This week, Lynne Twist’s comment about money really stopped me dead in my tracks:
We totally forgot that we invented it.
As more and more of our lives become financialised, it is hard to imagine a world beyond money. The price of everything is shoved into our faces in every direction. With NFT’s I’m pretty sure the sunrise will soon carry a price tag.
As Jacob Needleman says in Money and the meaning of Life; “we live in a world where we know the price of everything but the value of nothing.”
For something that is so pervasive, we are surprisingly uncritical about our understanding of and approach to money.
For a start, talking about money has become almost taboo. We hold the assumption that polite society doesn’t talk about money, or that somehow if you ask about the price, you cannot afford it.
The topic of Money carries a lot of shame, fear, and uncertainty. Which ends up keeping most people ignorant and holding onto false assumptions.
Inter-rest
Let’s take the origin of money. If you studied economics, you were taught that money was invented to solve a trading problem with barter economies. The story goes that I have fish and want shoes. The guy who sells shoes doesn’t want fish so I have a problem. Hey presto, money!
It is fungible, divisible, and transportable. A great store of value.
The only problem is, this story is a myth. If you move outside the confines of the hallowed halls of economics, anthropologists, archaeologists and sociologists will tell you this never happened.
As David Graeber describes in his book “Debt: the first 5000 years” – it would be totally illogical for our ancestors to operate that way.
Tribal and ancient societies build their economies on trust and abundance. As he describes, you knew the person you traded with and the kind of spot trades described in the economic fiction didn’t occur.
More likely you spoke to a neighbour and said, “Wow, I really like your sheep and need one to make a bag and feed my family.” “No problem,” the neighbour said and gave it to you.
Now you were in debt to your neighbour. And that’s a good thing.
Being a trust-based economy, your neighbour could call on that debt, and the social pressure to recompense her for her generosity was enough to ensure you didn’t default.
Being a cheapskate, in other words, giving your neighbour a rabbit for the sheep made sure you quickly lost opportunities to trade in the village.
So “generosity and abundance” was the predominant paradigm.
Mercenary position
So where does money come from?
As Graeber discovered, the root of money is violence.
It’s a two step process. First things have to have a set price, and secondly you need a denominated coinage.
In a trust based society there was no need to have an accurate and enumerated currency of exchange. The picture changes when someone gets upset and violence enters the equation.
All ancient civilisations had a very comprehensive and specifically enumerated set of penalties and fines for doing harm to someone. If, in a fight for instance, you cut someone’s ear off, it had a certain price, killing two hens had a price, etc. Violence turns transactions into a numbers game.
He also notes that coinage was invented for, and used by, soldiers. Marauding armies could not build up credit systems based on trust, so they had to use pieces of gold and silver to settle their transactions.
Governments soon understood that physical money was a way to feed and finance their armies. The rest of the population didn’t need coins because they trusted each other and operated on credit.
In order to get the rest of the population to accept the pieces of gold and silver, the government introduced taxes, which had to be paid in the pieces of gold and silver used by the soldiers.
Governments in China, India, and the Middle East created markets for their currency by introducing taxes. Fundamentally, to feed their armies.
Current sea
Originally coins carried the images of deities and natural gods. Around the time of the roman empire, they started minting coins with the emperor. Man became god.
And now, money has become god.
We ascribe and assign many of the attributes that once belonged to gods, to money. It is all-pervasive. It creates and destroys. It is the source of abundance and great hardship.
We have fully adopted the mantra: Money makes the world go round.
Yet, as Lynne Twist said, we invented it! Which means, we also have the means to change the way it works for society.
As Adam Smith said, currency operates in a circulatory system. We use the language of hydraulics to talk about money. Pools of capital, cashflows and turbulence in the market.
We understand inherently that currency has its roots in currents, the flows of energy, attention, and connection which are at the root of our human experience. Yet money has turned this into a discreet, anonymous and disconnected, even disembodied phenomenon.
And if you look really closely it’s a complete fiction.
Fictional reserve banking
Money doesn’t exist until someone (an individual, a corporation, or the state) incurs a debt. When you go into a bank and ask for a loan, the bank doesn’t look in their vaults to see if they have €50 000 to give you. They type a few numbers into the computer, and presto, €50 000 that didn’t exist ten seconds ago, are suddenly conjured into existence.
When you pay off that debt, a few strokes of the keyboard, and the Euros cease to exist (or become retired in the technical language).
So modern money in some ways is finding its way back to the origins. A fluid, mutual securitization in trust. Money exists because of the promises we make to each other.
This realisation has led to numerous movements in the last years calling into question who has the authority to issue currency. In the same way, we are moving towards non-violent communication, is there an alternative to state-backed fiat money that can be non-violent money?
I’m not talking about Bitcoin and its copycats. In many ways they are simply too reactionary to the current paradigm to be revolutionary.
True shifts can only be achieved once we break free from the scarcity mindset.
Circular currencies
By reframing money as a limitless resource, Modern Monetary Theory (MMT) provides a new lens through which to view our relationship with money.
MMT argues that the state has no limit on the amount of money it can produce, so there should be no scarcity. As they have demonstarted during the pandemic, trillions can be conjured out of thin air to be spent on supporting people and businesses in need.
The key constraint for the MMT theorists is inflation, which occurs when money is taken out of productive circulation. In other words, when money gets hoarded. (or as we see with Bitcoin, becomes the object of speculation)
The fact that we have not seen inflation rise with all the stimulus in play, indicates that we are not close to productive capacity. Money is circulating and creating new value.
For me, the great thing about MMT is how it aligns money with the environmental and more specifically the regenerative mindset.
Ecological and social outcomes are part of the productive capacityof an economy.
This system of flow mirrors natural systems. Cells that hoard resources die. In fact, many diseases are caused by reducing cells’ ability to exchange vital nutrients and waste products.
Healthy pressence
By shifting our focus to the interactions of exchange, rather than the scope of accumulation, we can finally align the economy with what is valuable to the planet and her people.
We can build a regenerative economy on a set of principles that operate in the zero growth future because interest and speculation become the circulatory disease that can be exorcised.
Imagine a future where the health of the economy is defined by flow:hoarding ratios rather than debt:GDP ratios.
We can reintroduce pressence and the connectedness of the current moment to the currency of exchange.
Let’s take that leap!
Three key take-outs:
* ConnectionHow do you measure your currency? How do you understand and evaluate your connection to the flow of economic and social activity?
* FlowWhat is your Flow : Hoarding ratio? Are you generous with your accumilated experience, knowledge, insight and wealth? How do you stimulate a process of regeneration?
* ValueWhat is the currency you use to express your value? How do you measure the most valuable things in your life? Can you see yourself beyond the financialised modern mindset?
This week’s inspiration: Dollar Brand - the music you are about to hear, is only your inner ear.
