Money is generally understood as a means of exchange. In alternative contexts where the awakening of consciousness is known, it is common to understand money as an energy of exchange that has to do with our attitude of gratitude towards life and our mentality of abundance or scarcity.
But understanding money solely as an energy of exchange is a limited understanding.
In the post The amazing labyrinth of abundance I reflect deeply on this. Why should a child go hungry, because of his mentality of scarcity? Evidently that explanation is not sufficient. Nor is it enough to blame it all on the avarice and corruption of big corporations, politicians and businessmen: when you understand the economic system you realize that even if we were to eliminate all avarice and corruption the problem would remain.
Moreover, it goes without saying that many people today are fully convinced of their intention to adopt a mentality of abundance and gratitude towards life, yet that does not produce the expected result in terms of money flow. Rather, those who do well with money are in general those who adapt well to the conventional economic system (such as Elsie Abundance in the post Marriage between Abundance and Sufficiency).
In reality, money, more than an energy of exchange, is a social institution that (like all our institutions) reflects the cultural mentality of separation: a specific collective neuronal organization.
If what I have just said sounds very strange, don't worry, here is a very simple story that will help you understand this.
Consider the following (original idea taken from Charles Eisenstein’s book Sacred Economics). Imagine a small village where there is no money. Let’s say people barter with basic goods. 20 families live in the village. Alice produces beans, Peter produces corn, Kimberley has some chickens, Steven is a carpenter. They all do what they with the most basic technologies, of course their agriculture is fully organic (in their world that word makes no sense).
When Alice wants some corn and Peter wants some beans, things are very easy: Alice takes some corn from Peter, Peter takes some beans from Alice. Everybody is happy.Another day Alice wants some corn but Peter doesn’t want any beans. Luckily, Peter does want some eggs, and Kimberley wants some beans. So the exchange goes: Alice gets her corn, Peter gets his eggs, and Kimberley gets her beans. Everybody happy.
Next week, Peter doesn’t want beans nor eggs, he wants to build his house. That would probably take a lot of corn, however Steven doesn’t want that much corn. He actually wants beans but today Alice doesn’t want any corn. So on and so forth. The point is, bartering without a currency can get complicated.
So, one sunny day a Banker arrives to the village. He is actually an honest banker, one who believes people in the village can do better and simply wants to help them. I am not being sarcastic here, I do not want the reader to get distracted by the stereotype of a greedy banker. Anyways, in the vision of sacred economics greed is not a problem but simply a symptom (and by the way a symptom that is present often but not always; there is in my opinion an exaggeration or an obsession in blaming greed for our civilization’s imminent collapse).
Mr. Banker tells the villagers they can do better by having a currency. “You can exchange more efficiently if you have a currency. Not only that, but you can have your economy grow: produce more, and have access to new goods and services. Let me help you. Get me a cow hide and I will cut it in small pieces (standard size). Then I will give each family 10 pieces of hide. The only condition is when I come back next year, each family has to give me back 11 pieces of hide”. The villagers accept the proposal.
Dear reader, don’t jump to conclusions too fast. Let me guide you. First, a total of 200 hide pieces are circulating in the economy, so there is no way all 20 families can pay back 11 pieces because that will take 220 hide pieces. Thus, this would mean at least 2 families have to go bankrupt (unless Mr. Bank issues new hide pieces in the middle of the year). But let’s go step by step.
First thing that happens is that indeed exchange is easier now (nothing at all wrong with that). The second thing that happens, is that together with this new technology of exchange something else came into the village: a new mentality of “we can do better”. A very healthy realization that one can improve upon whatever one is doing. For example, at a very low cost Kimberley can get some leftovers from Alice’s corn field and have her chickens produce more eggs. Likewise, Alice can get the chicken’s manure and improve corn yields. If Alice’s corn does better, she will be able to pay back her debt and presumably even keep a profit for herself. With the extra hide pieces, she can increase her family’s consumption, let’s say build a bigger house, perhaps buy a refrigerator, and/or make new investments, innovations in her corn field.
Now, one thing that is intuitive to see is that at the beginning of the monetization of the village, innovations are very easy to implement. At the very beginning, innovations have very low cost and very high payoff, generally speaking. So we can imagine the whole village doing better, innovating, having higher yields, producing more and new goods.
When that is the case (increase in economic activity), simply what happens is that before the term is over, some villagers will be calling Mr. Banker to borrow more hide pieces. So physically that is what happens, basically more hide pieces are “printed by the federal reserve”, and these are used to pay back the entire debt at the end of the first period.
So the economy can in principle grow in a very healthy way, increasing consumption and wellbeing for all villagers and fully servicing the debt. In fact, what’s needed for a healthy economic growth is that the rate of increase in economic activity be the same or higher than the interest rate in the currency (in this example 10%).
A healthy growth like this can happen for several years indeed (maybe a couple centuries?). But the problem is that money (hide pieces) is always issued as debt. So no matter what you do economic activity must always increase. Put simply, no matter what yield you had last year, you have to improve it this year. Think about it biologically for the case of the corn field. When you add the first natural fertilizer yields will do much better. If you keep adding more and more the response in terms of higher yields will be less and less to the point that it doesn’t make a difference (or it becomes harmful to yields).
So you innovate again: you make a more detailed study of what nutrients the plant need and when, and you move to chemical fertilizers that allow you to provide the plant with the precise dosages that optimize yield (strictly speaking, that maximize profits). (And by the way, the crop is no longer organic as it used to be). Up to the point where you can’t do any better. So you innovate again: you bring in pesticides. Same process. So you innovate again: you get GMO seeds. So on and so forth.
Economic growth can be sustained by increasing the profitability of what is already being produced, or by transforming some aspect of the gift of life into commercial activity. For example, a mountain that becomes a mining operation. For example, a social relationship such as childcare that was initially a free or reciprocal relationship, and becomes a business relationship.
More than anything the point I want to make is to reach a place in your heart that might know a few things:
Growth cannot go on forever;
while it does go on, it does at an increasing cost for nature and for the wellbeing, health and beauty of all life; and
that we have already reached the point where further economic growth is disastrous for the wellbeing and for the beauty of life.
But let’s go back to the village. The economy grows in a healthy way for several years, while Mr. Banker issues more hide pieces. As soon as growing is no longer as easy and as common sense as it was at the beginning, competition naturally arises. That is, the force that leads you to try to do better than others. You can compete for supplies, for customers, for the property rights of new innovations, etc.
From one point of view, competition can be healthy, if it is taken as a positive force that simply makes you do whatever you do better; for example if it leads you to healthy and harmless even costless innovations.
But pretty soon we know this ceases to be the case. Competition and growth start hurting.
Please notice that this is a truth in my heart, perhaps also a truth in your heart. But THIS IS NOT a scientific truth, an intellectual truth. Very legitimately, say an innovator in Silicon Valley might inhabit a different story, a story where healthy innovations can go on forever. All I am saying his is not my truth, and that alternate truths inhabit different stories and become true only in the heart, not in reasoning.
So, at this point, not every family is capable of paying back her debt. This means bankruptcy. This is the moment when the game of musical chairs begin. Every time the music stops, someone goes bankrupt – is left with no chair. The bank auctions the collateral property and the person that naturally buys it is the person that is already doing well, that has the capital for buying properties.
So quite naturally economic inequality starts building up. Properties and money will begin accumulating in few hands while more and more families cease to be owners of their land and means of life, and become wage-earners and rent-payers.
So you see, economic inequality is endemic to the system, it is not the result of right wing policies nor greedy rich people. As long as money is issued as debt, the pressure for economic growth continually produces inequality as a result.
Not only it produces inequality, but it hurts the beauty of the very gift of life in many ways.
I might say this is where the vision of sacred economics begins. By that I am trying to say that there is so much more to be said, and if you’re feeling full of screaming questions inside, you are on the right track. (Many of such questions I can address on the workshops I facilitate, where the conditions are met to dive deeply into these issues with the heart).
The main and most obvious question is probably: why can’t we have an economic system where money is issued at zero interest rate? The answer is that such economic system is not compatible with our deep and not at all obvious culture of separation. Rather than figuring it out ("engineering the correct economic system"), a healthy economic system will arise naturally from a culture of interbeing. Again, this is only 1% of what there is to be said.
It is worth mentioning, if one were to decree the cessation of economic growth, we would necessarily have to accept bankruptcy (which hits the poor hardest), accept widespread unemployment, accept that many families are left on the street, accept a rise in the suicide rate (as happened in the case of Greece), accept that you do not have a budget for social programs such as health and education, etc. What I mean by this is that there is no political or intellectual solution, which is why being realistic means stepping into the mystery. "Let's be realistic: let's do the impossible."
In a culture, in a collective neuronal arrangement of Separation, if all that surrounds me is Otherness, it is natural that I very easily adopt the (deep and perpetual) belief that it is necessary to improve upon the already existing. (I am referring to the improvement that has to do with control, with exerting the force of reductionist reasoning). We need to increase production, we need to store for next year, we need to improve our technologies until we become independent of hostile or at best indifferent forces of nature. Note that this belief is present in part in the narrative of sustainable development, not only in the narrative of predatory capitalism (i. e., it is not an ethical or good intentions issue). The alternative by the way is an economy born of trust in life. In a culture of distrust in life, who would lend money without interest, knowing that the person who uses it can make it grow without you taking advantage of it? Which bank would lend money at a zero interest rate, as long as there is a risk of non-payment?
The alternative of believing in the perpetual controlled improvement of what already exists is to rediscover the multiple, elusive, uncontrollable mysteries of happiness in life that lie hidden, latent.
A personal note
In a system that endemically produces inequality and destroys nature, not by lack of good intentions but the very fact of the need of economic growth, it is very difficult to feel comfortable with money. If you want it and don’t want it at the same time how can the universe help you out?
If I live and let die my emotions I know I am free of guilt and shame. I might become friends with the system, accept it, plan and control my monthly budget, charge for my services, do marketing to convince clients, turn ideas into opportunities to extract money....
But still, being free from all shame and guilt about money I still simply don’t want to reproduce scarcity and the lack of trust. I just can’t feel good doing that. How can I do marketing of my services if it is not from the generosity of actually serving? It is not an issue of reaching a higher standard of virtue; it is a matter of feeling good! I want to live generosity. Am I getting it “wrong” still? Just let me know mystery of life, I am listening.
I want to share I have a need to clearly see the vision of an economic system trusted on the generosity of life, where naturally everybody is free (I always picture the free, divine ATM machine). I can’t sleep at night so graciously without this complete vision in my heart. All I can barely see is the freedom to be generous, to trust in life, to know nobody is doing it wrong because they don’t fit in or can’t adapt to the current system. After writing today I feel a step closer to live in such a way with the money institution just as it is now. However paradoxical it may be, I welcome it.