The Need for a True and Moral Economy

(A Primer, by Catherine Davis, concerned citizen) 1. INTRODUCTION

1.1. An economy may be defined as the careful, correct, effective and conservative use and management of resources to avoid unnecessary expenditure or waste. Todays core economy is widely considered to be the market or capitalistic economy. Ironically (and disturbingly) however, the market economy is anything but sustainable1. The following explains a few reasons why. 2. MARKET ECONOMIES, AND DEBT

2.1. Market economies are built on money. This wouldn't be a problem, but for the fact that the money system in its current form only survives by keeping people in debt, and debt restricts peoples happiness and freedom. Why is money debt-based? The debt-based money system2 2.2. We have a fractional reserve banking system which basically creates money out of NOTHING! For example: a. b. c. d. e. Customer A deposits $100 in a bank. That bank lends 90% (or $90) to Customer B, keeping 10% (0r $10) in reserve. Customer B takes that $90 and deposits it in a bank. Now theres $190 where there used to be $100. That bank lends out 90% of that $90 ($81) out to Customer C. Customer C deposits their $81 with a bank, which then lends out 90% to Customer D, and so on and so forthuntil money ends up being multiplied between ten and a hundred times more than the original $100 amount deposited.

2.3. In other words, this illustrates that the vast majority of money is just numbers on computers, created out of thin air, which is often loaned to us as debt but at a cost (fees and interest). Less than 1% of the money in circulation is actual notes and coins. The rest is digits on a computer screen representing customer savings or (and more importantly) debt (e.g. mortgages/ loaned credit). Keeping a critical mass of people and business in debt through loans is what the money system is built on. Even entire countries can borrow money to cover
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See Edgar Cahn in Building the Core Economy, at http://www.youtube.com/watch?v=4deABsB3TBU . http://www.doingitourselves.org/what-economic-crisis-really-means-and-what-we-can-do-about-it (includes animation video).
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their debts (the United States for example owes over $14 trillion)! Total world debt (money owed banks, investors and to other countries) is roughly $150 trillion. The world is basically bankrupt to itself. 2.4. Loans increase the amount of money in the economy, which fuels economic growth, jobs and such thereby providing the means to pay back our debts - with interest, of course! But this system only functions so long as people are kept in debt ever-expanding debt. To keep the economy expanding, and to keep people consuming, people and businesses must be able to take out more loans/credit. Should that system be interrupted, the whole system collapses, resulting in recession and depression. Recession / Depression 2.5. The cause behind the effect of recessions and / or depressions can be complex, and have many contributing factors depending on the situation. While this often makes it hard to predict exactly how and when recessions/ depressions will appear, history tells us they are an inevitable feature of the debt-based money system. For example: a. Customers (whether individuals, businesses or countries) take out loans they cant re-pay, such as mortgages. Once a threshold of customers default on their loans, the banks struggle to maintain sufficient funds / reserves3 for use by other customers (e.g. those who want to access their savings, want loans to expand their business activities, etc). Because these other customers cant access funds, these customers struggle to pay their bills once a threshold of actors in the marketplace cant pay their bills, the economy starts contracting. i. One example of how people get into financial trouble is what happened in the United States, where the Government made it more affordable for people to take out a home mortgage, increasing the housing demand. Initially, people could afford to make their mortgage repayments. At the same time the housing supply couldnt keep up with the housing boom demand created, and this sent house prices skyrocketing up. This attracted the interest of speculators: investors gave banks more money to loan as mortgages thinking the customers repayments were a safe way to get returns. Simultaneously, banks were greedily loaning out invented money (i.e. that didnt really exist)4 without keeping enough actual money in reserve AND to people who really couldn't afford to finance their loans. Then, people started defaulting on their loans, and it got to the point that the banks took back ownership of the homes for mortgagee sales to recover their

3 4

See fractional reserve explanation above at para 2.2. See fractional reserve explanation above at para 2.2.

money. This resulted in a flood/ oversupply of mortgagee sales in the marketplace sending house prices back down again. The decline in home value meant banks recovered less from mortgagee sales, and combined with increasing loan defaults and having little in reserve to begin with, banks found they didnt have enough to pay their investors. Banks themselves had to declare bankruptcy affecting investors and economies world-wide. b. When banks dont leave enough actual money in reserve, they lend out less which decreases the amount of money in the economy, and less money to buy goods and services. This leads to a fall in prices, which can lead to less business profits, less money in circulation, less savings, less in the bankand the vicious cycle starts over again. How is it customers who cant afford to finance a loan in the first place are none the less able to take them out? Often its because: i. banks get too greedy and over-extend their capacity: they give out loans on too high a fractional basis (not leaving enough in reserve). Governments (often under pressure from the Bankers themselves) dont regulate banking sufficiently to protect against risky and greedy fractional reserve practices.

c.

ii.

d.

Business production is interrupted, e.g. when a key resource becomes scarce or more expensive (such as oil) it forces businesses to take action to maintain their profit levels or simply stay viable such as cutting costs (like firing staff) or increasing the price of their products/services. Ensuing unemployment means people cant pay their bills (see a. above), and increased prices has an on-flow effect of increasing the cost of production of other goods/ services, thereby maintaining a vicious cycle of high unemployment and high prices for necessities.

2.6. These sorts of cause-effect phenomena are what happened during the great depression, and it's what's going on now. In such a scenario, the Government often uses hard-earned taxpayer money to bail out failed investments, companies and their Executives. This is done in an effort to keep the economy going using the same broke (literally!) money system that caused the systemic failure in the first place: and which will certainly fail again in the future. Sometimes Governments might also create more money and put that into circulation to keep the economy afloat. However, such currency mostly goes straight into paying down debts as the first priority rather than where its needed to help ease human suffering. This is why our economies have only barely recovered since 2008. The truth is, however, all such recovery measures are ultimately as useful as moving the deckchairs around on the Titanic. The problem is the Titanic: we need a new economic vehicle one based on strong social and ethical economic values.

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MARKET ECONOMIES, AND WASTE

3.1. As explained above, todays economies must be ever expanding and growing if theyre to survive. This means consumers have to buy stuff. More and more stuff. To facilitate this, obsolescence is systematically built into product manufacturing. This means goods are made to break down within a certain time. In other words, things arent made to last. This forces consumers to buy more stuff more often, which leads to an appalling and unnecessary waste of natural resources. 4. MARKET ECONOMIES, AND ENDLESS GROWTH

4.1. The problem with the economys need for endless expansion should be painfully obvious. Yet, it seems people still are not prepared to acknowledge this one simple fact: on a planet with finite resources, nothing can continue expanding forever, everything has its limit, including the economy. Example: a functioning market economy is largely dependent on access to cheap natural resources, such as oil, for the ever-increasing production of stuff to sell to consumers. However, as resource extraction gets harder that resource becomes more scarce its running out.5 And oil is needed for pretty much everything in our everyday life. Other resources like natural gas, minerals even clean water are becoming more scarce. So those who advocate economies based on endless expansion in a finite environment are simply insane. The very notion of such sustainable growth is an oxymoron. Such growth never has and never will be sustainable. 5. MARKET ECONOMIES, AND PROFIT MOTIVATIONS

5.1. Although there are other motivating factors, the first order of businesses in the marketplace is generally speaking to stay financially viable. The problem is with the overwhelming number of businesses most notably but not limited to giant Corporations - who are ruthless in their pursuit of profit. This leads to decision-making and behaviours which in turn produce unacceptably destructive and even pathological results. For a more detailed discussion, see (among other sources) the DVD The Corporation (2006).6 6. MARKET ECONOMIES, AND SCARCITY

6.1. We talked above about how things that are scarce (i.e. in big demand but in short supply) have a higher value in a market economy. Conversely, things in abundance that are easy to come by arent valued. This means that things like family relationships, friends, neighbours,
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And the more scarce, the more expensive it is. It used to cost one barrel of oil to get about 100 barrels of oil out of the ground. Now one barrel only returns 10 barrels, and declining. 6 At www.thecorporation.com. See also http://www.scribd.com/doc/112293708/The-Place-of-Corporations-in-aNew-Constitution-For-Aotearoa.

social networks, community, civil society, love, caring, generosity, clean air, clean water, fertile landall those things are de-valued in a market economy. People are taught not to value or take care of them (which perversely leads to them ultimately becoming scarce and therefore potentially economically valuable!). But, they have an inherent value as being central to human spiritual, social, cultural or environmental wellbeing: These are the things responsible for raising children; making neighbourhoods safe; holding politicians, government officials and leaders accountable; ensuring social justice; protecting the natural environment. So when the market economy teaches us such things are of no value, we tend not to practice or nurture those things that are critical to sustaining life itself, resulting in todays disintegration of society, increasing social ills, and the degradation of the environment. 7. THE SOLUTION: A NEW CORE ECONOMY

7.1. Some have described working for money and surviving in this debtbased money system as basically a form of paid slavery to the 1% of people who hold most of the planets wealth and power. Those 1%, big businesses, Governments (who are just puppets for big business) and the media are deliberately avoiding these issues, hoping to keep the masses/ 99% placated so the status quo can continue to serve them a little bit longer. As things worsen, governments are likely to prioritise saving themselves, for example by raising taxes and cutting spending on primary sectors such as health and education, rather than fixing the core problem. How can we liberate ourselves and experience a more dignified, meaningful life for ourselves today, and for our tamariki mokopuna in the future? More fundamentally, its actually a question of survival. 7.2. We have to create a new core economy, a new measure for value other than monetary price; one that is based in ethics (and for me, tikanga Mori would be a great starting point!) not the values of the marketplace; based on values that support not restrain the pursuit of meaningful human life; on valuing civic, caring, social, environmental and cultural contributions of human beings. But how will that creation happen? Whats our strategy? A Change of Conscious Awareness Step 1: Responsibility 7.3. I suggest that the solution for change has many parts. First, as with any addict who is finally taking responsibility, we need embrace and accept the reality and truth of our situation. We need to own it as ours. Stop denying that it exists! 7.4. I find it interesting to observe the bigger picture that many of our social ills today are inextricably linked to a failure (to some nature and degree) to take responsibility: whether at a micro level with an

individual who refuses to acknowledge their personal contribution to the state of their own ill-health, or at a macro level where the media as an industry mis-represents a story to the public. This is not to condemn others: blaming is not constructive and often leads to more resistance, defensive behaviour and denial. It must also be recognised that people whether individuals or collectives are doing the best they can with the consciousness that they have. So we need to recognise that people are where they are consciously, meet them where they are, and codesign solutions to suit. Rather than blaming, its about noticing whats happening so that we have a point of contrast for its opposite that we wish to create: something else that is in our best and highest interests. Step 2: Right / Constructive Thinking 7.5. Then, we need to recognise that to design a way out means having the right answers; and to arrive at the right answers we need to ask ourselves the right questions. Pertinent questions, based in right thinking. By this I mean thinking which is sourced not just from robust critical intellectual analysis using our physical perceptions and thinking faculties, but also (and more importantly) from an awareness of and faith in who we are essentially are as Beings on Earth: He tangata, He Atua! He tangata, He Atua! (as Dr. Rose Pere would say). We are spirit first, and physical beings second. We are God / the Divine/ Universal Consciousness/ Infinite Creative Source Energy (whatever we wish to label it as) manifested in human form - and as such we are also Creators. We were very aware to this truth in ages past, but have become asleep to it in these more civilised times (so-called). 7.6. Einstein once said something along the lines of a problem cant be fixed with the same mind or thinking that created it. And weve often heard the phrase, to continue the same behaviour and yet expect different results is insanity. I would add that you could substitute thinking for the word behaviour and that statement would also hold true. Probably, even more so, as both ancient teachings and science now definitively agree that everything is created twice: first, in the mind/ consciousness, and second through physical action. Step 3: Action! 7.7. So critical, constructive thinking is hugely important, but action is still required. The people / citizens must act, and act now, if we are to turn things around and create a secure and harmonious world. We can all take some kind of action. It wont all be big action necessarily, and neither should we expect everyone to take big action or even the same action, because were all different and have differing capacities to act. 7.8. A good place to start is by raising your own level of awareness by doing your own research. There are many good sources of freely-available information these days in libraries, on the internet. And the great thing

is, many have already done the hard yards for you! There is lots of material out there that summarises the issues so YOU DONT HAVE TO! 7.9. There are also many groups of like-minded people, social-justice and social transformation movements that you can join. These are great for providing an environment and community of strength and support while you (and your community, if want) are on your journey of discovery.7 7.10. In the meantime, here are a few tangible ideas to get you started: a. b. c. d. Realise that less competing with others and more creating and collaborating with others is the key to a thriving community. Build food, energy, water, knowledge, health, social and other securities necessary for a fulfilling life in your community. Work shorter hours for money. This will free up time to dedicate to other parts of your strategy. Establish and support local currencies that are more equitable (not debt-based) and stable (not tied to whats happening on the international market). At the same time look for ways to change your lifestyle so that you and your home environment are more energy-efficient (i.e. less energy to run systems, more energy output e.g. passive solar heating in homes so less energy required to heat them; or eating healthy foods that will sustain you and your environment). Grow your own food. Ideally, this would be done: i. in an interdependent environment, e.g. where whnau support whnau with their own crops, or whnau contribute to a community garden/s. using permacultural and organic technologies which are more in tune with natures ways and rhythms.

e.

f.

ii. g. h.

Manage your own health naturally. Spend more time with like-minded family and friends to strengthen social relationships, support one another in your journey, transmit valuable intergenerational knowledge. Lobby your whanau, hap and iwi authorities to seriously put this on their business Agenda!

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ENDS

For example, http://www.transitiontowns.org.nz/, http://www.thrivemovement.com/, http://www.thezeitgeistmovement.com/, http://www.occupytogether.org/.