to lend money to businesses that will earn and repay less than the original loan, because, unlent, their money would depreciate at an even higher rate. In this type of economy, activities that will bring benefits in 30, 50, or years become economically feasible.

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Sacred Economics: The Currency of Life Sacred Economics: The Currency of Life
Sacred Economics: The Currency of Life Sacred Economics: The Currency of Life
Sacred Economics: The Currency of Life Sacred Economics: The Currency of Life
Sacred Economics: The Currency of Life Sacred Economics: The Currency of Life
Sacred Economics: The Currency of Life Sacred Economics: The Currency of Life

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