EVOLVING EXCHANGE MODELS FOR A SUSTAINABLE FUTURE
‘If we did not have money, no one would be poor.’ - Alex Georgiev In all the time and effort many people are spending in developing economic models to support collaborative sustainable change, it is interesting that few question the exchange model we use and how this affects social behaviour, as Bernard Lietaer, the co-creator of the Euro and Terra, has succinctly pointed out in his book ‘The Future of Money’1. Given the parameters and scope of a steady-state economy (SSE), I’d like to present what currency models would best support an SSE over ethical based governance, and where that would lead. It was after I interviewed three think tanks back to back advocating sustainable practices in industry that set the trigger off to find out where the fulcrum point is to achieve sustainable change. ‘Do you connect with each other and share knowledge about how to leverage practicing sustainability, across your sectors?’ ‘Oh, no. We offer a different package.’ I realised then it was the commodification of what we create, and the price for it, that affects progressive shifts to creating more sustainably, and the status in achieving this. As much as many enterprises look for sustainable solutions and the profit this can afford within the current money model, the eventual abundance of creating sustainably opposes the scarcity that money creates for profit to exist. David Graeber’s book ‘Debt: The First 5000 Years’2 effectively illustrates the journey of commodified exchange, and the power though violence that comes with it. Debt became an exchange in gratitude to an object of ownership. Similar to the cycles of competitive business and monetary crash cycles, I personally believe that civilisation cycles are due to the type of money we use more than any other cause. The advent of social entrepreneurship and more collaborative ways of exchange has brought an array of possible exchange solutions, usually based around usury, demurrage, or mutual credit. The purpose behind them can either be more as a commodity or promote sustainable change, but almost all aim to function within global money markets that, as Thomas Piketty suggests in his book ‘Capital in the Twenty-First Century’3, inherently is not sustainable and concentrates buying wealth, increasing inequality and social unrest. Capitalism, as we practice it, seems to contradict the intrinsic motivation we have to create. Richard Ryan’s work Self-Determination Theory,4 eloquently communicated through the presentations by Dan Pink, demonstrates that we are far more empowered within an environment that values our creative autonomy over mechanical systems that demand being motivated by reward. We are far more productive and happily express our autonomy and give our purpose through mastery than be reduced to tasks that restrict us, yet accept to do for a price. Consequently, any currency design must not only leverage sustainable innovation, but also be a vehicle to empower to create the highest quality without wasting people’s time and Earth’s resources, as current knowledge allows. No doubt this is going to open a few questions to definitions of capitalism, quality, and sustainability. Free-markets are not solely within a capitalist system. Investopedia defines capitalism as ‘an economic system based on ownership of the factors of production’5 whereas a free market is solely based ‘on demand and supply [where] a buyer and a seller transact freely only when they voluntarily agree on the price of a good or a service’5. it seems that free markets and laissez-faire have a volatile history, hence labouring on governance. However, I believe is the exchange model we use that affects how constructive, or not, they are, and any governance to empower them. Quality certainly can be different to different people, the focus being how valuable an experience is for those choosing to participate in it. However, how well such quality is created is a universal asset: that it has an audience of both participants and creators, valuing time and resources in the most sustainable way possible. Sustainability is also perceived to be different for different people, arguably around the intersection of economic, social, and environmental factors, depending on what one wishes to achieve. Again, the foundation of any creative excellence is the social and environmental connections created: circular economic practices, wellbeing, bespoke manufacture, unlimited knowledge sharing o leverage time and resources in the most effective way. So, however anyone can prioritise sustaining a finance market, valuing ecology is inescapable. There is a lot of movement in looking for solutions within the current economic framework: micro lending, social enterprises, not-for-profits, philanthropy, management of the commons, and universal basic income (UBI), all working with flows in valuing social return of investment (SROI), energy returned on energy invested (EROI), and natural capital, connecting these to profit. Discussions focus on governance over markets, believing that ethics is the only way forward for a worthwhile solution. Deciding quantitative values for global impact at such a scale is excruciatingly difficult and forestalls other, more productive avenues of change. An example, the Accountability Institute6 in Melbourne is looking at how to expand double entry accounting into a quantified system of accountability. They look at a six column balance sheet, for money, social good, and environmental support. Their continuing stumbling block is not only what amounts to value social and ecological resources, but that, ultimately, this reduces them back into monetary figures which only reinforces the accounting method they want to avoid. The energy spent looking at solutions that subordinate sustainability is the same when arguing if climate change is real or not. The point is it doesn’t excuse compromising people or Earth. Not a very good return of investment for time spent, yet we keep doing it. Tim Kesser’s work ‘The Dark Side of Materialism’7 validates the see-saw argument between extrinsic status through money versus intrinsic reward creating sustainably. Trying to find sustainable solutions within a monetary model that doesn’t want one wastes a lot of time and energy. Why should enterprises that value community and resources sacrifice time and profit, and vice vera? Even the startup explosion, as creative as it appears, value themselves more for valuation and exit over any sustainable long-term affects that change the game. We accept that failure is a learning curve, but does it need to happen in such a competitive market that leads to so much wasted effort? Automated production and intelligence is also changing the longevity of the work cycle as we know it. Less people can find work, leading to less people being able to buy it, regardless of how efficiently it is made. Renewable energy is a great case in point. It is becoming increasingly cheap to create abundant electrical energy with the work of Elon Musk, with buildings not even needing to go on-grid for their energy needs, that the price is falling, but the exchange market we use does not allow these innovations to take hold. Instead, some governments are taxing those using solar energy to stop the regression of the fossil market.8 The fossil fuel industry can’t compete, instead corrupting governance, and therefore the environment, for money. These foundations are important to establish what purpose a currency has and the parameters to achieve them. With so many currencies with so many different nuances, more around glorifying currency as commodity over being a unit of exchange, it’s important to have a strong brief to work from. I do not believe nothing is of higher value than driving sustainable innovation, in the full meaning of the word, so lets look at what parameters a currency, or currencies should have to achieve that. Deciding basic parameters for worthwhile currencies is much simpler than currency designers make it out to be. Contemporary designers follow similar parameters to current fiat currency, as variations of this are familiar to people and easier to implement. Small steps of empowerment are simpler to accept, as and support the governing structure almost everyone is used to. The sad reality is they do not change very much, and limit their scope of acceptance. How many times have you heard that alternate currencies can only work in small communities and that we need different currencies for different communities if they are going to work. This focuses on communities, countries, political parties, like corporations. Not people. Behind all entities are people, so design a currency that empowers all people, and the rest follows accordingly. People mistake money being wealth itself. It isn’t. It is an exchange mechanism for wealth: this being all that we create. Therefore, the total amount of money that exists at any one time must reference what is actually created. As money is a service to exchange wealth, money itself should not have a cost to use. Consequently, any currency that has usury or demurrage is then less than suitable. Both also demand some kind of tax to be employed, supporting governance and oversight, assuming that these are required for larger community projects, and not cheating the system. History has shown how maligned and energy sapping centralised governance can be, especially around projects they support, irrespective of communities’ opinions. Direct democracy offers a lot more flexibility, but so few governments apply it, drawn more to the power of wealth in governance, at the expense of the people; again why the exchange model employed is so fundamentally important. That money has no cost does not mean there is no debt, but there is no cost on the debt. The world has and still is experiencing the consequences of usury exchange models. Inequality, debt dependence, abundant creation but scarce distribution. It is killing cultural diversity and sustainable innovation. It’s interesting that usury is now defined as ‘the lending or practice of lending money at an exorbitant interest6’ when historically it was any ‘interest paid for the use of money’. That implies that any other type of currency is not plausible. Most dutifully accept this, blaming the lack of moral code business has rather than the currency we use that business invariably uses to support itself. Demurrage has different issues. It is a great mechanism to value creating something and spending over saving, and can be made stable through the currency devaluation being paid to government or written off completely. It can also leverage full employment. The demurrage currency used in Wörgl, Austria, nearing the end of The Great Depression is an excellent example of the effect demurrage currencies have. While the world was screaming nonsensically for jobs, Mayor Michael Unterguggenberger empowered the community by creating ‘Certified Compensation Bills’9 as a means of fulfilling badly needed public works, and the support industries for that, or lose value in what they earned. It was so successful that other communities were about to set up they own before the Austrian National Bank outlawed it across the country. Crypto-currencies have exponentially grown the currency commodities market since the launch of Bitcoin (BTC) in 31 October 2008, with more than 700 in existence and counting. They are unique as effective alternate units of exchange, such as Ripple or Stellar, or just prized elite possessions, like 42Coin. Most are the epitome of the speculative currency market, potentially inviting everyone to create their own illusory value; an argument in itself for just having one currency. It is the parameters of that one currency to either support the people, or not, that make all the difference. Blockchains are being used to drive trustless transactions, but this is hardly human, let alone possible. Instead, it would be better to develop blockchains to promote more trustful exchanges, which value what is being exchanged with respect more than forced obligation. This in itself would resolve so many conflicts. Bitcoin is an ingenious phenomenon. Of course, in the short-term, it is considered a commodity currency like almost every other, but forecasting its long term game offers a different picture. What would happen to the velocity of money, and pricing, if everyone used Bitcoin? Bitcoin perpetually deflates because it has an absolute volume limit: 21 million. It is set to hit this at around 2140. Its diseconomy of scale, meaning using resources to mine Bitcoin becoming redundant, is expected to hit within the next decade. As this infection point approaches, there is less need for infrastructure, nor desire to charge a fee for mining, as it restricts the money supply. Either way, the volume of currency is depleting anyway as people use the blockchain for other purposes such as smart contracts. Even if Bitcoin was solely used for transactions, prices would perpetually fall to keep it in circulation. How it flows becomes dependent on population numbers. Even if the population reduces, differences in pricing narrow and stabilise to keep it in flow. Supporters of Bitcoin, who predominantly see it as a commodity, are looking at splitting the coin to increase its volume as it’s infrastructure is so big. Instead, we could look at the other message that it is trying to tell us: that the price mechanism can never value quality, and that all quantitative currencies are inherently redundant. What is so captivating is that Bitcoin hedged the commodities market to build infrastructure to run itself to the point of illustrating its irrelevance. I do not think this endgame escaped the designer, whoever that may be. It took Sardex10 six years of trial and error to discover that the best currency is one that has no costs. A mutual credit model founded in Sardinia, it is created only by work, or the promise and completion of work. It is loaned without interest, but is paid back in full. Most importantly, while it is valued 1:1 with the Euro, they are not exchangeable for it. The local government once asked for a line of credit but knowing that the government would never pay it back, refused. As a complementary currency, its primarily based on trading surplus, but is not limited to this and can work independently at a larger scale. People trade with the same diversity of pricing as that of the Euro, but as its acceptance increases across all exchanges, the pricing difference between services narrows to keep exchange, and your reputation, in flow, stabilising pricing, therefore the currency. While there is more of an emphasis in creating sustainably, what it may lack is the competitive game to really drive status in that. This is where fully qualitative currencies come into their own. We have and always will value reputation as a true, unlimited, resource, but have failed to find an exchange model to match that. Collaborative economy supporters who support reputation, such as Rachel Botsman in her book ‘Collaborative Consumption’ still connect sharing within the current money model we use now, as do many leveraging abundance, such as renowned motivators such as Anthony Robbins, Peter Diamandis, and John Demartini suggest. Clearly, it can’t, as money only has value in its scarcity. As a currency, reputation is unlimited, decentralised, has no cost, and based on all work produced. And the only exchange model that truly supports reputation in creating customised sustainable experiences, that are possibly automated, on demand, is gifting. Gifting games sustainability. It flips status from a destructive competitive money game totally over to a constructive collaborative qualitative one. There is still a competition of ideas, but status demands connecting these together, sharing knowledge, transparency, creating highest quality with minimal resources in the shortest time, excellence without limitations to price. Resources are not wasted making less than the best. That is sustainable abundance. Instead of searching for funding to buy people to fulfil projects, it is about finding those who see the value of what you wish to create, all choosing to give their time and resources to make it happen, and gifting it, as you will. As everyone is doing this, the ROI of gifting far surpasses that of money, and totally supports and expresses our intrinsic need to create, and be respected for that. Open source platforms like Wikipedia and GitHub are perfect examples of how empowering creating, and gifting it, can be. Timebanking Australia have also discovered that people earning time are gifting their time amounts to other people to further support causes they already would support without time currency. Gifting also totally supports a free market that requires little governance as there is no status compromising sustainability. Protecting ownership of resources becomes redundant, as does wasting resources for civil action. Colin Turner’s book Into the Open Economy holds that the majority of social, economic and environmental problems are caused by the limitations of the market system, and that honouring reputation is a far more inspiring way of awarding excellence. To fully realise the empowerment of gifting will take some time to get used to, but a stable free one offers an effective transition. Positive Money UK, founded by Ben Dyson, advocates what a non-fractional, usury-free currency can achieve. It proposes stabilising the economy, reduces inequality, can support qualitative change, and free-market choices, what SSE advocates want to achieve, as well as direct democracy over governing controls. What is not apparent is its incentive to gain status in gaming sustainably and any onslaught of automated production. Still it is a long way forward from where we are now, and does help refocus wealth towards more qualitative, collaborative frameworks, whatever those experiences turn out to be. We are not always rational and hang onto fears and beliefs that contain us for so long. Whatever the logic and benefits of changing to a qualitative exchange currency, what is most important is that people feel safe and empowered to change, supported to accept the challenges ahead, and not be held back by misconceptions, inevitability, or delusion, for change to happen. 3 http://www.investopedia.com/ask/answers/042215/what-difference-between-capitalist-system-and-free-market-system.asp
4 www.theaccountabilityinstitute.net 5 https://www.youtube.com/watch?v=oGab38pKscw 6 http://www.dictionary.com/browse/usury 7 https://realcurrencies.wordpress.com/2012/07/02/the-power-of-demurrage-the-worgl-phenomenon/ 8 9 10 http://www.sardex.net/en/
This is our future.
