Friday, 17 August 2012

Plutocratic Rule

Charles Eisenstein wants to Devalue your Money to Save the Economy
by Erik Curren

Imagine if you had a warehouse full of bread that would go stale in three days. You’d want to get rid of it as quickly as possible. Of course, you wouldn’t try to sell it at premium prices. Instead, you’d want to hold a liquidation sale. Or, maybe even not go through the bother of trying to sell it at all — just give it away. In that way, you’d earn both gratitude and favors that you could call in later. In a sense, giving away all your bread would become an investment in social capital.
Or, consider the linguist who asked an indigenous hunter from Brazil’s Piraha tribe why, when he felled some big game, he threw a big feast, letting his guests eat up all the meat in one orgy of indulgence, instead of thriftily drying the meat to save it for the future? In response, the hunter laughed and replied, “I store meat in the belly of my brother.”
Charles Eisenstein, author of Sacred Economics: Money, Gift, and Society in the Age of Transition, told me these two stories in a recent interview as a way to illustrate how wealth can reside in human relationships rather than merely be stored up goods or in their proxy — money.
Nature and relationships
The last two centuries stand out from the rest of human history for the dominance of money as a medium of exchange. “Most of our ancestors didn’t use money very much, not for food, shelter, clothing, or entertainment. All these were done by people helping each other out in the family or extended family,” Eisenstein told me.
In the past, only a small part of the population, mostly merchants, handled money on a regular basis. Now, nearly everybody needs money just to buy daily necessities.
Ever since the Industrial Revolution, the marketplace has expanded from a sideshow into the world economy’s main event. ”The monetized realm has grown, converting nature into products and relationships into paid services until there’s almost nothing left to convert anymore,” Eisenstein told me.
    We can’t cut down more forests or increase the fish catch. What’s less recognized is that the social space to convert relationships into services has almost reached its peak too. We pay for almost everything, even the most intimate things, like cooking meals. People hardly sing anymore — we pay for our entertainment. There’s almost no community left, community being a group of people who share gifts. You look at your neighbor driving out of his garage in his car and you might say hi, but behind that there’s a view that you don’t need each other.
Aside from the anomie and alienation this creates for people, the problem is that peak nature and peak relationships are together slowing growth and starving the economy.
Our economy cannot function without growth because most money is not printed by governments, as people usually imagine, but is instead loaned into existence by central banks and commercial lenders, who can loan out ten dollars or more for every dollar they’re required to have in their vaults. In effect, then, a lender creates new money with every loan.
And the whole point of making loans is to earn interest for the lender.
But for the borrower, interest obliges her to pay back more than she borrowed. And to earn the money to pay back the principal plus accumulated interest, the borrower will need to create goods and services. Multiply that out across the whole economy, and it becomes an imperative for economic growth.
 “Without growth, debt increases faster than income and wealth and the whole system crashes. Before that, you get polarization of wealth income and unemployment,” Eisenstein said, aptly describing today’s plutocratic rule by the top 1%.
So, since all national currencies, whether the dollar or the Euro or the Yuan, allow lenders to earn interest, the whole economy becomes addicted to economic growth. As long as we continue to let banks create our money through their loans, we’ll all have to keep creating more goods and services, thus despoiling the Earth and exploiting each other just to stay above water.