by David Orrell
This type of economic interaction could historically be found everywhere—and seems to be in direct contravention to the market economy and the assumptions of mainstream economics (what would rational economic man think?).34 Furthermore, there are spaces of overlap that were long considered a realm of the work-for-pay economy only to be invaded by people expecting other than a monetary reward. The online world, in particular, seems to encourage this type of interaction. Famous examples include Wikipedia, where people write and edit articles for no compensation; designs for 3D printing and the “maker” community; and open-source software that is used by organizations from NASA to Google to Bitcoin. The Internet itself runs largely on open-source code, as do components of smartphones. Those who pitch in cite “learning, working with interesting people, or satisfying an itch” and other nonmonetary rewards such as peer recognition as their primary motivations.35 The work might be unpaid, but its economic impact is significant. In Europe alone, programmer Carlo Daffara argues, open-source software lowers costs and increases efficiency by €116 billion a year.36
Open-source code is often issued under a general public license (GPL), which was invented in 1980s by the hacker-activist Richard Stallman. He called the GPL a copyleft law, because in many respects it is the opposite of copyright: instead of asserting the right to exclusive use, it asserts that the resource must remain in the digital commons, freely available to all under certain conditions (e.g., any program that incorporates the code must also be GPL). People can therefore contribute to the community without worrying that their ideas are going to be appropriated by a corporation. The legal framework was later emulated by Creative Commons licenses, which are used by artists, writers, and other creative types to similarly protect (or keep unprotected) their output, and in academia by open-access online journals that subvert the expensive publication model favored by established academic publishers (which is fitting since universities were created in the Middle Ages as a way to keep knowledge a common shared resource). As the author and commons activist David Bollier notes, “Among the ‘born digital’ generation, many conventional ideas about private property rights—the exclusivity of control, commercial motives and indifference to the common good over the long term—seem decidedly old-fashioned, if not antisocial.”37 If the Romans (with later input from John Locke) gave us our customs of property laws and ownership, then the open-source community is showing us how to give stuff away. (Though open-source code is not really a human invention—the ultimate example is DNA, which has evolved precisely because it has been shared and tinkered with by countless organisms. About 8 percent of the human genome consists of recycled viral genes.)38
A research group set up by the government of Ecuador, for example, recently created a transition plan, known as FLOK (Free-Libre, Open Knowledge), which proposes to reinvent everything from agriculture to design to government along “principles that are the basic foundations of the internet: peer-to-peer collaboration and shared knowledge.”39 The aim is not to optimize GDP, but instead something closer to the indigenous people’s fuzzy concept of buen vivir (good living). Perhaps uncoincidentally, the same country was the first to produce its own purely digital currency. It is based on the U.S. dollar, which is the country’s present currency, but some see it as presenting a possible route out of dollarization.40
The gift economy, together with shared stewardship of common areas such as the Internet, can therefore produce something that yields monetary value or, better yet, something that has a real value for the economy and by extension society. The reason why it is not expressed in those terms very often is that doing so would involve a switch from social norms to market norms, which is what is being avoided. Monetizing something means putting a number on it, a process actively resisted by many of the most important things in life (such as life itself, the ultimate gift). And when something is a gift, the usual principles of economics and commerce simply don’t apply. In the past, economic growth has come in part from bringing into the money economy resources previously shared for free or services such as housework or caring for the young or the old. Growing the gift economy means putting this process into reverse—the numbers look bad, but the end result might be a happier or at least more connected and resilient society.
Sharing
The growth in giving has been equaled by the growth in sharing. Be it schemes focused on transportation (Uber), accommodation (Airbnb), or finance (Kickstarter), they all have two things in common: first, the premise that the person next door can be as good a driver/host/banker as a professional with an official stamp; and second, the premise that technologies, rather than top-down regulation, can guarantee that those who do not deliver shall be quickly identified by the constant flow of consumer reviews and shortly thereafter excluded by the resulting lack of demand for their services.
The primary motivation for using or providing such services still appears to be about saving or making money, with the biggest profits made by the companies running them.41 On Facebook, for example, you share the details of your life with friends, but also with Facebook, Inc., whose lead underwriters for its 2012 initial public offering were those seasoned power brokers Morgan Stanley, JP Morgan, and Goldman Sachs. At the time of this writing, similar IPOs are anticipated for Uber and Airbnb. However, other models are also possible.
Tool libraries, for example, have been around in the United States since 1970s, but the idea took off after the success of the West Seattle Tool Library (founded in 2009) gained media attention. Now more than seventy cities in North America and others around the world, have similar libraries. The emphasis is on borrowing things such as power tools but some also offer workspaces fitted out with equipment such as laser cutters and 3D printers. The Toronto Tool Library, for example, offers access to more than 3,000 tools for $50 per year. Or in exchange for three shifts per week, workers gain 24/7 access to the facilities. According to its founders, Ryan Dyment and Lawrence Alvarez, the aim of the project is not just about tools but about engineering a change in “cultural consciousness”—a kind of mental retooling that will change our perception of ownership, remove barriers to access, and get us out of our single-use mentality, which is “disrespectful to the resources.”42 The boxer Floyd Mayweather Jr. is said to wear his shoes only once, and we often treat tools the same way (also books, which is why we have book libraries). Scarcity is often self-imposed or artificially created by corporations and can be circumvented with different organizational structures, which by making better use of resources reduce the burden on the environment. Whether the structure is peer-to-peer or centralized, or how fees are handled, is in a sense secondary to this end result.
It is no coincidence that most of these companies and organizations started in the years following the financial crisis (Airbnb was founded in 2008, Uber and Kickstarter in 2009) and were embraced by a generation whose neo-thrifty attitudes—especially an interest in using rather than owning—were shaped by that crisis; and whose environmental concerns were shaped by worries over climate change. Again, of course, according to conventional metrics, all of this sharing is bad for the economy, because it will reduce jobs in areas such as tool manufacturing. And if users don’t need to buy and own tools, they might work less hard themselves. But this just highlights the inappropriateness of our current economic model. It makes as much sense as saying that the creatures in the rain forest should stop sharing the trees because it is making things too easy.
The sharing economy and the cybercurrency movement are based on a shared ethos: there is a synergy between the idea of sharing tools and Ethereum’s idea of sharing computer storage space. And they point toward a system in which money plays a smaller role, with the Internet taking over the task of matching users—thus solving the problem of William Stanley Jevons’s “double coincidence of wants”—and online reputation emerging as a new kind of social currency. Of course, gift and sharing economies have their shadow side—they’re not utopian—especially when they grow up in
the cracks of a failing, distorted economy. In Venezuela, for example, there is a thriving “gift” economy. Price controls mean that many critical goods, from foods to drugs, are set at artificially low prices by the state. Instead of selling items at these prices, shopkeepers prefer to keep the goods for certain clients who will in turn reward them with favors. The system resembles the graft networks, known as blat, in the former Soviet Union. The need for money is therefore replaced by the need for connections, which in many respects seems even less fair.43
Even in rich countries where corruption might be low, unpaid interns and many authors and artists contribute their work in the hope that it will give them experience or exposure, though they would probably prefer a paycheck. Academics rightly celebrate their own gift economy of sharing research, but only because their universities reward them with salary, merit points, and tenure. Robert Reich, meanwhile, argues that work-on-demand services such as Uber and Airbnb are “hurtling us backwards” to the nineteenth century: a world without basic protections for laborers, where many tasks are automated and “human beings do the work that’s unpredictable—odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours—and patch together barely enough to live on.”44 It is often said that “markets loathe uncertainty,” as if they are delicate flowers that must be left undisturbed so they can get on with their important job of optimizing utility, but they seem to have a knack for producing uncertainty. Gift and sharing economies will work only if they are honored rather than exploited—if our sense of community is itself treated as a commons rather than yet another area to be colonized by number.
Going Medieval
Perhaps the best way forward, in monetary terms rather than social organization, is in fact to reach backward—not to the nineteenth century, but even further, a thousand years back. Few people today would want to give up the incredible developments in technology and living standards of the past few centuries. But in a search for new monetary ideas, much can be learned from the last era when virtual currencies were in the ascendant phase, the High Middle Ages of the eleventh to thirteenth centuries, before finance was Medicified.
While neoclassical economics was developed by idealists who had a vision of a good society, one of the more notable features of both modern capitalism and economic theory to have made itself evident by its absence during the GFC was any sense of right and wrong, of good and evil.45 Economic theory teaches that market price measures intrinsic value, which itself is a measure of utility. As economists M. Neil Browne and J. Kevin Quinn note, “Economists distinctly do not question the moral worth of market prices and wages.”46 According to Sedláček, mainstream economics has neglected ethics to the point where “it is almost heretical to even talk about it.”47 Instead, this subject was outsourced to the invisible hand of the markets.
As we have seen, though, while money is a tool for setting numerical prices in the market, the relationship it produces between exact price and fuzzy value is uncertain, unstable, and often misleading. The idea that the market knows best, or that maximizing profit is the same as doing “God’s work” in Lloyd Blankfein’s phrase, is very far from the view that prevailed in the Middle Ages, with its concept of the just price. The idea that the state—and everyone else—must borrow its own money at interest stands in marked contrast to medieval ideas about usury. The idea that the economy has to continuously grow would have been equally foreign.
Our aim is certainly not to romanticize the High Middle Ages or sell it as a utopian vision—and few would want to see an economy based on undernourished and disease-prone serfs doing digital piecework, where what counts is social standing and control of land (though that sometimes seems to be the way we are heading). But the comparison does point the way to a monetary system that would address issues such as limits to growth, economic inequality, and societal happiness and resilience.
By harnessing the powers of virtual currencies and the extraordinary wave of invention overtaking finance, we can realign the basic incentives of our monetary system away from an exclusive focus on short-term profit. Seignorage earned on national and regional currencies can be recycled back to the state rather than being sequestered by private banks (the Medicis of our day). Alternative currencies will play an important complementary role, and local currencies can help align money with the needs of a community. Currencies with negative interest rates, appropriately used, will both discourage hoarding, and—by not discounting the future—encourage long-term thinking. We also need imaginative strategies—such as basic income–style cash handouts or restrictions on lending—to tackle the mounting debt whose charge hangs over every region of the world economy, holding us in awe and fear of its next unpredictable lightning strike (given the mathematical tendency of unpaid debts to climb toward infinity, one suspects that debt write-offs will also be involved at some stage). A first step is to come out of denial about the true nature of our current virtual money system, with its easy money creation and gold standard debt collection.
At the same time, we can reinvigorate the idea of a commons and fight back against the modern enclosure of land, water, and even our thought processes by corporate interests (then the commons were reserved for grazing animals, now we need some unbranded space for our minds to wander). We can reduce the size of the financial sector, so that it no longer dominates the flow of money in the economy. Perhaps a modern version of caritas will even emerge as a nonmonetary measure of personal and societal worth. In this context, a shrinking GDP would by no means be a disaster if it represents a kind of reclaiming of space from the money economy.
Money Is the Message
Faced with worries over resource shortages, environmental disaster, extreme wealth inequality, out-of-control debt, mass unemployment, and so on, it is easy to be pessimistic about the future—especially since we have borrowed so much from it already in both financial and environmental terms. However, these problems are in many respects the product of our old money system, and its associated ideology, which say that numbers accurately reflect value, that debt is just a neutral transfer from one group of people to another, and that money is inert. We live in a time of change when, having been trained to equate value with scarcity, we perceive everything as being scarce, except for information—and information is the most precious commodity of all. If we are worried that computers and robots are going to remove the need for work, it only shows how perverse economic incentives have become—and how urgently we need to embrace the new paradigm that is emerging in piecemeal fashion from the tremors of the Nixon shock and the later financial crises. Some of the most interesting developments will take place in the areas that are least well-served by our conventional money system, where the gap between number and value is the greatest.
While it is impossible to predict how currencies and the economy itself will evolve, here are some thoughts based on general trends that we expect to continue:
• We will have a range of overlapping currencies, on a local, national, regional, and global scale. Some moneys will be state managed, others corporate or open source. Some will be open, so switching in or out will be fluid and easy; others will try to insulate themselves. Some, like Bitcoin, will be mostly pseudonymous; others, such as corporate currencies, will track information about users.
• The main spawning ground and incubator for alternative currencies and ideas about money will be the online, virtual economy. One outcome will be a “just price” for digital content, though it may not be measured in dollars.
• Online and mobile purchases will automatically incorporate a variety of reward schemes. Some of these will become so popular that they will serve as forms of money.
• Alternative currencies will eventually become a part of everyday life for most people, just as precious metal coins once were, with the difference that they will be held in a digital wallet rather than a leather purse.
• Money of any type will play a smaller role as the Int
ernet allows for a broader range of transactions, including sharing, gifting, and direct barter.
• An already nascent gift economy will emerge, where it is online reputation that opens doors and creates opportunities, rather than net worth.
• Monetary developments will be further accelerated by debt crises that force people, or countries, to adopt alternatives.
• The age of robotics, along with a basic income, will allow people more time to pursue nonmonetary goals.
• According to conventional measures, the economy’s metabolism—deprived of its heady levels of debt oxygen—will slow, but it will be more resilient.
• The emerging economy will be better placed to address issues such as climate change, inequality, and societal happiness than our current model.
• New theories of economics will develop that will put the dualistic, dynamic, and creative properties of money at their heart.
• Money will continue to be a source of human drama and tension, no matter what form it takes.
Although some aspects of this picture may sound radical, its components have been works in progress for decades. It is just that they have captured little attention, exactly because they don’t register as part of the normal economy. Creating a new cybercurrency or writing some open-source code does not boost GDP—it might even subtract from it by destroying someone’s business model. If Wikipedia were a company, it has been estimated that its market capitalization would be in the tens of billions of dollars—but it is not a company; instead it is something that prevents companies from making money by doing the same thing.48 Such projects represent a new type of organization in which money plays no role; another way to coordinate people and get them on the same page.
Our view of money has been shaped by a mainstream economic theory that—with its emphasis on principles such as stability, linearity, symmetry, unity, and rationality—conforms to an idea about what is good and beautiful that dates back to the Pythagoreans. It came into its own during the growth phase of the Industrial Age, but is now running out of room. The resulting breakdown in this mental monoculture, documented in chapter 7, is mirrored by a breakdown in the monoculture of mainstream currencies. Perhaps the greatest contribution of inventions such as Bitcoin is to present a new aesthetic, based (like a mature ecosystem) on decentralized networks rather than on linear hierarchy; a picture that makes our fool’s gold traditional currencies look corny and antiquated in comparison and opens our minds to unforeseen possibilities. Artists and writers may turn out to be as important as economists or scientists in reshaping our view of money.49
